[Federal Register Volume 85, Number 67 (Tuesday, April 7, 2020)]
[Notices]
[Pages 19545-19548]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07224]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88532; File No. 4-443]
Joint Industry Plan; Order Approving Amendment No. 5 to the Plan
for the Purpose of Developing and Implementing Procedures Designed To
Facilitate the Listing and Trading of Standardized Options To Adopt a
Penny Interval Program
April 1, 2020.
I. Introduction
On July 18, 2019, BOX Exchange LLC; Cboe BZX Exchange, Inc.; Cboe
C2 Exchange, Inc.; Cboe Exchange, Inc.; Cboe EDGX Exchange, Inc.; Miami
International Securities Exchange, LLC; MIAX Emerald, LLC; MIAX PEARL,
LLC; Nasdaq BX, Inc.; Nasdaq GEMX, LLC; Nasdaq ISE, LLC; Nasdaq MRX,
LLC; Nasdaq PHLX LLC; The Nasdaq Stock Market LLC; NYSE American, LLC;
NYSE Arca, Inc. (collectively, ``Exchanges''); and The Options Clearing
Corporation (``OCC'') (together with the OCC, ``Plan Sponsors'') filed
with the Securities and Exchange Commission (``Commission'') pursuant
to Section 11A(a)(3) of the Securities Exchange Act of 1934 (``Act'')
\1\ and Rule 608 thereunder,\2\ a proposal to amend the Plan for the
Purpose of Developing and Implementing Procedures Designed to
Facilitate the Listing and Trading of Standardized Options (the
``Plan'').\3\ Amendment No. 5 was published for comment in the Federal
Register on December 17, 2019.\4\
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\1\ 15 U.S.C. 78k-1(a)(3).
\2\ 17 CFR 242.608.
\3\ See Letter from BOX Exchange LLC, CBOE BZX Exchange, Inc.,
CBOE Exchange, Inc., CBOE C2 Exchange, Inc, CBOE EDGX Exchange,
Inc., Miami International Securities Exchange, LLC, MIAX Emerald,
LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., NASDAQ GEMX, LLC, NASDAQ ISE,
LLC, NASDAQ MRX, LLC, NASDAQ PHLX, LLC, The NASDAQ Stock Market LLC,
NYSE American, LLC, NYSE Arca, Inc., and the OCC, to Vanessa
Countryman, Secretary, Commission, dated July 18, 2019. (``Amendment
No. 5''). On July 6, 2001, the Commission approved the Plan, which
was proposed by the American Stock Exchange LLC, Chicago Board
Options Exchange, Incorporated, International Securities Exchange
LLC, OCC, Philadelphia Stock Exchange, Inc., and Pacific Exchange,
Inc. See Securities Exchange Act Release No. 44521, 66 FR 36809
(July 13, 2001). See also Securities Exchange Act Release Nos. 49199
(February 5, 2004), 69 FR 7030 (February 12, 2004) (adding Boston
Stock Exchange, Inc. as a Plan Sponsor); 57546 (March 21, 2008), 73
FR 16393 (March 27, 2008) (adding The Nasdaq Stock Market, LLC as a
Plan Sponsor); 61528 (February 17, 2010), 75 FR 8415 (February 24,
2010) (adding BATS Exchange, Inc. as a Plan Sponsor); 63162 (October
22, 2010), 75 FR 66401 (October 28, 2010) (adding C2 Options
Exchange Incorporated as a Plan Sponsor); 66952 (May 9, 2012), 77 FR
28641 (May 15, 2012) (adding BOX Options Exchange LLC as a Plan
Sponsor); 67327 (June 29, 2012), 77 FR 40125 (July 6, 2012) (adding
Nasdaq OMX BX, Inc. as a Plan Sponsor); 70765 (October 28, 2013), 78
FR 65739 (November 1, 2013) (adding Topaz Exchange, LLC as a Plan
Sponsor); 70764 (October 28, 2013), 78 FR 65733 (November 1, 2013)
(adding Miami International Securities Exchange, LLC as a Plan
Sponsor); 76822 (January 1, 2016), 81 FR 1251 (January 11, 2016)
(adding EDGX Exchange, Inc. as a Plan Sponsor); 77323 (March 8,
2016), 81 FR 13433 (March 14, 2016) (adding ISE Mercury, LLC as a
Plan Sponsor); 79897 (January 30, 2017), 82 FR 9263 (February 3,
2017) (adding MIAX PEARL, LLC as a Plan Sponsor); and 85228 (March
1, 2019), 84 FR 8355 (March 7, 2019) (adding MIAX Emerald, LLC as a
Plan Sponsor). The full text of the Plan is available at: https://www.theocc.com/components/docs/clearing/services/options_listing_procedures_plan.pdf.
