Federal Register / Vol. 80, No. 16 / Monday, January 26, 2015 / Notices 4021 

45 15 U.S.C. 78f(b)(5). 

46 15 U.S.C. 78s(b)(2). 

47 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 ‘‘SPDR®,’’ ‘‘Standard & Poor’s®,’’ ‘‘S&P®,’’ ‘‘S&P 

500®,’’ and ‘‘Standard & Poor’s 500’’ are registered 

trademarks of Standard & Poor’s Financial Services 

LLC. The SPY ETF represents ownership in the 

SPDR S&P 500 Trust, a unit investment trust that 

generally corresponds to the price and yield 

performance of the SPDR S&P 500 Index. 

4The report is attached as Exhibit 3. 

5See Securities Exchange Act Release No. 70879 

(November 14, 2013), 78 FR 69731 (November 20, 

2013) (SR–Phlx–2013–108). 

The Sub-Adviser will evaluate the 

creditworthiness of counterparties on an 

ongoing basis. The Fund will segregate 

assets determined to be liquid by the 

Sub-Adviser in accordance with the 

1940 Act to cover its obligations under 

derivative instruments. The Fund will 

include appropriate risk disclosure in 

its offering documents, including 

leveraging risk. 

(11) The Fund’s portfolio will be 

diversified by industry and issuer, with 

no individual issuer representing more 

than 5% of the portfolio. 

(12) Not more than 10% of the net 

assets of the Fund in the aggregate 

invested in equity securities (other than 

non-exchange-traded investment 

company securities) shall consist of 

equity securities whose principal 

market is not a member of the ISG or is 

a market with which the Exchange does 

not have a comprehensive surveillance 

sharing agreement. Not more than 10% 

of the net assets of the Fund in the 

aggregate invested in exchange-traded 

options contracts shall consist of 

options contracts whose principal 

market is not a member of the ISG or is 

a market with which the Exchange does 

not have a comprehensive surveillance 

sharing agreement. U.S. exchangetraded futures contracts, U.S. exchangetraded options on futures contracts, and 

U.S. exchange-traded put and call 

options in which the Fund invests will 

trade on exchanges that are members of 

ISG. 

(13) Unsponsored ADRs will not 

exceed 10% of the Fund’s net assets. 

(14) The Fund may invest up to 5% 

of its net assets in non-agency ABS. 

(15) The Fund may invest up to 5% 

of its net assets in MBS and mortgagerelated securities. 

(16) A minimum of 100,000 Shares 

will be outstanding at the 

commencement of trading on the 

Exchange. 

This approval order is based on all of 

the Exchange’s representations, 

including those set forth above and in 

the Notice, and the Exchange’s 

description of the Fund. 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change, as modified by Amendment 

No. 1, is consistent with Section 6(b)(5) 

of the Act 45 and the rules and 

regulations thereunder applicable to a 

national securities exchange. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,46 that the 

proposed rule change (SR–NYSEArca– 

2014–126), as modified by Amendment 

No. 1, be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.47

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–01246 Filed 1–23–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74099; File No. SR–Phlx– 

2015–07] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

SPY Pilot Program 

January 20, 2015. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 

13, 2015, NASDAQ OMX PHLX LLC 

(‘‘Phlx’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The Exchange proposes to extend the 

pilot program that eliminates position 

limits for options on the SPDR® S&P 

500® exchange-traded fund (‘‘SPY ETF’’ 

or ‘‘SPY’’),3 which list and trade under 

the symbol SPY (‘‘SPY Pilot Program’’). 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://

nasdaqomxphlx.cchwallstreet.com/, at 

the principal office of the Exchange, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend Rule 1001, entitled 

‘‘Position Limits,’’ to extend the current 

pilot, which expires on February 4, 

2015, to July 12, 2015 (‘‘Extended 

Pilot’’). This filing does not propose any 

substantive changes to the SPY Pilot 

Program. In proposing to extend the 

SPY Pilot Program, the Exchange 

reaffirms its consideration of several 

factors that supported the original 

proposal of the SPY Pilot Program, 

including (1) the availability of 

economically equivalent products and 

their respective position limits; (2) the 

liquidity of the option and the 

underlying security; (3) the market 

capitalization of the underlying security 

and the related index; (4) the reporting 

of large positions and requirements 

surrounding margin; and (5) the 

potential for market on close volatility. 

