September 18, 2020

Volume X, Number 262

September 17, 2020

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September 16, 2020

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September 15, 2020

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FINRA Proposes to Increase Positions Limits on Certain Options

On July 14, the Financial Industry Regulatory Authority (FINRA) filed a proposed rule change to amend Rule 2360 (Options) to increase position limits on options on certain exchange-traded funds. FINRA has indicated that increasing the position limits for conventional options subject to the proposed rule change could lead to a more liquid and competitive market for these options, which will benefit customers interested in these products.

Rule 2360(b)(3)(A)(iii) establishes position limits for conventional equity option contracts. FINRA is now proposing to amend the rule by adding new position limits for options on certain ETFs and increasing the existing position limits for other options on ETFs as indicated below.

Security Underlying Option 

Position Limit

The DIAMONDS Trust (DIA)

300,000 contracts

The Standard and Poor’s Depositary Receipts Trust (SPY)

3,600,000 contracts

The iShares Russell 2000 ETF (IWM)

1,000,000 contracts

The PowerShares QQQ Trust (QQQ)

1,800,000 contracts

The iShares MSCI Emerging Markets ETF (EEM)

1,000,000 contracts

iShares China Large-Cap ETF (FXI)

1,000,000 contracts

iShares MSCI EAFE ETF (EFA)

1,000,000 contracts

iShares MSCI Brazil Capped ETF (EWZ)

500,000 contracts

iShares 20+ Year Treasury Bond Fund ETF (TLT)

500,000 contracts

iShares MSCI Japan ETF (EWJ)

500,000 contracts

iShares iBoxx High Yield Corporate Bond Fund  (HYG)

500,000 contracts

Financial Select Sector SPDR Fund (XLF)

500,000 contracts

FINRA has filed the proposed rule change for immediate effectiveness.

The rule filing is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 199

TRENDING LEGAL ANALYSIS


About this Author

Susan Light, Katten Law Firm, Finance Law Attorney, New York
Partner

Susan Light focuses her practice on financial services regulatory matters. She counsels broker-dealers, hedge funds, investment banks and financial services clients on enforcement issues involving the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), other self-regulatory organizations (SROs) and state and federal regulatory authorities. She has particular experience related to sales practice issues, financial and operational issues, anti-money laundering, crowdfunding, cybersecurity, and cryptocurrencies.

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212-940-8599
Michael T. Foley, Katten, Lawyer, Finance, FINRA, Chicago
Special Counsel

Michael Foley represents broker-dealers, investment advisers and other financial services industry participants with respect to a broad spectrum of legal and regulatory matters arising under the federal securities laws.

Michael has nearly 20 years of experience in private practice and in-house at both a large, full-service broker-dealer and at an online discount broker-dealer, advising broker-dealers and other financial institutions regarding compliance with the federal securities and commodities laws, and with the regulations of the US Securities and Exchange Commission, the US Commodity Futures Trading Commission and financial industry self-regulatory organizations. 

312-902-5452
Laura Krcmaric, Financial Services Attorney, Katten Law Firm
Associate

Laura Krcmaric represents clients in the financial services industry, focusing on regulatory and compliance work. Prior to joining Katten, Laura served as counsel for Credit Suisse, where she provided advice to the private banking and wealth management division. She also was an honors intern with the Securities and Exchange Commission.

While in law school, Laura served as a staff member and symposium editor for the North Carolina Law Review. She also was a member of the Community Development Law Clinic, representing nonprofit organizations.

312.902.5437