\4\ See Securities Exchange Act Release No. 87681 (December 9,
2019), 84 FR 68960 (``Notice'').
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The Commission received no comment letters regarding the Amendment.
This order approves Amendment No. 5 to the Plan.
II. Description of the Amendment
A. Background
In January 2007, the Commission approved rules that allowed the six
registered options exchanges that then existed to begin quoting certain
multiply listed options classes overlying thirteen stocks and Exchange
Traded Funds (``ETFs'') in penny increments pursuant to a six-month
Penny Pilot
[[Page 19546]]
Program (``Penny Pilot'').\5\ The Penny Pilot was designed to determine
whether investors would benefit from options being quoted in penny
increments, and in which classes the benefits were most significant.
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\5\ See Securities Exchange Act Release Nos. 55153 (January 23,
2007), 72 FR 4553 (January 31, 2007) (SR-Phlx-2006-74); 55154
(January 23, 2007), 72 FR 4743 (February 1, 2007) (SR-CBOE-2006-92);
55162 (January 24, 2007), 72 FR 4738 (February 1, 2007) (SR-Amex-
2006-106); 55161 (January 24, 2007), 72 FR 4754 (January 24, 2007)
(SR-ISE-2006-62); 55156 (January 23, 2007), 72 FR 4759 (February 1,
2007) (SR-NYSEArca-2006-73); and 55155 (January 23, 2007), 72 FR
4741 (February 1, 2007) (SR-BSE-2006-49).
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Following that initial approval, the Commission approved additional
Exchange rules that expanded the number of options classes covered by
the Penny Pilot.\6\ In each instance, these approvals relied upon the
consideration of data periodically provided by the Exchanges that
analyzed how quoting options in penny increments affects spreads,
liquidity, quote traffic, and volume. Today, the Penny Pilot includes
363 options classes, which are among the most actively traded, multiply
listed options classes.\7\ The Penny Pilot is scheduled to expire by
its own terms on June 30, 2020.\8\
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\6\ See, e.g., Securities Act Release Nos. 56568 (September 27,
2007) (NYSEArca-2007-88); 57559 (March 26, 2008) (NYSEArca-2008-34);
and 60711 (September 23, 2009), 74 FR 49419 (September 28, 2009)
(NYSEArca-2009-44).
\7\ See Securities Exchange Act Release Nos. 60711 (September
23, 2009), 74 FR 49419 (September 28, 2009) (SR-NYSEArca-2009-44);
60865 (October 22, 2009), 74 FR 55880 (October 29, 2009) (SR-ISE-
2009-82); 60864 (October 22, 2009), 74 FR 55876 (October 29, 2009)
(SR-CBOE-2009-076); 60874 (October 23, 2009), 74 FR 56682 (November
2, 2009) (SR-NASDAQ-2009-091); 60873 (October 23, 2009), 74 FR 56675
(November 2, 2009) (SR-Phlx-2009-91); 60886 (October 27, 2009), 74
FR 56897 (November 3, 2009) (SR-BX-2009-067); and 61106 (December 3,
2009), 74 FR 65193 (December 9, 2009) (SR-NYSEAmex-2009-74).
\8\ See Securities Exchange Act Release Nos. 87632 (November 26,
2019), 84 FR 66255 (December 3, 2019) (SR-BOX-2019-34); 87740
(December 13, 2019), 84 FR 69800 (December 19, 2019) (CboeBZX-2019-
106); 87738 (December 13, 2019), 84 FR 69795 (December 19, 2019)
(C2-2019-027); 87739 (December 13, 2019), 84 FR 69801 (December 19,
2019) (CBOE-2019-119); 87741 (December 13, 2019), 84 FR 69805
(December 19, 2019) (CboeEDGX-2019-074); 87606 (November 25, 2019),
84 FR 66030 (December 2, 2019) (MIAX-2019-47); 87608 (November 25,
2019), 84 FR 66046 (EMERALD-2019-36); 87609 (November 25, 2019), 84
FR 66032 (December 2, 2019) (PEARL-2019-34); 87754 (December 16,
2019), 84 FR 70232 (December 20, 2019) (BX-2019-046); 87753
(December 16, 2019), 84 FR 70243 (December 20, 2019) (GEMX-2019-19);
87752 (December 16, 2019), 84 FR 70230 (December 20, 2019) (ISE-
2019-33); 87766 (December 16, 2019), 84 FR 70214 (December 20, 2019)
(MRX-2019-26); 87746 (December 13, 2019), 84 FR 69803 (December 19,
2019) (Phlx-2019-55); 87831 (December 20, 2019), 84 FR 72013
(December 30, 2019) (Nasdaq-2019-100); 87610 (November 25, 2019), 84
FR 66047 (December 2, 2019) (NYSEArca-2019-83); 87633 (November 26,
2019), 84 FR 66251 (December 3, 2019) (NYSEAmex-2019-51).
