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.