[Federal Register Volume 79, Number 190 (Wednesday, October 1, 2014)]
[Notices]
[Pages 59319-59321]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-23312]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73215; File No. SR-BOX-2014-21]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change
Regarding the Short Term Option Series Program
September 25, 2014.
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 September 22, 2014, BOX Options Exchange LLC (the
``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 self-regulatory
organization. The Commission is
[[Page 59320]]
publishing this notice to solicit comments on the proposed rule from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend BOX Rules 5050 (Series of Options
Contracts Open for Trading) and 6090 (Terms of Index Options Contracts)
to conform Exchange rules pertaining to finer strike price intervals
for standard expiration contracts in option classes that also have
Short Term Options (``STOs'') \3\ listed on them (``related non-STOs'',
``related non Short Term Options'', or ``non-STOs''). The text of the
proposed rule change is available from the principal office of the
Exchange, at the Commission's Public Reference Room and also on the
Exchange's Internet Web site at http://boxexchange.com.
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\3\ STOs, also known as ``weekly options'' as well as ``Short
Term Options'', are series in an options class that are approved for
listing and trading on the Exchange in which the series are opened
for trading on any Thursday or Friday that is a business day and
that expire on the Friday of the next business week. If a Thursday
or Friday is not a business day, the series may be opened (or shall
expire) on the first business day immediately prior to that Thursday
or Friday, respectively. STOs are listed and traded pursuant to the
STO Program. For STO Program rules regarding non-index options, see
Rule 5050 and IM-5050-6 to Rule 5050. For STO Program rules
regarding index options, see Rule 6090 and IM-6090-2 to Rule 6090.
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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 self-regulatory organization
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 self-regulatory organization
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 Exchange proposes to amend BOX Rules 5050 (Series of Options
Contracts Open for Trading) and 6090 (Terms of Index Options Contracts)
to conform Exchange rules pertaining to finer strike price intervals
for standard expiration contracts in option classes that also have STOs
listed on them.
The STO Program, which was initiated in 2010,\4\ is codified in IM-
5050-6 to Rule 5050 for non-index options including equity and exchange
traded fund (``ETF'') options, and in IM-6090-2 to Rule 6090 for index
options. Under these rules, the Exchange may list STOs in up to fifty
option classes,\5\ including up to thirty index option classes,\6\ in
addition to option classes that are selected by other securities
exchanges that employ a similar program under their respective rules.
For each of these option classes, the Exchange may list five STO
expiration dates at any given time, not counting monthly or quarterly
expirations.\7\ Specifically, on any Thursday or Friday that is a
business day, the Exchange may list STOs in designated option classes
that expire at the close of business on each of the next five
consecutive Fridays that are business days.\8\ These STOs, which can be
several weeks or more from expiration, may be listed in strike price
intervals of $0.50, $1, or $2.50, with the finer strike price intervals
being offered for lower priced securities, and for options that trade
in the Exchange's dollar strike program.\9\ More specifically, the
Exchange may list short term options in $0.50 intervals for strike
prices less than $75, or for option classes that trade in one dollar
increments in the related non-short term option, $1 intervals for
strike prices that are between $75 and $150, and $2.50 intervals for
strike prices above $150.\10\
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\4\ See Securities Exchange Act Release No. 62505 (July 15,
2010), 75 FR 42792 (July 22, 2010) (Notice of Filing and Immediate
Effectiveness of SR-BX-2010-047).
\5\ See IM-5050-6(b)(1) to Rule 5050.
\6\ See IM-6090-2(b)(1) to Rule 6090.
\7\ See IM-5050-6(a) to Rule 5050 and IM-6090-2(a) to Rule 6090.
\8\ Id.
\9\ See IM-5050-6(b)(5) to Rule 5050 and IM-6090-2(b)(5) to Rule
6090.
\10\ Id. The $2.50 interval does not apply to indexes. See IM-
6090-2(b)(5) to Rule 6090.
