[Federal Register Volume 78, Number 113 (Wednesday, June 12, 2013)]
[Notices]
[Pages 35338-35340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-13882]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69711; File No. SR-BOX-2013-29]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To Amend
BOX Rule 8050 to Lower the Minimum Quoting Requirement for Market
Makers Quoting in Jumbo SPY Options
June 6, 2013.
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 May 31, 2013, BOX Options Exchange LLC (``BOX'' 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.
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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 Rule 8050 to lower the minimum
quoting requirement for Market Makers quoting in Jumbo SPY Options. 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.
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
On May 10, 2013 the Exchange began listing and trading option
contracts overlying 1,000 SPDR[supreg] S&P 500[supreg] exchange-traded
fund shares (``SPY''),\3\ or (``Jumbo SPY Options'').\4\ Whereas
standard options contracts represent a deliverable of 100 shares of an
underlying security, this product represents 1,000 SPY shares. Except
for the difference in the number of deliverable shares, Jumbo SPY
Options have the same terms and contract characteristics as regular-
sized options contracts (``standard options''), including exercise
style. Accordingly, the Commission noted in the approval order that the
Exchange's rules that apply to the trading of standard options would
apply to Jumbo SPY Options as
[[Page 35339]]
well.\5\ The Exchange proposes to amend BOX Rule 8050 to lower the
minimum quoting requirement for Market Makers quoting in Jumbo SPY
Options.
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\3\ ``SPDR[supreg],'' ``Standard & Poor's[supreg],''
``S&P[supreg],'' ``S&P 500[supreg],'' 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.
\4\ See Securities Exchange Act Release No. 34-69511 (May 3,
2013), 78 FR 27271 (May 9, 2013) (Order Approving SR-BOX-2013-06).
\5\ Id.
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Currently, the Exchange requires that a Market Maker's bid and
offer for a series of options contracts shall be accompanied by the
number of contracts at that price the Market Maker is willing to buy
from or sell to Customers. Every Market Maker bid or offer must have an
initial size of at least ten (10) contracts.\6\ The Exchange proposes
to lower the Market Maker bid or offer initial size requirement for
Jumbo SPY options to 1/10th of the current requirement. Specifically,
the Exchange proposes to make the required minimum number of contracts
for a Market Maker's bid or offer in Jumbo SPY Options one (1)
contract.
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\6\ BOX Rule 8050(b).
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The Exchange believes it is appropriate to adjust the Market Maker
quoting requirement for Jumbo SPY Options so it is scaled based upon
the total number of shares of the underlying security instead of the
total number of options contracts. Under the proposed rule change a
Market Maker would be required to quote at least ten (10) contracts for
standard options that represent a total of 1,000 shares of the
underlying security. For Jumbo SPY Options the Market Maker would only
be required to quote at least one (1) contract, but this would still
represent a total of 1,000 shares of the underlying security. The
Exchange believes that modifying the quotation requirement for Jumbo
SPY Options will encourage Market Maker quoting in this new product and
lead to increased liquidity.
The Exchange notes that a minimum quoting requirement of one (1)
contract is not novel and certain exchanges have a minimum quoting
requirement of one (1) contract for all classes.\7\ Further, the
Exchange believes that having different quotation requirements for
Jumbo SPY Options than those required for standard options on SPY would
not lead to investor confusion and will instead increase liquidity in
this new product, therefore enabling market participants to trade Jumbo
SPY Options with greater precision.
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\7\ See NASDAQ OMX BX Rule Chapter VII, Sec. 6 (Market Maker
Quotations).
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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''),\8\ in general, and Section 6(b)(5) of the Act,\9\ 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 proposed rule change will assure that standard
options and Jumbo SPY Options will have an equivalent Market Maker
quoting requirement in terms of shares on the underlying security. The
Exchange believes that investors and other market participants will
benefit from this proposed rule change because it establishes a lower
quoting requirement for Jumbo SPY Options, which will increase the
overall liquidity in this new product.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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Finally, the Exchange believes that the proposed rule change is not
designed to permit unfair discrimination among market participants as
all Market Makers may quote Jumbo SPY Options once they are appointed
to this options class.
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. Specifically, the Exchange
believes that investors will benefit from the increased liquidity of
Jumbo SPY Options. Quoting in Jumbo SPY Options is entirely voluntary
and Market Makers can determine if they would like to trade in this new
product. The Exchange believes this proposed rule change is necessary
to establish equivalent Market Maker quoting requirements for Jumbo SPY
Options, a new options product.
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 foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6)
thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with written notice of its intent to file the proposed rule change,
along with a brief description and 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 fulfilled this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter
time if such action is consistent with the protection of investors and
the public interest. The Exchange requests that the Commission waive
the 30-day operative delay so that the proposed rule change may become
immediately operative. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest.\12\ The Exchange began trading Jumbo SPY Options on
May 10, 2013, and waiver of the operative delay will allow the Exchange
to implement its proposal without delay. For these reasons, the
Commission designates the proposed rule change as operative upon
filing.
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\12\ 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.
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
[[Page 35340]]
Send an email to [email protected]. Please include
File Number SR-BOX-2013-29 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BOX-2013-29. 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
10:00 a.m. and 3:00 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-2013-29 and should be
submitted on or before July 3, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-13882 Filed 6-11-13; 8:45 am]
BILLING CODE 8011-01-P