[Federal Register Volume 85, Number 127 (Wednesday, July 1, 2020)]
[Notices]
[Pages 39645-39649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14113]
[[Page 39645]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89151; File No. SR-NASDAQ-2020-033]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Options 9, Sections 13 and 15 To Increase the Position and
Exercise Limits for Options on the SPDR[supreg] S&P 500[supreg] ETF
Trust
June 25, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 17, 2020, The Nasdaq Stock Market LLC (``Nasdaq'' or
``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 Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change 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 the
Substance of the Proposed Rule Change
The Exchange proposes to amend The Nasdaq Options Market LLC's
(``NOM'') Options 9, Section 13, Position Limits, to increase position
limits for options on the SPDR[supreg] S&P 500[supreg] ETF Trust
(``SPY''), and similarly increase exercise limits within Options 9,
Section 15, Exercise Limits.
The text of the proposed rule change is available on the Exchange's
website at http://nasdaq.cchwallstreet.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 Exchange 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 Exchange 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 Options 9, Section 13, Position
Limits, to increase position limits for options on SPY. The Exchange's
position limits are incorporated by reference to Cboe Exchange, Inc.
(``Cboe''), except for SPY.\3\ The proposed amendments to SPY are based
on the similar proposal by Cboe.\4\ The Exchange also proposes to make
minor non-substantive technical corrections to Options 9, Section 13
and Options 9, Section 15. Each change will be described below.
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\3\ See Options 9, Section 13(a)(1). The Exchange notes that
with respect to U.S. Dollar-Settled Foreign Currency Options, those
position limits are incorporated by reference to Phlx. See Options
9, Section 13(a)(4).
\4\ See Securities Exchange Act Release No. 88768 (April 29,
2020) (SR-CBOE-2020-015) (Notice of Filing of Amendment No. 1 and
Order Granting Accelerated Approval of a Proposed Rule Change, as
Modified by Amendment No. 1, to Increase Position Limits for Options
on Certain Exchange-Traded Funds and Indexes). The Cboe proposal
also proposed to increase position limits for options overlying a
number of ETFs as well as the MSCI Emerging Markets Index (``MXEF'')
and the MSCI EAFE Index (``MXEA''). The Exchange's proposal only
proposes an increase to the position (and exercise limits) for
options overlying SPY. NOM does not list options on MXEF and MXEA.
Also, other options and Exchange-Traded Fund position limits, which
were amended in Cboe's rule change, have already been increased on
NOM because NOM's rules at Options 9, Section 13 and Options 9,
Section 15 incorporate its position limits and exercise limits to
Cboe, except for SPY. Accordingly, this proposal is limited to SPY.
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Position limits are designed to address potential manipulative
schemes and adverse market impacts surrounding the use of options, such
as disrupting the market in the security underlying the options. While
position limits should address and discourage the potential for
manipulative schemes and adverse market impact, if such limits are set
too low, participation in the options market may be discouraged. The
Exchange believes that position limits must therefore be balanced
between mitigating concerns of any potential manipulation and the cost
of inhibiting potential hedging activity that could be used for
legitimate economic purposes.
The Exchange has observed an ongoing increase in demand in options
on the SPDR[supreg] S&P 500[supreg] ETF Trust (``SPY'') for both
trading and hedging purposes. Though the demand for options on SPY
appear to have increased, position limits (and corresponding exercise
limits) for options on SPY have remained the same. The Exchange
believes these unchanged position limits may have impeded, and may
continue to impede, trading activity and strategies of investors, such
as use of effective hedging vehicles or income generating strategies
(e.g., buy-write or put-write), and the ability of Market Makers to
make liquid markets with tighter spreads in these options, resulting in
the transfer of volume to over-the-counter (``OTC'') markets. OTC
transactions occur through bilateral agreements, the terms of which are
not publically disclosed to the marketplace. As such, OTC transactions
do not contribute to the price discovery process on a public exchange
or other lit markets. Therefore, the Exchange believes that the
proposed increase for position limits (and exercise limits) on options
on SPY may enable liquidity providers to provide additional liquidity
to the Exchange and other market participants to transfer their
liquidity demands from OTC markets to the Exchange, as well as other
options exchange on which they participate. As described in further
detail below, the Exchange believes that the continuously increasing
market capitalization of SPY and SPY component securities, as well as
the highly liquid markets for those securities, reduces the concerns
for potential market manipulation and/or disruption in the underlying
markets upon increasing position limits, while the rising demand for
trading options on SPY for legitimate economic purposes compels an
increase in position limits (and corresponding exercise limits).
