[Federal Register Volume 83, Number 231 (Friday, November 30, 2018)]
[Notices]
[Pages 61705-61707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25996]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84649; File No. SR-NYSEAMER-2018-51]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rule 903, Series of Options Open for Trading
November 26, 2018.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that on
November 19, 2018, NYSE American LLC (``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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 903. The proposed rule change
is available on the Exchange's website at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
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 those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to amend Rule 903, Series of Options
Open for Trading, to permit the listing and trading of up to ten
expiration months for long term options on the SPDR[supreg] S&P
500[supreg] Exchange-Traded Fund (the ``SPY ETF'').
Commentary .03(a) of Rule 903 (``Commentary .03'') provides that
the Exchange may list, with respect to any class of stock or Exchange-
Traded Fund Share options series, options having from twelve up to
thirty-nine months from the time they are listed until expiration
(``LEAPS''). Under the current Rule, the Exchange may list up to six
LEAPS expiration months.\4\ The Exchange proposes to amend Commentary
.03 to permit up to ten LEAPS expiration months for options on the SPY
ETF.\5\ This proposal, which is substantially the same as a recent rule
amendment submitted by Nasdaq PHLX LLC (``PHLX'') and driven by
customer demand,\6\ would add liquidity to the SPY ETF options market
by allowing market participants to hedge risks relating to SPY ETF
positions over a potentially longer time period with a known and
limited cost.
---------------------------------------------------------------------------
\4\ Strike price interval, bid/ask differential and continuity
rules shall not apply to such options series until the time to
expiration is less than nine months. See Commentary .03(a) of Rule
903.
\5\ See proposed Commentary .03(a) of Rule 903 (providing in
relevant part, that ``[t]here may be up to ten expiration months for
options on the [SPY ETF] and up to six extended far term expiration
months for options on any other index, Exchange-Trade Fund Share, or
equity option class''). The Exchange also proposes a technical
change to remove the errant period that appears after ``(LEAPS)'' in
the title of Commentary .03, which would add clarity and consistency
to Exchange rules. See proposed Commentary .03 of Rule 903.
\6\ See also Securities Exchange Act Release No. 84449 (October
18, 2018), 83 FR 53699 (October 24, 2018) (SR-Phlx-2018-64) (``PHLX
Rule Change''). The Exchange notes that the PHLX Rule Change does
not apply to LEAPS on index options, as PHLX already provided for up
to ten expirations in LEAPS on index options in PHLX Rule
1101A(b)(iii). Because Commentary .03 includes index options, this
proposal is consistent with both the PHLX Rule Change and PHLX Rule
1101A(b)(iii).
---------------------------------------------------------------------------
The SPY ETF options market today is characterized by its tremendous
daily and annual liquidity. As a consequence, the Exchange believes
that the listing of additional SPY ETF LEAPS expiration months would be
well received by investors. This proposal to expand the number of
permitted SPY ETF LEAPS would not apply to LEAPS on any other
[[Page 61706]]
class of stock or Exchange-Traded Fund Share options.\7\
---------------------------------------------------------------------------
\7\ Historically, SPY is the largest and most actively traded
ETF in the United States as measured by its assets under management
and the value of shares traded.
---------------------------------------------------------------------------
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \8\ of the
Securities Exchange Act of 1934 (the ``Act''), in general, and furthers
the objectives of Section 6(b)(5),\9\ in particular, in that it is
designed 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, by offering market participants additional LEAPS on
SPY options for their investment and risk management purposes. The
proposal is intended simply to provide additional trading opportunities
which have been requested by customers, thereby facilitating
transactions in options and contributing to the protection of investors
and the maintenance of fair and orderly markets. The proposed rule
change responds to the continuing needs of market participants,
particularly portfolio managers and other institutional customers, by
providing protection from long-term market moves and by offering an
alternative to hedging portfolios with futures positions or off-
exchange customized derivative instruments.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the addition today of four additional
expiration months for SPY ETF LEAPS does not represent a proliferation
of expiration months, but is instead a very modest expansion of LEAPS
options in response to stated customer demand. Significantly, the
proposal would feature new LEAPS expiration months in only a single
class of options--the SPY ETF--that are very liquid and heavily traded,
as discussed above. Additionally, the Exchange notes by way of
precedent that ten expiration months are already permitted for stock
index LEAPS options on other markets.\10\ Further, the Exchange has the
necessary systems capacity to support the new SPY ETF LEAPS expiration
months.
---------------------------------------------------------------------------
\10\ See NYSE Arca Rule 5.19-O(b)(1) and PHLX Rule
1101A(b)(iii).
---------------------------------------------------------------------------
The Exchange notes that this proposal is substantially the same as
a recent rule amendment submitted by PHLX.\11\
---------------------------------------------------------------------------
\11\ See PHLX Rule Change, supra note 6.
---------------------------------------------------------------------------
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 proposal merely provides
investors additional investment and risk management opportunities by
providing flexibility to the Exchange to list additional long term
options expiration series, expanding the number of SPY LEAPS offered on
the Exchange from six expiration months to ten expiration months.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to 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 \12\ and Rule 19b-
4(f)(6) thereunder.\13\
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
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 satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\15\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange's
proposal would conform the Exchange's rules relating to the permitted
number of SPY ETF LEAPS expiration months to those of PHLX.\16\
Accordingly, the Commission believes that the proposal raises no new or
novel regulatory issues, and waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
The Commission therefore waives the 30-day operative delay and
designates the proposal operative upon filing.\17\
---------------------------------------------------------------------------
\14\ Id.
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ See supra, note 6.
\17\ 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).
---------------------------------------------------------------------------
At any time within 60 days of the filing of such 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
Send an email to [email protected]. Please include
File Number SR-NYSEAMER-2018-51 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEAMER-2018-51. 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 website (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 website 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
[[Page 61707]]
office of the Exchange. All comments received will be posted without
change. Persons submitting comments are cautioned that we do not redact
or edit personal identifying information from comment submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-NYSEAMER-2018-
51 and should be submitted on or before December 21, 2018.
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-25996 Filed 11-29-18; 8:45 am]
BILLING CODE 8011-01-P