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BOX Exchange Submits Rule Change to Increase Position Limits

May 20th | 2020



On May 18, 2020 the BOX Options Exchange, LLC proposed a rule change to the Securities and Exchange Commission (“SEC”) seeking to increase position limits for options on certain exchange-traded funds (“ETFs”) and thereby similarly increase certain exercise limits. Details of the rule can be found on BOX Options Exchange, LLC’s web page. Those ETFs include the following tickers: SPY, EFA, FXI, HYG, and XLF. The notice for comment stated that “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. . . . “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.” FINRA’s rules on Equity Options Position Limits Rules clarifies the option exchange rules generally.

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