[Federal Register Volume 79, Number 210 (Thursday, October 30, 2014)]
[Notices]
[Pages 64640-64642]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-25779]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73422; File No. SR-CBOE-2014-079)


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Renew an Existing Pilot Program

October 24, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on October 16, 2014, Chicago Board Options Exchange, Incorporated 
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (the ``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 Substance 
of the Proposed Rule Change

    The Exchange proposes to renew an existing pilot program until May 
3, 2016. Under the existing pilot program, the Exchange is permitted to 
list P.M.-settled options on broad-based indexes that expire on: (a) 
Any Friday of the month, other than the third Friday-of-the-month 
(``End of Week Expirations'' or ``EOWs''), and (b) the last trading day 
of the month (``End of Month Expirations'' or ``EOMs''). The text of 
the proposed rule change is provided below. (additions are italicized; 
deletions are [bracketed])

* * * * *
Chicago Board Options Exchange, Incorporated

Rules
* * * * *
Rule 24.9. Terms of Index Option Contracts
    (a)-(d) No change.
    (e) End of Week/End of Month Expirations Pilot Program (``EOW/EOM 
Pilot Program'')
    (1) End of Week (``EOW'') Expirations. The Exchange may open for 
trading EOWs on any broad-based index eligible for regular options 
trading to expire on any Friday of the month, other than the third 
Friday-of-the-month. EOWs shall be subject to all provisions of this 
Rule

[[Page 64641]]

and treated the same as options on the same underlying index that 
expire on either the Saturday following the third Friday of the month, 
for series expiring prior to February 1, 2015, or on the third Friday 
of the expiration month, for series expiring on or after February 1, 
2015; provided, however, that EOWs shall be P.M.-settled.
    (2) End of Month (``EOM'') Expirations. The Exchange may open for 
trading EOMs on any broad-based index eligible for regular options 
trading to expire on last trading day of the month. EOMs shall be 
subject to all provisions of this Rule and treated the same as options 
on the same underlying index that expire on either the Saturday 
following the third Friday of the month, for series expiring prior to 
February 1, 2015, or on the third Friday of the expiration month, for 
series expiring on or after February 1, 2015; provided, however, that 
EOMs shall be P.M.-settled.
    (3) Duration of EOW/EOM Pilot Program. The EOW/EOM Pilot Program 
shall be through [November 3, 2014] May 3, 2016.
    (4) EOW/EOM Trading Hours on the Last Trading Day. On the last 
trading day, transactions in expiring EOWs and EOMs may be effected on 
the Exchange between the hours of 8:30 a.m. (Chicago time) and 3:00 
p.m. (Chicago time). This subsection (4) applies to all outstanding 
expiring EOW and EOM Expirations listed on or before May 6, 2011 and 
all EOWs and EOMs listed thereafter under the EOW/EOM Pilot Program.

* * * Interpretations and Policies:
    .01-.14 No change
* * * * *
    The text of the proposed rule change is also available on the 
Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission.

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

    On September 14, 2010, the Commission approved a CBOE proposal to 
establish a pilot program under which the Exchange is permitted to list 
P.M.-settled options on broad-based indexes to expire on (a) any Friday 
of the month, other than the third Friday-of-the-month, and (b) the 
last trading day of the month.\3\ Under the terms of the End of Week/
End of Month Expirations Pilot Program (``Program''), EOWs and EOMs are 
permitted on any broad-based index that is eligible for regular options 
trading. EOWs and EOMs are cash-settled and have European-style 
exercise. The proposal became effective on a pilot basis for a period 
of fourteen months that commenced on the next full month after approval 
was received to establish the Program \4\ and was subsequently 
extended.\5\ The Program is scheduled to expire on November 3, 2014. 
The Exchange believes that the Program has been successful and well 
received by its Trading Permit Holders and the investing public during 
that the time that it has been in operation. The Exchange hereby 
proposes to extend the Program until May 3, 2016. This proposal does 
not request any other changes to the Program.
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    \3\ See Securities Exchange Act Release No. 62911 (September 14, 
2010), 75 FR 57539 (September 21, 2010) (order approving SR-CBOE-
2009-075).
    \4\ Id.
    \5\ See Securities Exchange Act Release No. 65741 (November 14, 
2011), 76 FR 72016 (November 21, 2011) (immediately effective rule 
change extending the Program through February 14, 2013). See also 
Securities Exchange Act Release No. 68933 (February 14, 2013), 78 FR 
12374 (February 22, 2013) (immediately effective rule change 
extending the Program through April 14, 2014). See also Securities 
Exchange Act Release No. 71836 (April 1, 2014), 79 FR 19139 (April 
7, 2014) (immediately effective rule change extending the Program 
through November 3, 2014).
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    Pursuant to the order approving the establishment of the Program, 
two months prior to the conclusion of the pilot period, CBOE is 
required to submit an annual report to the Commission, which addresses 
the following areas: Analysis of Volume & Open Interest, Monthly 
Analysis of EOW & EOM Trading Patterns and Provisional Analysis of 
Index Price Volatility. The Exchange has submitted, under separate 
cover, the annual report in connection with the present proposed rule 
change. Confidential treatment under the Freedom of Information Act is 
requested regarding the annual report.
    If, in the future, the Exchange proposes an additional extension of 
the Program, or should the Exchange propose to make the Program 
permanent (which the Exchange currently intends to do), the Exchange 
will submit an annual report (addressing the same areas referenced 
above and consistent with the order approving the establishment of the 
Program) to the Commission at least two months prior to the expiration 
date of the Program. The annual report will be provided to the 
Commission on a confidential basis. Any positions established under the 
Program will not be impacted by the expiration of the Program.
    The Exchange believes there is sufficient investor interest and 
demand in the Program to warrant its extension. The Exchange believes 
that the Program has provided investors with additional means of 
managing their risk exposures and carrying out their investment 
objectives. Furthermore, the Exchange has not experienced any adverse 
market effects with respect to the Program.
    The Exchange believes that the proposed extension of the Program 
will not have an adverse impact on capacity.
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.\6\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \7\ 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 facilitation 
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) \8\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ Id.
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    In particular, the Exchange believes that the Program has been 
successful to date and states that it has not encountered any problems 
with the

[[Page 64642]]

Program. The proposed rule change allows for an extension of the 
Program for the benefit of market participants. Additionally, the 
Exchange believes that there is demand for the expirations offered 
under the Program and believes that that EOWs and EOMs will continue to 
provide the investing public and other market participants increased 
opportunities to better manage their risk exposure.

B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. Specifically, the Exchange 
believes that, by extending the expiration of the Program, the proposed 
rule change will allow for further analysis of the Program and a 
determination of how the Program shall be structured in the future. In 
doing so, the proposed rule change will also serve to promote 
regulatory clarity and consistency, thereby reducing burdens on the 
marketplace and facilitating investor protection.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the 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 if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6)(iii) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The Commission believes that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest, 
as it will allow the pilot program to continue uninterrupted, thereby 
avoiding investor confusion that could result from a temporary 
interruption in the pilot program. For this reason, the Commission 
designates the proposed rule change to be operative upon filing.\11\
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    \11\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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.

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-CBOE-2014-079 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-CBOE-2014-079. 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 Web site (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 Web site viewing and 
printing in the Commission's Public Reference Room at 100 F Street NE., 
Washington, DC 20549-1090 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; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
CBOE-2014-079 and should be submitted on or before November 20, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-25779 Filed 10-29-14; 8:45 am]
BILLING CODE 8011-01-P