[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]


=======================================================================
-----------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \6\ See Commentary .05(a)(iv)(A) to Rule 1012.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \7\ See Notice, supra note 4, at 44232.
    \8\ Id.
    \9\ Id.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \12\ See Notice, supra note 4, at 44232.
    \13\ Id.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-21122 Filed 9-4-14; 8:45 am]
BILLING CODE 8011-01-P