[Federal Register Volume 83, Number 249 (Monday, December 31, 2018)]
[Notices]
[Pages 67759-67760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28384]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84940; File No. SR-CBOE-2018-076]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
to the Penny Pilot Program
December 21, 2018.
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 December 20, 2018, Cboe Exchange, Inc. (the ``Exchange'' or
``Cboe Options'') 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
Exchange filed the proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule
19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the operation of Penny Pilot
Program through June 30, 2019. The text of the proposed rule change is
provided below.
(additions are in italics; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 6.42. Minimum Increments for Bids and Offers
(a)-(b) No change.
. . . Interpretations and Policies:
.01-.03 No change.
.04 The Exchange may replace any option class participating in
the Penny Pilot Program that has been delisted with the next most
actively traded, multiply listed option class, based on national
average daily volume in the preceding six calendar months, that is
not yet included in the Pilot Program. Any replacement class would
be added on the second trading day following [July 1, 2018]January
1, 2019. The Penny Pilot will expire on [December 31, 2018]June 30,
2019.
* * * * *
The text of the proposed rule change is also available on the
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
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
The Penny Pilot Program (the ``Pilot Program'') is scheduled to
expire on December 31, 2018. The Exchange proposes to extend the Pilot
Program until June 30, 2019. The Exchange believes that extending the
Pilot Program will allow for further analysis of the Pilot Program and
a determination of how the Pilot Program should be structured in the
future.
During this extension of the Pilot Program, the Exchange proposes
that it may replace any option class that is currently included in the
Pilot Program and that has been delisted with the next most actively
traded, multiply listed option class that is not yet participating in
the Pilot Program (``replacement class''). Any replacement class would
be determined based on national average daily volume in the preceding
six months,\5\ and would be added on the second trading day following
January 1, 2019. The Exchange will employ the same parameters to
prospective replacement classes as approved and applicable in
determining the existing classes in the Pilot Program, including
excluding high-priced underlying securities.\6\ The Exchange will
announce to its Trading Permit Holders by circular any replacement
classes in the Pilot Program.
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\5\ The month immediately preceding a replacement class's
addition to the Pilot Program (i.e., December) would not be used for
purposes of the six-month analysis. Thus, a replacement class to be
added on the second trading day following January 1, 2019 would be
identified based on The Option Clearing Corporation's trading volume
data from June 1, 2018 through November 30, 2018.
\6\ See Securities Exchange Act Release No. 60864 (October 22,
2009), 74 FR 55876 (October 29, 2009) (SR-CBOE-2009-76).
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The Exchange is specifically authorized to act jointly with the
other options exchanges participating in the Pilot Program in
identifying any replacement class. The Exchange lastly represents that
the Exchange has the necessary system capacity to continue to support
operation of the Penny Pilot.
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.\7\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \8\ 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) \9\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. In particular, the proposed rule change allows for
an extension of the Pilot Program for the benefit of market
participants. The Exchange notes that this proposal does not propose
any new policies or provisions that are unique or unproven, but instead
relates to the continuation of an existing program that operates on a
pilot basis.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ Id.
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[[Page 67760]]
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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 Pilot Program, the proposed rule change will allow
for further analysis of the Pilot Program and a determination of how
the Program should 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. In addition, the Exchange has been
authorized to act jointly in extending the Pilot Program and believes
the other exchanges will be filing similar extensions.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) \11\ thereunder.
Because the foregoing 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 after the date of the filing, 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 19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6)
\13\ thereunder.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative prior to 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. 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 because doing so will
allow the Pilot Program to continue without interruption in a manner
that is consistent with the Commission's prior approval of the
extension and expansion of the Pilot Program.\16\ Accordingly, the
Commission designates the proposed rule change as operative upon filing
with the Commission.\17\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ See Securities Exchange Release No. 61061 (November 24,
2009), 74 FR 62857 (December 1, 2009) (SR-NYSEArca-2009-44).
\17\ For purposes only of waiving the operative delay for this
proposal, the Commission has 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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-2018-076 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-2018-076. 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 website (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 website viewing and printing in
the Commission's Public Reference Room, 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 the filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2018-076 and should be
submitted on or before January 22, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-28384 Filed 12-28-18; 8:45 am]
BILLING CODE 8011-01-P