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B. Description of the Proposal
In light of the imminent expiration of the Penny Pilot, the Plan
Sponsors now propose in Amendment No. 5 to the Plan to replace the
Penny Pilot by instituting a permanent program (the ``Penny Program'')
that would permit quoting in penny increments for certain classes of
options. Under the terms of this proposal, designated options classes
would continue to be quoted in $0.01 and $0.05 increments according to
the same parameters for the Penny Pilot. In addition, the Penny Program
would: (1) Establish an annual review process to add and/or remove
options classes from the Penny Program; (2) allow an option class to be
added to the Penny Program outside of the annual review process if it
is a newly listed option class or a class that experiences significant
growth in activity, provided such class meets certain objective
criteria; (3) provide that if a corporate action involves one or more
options classes in the Penny Program, all adjusted and unadjusted
series of the option class would continue to be included in the Penny
Program; (4) provide that any series in an option class participating
in the Penny Program in which the underlying security has been
delisted, or are identified by OCC as ineligible for opening customer
transactions, would continue to quote pursuant to the rules of the
Penny Program until all such options have expired; and (5) establish
voting provisions governing amendments to the Penny Program.\9\
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\9\ Amendment No. 5 also proposes to make certain administrative
changes to Section 4 of the Plan to replace references to ``the
adjustment panel'' with references to ``the OCC'' to ensure that the
language in the Plan is consistent with changes made in a separate
filing. See Securities Exchange Act Release No. 84565 (November 9,
2018), 83 FR 57778 (November 16, 2018) (SR-ODD-2018-01). See also
Securities Exchange Act Release No. 69977 (July 11, 2013), 78 FR
42815 (July 17, 2013) (SR-OCC-2013-05). In addition, Amendment No. 5
proposes to make non-substantive ministerial changes to Section 9 of
the Plan to update the names and addresses of certain Plan Sponsors.
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1. Minimum Quoting Increments and Initial Selection of Options Classes
for the Penny Program
The minimum quoting increment requirements that currently apply
under the Penny Pilot would continue to apply for options classes
included in the Penny Program. Specifically, (i) the minimum quoting
increment for all series in the QQQ, SPY, and IWM would continue to be
$0.01, regardless of price; (ii) options classes with a price of less
than $3.00 would be quoted in $0.01 increments for all series; and
(iii) options classes with a price of $3.00 or higher would be quoted
in $0.05 increments for all series.\10\
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\10\ See Proposed Section 3.1 of the Plan.
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The Penny Program would initially apply to the 363 most actively
traded, multiply listed options classes \11\ that (i) are currently
included the Penny Pilot or, (ii) if not currently in the Penny Pilot,
overlie securities priced below $200, or any index at an index level
below $200.\12\ As is the case today, the Exchanges will use the OCC
rankings and apply these objective criteria to determine which classes
are eligible for inclusion in the Penny Program. Once an option class
is added to the Penny Program, it would remain in the Program subject
to the annual review process described in further detail below.\13\
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\11\ This number is taken from the current number of the options
classes in the Penny Pilot. See Notice, supra note 4 at 68961.
\12\ OCC will rank all multiply listed options classes based on
National Cleared Volume for the six-month period ending in the month
that the Commission approves proposed Amendment No. 5 to determine
whether an option class is among the 363 most activity traded. See
Proposed Section 3.1(a) of the Plan. Eligibility for inclusion in
the Penny Program will be determined at the close of trading on the
monthly expiration Friday of the second full month following
approval of the proposed Amendment. See id. Certain options classes
that currently quote in penny increments pursuant to the Penny Pilot
that are not among the 363 most actively traded multiply listed
options classes at the time of the initial selection will no longer
be eligible to quote in penny increments under the Penny Program.