The Exchange submitted a report to 

the Commission on January 2, 2015, 

which report reflected, during the time 

period from December 1, 2013 through 

November 30, 2014, the trading of 

standardized SPY options with no 

position limits consistent with option 

exchange provisions.4 The report was 

prepared in the manner specified in 

Phlx’s filing extending the SPY Pilot 

Program.5 The Exchange notes that it is 

unaware of any problems created by the 

SPY Pilot Program and does not foresee 

any as a result of the proposed 

extension. 

As with the original proposal, related 

to the SPY Pilot Program, the Exchange 

represents that a Pilot Report will be 

submitted at least thirty (30) days before 


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4022 Federal Register / Vol. 80, No. 16 / Monday, January 26, 2015 / Notices 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f)(6). 

10 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and the text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. The 

Exchange has satisfied this requirement. 

11 17 CFR 240.19b–4(f)(6). 

12 17 CFR 240.19b–4(f)(6)(iii). 

13For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

the end of the Extended Pilot and would 

analyze that period. The Pilot Report 

will detail the size and different types 

of strategies employed with respect to 

positions established as a result of the 

elimination of position limits in SPY. In 

addition, the report will note whether 

any problems resulted due to the no 

limit approach and any other 

information that may be useful in 

evaluating the effectiveness of the 

Extended Pilot. The Pilot Report will 

compare the impact of the SPY Pilot 

Program, if any, on the volumes of SPY 

options and the volatility in the price of 

the underlying SPY shares, particularly 

at expiration during the Extended Pilot. 

In preparing the report the Exchange 

will utilize various data elements such 

as volume and open interest. In addition 

the Exchange will make available to 

Commission staff data elements relating 

to the effectiveness of the SPY Pilot 

Program. 

Conditional on the findings in the 

Pilot Report, the Exchange will file with 

the Commission a proposal to extend 

the pilot program, adopt the pilot 

program on a permanent basis or 

terminate the pilot. If the SPY Pilot 

Program is not extended or adopted on 

a permanent basis by the expiration of 

the Extended Pilot, the position limits 

for SPY would revert to limits in effect 

at the commencement of the SPY Pilot 

Program. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 6 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 7

in particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

The Exchange believes that the 

proposed rule change would be 

beneficial to market participants, 

including market makers, institutional 

investors and retail investors, by 

permitting them to establish greater 

positions when pursuing their 

investment goals and needs. The 

Exchange also believes that 

economically equivalent products 

should be treated in an equivalent 

manner so as to avoid regulatory 

arbitrage, especially with respect to 

position limits. Treating SPY and SPX 

options differently by virtue of imposing 

different position limits is inconsistent 

with the notion of promoting just and 

equitable principles of trade and 

removing impediments to perfect the 

mechanisms of a free and open market. 

At the same time, the Exchange believes 

that the elimination of position limits 

for SPY options would not increase 

market volatility or facilitate the ability 

to manipulate the market. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

In this regard and as indicated below, 

the Exchange notes that the rule change 

is being proposed as a competitive 

response to similar filings by other 

options exchanges. The Exchange 

believes this proposed rule change is 

necessary to permit fair competition 

among the options exchanges and to 

establish uniform position limits for a 

multiply listed options class. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A) of the Act 8 and Rule 19b– 

4(f)(6) thereunder.9 Because the 

foregoing proposed rule change does 

not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act and Rule 19b– 

4(f)(6) thereunder.10

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 11 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 12

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has asked 

the Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange believes that 

waiver of the operative delay is 

consistent with the protection of 

investors and the public interest 

because it will permit the SPY Pilot 

Program to continue without 

interruption. The Commission believes 

that waiving the 30-day operative delay 

is consistent with the protection of 

investors and the public interest. 

Therefore, the Commission hereby 

waives the operative delay and 

designates the proposed rule change 

operative upon filing.13

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2015–07 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2015–07. This file 

number should be included on the 


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Federal Register / Vol. 80, No. 16 / Monday, January 26, 2015 / Notices 4023 

14 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3BAC is the symbol for Bank of America 

Corporation, IWM is the symbol for iShares Russell 

200 ETF, QQQ is the symbol for PowerShares QQQ 

Trust Series 1 ETF, SPY is the symbol for SPDR S&P 

500 ETF, and VXX is the symbol for iPath S&P 500 

VIX Short Term Futures ETN. 