Proposed Position Limits for Options on SPY
Options 9, Section 13 sets forth the position limit for options on
SPY. The Exchange proposes to amend Options 9, Section 13 to double the
position limits for options on SPY. The current position limit for
options on SPY is 1,800,000 and the proposed position limit for options
on SPY is 3,600,000. The Exchange represents that SPY qualifies for the
initial listing criteria set forth in Options 4, Section 3(i) for ETFs.
In addition, the Exchange is making corresponding amendments to
exercise limits for options on SPY within Options 9, Section 15.
Composition and Growth Analysis for SPY
As stated above, position (and exercise) limits are intended to
prevent the establishment of options positions that can be used or
might create incentives to manipulate the underlying market so as to
benefit options positions. The Commission has recognized that these
limits are designed to minimize the potential for
[[Page 39646]]
mini-manipulations and for corners or squeezes of the underlying
market, as well as serve to reduce the possibility for disruption of
the options market itself, especially in illiquid classes.\5\
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\5\ See Securities Exchange Act Release No. 67672 (August 15,
2012), 77 FR 50750 (August 22, 2012) (SR-NYSEAmex-2012-29).
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SPY as well as SPY components are highly liquid, and are based on a
broad set of highly liquid securities and other reference assets, as
demonstrated through the trading statistics presented in this proposal.
Indeed, the Commission recognized the liquidity of the securities
comprising the underlying interest of SPY and permitted no position
limits on SPY options from 2012 through 2018.\6\
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\6\ See Securities Exchange Act Release No. 69180 (March 19,
2013), 78 FR 17962 (March 25, 2013) (SR-NASDAQ-2013-046), which
implemented a pilot program that ran through 2017, during which
there were no position limits for options on SPY. The Exchange notes
that throughout the duration of the pilot program it was not aware
of any problems created or adverse consequences as of result of the
pilot program. See also Securities Exchange Act Release No. 83421
(June 13, 2018), 83 FR 28474 (June 19, 2018) (SR-NASDAQ-2018-044).
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To support the proposed position limit increase (and corresponding
increase in exercise limit), the Exchange considered both the liquidity
of SPY and the component securities of SPY, as well as the availability
of economically equivalent products to the overlying option and its
respective position limit. SPY is based upon S&P 500 Index, and
therefore the options on SPY are economically equivalent to the options
on the index, which have no position limits. Accordingly, the Exchange
believes the position limit of 3,600,000 contracts is appropriate for
options on SPY.
The Exchange is presenting data collected by Cboe as part of its
initial filing to increase the position and exercise limit on SPY, that
the Commission approved,\7\ following trading statistics regarding
shares of and options on SPY, as well as the component securities:
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\7\ See supra note 3.
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Shares Total market cap
Product ADV \8\ (ETF ADV (option outstanding Fund market cap of ETF
shares) contracts) (ETFs) \9\ (USD) components \10\
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SPY................. 70.3 million..... 2.8 million...... 968.7 million... 312.9 billion... 29.3 trillion.
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The Exchange is presenting the following data collected by Cboe as
part of its initial filing, that the Commission has approved,\11\ for
the same trading statistics, where applicable, as above regarding a
sample of other ETFs, as well as the current position limits for
options on such ETFs pursuant to Options 9, Section 13, to draw
comparisons in support of a proposed position limit increase for
options on SPY (see further discussion below):
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\8\ Cboe's Average daily volume (ADV) data for ETF shares and
options contracts are for all of 2019. Additionally, reference to
ADV in ETF shares, and ETF options herein this proposal are for all
of 2019, unless otherwise indicated.
