[Federal Register Volume 89, Number 142 (Wednesday, July 24, 2024)]
[Notices]
[Pages 59945-59948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16219]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100560; File No. SR-BOX-2024-18]


Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the 
Strike Interval for Options on SPDR[supreg] Gold Shares

July 18, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 59946]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 17, 2024, BOX 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 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 BOX Rule 5050 (Series of Options 
Contracts Open for Trading) to amend the strike interval for options on 
SPDR[supreg] Gold Shares (``GLD''). 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 
website at https://rules.boxexchange.com/rulefilings.

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 BOX Rule 5050 (Series of Options 
Contracts Open for Trading) to amend the strike interval for options on 
SPDR[supreg] Gold Shares (``GLD'').
    Specifically, the Exchange proposes to amend IM-5050-1(b) to allow 
for the interval between strike prices of series of options on 
Exchange-Traded Fund Shares (``ETFs'' or ``Units'') \3\ of SPDR[supreg] 
Gold Shares or ``GLD'' to be $1 or greater, including where the strike 
price is greater than $200.
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    \3\ See BOX Rule 5020(h).
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    Currently, IM-5050-1(b) provides that,

    For series of options on Exchange Traded Fund Shares that 
satisfy the criteria set forth in Rule 5020(h), the interval of 
strike prices may be $1 or greater where the strike price is $200 or 
less or $5 or greater where the strike price is over $200. 
Notwithstanding any other provision regarding the interval of strike 
prices of series of options on Exchange-Traded Fund Shares in this 
rule, the interval of strike prices on SPDR[supreg] S&P 500[supreg] 
ETF (``SPY''), iShares S&P 500 Index ETF (``IVV''), PowerShares QQQ 
Trust (``QQQ''), iShares Russell 2000 Index Fund (``IWM''), and the 
SPDR[supreg] Dow Jones[supreg] Industrial Average ETF (``DIA'') 
options will be $1 or greater.

    At this time, the Exchange proposes to modify the interval setting 
regime to be $1 or greater where the strike price is greater than $200 
for GLD options, similar to SPY, IVV, QQQ, IWM and DIA. The Exchange 
believes that the proposed rule change would make GLD options easier 
for investors and traders to use and more tailored to their investment 
needs.
    GLD is an Exchange-Traded Fund Share designed to closely track the 
price and performance of the price of gold bullion. GLD is widely 
quoted as an indicator of gold stock prices and is a significant 
indicator of overall economic health. Investors use GLD to diversify 
their portfolios and benefit from market trends. Additionally, GLD is a 
leading product in its asset class that trades within a ``complex'' 
where, in addition to the underlying security, there are multiple 
instruments available for hedging such as, COMEX Gold Futures; Gold 
Daily Futures; iShares GOLD Trust; SPDR GOLD Minishares Trust; Aberdeen 
Physical Gold Trust; and GraniteShares Gold Shares. Accordingly, the 
Exchange believes that offering a wider base of GLD options affords 
traders and investors important hedging and trading opportunities, 
particularly in the midst of current price trends. The Exchange 
believes that not having the proposed $1 strike price intervals above 
$200 in GLD significantly constricts investors' hedging and trading 
possibilities. The Exchange therefore believes that by having smaller 
strike intervals in GLD, investors would have more efficient hedging 
and trading opportunities due to the lower $1 interval ascension. The 
proposed $1 interval above the $200 strike price, will result in having 
at-the-money series based upon the underlying ETF moving less than 1%. 
The Exchange believes that the proposed strike setting regime is in 
line with the slower movements of broad-based indices. Considering the 
fact that $1 intervals already exist below the $200 price point and 
that GLD have consistently inclined in price toward the $200 level, the 
Exchange believes that continuing to maintain the current $200 level 
(above which intervals increase 500% to $5), may have a negative effect 
on investing, trading and hedging opportunities, and volume. The 
Exchange believes that the investing, trading, and hedging 
opportunities available with GLD options far outweighs any potential 
negative impact of allowing GLD options to trade in more finely 
tailored intervals above the $200 price point. The proposed strike 
setting regime would permit strikes to be set to more closely reflect 
the increasing value in the underlying and allows investors and traders 
to roll open positions from a lower strike to a higher strike in 
conjunction with the price movements of the underlying ETF. Under the 
current rule, where the next higher available series would be $5 away 
above a $200 strike price, the ability to roll such positions would be 
impaired. Accordingly, to move a position from a $200 strike to a $205 
strike under the current rule, an investor would need for the 
underlying product to move 2.5%, and would not be able to execute a 
roll up until such a large movement occurred. The Exchange believes 
that with the proposed rule change, the investor would be in a 
significantly safer position of being able to roll his open options 
position from a $200 to a $201 strike price, which is only a 0.5% move 
for the underlying. As a result, the proposed rule change will allow 
the Exchange to better respond to customer demand for GLD strike price 
more precisely aligned with the smaller, longer-term incremental 
increases in the underlying ETF. The Exchange believes that the 
proposed rule change, like the other strike price programs currently 
offered by the Exchange, will benefit investors by providing investors 
the flexibility to more closely tailor their investment and hedging 
decisions using GLD options. Moreover, by allowing series of GLD 
options to be listed in $1 intervals between strike prices over $200, 
the proposal will moderately augment the potential total number of 
options series available on the Exchange. However, the Exchange 
believes 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. The Exchange also 
believes that Participants will not have a capacity issue due to the 
proposed rule change. In addition, the Exchange represents that it does 
not believe that this expansion will cause fragmentation of liquidity, 
but rather, believes that finer strike intervals will serve to increase

