[Federal Register Volume 81, Number 134 (Wednesday, July 13, 2016)]
[Notices]
[Pages 45348-45349]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16488]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78247; File No. SR-BOX-2016-31]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend IM-3120-2 to Rule 3120 To Extend the Pilot Program That 
Eliminated the Position Limits for Options on SPDR S&P 500 ETF 
(``SPY'') (``SPY Pilot Program'')

July 7, 2016.
    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 July 6, 2016, 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 publishing this notice to solicit comments on the proposed rule 
change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend IM-3120-2 to Rule 3120 to extend the 
pilot program that eliminated the position limits for options on SPDR 
S&P 500 ETF (``SPY'') (``SPY Pilot Program''). 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
    The Exchange proposes to amend IM-3120-2 to Rule 3120 to extend the 
time period of the SPY Pilot Program,\3\ which is currently scheduled 
to expire on July 12, 2016, through July 12, 2017.\4\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 67936 (September 27, 
2012), 77 FR 60491 (October 3, 2012) (Notice of Filing and Immediate 
Effectiveness of SR-BOX-2012-013).
    \4\ See Securities Exchange Act Release No. 75410 (July 9, 
2015), 80 FR 41540 (July 15, 2015) (Notice of Filing and Immediate 
Effectiveness of SR-BOX-2015-25).
---------------------------------------------------------------------------

    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.
    In the proposal to extend the SPY Pilot Program, the Exchange 
stated that if it were to propose an extension, permanent approval or 
termination of the program, the Exchange would submit, along with any 
filing proposing such amendments to the program, a report providing an 
analysis of the SPY Pilot Program covering the period since the 
previous extension (the ``Pilot Report'').\5\ Accordingly, the Exchange 
is submitting the Pilot Report detailing the Exchange's experience with 
the SPY Pilot Program. The Pilot Report is attached as Exhibit 3 to 
this filing. 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. In extending the SPY Pilot Program, the 
Exchange states that if it were to propose another extension, permanent 
approval or termination of the program, the Exchange will submit 
another Pilot Report covering the period since the previous extension, 
which will be submitted at least 30 days before the end of the proposed 
extension. If the SPY Pilot Program is not extended or adopted on a 
permanent basis by July 12, 2017, position limits in SPY will revert to 
their Pre-Pilot levels. Extending the SPY Pilot Program will give the 
Exchange and Commission additional time to evaluate the pilot and its 
effect on the market.
---------------------------------------------------------------------------

    \5\ Id.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act, in general, and Section 
6(b)(5) of the Act, in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, 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 extending the SPY Pilot Program promotes just and 
equitable principles of trade by permitting market participants, 
including market makers, institutional investors and retail investors, 
to establish greater positions when pursuing their investment goals and 
needs.

[[Page 45349]]

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. The proposed rule change is not 
designed to address any aspect of competition, whether between the 
Exchange and its competitors, or among market participants. Instead, 
the proposed rule change is designed to allow the SPY Pilot Program to 
continue without interruption. Additionally, the Exchange expects other 
SROs will propose similar extensions.

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 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.\6\
---------------------------------------------------------------------------

    \6\ 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.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \7\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \8\ 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 allow 
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.\9\
---------------------------------------------------------------------------

    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ 17 CFR 240.19b-4(f)(6)(iii).
    \9\ For 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).
---------------------------------------------------------------------------

    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-2016-31 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-2016-31. 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 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-BOX-2016-31, and should be 
submitted on or before August 3, 2016.
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Brent J. Fields,
Secretary.
[FR Doc. 2016-16488 Filed 7-12-16; 8:45 am]
 BILLING CODE 8011-01-P