\9\ See Amendment No. 1 to SR-CBOE-2020-015, at page 4,
available at https://www.sec.gov/comments/sr-cboe-2020-015/srcboe2020015-7081714-215592.pdf (``Amendment No. 1'').
\10\ See Amendment No. 1, at page 4.
\11\ See supra note 4.
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Current
Product ADV (ETF shares) ADV (option Shares outstanding Fund market cap (USD) Total market cap of position
contracts) (ETFs) ETF components limits
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QQQ...................... 30.2 million.......... 670,200 410.3 million......... 88.7 billion.......... 10.1 trillion........ 1,800,000
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The Exchange believes that, overall, the liquidity in the shares of
SPY and in the component securities of SPY and in its overlying
options, as well as the large market capitalizations and structure of
SPY support the proposal to increase the position limit for SPY (and
corresponding exercise limit). Given the robust liquidity and
capitalization in SPY and in the component securities of SPY the
Exchange does not anticipate that the proposed increase in position
limits would create significant price movements. Also, the Exchange
believes the market capitalization of the underlying component
securities of the S&P 500 Index are large enough to adequately absorb
potential price movements that may be caused by large trades.
The following analysis for SPY, which the Exchange agrees with in
support of this proposal, as well as the statistics presented in
support thereof, were presented by Cboe in their initial filing, which
was approved by the Commission.\12\ The Exchange notes that SPY tracks
the performance of the S&P 500 Index, which is an index of diversified
large cap U.S. companies.\13\ It is composed of 505 selected stocks
spanning over approximately 24 separate industry groups. The S&P 500 is
one of the most commonly followed equity indices, and is widely
considered to be the best indicator of stock market performance as a
whole. SPY is one of the most actively traded ETFs, and, since
2017,\14\ its ADV has increased from approximately 64.6 million shares
to 70.3 million shares by the end of 2019. Similarly, its ADV in
options contracts has increased from 2.6 million to 2.8 million through
2019.\15\ As noted, the demand for options trading on SPY has continued
to increase, however, the position limits have remained the same, which
the Exchange believes may have impacted growth in SPY option volume
from 2017 through 2019. The Exchange also notes that SPY shares are
more liquid than INVESCO QQQ Trust\SM\, Series 1 (``QQQ'') shares,
which is also currently subject to a position limit of 1,800,000
contracts. Specifically, SPY currently experiences over twice the ADV
in shares and over four times the ADV in options than that of QQQ.\16\
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\12\ See supra note 4.
\13\ See SPDR S&P 500 ETF Trust, available at https://www.ssga.com/us/en/individual/etfs/funds/spdr-sp-500-etf-trust-spy
(January 21, 2020).
\14\ See supra note 4.
\15\ See also Securities Exchange Act Release No. 83421 (June
13, 2018), 83 FR 28474 (June 19, 2018) (SR-NASDAQ-2018-044). (Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend The Nasdaq Options Market LLC (``NOM'') Rules at Supplementary
Material to Chapter III, Section 7, Entitled ``Position Limits,''
and Section 9, Entitled ``Exercise Limits'').
\16\ The 2019 ADV for QQQ shares is 30.2 million and for options
on QQQ is 670,200.
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Creation and Redemption for ETFs
The Exchange believes that the creation and redemption process for
ETFs will lessen the potential for manipulative activity with options
on SPY. When an ETF provider wants to create more shares, it looks to
an Authorized Participant (generally a market maker or other large
financial institution) to acquire the securities the
[[Page 39647]]
ETF is to hold. For instance, when an ETF is designed to track the
performance of an index, the Authorized Participant can purchase all
the constituent securities in the exact same weight as the index, then
deliver those shares to the ETF provider. In exchange, the ETF provider
gives the Authorized Participant a block of equally valued ETF shares,
on a one-for-one fair value basis. The price is based on the net asset
value, not the market value at which the ETF is trading. The creation
of new ETF units can be conducted during an entire trading day, and is
not subject to position limits. This process works in reverse where the
ETF provider seeks to decrease the number of shares that are available
to trade. The creation and redemption process, therefore, creates a
direct link to the underlying components of the ETF, and serves to
mitigate potential price impact of the ETF shares that might otherwise
result from increased position limits for the ETF options.