[[Page 59947]]

liquidity available as well as price efficiency by providing more 
trading opportunities for all market participants.
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''),\4\ in general, and Section 6(b)(5) of the Act,\5\ 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. 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.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    In particular, the proposed rule change will allow investors to 
more easily use GLD options. Moreover, the proposed rule change would 
allow investors to better trade and hedge positions in GLD options 
where the strike price is greater than $200, and ensure that investors 
in both options are not at a disadvantage simply because of the strike 
price. The Exchange believes the proposed rule change is consistent 
with Section 6(b)(1) of the Act, which provides that the Exchange be 
organized and have the capacity to be able to carry out the purposes of 
the Act and the rules and regulations thereunder, and the rules of the 
Exchange. The proposal allows the Exchange to respond to customer 
demand to allow GLD options to trade in $1 intervals above a $200 
strike price. The Exchange does not believe that the proposed rule 
would create additional capacity issues or affect market functionality. 
As noted above, ETF options trade in wider $5 intervals above a $200 
strike price, whereby options at or below a $200 strike price trade in 
$1 intervals. This creates a situation where contracts on the same 
option class effectively may not be able to execute certain strategies 
such as, for example, rolling to a higher strike price, simply because 
of the $200 strike price above which options intervals increase by 
500%. This proposal remedies the situation by establishing an exception 
to the current ETF interval regime for GLD options to allow such 
options to trade in $1 or greater intervals at all strike prices.
    The Exchange believes that the proposed rule change, like other 
strike price programs currently offered by the Exchange, will benefit 
investors by giving them increased flexibility to more closely tailor 
their investment and hedging decisions. By way of example, GLD is a 
leading product in its asset class and it trades within a ``complex'' 
where, in addition to the underlying security, there are multiple 
instruments available for hedging such as, COMEX Gold Futures; Gold 
Daily Futures; iShares GOLD Trust; SPDR GOLD Minishares Trust; Aberdeen 
Physical Gold Trust; and GraniteShares Gold Shares.
    With regard to the impact of this proposal on system capacity, the 
Exchange believes it and OPRA have the necessary systems capacity to 
handle any potential additional traffic associated with this proposed 
rule change. The Exchange believes that its Participants will not have 
a capacity issue as a result of this proposal. Further, the Exchange 
believes the proposal does not unfairly discriminate among market 
participants, as all market participants will be treated in the same 
manner under this proposal.
    Finally, the Exchange notes the proposed rule change is 
substantively the same as a rule change proposed by Nasdaq ISE, LLC 
(``ISE'') which the Commission recently approved.\6\
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    \6\ See Securities Exchange Act Release No. 100447 (June 28, 
2024), 89 FR 55293 (July 3, 2024) (SR-ISE-2024-17).
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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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. Rather, the Exchange 
believes that the proposed rule change will result in additional 
investment options and opportunities to achieve the investment and 
trading objectives of market participants seeking efficient trading and 
hedging vehicles, to the benefit of investors, market participants, and 
the marketplace in general. Specifically, the Exchange believes that 
GLD options investors and traders will significantly benefit from the 
availability of finer strike price intervals above a $200 price point. 
In addition, the interval setting regime the Exchange proposes to apply 
to GLD options is currently applied to SPY, IVV, QQQ, IWM and DIA 
options, which are similarly popular and widely traded ETF products and 
track indexes at similarly high price levels. Thus, the proposed strike 
setting regime for GLD options will allow options on this actively 
traded ETF with index levels at corresponding price levels to trade 
pursuant to the same strike setting regime. This will permit investors 
to employ similar investment and hedging strategies for each of these 
options.
    The Exchange does not believe the proposal will impose any burden 
on inter-market competition, as nothing prevents other options 
exchanges from proposing similar rules to make a finer strike price 
intervals above a $200 price point available for GLD options. The 
Exchange notes that the proposed rule change is not a novel proposal, 
as the Commission recently approved a substantively identical proposal 
of another exchange.\7\ Further, the Exchange does not believe the 
proposal will impose any burden on intramarket competition, as all 
market participants will be treated in the same manner under this 
proposal.
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    \7\ Id.
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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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\ 
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)(iii) of the Act \10\ and subparagraph (f)(6) of 
Rule 19b-4 thereunder.\11\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 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.

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[[Page 59948]]

    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. According to 
the Exchange, the proposed rule change is a competitive response to a 
filing submitted by ISE that recently was approved by the 
Commission.\14\ The Exchange has stated that waiver of the 30-day 
operative delay would allow the Exchange to implement the proposal at 
the same time as its competitor exchanges, thus creating competition 
among GLD options. The Commission believes that the proposed rule 
change presents no novel issues and that waiver of the 30-day operative 
delay is consistent with the protection of investors and the public 
interest. Accordingly, the Commission hereby waives the 30-day 
operative delay and designates the proposed rule change as operative 
upon filing.\15\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ See supra note 6.
    \15\ 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. 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-BOX-2024-18 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-BOX-2024-18. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-BOX-2024-18 and should be 
submitted on or before August 14, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12), (59).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-16219 Filed 7-23-24; 8:45 am]
BILLING CODE 8011-01-P