[Federal Register Volume 79, Number 172 (Friday, September 5, 2014)]
[Notices]
[Pages 53089-53090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-21122]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72949; File No. SR-Phlx-2014-46]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order
Granting Approval of Proposed Rule Change, as Modified by Amendment No.
1, Relating to SPY and DIA Options
August 29, 2014.
I. Introduction
On July 9, 2014, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934
(``Act''),\2\ and Rule 19b-4 thereunder,\3\ a proposed rule change to
allow $1 or greater strike price intervals for options on the
SPDR[supreg] S&P 500[supreg] Exchange Traded Fund (``SPY'') and the
SPDR[supreg] Dow Jones[supreg] Industrial Average Exchange Traded Fund
(``DIA'') for strike prices above $200. On July 22, 2014, the Exchange
filed Amendment No. 1 to the proposal. The proposed rule change, as
modified by Amendment No. 1, was published for comment in the Federal
Register on July 30, 2014.\4\ The Commission received three comment
letters on the proposal.\5\ This order approves the proposed rule
change, as modified by Amendment No. 1.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ See Securities Exchange Act Release No. 72664 (July 24,
2014), 79 FR 44231 (``Notice'').
\5\ See letters to Elizabeth M. Murphy, Secretary, Commission,
from Joseph Burtnick, dated July 28, 2014; Michael, dated August 26,
2014; and Colin J. Gerrard, dated August 28, 2014. All three
commenters supported the approval of the proposal because it would
enhance market participation in SPY options.
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II. Description of the Proposed Rule Change
Under current Phlx Rule 1012 (Series of Options Open for Trading),
the interval of strike prices of series of options on Exchange Traded
Fund (``ETF'') Shares is $1 or greater where the strike price is $200
or less and $5 or greater where the strike price is more than $200.\6\
The Exchange proposes to narrow those strike intervals by amending
Commentary .05(a)(iv)(C) to Rule 1012 to allow trading of SPY and DIA
options in $1 strike intervals where the strike price is above $200.
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\6\ See Commentary .05(a)(iv)(A) to Rule 1012.
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With regard to the impact of the proposal on system capacity, the
Exchange states that it has analyzed its capacity and represents that
it and the Options Price Reporting Authority (``OPRA'') have the
necessary systems capacity to handle any potential additional traffic
associated with this proposed rule change.\7\ In addition, the Exchange
states that it believes that its members will not experience a capacity
issue as a result of this proposal.\8\ Furthermore, the Exchange states
that it does not believe the proposed rule change will cause
fragmentation of liquidity.\9\
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\7\ See Notice, supra note 4, at 44232.
\8\ Id.
\9\ Id.
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III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\10\ In particular, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act,\11\ which
requires, among other things, that the rules of a national securities
exchange be designed to promote just and equitable principles of trade,
to prevent fraudulent and manipulative acts, 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 Commission believes that the proposed change may provide
the investing public and other market participants more flexibility to
closely tailor their investment and
[[Page 53090]]
hedging decisions in SPY and DIA options, thus allowing them to better
manage their risk exposure.
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\10\ In approving the proposed rule change, the Commission has
considered its impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\11\ 15 U.S.C. 78f(b)(5).
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In approving this proposal, the Commission notes that the Exchange
has represented that it and OPRA have the necessary systems capacity to
handle the potential additional traffic associated with this proposed
rule change.\12\ The Exchange further stated that it believes its
members will not have a capacity issue as a result of the proposal and
that it does not believe this expansion will cause fragmentation of
liquidity.\13\
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\12\ See Notice, supra note 4, at 44232.
\13\ Id.
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\14\ that the proposed rule change (SR-Phlx-2014-46), as modified by
Amendment No. 1, be, and hereby is, approved.
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\14\ 15 U.S.C. 78f(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-21122 Filed 9-4-14; 8:45 am]
BILLING CODE 8011-01-P