The Exchange understands that the ETF creation and redemption
process seeks to keep an ETF's share price trading in line with the
ETF's underlying net asset value. Because an ETF trades like a stock,
its share price will fluctuate during the trading day, due to simple
supply and demand. If demand to buy an ETF is high, for instance, the
ETF's share price might rise above the value of its underlying
securities. When this happens, the Authorized Participant believes the
ETF may now be overpriced, so it may buy shares of the component
securities and then sell ETF shares in the open market (i.e.,
creations). This may drive the ETF's share price back toward the
underlying net asset value. Likewise, if the ETF share price starts
trading at a discount to the securities it holds, the Authorized
Participant can buy shares of the ETF and redeem them for the
underlying securities (i.e., redemptions). Buying undervalued ETF
shares may drive the share price of the ETF back toward fair value.
This arbitrage process helps to keep an ETF's share price in line with
the value of its underlying portfolio.
Surveillance and Reporting Requirements
The Exchange believes that increasing the position limits for the
options on SPY would lead to a more liquid and competitive market
environment for these options, which will benefit customers interested
in trading these products. The reporting requirement for the options on
SPY would remain unchanged. Thus, the Exchange would still require that
each Participant that maintains positions in the options on the same
side of the market, for its own account or for the account of a
customer, report certain information to the Exchange. This information
would include, but would not be limited to, the options' positions,
whether such positions are hedged and, if so, a description of the
hedge(s). Market Makers would continue to be exempt from this reporting
requirement, however, the Exchange may access Market-Maker position
information.\17\ Moreover, the Exchange's requirement that Participants
file reports with the Exchange for any customer who held aggregate
large long or short positions on the same side of the market of 200 or
more options contracts of any single class for the previous day will
remain at this level for the options subject to this proposal and will
continue to serve as an important part of the Exchange's surveillance
efforts.\18\
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\17\ The Options Clearing Corporation (``OCC'') through the
Large Option Position Reporting (``LOPR'') system acts as a
centralized service provider for Participant compliance with
position reporting requirements by collecting data from each
Participant, consolidating the information, and ultimately providing
detailed listings of each Participant's report to the Exchange, as
well as Financial Industry Regulatory Authority, Inc. (``FINRA''),
acting as its agent pursuant to a regulatory services agreement
(``RSA'').
\18\ See Options 6E, Section 2 for reporting requirements.
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The Exchange believes that the existing surveillance procedures and
reporting requirements at the Exchange and other SROs are capable of
properly identifying disruptive and/or manipulative trading activity.
The Exchange also represents that it has adequate surveillances in
place to detect potential manipulation, as well as reviews in place to
identify potential changes in composition of SPY and continued
compliance with the Exchange's listing standards. These procedures
utilize daily monitoring of market activity via automated surveillance
techniques to identify unusual activity in both options and the
underlyings, as applicable.\19\ The Exchange also notes that large
stock holdings must be disclosed to the Commission by way of Schedules
13D or 13G,\20\ which are used to report ownership of stock which
exceeds 5% of a company's total stock issue and may assist in providing
information in monitoring for any potential manipulative schemes.
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\19\ The Exchange believes these procedures have been effective
for the surveillance of trading the options subject to this
proposal, and will continue to employ them.
\20\ 17 CFR 240.13d-1.
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The Exchange believes that the current financial requirements
imposed by the Exchange and by the Commission adequately address
concerns regarding potentially large, unhedged positions in the options
on SPY. Current margin and risk-based haircut methodologies serve to
limit the size of positions maintained by any one account by increasing
the margin and/or capital that a Participant must maintain for a large
position held by itself or by its customer.\21\ In addition, Rule 15c3-
1 \22\ imposes a capital charge on Participants to the extent of any
margin deficiency resulting from the higher margin requirement.
