what's going on everyone good morning charlie here we have filing to talk about out of sibo
and this is related to option position limits and it has been approved on an accelerated basis
so what we're looking at here in an introduction is on april 21st 2021
sibo exchange filed with the securities and exchange commission a proposed rule to change
to amend interpretation and policy zero seven of exchange rule 8.3 which is uh position limits
to increase the position limits for options in the following exchange traded funds and exchange
traded notes spdr gold shares or gld ishares ibox investment grade corporate bond etf or lqd
i share silver trust or slv ipath s p 500 vix short term futures etn or vxx
proshares ultravix short term futures etf or uv xy and then vanek vectors gold miners etf gdx
so a little bit of a background on june 17th 2021 the commission designated a longer period with
which to approve the proposal change disapprove or institute proceedings to determine whether to
approve or disapprove the change on july 27th the exchange submitted amendment number one
to the proposed rule change which replaced and superseded the proposed rule change as
originally filed on august 5th 2021 the commission published notice of amendment number one and
instituted proceedings to determine whether to approve or disapprove the proposed rule change
as modified by that amendment on october 8th the exchange submitted amendment number 2
to the proposed rule change which replaced and superseded the proposed rule change as
modified by amendment number 1 on october 25th the exchange submitted amendment number three
to the proposal change and then the commission is publishing this notice
to solicit comment on amendment numbers two and three and is approving the proposed rule
change as modified by those amendments number one two and three on an accelerated basis
so basically currently position limits for options on etf traded on the exchange such as those
subject to this proposal as amended are determined pursuant to the exchange rule 8.3 and generally
vary according to the number of outstanding shares and past six months trading volume of
the underlying security options on the securities with the largest numbers of outstanding shares
and trading volume have a standard option position limit of 250 000 contracts with adjustments for
splits recaps etc on the same side of the market in addition interpretation and policy point zero
seven of exchange rule 8.30 currently sets forth separate position limits for options
on certain etfs that range from three hundred thousand to three point six million contracts
the the purpose of the proposed rule changes modified is to amend interpretation policy point
zero seven to exchange rule eight point three zero to increase the position limits for options on lqd
and gdx for 250 000 contracts to 500 000 contracts the exchange believes that the
proposed position limit increase will lead to a more liquid and competitive market
environment for these options that will benefit customers interested in trading these products
the exchange states that the current position limits for options on lqd and
gdx may have impeded the ability of market makers to make markets on the exchange
according to the exchange the proposal is designed to encourage liquidity
to provide additional liquidity to the exchange and other market participants to shift liquidity
from over-the-counter markets onto the exchange which it believes would enhance
the process of price discovery conducted on the exchange through increased order flow
the proposal would also benefit market participants the exchange maintains by providing
them with the ability to more effectively execute their trading and hedging activities
the exchange also represents that the existing surveillance procedures and reporting requirements
at the exchange and other self-regulatory organizations are capable of properly
identifying disruptive and or manipulative trading activity yet right according to the exchange its
surveillance procedures utilize daily monitoring of market activity via automated surveillance
techniques to identify unusual activity in both options and the underlying products
so in essence they are increasing position limits on lqd and gdx from 250 000 contracts
to 500 000 contracts effectively doubling them helps improve price discovery helps
improve liquidity helps participants implement hedging strategies bring over the counter volume
back to the exchange which is a big one uh it will bring volume from over-the-counter
markets to the exchange uh to bring more order flow and again don't worry but they're
going to make sure that no crime happens right because they're so good at that take it easy