Any options classes that are currently in the Penny Pilot, but that
are not selected for inclusion in the Penny Program following the
initial selection process would be subject to the minimum trading
increment as described in the rules of the Exchanges. See Notice,
supra note 4, at 68961. Such changes would be effective on the first
trading day of the third full calendar month following the
Amendment's approval date. See Proposed Section 3.1(a) of the Plan.
\13\ See Notice, supra note 4, at 68961.
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2. Annual Review Process
The Penny Program provides for an annual review process by which
options classes can be added and removed from the Penny Program based
on objective criteria. The annual review process is designed to ensure
that the most active eligible issues are included in the Penny Program
while also preventing a high rate of turnover for issues that are
removed from the Penny Program. Specifically, on an annual basis
(commencing in December 2020), the OCC would rank all multiply listed
options classes based on National Cleared Volume from June 1 through
November 30 to determine the most actively traded options classes.\14\
Any option class not yet in the Penny Program that is among the 300
most actively traded, multiply listed options
[[Page 19547]]
classes overlying securities priced below $200, or an index at an index
level below $200, would be added to the Penny Program on the first
trading day in January following the annual review.\15\ In addition,
based on the annual review, options classes that are ranked between the
300 most actively traded and the 425 most actively traded would
continue to be included in the Penny Program,\16\ but any option class
that falls outside of the 425 most actively traded, multiply listed
option class would be removed from the Penny Program and would be
subject to the minimum quoting increment rules set forth in the
Exchanges' rules, effective on the first day of trading in April.\17\
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\14\ Proposed Section 3.1(b) of the Plan.
\15\ Proposed Section 3.1(b)(1) of the Plan. After extensive
discussion, the Plan Sponsors concluded that including the top 300
classes would ensure that the Penny Program always includes the most
active issues. See Notice, supra note 4, at 68961-62 and n.14.
\16\ Proposed Section 3.1(b) of the Plan. The Plan Sponsors
determined that including the top 425 options classes would prevent
high turnover rates of classes and thus provide the least disruptive
means of implementing the annual rebalancing of the Penny Program.
See Notice, supra note 4, at 68961-62 and n.14.
\17\ Proposed Section 3.1(b)(2) of the Plan.
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3. Changes to the Composition of the Penny Program Outside of the
Annual Review Process
i. Newly Listed Options Classes and Options Classes With Significant
Growth in Activity
The Penny Program would specify a process and parameters for
including options classes in the Penny Program outside the annual
review process in two circumstances. These provisions are designed to
provide objective criteria for the Exchanges to add to the Penny
Program new options classes in issues with the most demonstrated
trading interest from market participants and investors on an expedited
basis prior to the annual review, with the benefit that market
participants and investors will then be able to trade these new options
classes based upon quotes expressed in finer trading increments.
First, Section 3.1(c) provides for certain newly listed options
classes to be added to the Penny Program outside of the annual review
process, provided that (i) the class is among the 300 most actively
traded, multiply listed options classes, as ranked by National Cleared
Volume at OCC, in its first full calendar month of trading; and (ii)
the underlying security is priced below $200 or the underlying index is
at an index level below $200. Such newly listed options classes added
to the Penny Program pursuant to this process would remain in the Penny
Program for one full calendar year and then would be subject to the
annual review process.\18\
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\18\ See Proposed Section 3.1(c) of the Plan.
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Second, the Penny Program would allow an option class to be added
to the Penny Program outside of the annual review process if it is an
option class that meets certain specific criteria. Section 3.1(d)
provides that an option class may be added to the Penny Program,
provided that (i) it is among the 75 most actively traded, multiply
listed options classes, as ranked by National Cleared Volume at OCC,
for six full calendar months of trading, and (ii) the underlying
security is priced below $200 or the underlying index is at an index
level below $200. Options classes that are added to the Penny Program
pursuant to Section 3.1(d) would remain in the Penny Program for the
rest of the calendar year in which they are added and then would be
subject to the annual review process.\19\
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\19\ See Proposed Section 3.1(d) of the Plan.
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ii. Corporate Actions
Section 3.1(e) specifies a process to address options classes in
the Penny Program that undergo a corporate action and is designed to
ensure continuous liquidity in the affected options classes.
Specifically, if a corporate action involves one or more options
classes in the Penny Program, all adjusted and unadjusted series of an
option class would continue to be included in the Penny Program.\20\
Furthermore, neither the trading volume threshold, nor the initial
price test would apply to options classes added to the Penny Program as
a result of the corporate action. Finally, the newly added adjusted and
unadjusted series of the option class would remain in the Penny Program
for one full calendar year and then would become subject to the annual
review process.