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\21\ See Options 6C, Section 3 for a description of margin
requirements.
\22\ 17 CFR 240.15c3-1.
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Technical Corrections
The Exchange proposes to: (1) Update the Chicago Board Options
Exchange to Cboe Exchange, Inc. (``Cboe'') as the name of this self-
regulatory organization has changed; (2) rename the SPDR[supreg] S&P
500[supreg] exchange-traded fund (``SPY ETF'' or ``SPY'') as
``SPDR[supreg] S&P 500[supreg] ETF Trust (SPY) to update the name of
this product; (3) amend ``Customer'' to ``customer'' as this reference
refers to the customer of a Participant; and (4) amend ``PHLX'' to
``Phlx.''
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\23\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \24\ requirements that the rules of an exchange be
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 regulating, clearing,
settling, processing information with respect to, and 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. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \25\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\23\ 15 U.S.C. 78f(b).
\24\ 15 U.S.C. 78f(b)(5).
\25\ Id.
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The Exchange believes that the proposed increase in position limit
for options on the SPY will remove
[[Page 39648]]
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, protect investors and the
public interest, because it will provide market participants with the
ability to more effectively execute their trading and hedging
activities. The proposed increase will allow market participants to
more fully implement hedging strategies in related derivative products
and to further use options to achieve investment strategies (e.g.,
there are Exchange-Traded Products (``ETPs'') that use options on SPY
as part of their investment strategy, and the applicable position
limits (and corresponding exercise limits) as they stand today may
inhibit these ETPs in achieving their investment objectives, to the
detriment of investors). Also, increasing the applicable position
limits may allow Market Makers to provide the markets for these options
with more liquidity in amounts commensurate with increased consumer
demand in such markets. The proposed position limit increases may also
encourage other liquidity providers to shift liquidity, as well as
encourage consumers to shift demand, from over the counter markets onto
the Exchange, which will enhance the process of price discovery
conducted on the Exchange through increased order flow.
In addition, the Exchange believes that the structure of SPY, the
considerable market capitalization of the fund, underlying component
securities and the liquidity of the markets for the applicable options
and underlying component securities will mitigate concerns regarding
potential manipulation of the products and/or disruption of the
underlying markets upon increasing the relevant position limits. As a
general principle, increases in market capitalizations, active trading
volume, and deep liquidity of securities deters manipulation and/or
disruption. This general principle applies to the recently observed
increased levels of market capitalization, trading volume, and
liquidity in SPY, and the components of the Underlying ETFs [sic] (as
described above). The Exchange does not believe that the options
markets or underlying markets would become susceptible to manipulation
and/or disruption as a result of the proposed position limit increases.
Indeed, the Commission has previously expressed the belief that
removing position and exercise limits may bring additional depth and
liquidity to the options markets without increasing concerns regarding
intermarket manipulation or disruption of the options or the underlying
securities.\26\
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\26\ See Securities Exchange Act Release No. 62147 (October 28,
2005) (SR-CBOE-2005-41), at 62149.
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Further, the Exchange notes that the proposed rule change to
increase position limits for select actively traded options, is not
novel and has been previously approved by the Commission. The proposed
increase to the position and exercise limits on SPY has recently been
approved by the Commission.\27\ The Commission has previously approved,
on a pilot basis, eliminating position limits for options on SPY.\28\
In approving increases in position limits in the past, the Commission
relied heavily upon the exchange's surveillance capabilities,
expressing trust in the enhanced surveillances and reporting safeguards
that the exchange took in order to detect and deter possible
manipulative behavior which might arise from eliminating position and
exercise limits.
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\27\ See supra note 4.
\28\ See supra notes 9 and 10.
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The Exchange's surveillance and reporting safeguards continue to be
designed to deter and detect possible manipulative behavior that might
arise from increasing or eliminating position and exercise limits in
certain classes. The Exchange believes that the current financial
requirements imposed by the Exchange and by the Commission adequately
address concerns regarding potentially large, unhedged position in the
options on SPY, further promoting just and equitable principles of
trading, the maintenance of a fair and orderly market, and the
protection of investors.