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The Exchange recently proposed a change to the STO Program in IM-
5050-6 to Rule 5050 regarding non-index options and IM-6090-2 to Rule
6090 regarding index options that allows related non-STO series to be
opened during the month prior to expiration of such non-STO series in
the same manner and strike price intervals as permitted for STOs.\11\
Thus, the Prior Month Filing would allow standard monthly expiration
options to trade--a month prior to expiration--in the same intervals as
the weekly expiration STO. The Exchange does not propose any
substantive changes, but only ensures that the language within Rules
5050 and 6090, respectively, is in conformity in respect of the
interval that STOs and non-STOs may trade in during the month prior to
expiration of the non-STOs.
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\11\ See Securities Exchange Act Release No. 72483 (June 26,
2014), 79 FR 37820 (July 2, 2014) (Notice of Filing and Immediate
Effectiveness of SR-BOX-2014-18) (the ``Prior Month Filing'').
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Rules 5050(d)(6) and 6090(c)(6) now state that notwithstanding any
other provision regarding strike prices in the respective rules,
related non-STO series may be opened during the week prior to
expiration of such non-STO series in the same manner and strike price
intervals as permitted for STOs. This proposal conforms Rule 5050(d)(6)
to IM-5050-6 and Rule 6090(c)(6) to IM- 6090-2. Specifically, as
proposed Rules 5050(d)(6) and 6090(c)(6) would state that
notwithstanding any other provision regarding strike prices in this
rule, non-STOs that are on a class or an index class that has been
selected to participate in the STO Program (related non-STO series)
shall be opened during the month prior to expiration of such related
non-STO series in the same manner and intervals as permitted in IM-
5050-6 to Rule 5050 or IM-6090-2 to Rule 6090.\12\ No other changes are
proposed.
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\12\ See Rules 5050(d)(6) and 6090(c)(6).
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The Exchange is now permitted to list the standard monthly
expiration contract options in these narrower STO intervals at any time
during the month prior to expiration, which begins on the first trading
day after the prior month's expiration date, subject to the provisions
of Exchange rules. As discussed, this proposal simply conforms the
language of Rules 5050 and 6090 to make each of the rules internally
consistent.
The Exchange believes that continuing to introduce consistent
strike price intervals for STOs and related non-STOs during the month
prior to expiration benefits investors by giving them more flexibility
to closely tailor their investment decisions. The Exchange also
believes that this provides the investing public and other market
participants with additional opportunities to hedge their investments,
thus allowing these investors to better manage their risk exposure.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Securities Exchange Act of 1934
(the ``Act''),\13\ in general, and Section 6(b)(5) of the Act,\14\ in
particular, in that it is
[[Page 59321]]
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.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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As noted above, standard expiration options currently trade in
wider intervals than their weekly counterparts, except during the week
prior to expiration. This creates a situation where contracts on the
same option class that expire both several weeks before and several
weeks after the standard expiration are eligible to trade in strike
price intervals that the standard expiration contract is not. The Prior
Month Filing allowed STOs and non-STOs to be listed and traded in the
same intervals pursuant to Rules 5050 (non-index options) and 6090
(index options). This proposal conforms the language of each of the
respective rules to reflect the monthly time period, and negates
potential confusion from inconsistent language.\15\
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\15\ The Exchange represents that, because of the technical
conforming nature of the proposal, it will not have any impact on
system capacity.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. To the contrary, the Exchange
believes that the proposed technical conforming rule change continues
to provide additional investment options and opportunities to achieve
the investment objectives of market participants seeking efficient
trading and hedging vehicles, to the benefit of investors, market
participants, and the marketplace in general.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the 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, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6)
thereunder.\17\
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with 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.
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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 stated that waiver of this requirement will allow
STOs to be traded on the Exchange pursuant to rules that are internally
conformed, and would thus negate any potential market confusion. For
this reason, the Commission believes that the proposed rule change
presents no novel issues and that waiver of the 30-day operative delay
is consistent with the protection of investors and the public interest;
and will allow the Exchange to remain competitive with other exchanges.
Therefore, the Commission designates the proposed rule change to be
operative upon filing.\18\
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\18\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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 [email protected]. Please include
File Number SR-BOX-2014-21 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-BOX-2014-21. This file
number should be included on the 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
a.m. and 3 p.m. Copies of the 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-BOX-2014-21 and should be
submitted on or before October 22, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-23312 Filed 9-30-14; 8:45 am]
BILLING CODE 8011-01-P