[Federal Register Volume 84, Number 76 (Friday, April 19, 2019)]
[Notices]
[Pages 16552-16554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07852]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85650; File No. SR-CBOE-2019-022]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Renew an Existing Pilot Program Until November 4, 2019
April 15, 2019.
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 April 10, 2019, 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
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to renew an existing pilot program until November 4, 2019. The text of
the proposed rule change is provided below.
(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 24.9. Terms of Index Option Contracts
(a)-(d) (No change).
(e) Nonstandard Expirations Pilot Program
(1)-(2) (No change).
(3) Duration of Nonstandard Expirations Pilot Program. The
Nonstandard Expirations Pilot Program shall be through [May 6]
November 4, 2019.
(4) (No change).
. . . Interpretations and Policies:
.01-.14 (No change).
* * * * *
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
On September 14, 2010, the Commission approved a Cboe Options
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.\5\ On January 14,
2016, the Commission approved a Cboe Options proposal to expand the
pilot program to allow P.M.-settled options on broad-based indexes to
expire on any Wednesday of month, other than those that coincide with
an EOM.\6\ On August 10, 2016, the Commission approved a Cboe Options
proposal to expand the pilot program to allow P.M.-settled options on
broad-based indexes to expire on any Monday of month, other than those
that coincide with an EOM.\7\ Under the terms of the Nonstandard
Expirations Pilot Program (``Program''), Weekly Expirations and EOMs
are permitted on any broad-based index that is eligible for regular
options trading. Weekly Expirations 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 \8\ and was
subsequently extended.\9\ The Program is scheduled to expire on May 6,
2019. 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 November 4, 2019. This proposal
does not request any other changes to the Program.
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\5\ See Securities Exchange Act Release 62911 (September 14,
2010), 75 FR 57539 (September 21, 2010) (order approving SR-CBOE-
2009-075).
\6\ See Securities Exchange Act Release 76909 (January 14,
2016), 81 FR 3512 (January 21, 2016) (order approving SR-CBOE-2015-
106).
\7\ See Securities Exchange Act Release 78531 (August 10, 2016),
81 FR 54643 (August 16, 2016) (order approving SR-CBOE-2016-046).
\8\ Id.
\9\ See Securities Exchange Act Release 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 68933 (February 14, 2013), 78 FR
12374 (February 22, 2013) (immediately effective rule change
extending the Program through April 14, 2014); 71836 (April 1,
2014), 79 FR 19139 (April 7, 2014) (immediately effective rule
change extending the Program through November 3, 2014); 73422
(October 24, 2014), 79 FR 64640 (October 30, 2014) (immediately
effective rule change extending the Program through May 3, 2016);
76909 (January 14, 2016), 81 FR 3512 (January 21, 2016) (extending
the Program through May 3, 2017); 80387 (April 6, 2017), 82 FR 17706
(April 12, 2017) (extending the Program through May 3, 2018); 83165
(May 3, 2018), 83 FR 21316 (May 9, 2018) (SR-CBOE-2018-038)
(extending the Program through November 5, 2018); and 84534
(November 5, 2019), 83 FR 56119 (November 9, 2018) (SR-CBOE-2018-
070) (extending the Program through May 6, 2019).
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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 Options is
required to submit an annual report to the Commission, which addresses
the following areas: Analysis of Volume & Open Interest, Monthly
Analysis of Weekly Expirations & 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. Additionally, the Exchange will provide the
Commission with any additional data or analyses the Commission requests
because it deems such data or analyses necessary to determine whether
the Program is consistent with the Exchange Act. The Exchange is in the
process of making public all data
[[Page 16553]]
and analyses previously submitted to the Commission under the Program,
and will make public any data and analyses it makes to the Commission
under the Program in the future.
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. 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.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ 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) \12\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 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 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 Weekly Expirations 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 Options 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 \13\ and Rule 19b-
4(f)(6)(iii) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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 Exchange states that waiver of the 30-day operative delay
will allow it to extend the Program prior to its expiration on May 6,
2019, and maintain the status quo, thereby reducing market disruption.
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 Program to continue uninterrupted, thereby avoiding
investor confusion that could result from a temporary interruption in
the Program. For this reason, the Commission designates the proposed
rule change to be operative upon filing.\15\
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\15\ 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-2019-022 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-2019-022. 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
[[Page 16554]]
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, 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-2019-022, and should be submitted on or before May 10, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-07852 Filed 4-18-19; 8:45 am]
BILLING CODE 8011-01-P