Technical Corrections
The Exchange's proposal to make various technical amendments,
within Options 9, Section 13 and Options 9, Section 15 to: (1) Update
the Chicago Board Options Exchange to Cboe Exchange, Inc. (``Cboe'') as
the name of this self-regulatory organization has changed; (2) rename
the SPDR[supreg] S&P 500[supreg] exchange-traded fund (``SPY ETF'' or
``SPY'') as ``SPDR[supreg] S&P 500[supreg] ETF Trust (SPY) to update
the name of this product; (3) amend ``Customer'' to ``customer'' as
this reference refers to the customer of a Participant; and (4) amend
``PHLX'' to ``Phlx.'' Accordingly, these amendments are non-substantive
technical changes which add clarity to the Rulebook and are consistent
with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose an unnecessary burden on intra-market competition because it
will apply to all market participants. The Exchange does not believe
the proposed rule change will impose any burden on inter-market
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because the increased position limit (and exercise
limit) will be available to all market participants and apply to each
in the same manner. The Exchange believes that the proposed rule change
will provide additional opportunities for market participants to more
efficiently achieve their investment and trading objectives of market
participants.
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the Act. On the contrary, the Exchange
believes the proposal promotes competition because it may attract
additional order flow from the OTC market to exchanges, which would in
turn compete amongst each other for those orders.\29\ The Exchange
believes market participants would benefit from being able to trade
options with increased position limits in an exchange environment in
several ways, including but not limited to the following: (1) Enhanced
efficiency in initiating and closing out position; (2) increased market
transparency; and (3) heightened contra-party creditworthiness due to
the role of OCC as issuer and guarantor. The Exchange understands that
other options exchanges intend to file similar proposed rule changes
with the Commission to increase position limits on options on SPY. This
may further contribute to fair competition among exchanges for multiply
listed options.
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\29\ Additionally, several other options exchanges have the same
position limits as the Exchange is proposing, as they incorporate by
reference to Cboe's position limits, and as a result the position
limits for options on SPY and will increase at those exchanges.
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Technical Corrections
The Exchange's proposal to make various technical amendments,
within Options 9, Section 13 and Options 9, Section 15 to: (1) Update
the Chicago Board Options Exchange to Cboe Exchange, Inc. (``Cboe'') as
the name of this self-regulatory organization has changed; (2) rename
the SPDR[supreg] S&P 500[supreg] exchange-traded fund (``SPY ETF'' or
``SPY'') as ``SPDR[supreg] S&P 500[supreg] ETF Trust (SPY) to update
the name of this product; (3) amend ``Customer'' to ``customer'' as
this reference refers to the customer of a Participant; and (4) amend
``PHLX'' to ``Phlx.'' Accordingly, these amendments are non-substantive
[[Page 39649]]
technical changes which add clarity to the Rulebook and do not impose a
burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
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 \30\ and Rule 19b-
4(f)(6) thereunder.\31\
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\30\ 15 U.S.C. 78s(b)(3)(A).
\31\ 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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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \32\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \33\ 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 proposed rule change may become operative upon filing. The Exchange
states that waiver of the operative delay would be consistent with the
protection of investors and the public interest because it would allow
the Exchange to immediately increase its position and exercise limits
for options on SPY to those of Cboe, which the Exchange believes will
ensure fair competition among exchanges and provide consistency for
Nasdaq Participants that are also members at Cboe where these increased
position and exercise limits are currently in place. For this reason,
the Commission believes that waiver of 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 proposal as operative upon filing.\34\
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\32\ 17 CFR 240.19b-4(f)(6).
\33\ 17 CFR 240.19b-4(f)(6)(iii).
\34\ For purposes only of waiving the 30-day operative delay,
the Commission also has 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 change 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-NASDAQ-2020-033 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-NASDAQ-2020-033. 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 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. 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-NASDAQ-2020-033, and should be submitted
on or before July 22, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
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\35\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-14113 Filed 6-30-20; 8:45 am]
BILLING CODE 8011-01-P