4See Securities Exchange Act Release No. 72883 

(August 20, 2014), 79 FR 50971 (August 26, 2014) 

(SR–BX–2014–035) (order approving introduction 

of LMMs on BX) (the ‘‘LMM approval order’’). 

5LMM obligations and prohibitions are further 

described in Chapter VII, Section 14. 

6See BX Chapter VII, Section 2. 

7See BX Chapter VII, Section 13(A)(b). 

Subsequent applications are discussed in Section 

13(A)(c). 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Phlx– 

2015–07, and should be submitted on or 

before February 17, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–01252 Filed 1–23–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74097; File No. SR–BX– 

2015–004] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change Regarding BX 

LMM and Penny Pilot Options 

January 20, 2015. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 9, 

2015, NASDAQ OMX BX, Inc. (‘‘BX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Chapter XV, entitled ‘‘Options Pricing’’ 

and Section 2, entitled ‘‘Options 

Market—Fees and Rebates’’. 

Specifically, the Exchange proposes to: 

(1) Add the definition of Lead Market 

Maker (‘‘LMM’’) and amend the 

definition of Common Ownership in 

Chapter XV; (2) adopt three Monthly 

Volume Tiers in Section 2 that apply to 

LMMs in their specifically allocated 

options classes when adding liquidity in 

Penny Pilot options; (3) indicate in 

Section 2 that BAC, IWM, QQQ, SPY, 

and VXX are priced like all other Penny 

Pilot options; and (4) update the 

numbering of notes in Section 2. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://

nasdaqomxbx.cchwallstreet.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend Chapter XV, entitled 

‘‘Options Pricing’’ and Section 2, 

entitled ‘‘Options Market—Fees and 

Rebates’’. Specifically, the Exchange 

proposes to: (1) Add the definition of 

Lead Market Maker and amend the 

definition of Common Ownership in 

Chapter XV; (2) adopt three Monthly 

Volume Tiers in Section 2 that apply to 

LMMs (also known as ‘‘BX LMMs’’) in 

their specifically allocated options 

classes when adding liquidity in Penny 

Pilot options; (3) indicate in Section 2 

that BAC, IWM, QQQ, SPY, and VXX 3

are priced like all other Penny Pilot 

options; and (4) update the numbering 

of notes in Section 2. 

Lead Market Maker 

BX introduced LMMs this year on the 

Exchange,4 such that with respect to 

each class of options in an LMM’s 

appointment, an LMM is expected to 

engage, to a reasonable degree under the 

existing circumstances, in dealings for 

his own account when there exists, or 

it is reasonably anticipated that there 

will exist, a lack of price continuity, a 

temporary disparity between the supply 

of and demand for a particular option 

contract, or a temporary distortion of the 

price relationships between option 

contracts of the same class.5 Approved 

BX Options Market Makers 6 may 

become an LMM in one or more listed 

options. Initial application(s) to become 

an LMM shall be in a form and/or 

format prescribed by the Exchange and 

shall include the following: (1) 

Background information on the LMM 

including experience in trading options; 

(2) the LMM’s clearing arrangements; (3) 

adequacy of capital; and (4) adherence 

to Exchange rules and ability to meet 

obligations of an LMM.7 Once an 

applicant is approved by the Exchange 

as an LMM, any material change in 

capital shall be reported in writing to 

the Exchange within two business days 

after the change. The Exchange will not 

place any limit on the number of 

entities that may become LMMs, 

however the Exchange notes that there 

will only be one LMM per class. 

The Exchange is not, in this proposal, 

making any changes, substantive or 

otherwise, to how LMMs function. 

Rather, in that the proposed new 

volume tiers in Chapter XV, Section 2 

refer to LMMs, the Exchange is adding 

to Chapter XV a definition of LMM that 

refers back to Chapter VII, Section 13. 

Specifically, the Exchange proposes to 

state in Chapter XV: ‘‘The term ‘‘Lead 


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