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\20\ For example, if Company A acquires Company B and Company A
is not in the Penny Program but Company B is in the Penny Program,
once the merger is consummated and an options contract adjustment is
effective, then Company A would be added to the Penny Program and
remain in the Penny Program for one calendar year. See Notice, supra
note 4, at 68963 n.19.
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iii. Delisted or Ineligible Options Classes
Section 3.1(f) provides a mechanism to address options classes that
have been delisted or those that are no longer eligible for listing.
Specifically, any series in an option class participating in the Penny
Program in which the underlying has been delisted, or is identified by
OCC as ineligible for opening customer transactions, would continue to
quote pursuant to the terms of the Penny Program until all options
series have expired.
4. Amendments to the Penny Program
Section 3.1(h) sets forth an amendment process applicable to
changes to the Penny Program. Currently, amendments to the Plan (other
than an amendment to add a new Plan Sponsor) must be approved
unanimously by the Plan Sponsors.\21\ A new and separate process would
govern amendments to the Penny Program and any changes to Section 3.1.
Under this new process, for the first 60 months following Commission
approval of Amendment No. 5, any change to the Penny Program would
require unanimous approval by the Plan Sponsors. For the period
following the expiration of that initial 60-month period, any changes
to the Penny Program would require a super-majority (\2/3\) vote of the
Plan Sponsors. The Plan Sponsors structured the amendment process this
way because they believe delaying the elimination of the unanimity
requirement by 60 months would preserve the agreed upon provisions of
the Penny Program, except in circumstances where all the Plan Sponsors
agree a change is needed.
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\21\ See Section 7 of the Plan.
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III. Discussion and Commission Findings
The Commission finds that Amendment No. 5 is consistent with the
requirements of the Act and the rules and regulations thereunder.
Specifically, and as discussed in greater detail below, the Commission
finds that Amendment No. 5 is consistent with Section 11A of the Act
\22\ and Rule 608 thereunder \23\ in that it is appropriate in the
public interest, for the protection of investors and the maintenance of
fair and orderly markets, to remove impediments to, and perfect the
mechanisms of, the national market system to allow the Exchanges to
continue to quote certain options classes in penny increments on a
permanent basis pursuant to provisions established by Amendment No. 5.
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\22\ 15 U.S.C. 78k-1.
\23\ 17 CFR 242.608.
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In support of the proposal to establish the Penny Program, the
Exchanges prepared a report that contained the results of their
analysis of the Penny Pilot and its impact on several indicia of market
quality (``Report'').\24\ The
[[Page 19548]]
Report contains data and analysis on the impact of the Penny Pilot on
spread width, liquidity, and quote message traffic and shows that
spreads in options classes with a premium of less than $3.00 decreased
upon inclusion in the Penny Pilot.\25\ In addition, the Report shows
that volume increased in Penny Pilot classes \26\ and that while
liquidity at the National Best Bid or Offer decreased, the size
available was nonetheless greater than the size traded.\27\ Further,
the Exchanges represent that they and the Options Price Reporting
Authority (``OPRA'') have demonstrated sufficient capacity to handle
the increase in quotes resulting from quoting in penny increments
during the Penny Pilot. The Exchanges also represent that the OPRA
system and their own respective systems have sufficient quote capacity
to accommodate the projected increase in quote message traffic that is
likely to result from the Penny Program.\28\
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\24\ See Report on Activity in Options Classes Added to the
Penny Pilot dated March 8, 2019 (``Report''), submitted as Exhibit A
as part of Amendment No. 5. See also Notice, supra note 4, at 68966-
83.
\25\ Specifically, the Report states, ``[t]he study found that
the average spread width for issues in the Study Group was reduced
during the Pilot period as compared to pre-Pilot period.'' See
Notice, supra note 4, at 68967.
\26\ See id. at 68976-77.
\27\ See id. at 68967.
\28\ See id. at 68965-66.
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In addition to reviewing the data and analysis provided by the
Exchanges in their Report, the Commission reviewed an independent
analysis of the impact of the Penny Pilot on market quality conducted
by Cornerstone Research (``Cornerstone'').\29\ Cornerstone's analysis
used quoted and effective spreads as measures of market quality and
concluded that the most liquid options classes included in the Penny
Pilot experienced a significant decrease in effective and quoted
spread. For less liquid options classes, however, the results did not
suggest that allowing quoting in penny increments has a significant
effect on market quality. The Exchanges state that the results of their
analysis were consistent with Cornerstone's findings that inclusion in
the Penny Pilot is associated with a decrease in quoted spreads.\30\
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\29\ See DERA Memorandum on Cornerstone Analysis, dated December
18, 2017 and July 3, 2017 Cornerstone Analysis, available at:
https://www.sec.gov/files/DERA_Memo_on_a_Cornerstone_Penny_Pilot_Analysis.pdf.
\30\ See Notice, supra note 4, at 68967.
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The Commission believes that the evidence contained in both the
Exchanges' Report and the Cornerstone analysis demonstrates that the
Penny Pilot has benefitted investors and other market participants in
the form of narrower spreads while also having a minimal negative
impact on the industry. The Commission believes that investors will
benefit from the implementation of a permanent approach to allowing
continued quoting in penny increments for certain options classes. The
Penny Program is designed to facilitate a permanent environment where
investors can continue to enjoy reduced spreads, and concomitantly
potentially reduced costs, in portions of the options market where the
greatest amount of options trading occurs (i.e., the top 300 options
classes). Further, although the Exchanges predict that the Penny
Program will generate a significant increase in quote message
traffic,\31\ the Plan Sponsors have represented that the Exchange's
respective systems and OPRA's system will maintain sufficient capacity
to manage the increase in message traffic.
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\31\ See id. at 68975-83.
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The Penny Program annual review process will help facilitate the
maintenance of a fair and orderly market for trading options because it
provides a framework, based upon objective criteria, that rebalances
the composition of the Penny Program on an annual basis, thereby
helping to ensure that the most actively traded options classes are
included in the Penny Program. Further, the parameters of the annual
review process are designed to prevent high turnover for options
classes in the Penny Program by incorporating a buffer to help ensure
that options classes that are actively traded are not prematurely
removed from the Penny Program.
The Penny Program will also allow options classes to be added
outside the annual review process provided certain objective criteria
(trading volume thresholds and initial price tests) are satisfied.
These procedures should facilitate the maintenance of a fair and
orderly market by permitting options classes that reflect a certain
level of trading interest (either because the class is newly listed or
a class that experience a significant growth in investor interest) to
quote in finer trading increments, which in turn should benefit market
participants by reducing the cost of trading such options.
In addition, the process to address options classes in the Penny
Program that undergo a corporate action will help to ensure continued
liquidity in such options classes to the benefit of market participants
and investors thereby helping to promote just and equitable principles
of trade, remove impediments to and perfect the mechanism of a free and
open market and a national market system and protect investors and the
public interest by providing clarity and uniformity among the Exchanges
as to how such options classes will be treated.
Further, requiring that any series in an option class in the Penny
Program in which the underlying security has been delisted, or are
identified by OCC as ineligible for opening customer transactions,
continue to quote pursuant to the rules of the Penny Program until all
such options have expired, will promote the maintenance of fair and
orderly markets by encouraging market participants to continue to
provide liquidity in such options classes on a predictable and
transparent time frame.
The Exchanges' proposal to permit amendments to be approved by a
super-majority vote of the Exchanges, rather than by a unanimous vote,
as the Plan otherwise requires, should promote the maintenance of fair
and orderly markets and remove impediments by preventing a single
Exchange from having an effective veto over modifications to the Penny
Program that a super-majority of Exchanges support, thus potentially
obstructing improvements to the Program and its operations. The
Commission notes that the Exchanges' proposal to delay the elimination
of the unanimity requirement by 60 months is designed to preserve the
agreed upon provisions contained in Amendment No. 5, except in
circumstances where all the Exchanges agree a change is needed, which
in turn should allow the Penny Program to operate as proposed before
lesser supported changes are proposed.
The Commission notes that no comments were received in opposition
to continuing to allow the Exchanges to quote in penny increments or
with respect to the specific provisions regarding how the Penny Program
will operate.
For the reasons discussed above, the Commission finds that
Amendment No. 5 is consistent with Section 11A of the Act \32\ and Rule
608 thereunder.\33\
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\32\ 15 U.S.C. 78k-1.
\33\ 17 CFR 242.608.
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IV. Conclusion
It is therefore ordered, pursuant to Section 11A of the Act,\34\
and Rule 608 thereunder,\35\ that Amendment No. 5 to the Plan (File No.
4-443) be, and it hereby is, approved.
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\34\ 15 U.S.C. 78k-1.
\35\ 17 CFR 242.608.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
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\36\ 17 CFR 200.30-3(a)(29).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07224 Filed 4-6-20; 8:45 am]
BILLING CODE 8011-01-P