[Federal Register Volume 84, Number 201 (Thursday, October 17, 2019)]
[Notices]
[Pages 55656-55658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22592]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87274; File No. SR-CBOE-2019-098]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Relating 
To Amend the Appointment Weight Table in Rule 5.50 in the Shell 
Structure for the Exchange's Rulebook

October 10, 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 October 4, 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 amend the appointment weight table in Rule 5.50 in the shell 
structure for the Exchange's Rulebook that will become effective upon 
the migration of the Exchange's trading platform to the same system 
used by the Cboe Affiliated Exchanges (as defined below) (``shell 
Rulebook''). The text of the proposed rule change is provided in 
Exhibit 5.
    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
    In 2016, the Exchange's parent company, Cboe Global Markets, Inc. 
(formerly named CBOE Holdings, Inc.) (``Cboe Global''), which is also 
the parent company of Cboe C2 Exchange, Inc. (``C2''), acquired Cboe 
EDGA Exchange, Inc. (``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX'' or 
``EDGX Options''), Cboe BZX Exchange, Inc. (``BZX'' or ``BZX 
Options''), and Cboe BYX Exchange, Inc. (``BYX'' and, together with 
Cboe Options, C2, EDGX, EDGA, and BZX, the ``Cboe Affiliated 
Exchanges''). The Cboe Affiliated Exchanges are working to align 
certain system functionality, retaining only intended differences, 
between the Cboe Affiliated Exchanges, in the context of a technology 
migration. Cboe Options intends to migrate its trading platform to the 
same system used by the Cboe Affiliated Exchanges, which the Exchange 
expects to complete on October 7, 2019. In connection with this 
technology migration, the Exchange has a shell Rulebook that resides 
alongside its current Rulebook, which shell Rulebook will contain the 
Rules that will be in place upon completion of the Cboe Options 
technology migration.
    The Exchange proposes to amend an inadvertent error currently in 
the appointment weight table in shell Rule 5.50(g). Currently, the 
appointment weight table shows ``Options on the iPath S&P 500 VIX 
Short-Term Futures'' with an appointment weight of .100 in one row of 
the table and ``Index ETN (VXX)'' with a weight of .001 in the row 
directly below. The Exchange notes that this is incorrect and should be 
displayed in a single row containing ``Options on the iPath S&P 500 VIX 
Short-Term Futures Index ETN (VXX)'' with a weight of .100. A 
formatting error occurred that inadvertently broke apart Options on the 
iPath S&P 500 VIX Short-Term Futures Index ETN (VXX) into two rows.\5\ 
Indeed, the Exchange notes that neither Options on the iPath S&P 500 
VIX Short-Term Futures, nor Index ETN, are separate products on the 
Exchange and instead, Options on the iPath S&P 500 VIX Short-Term 
Futures Index ETN (symbol: VXX) is, in fact, the correct name of the 
product.\6\ Therefore, the Exchange now proposes to correct this in the 
appointment table to show Options on the iPath S&P 500 VIX Short-Term 
Futures Index ETN (VXX) with an appointment weight of .100. 
Additionally, the proposed rule change also removes the rows in the 
appointment table which refer to Options on the NASDAQ 100 Index

[[Page 55657]]

(NDX) and Morgan Stanley Retail Index Options (MVR), on which the 
Exchange is authorized to list options, but on which the Exchange does 
not currently, and does not intend, to list options. Because there are 
currently no options listed on either of these indexes, the proposed 
rule change has no impact on trading on the Exchange. The proposed rule 
change also corrects a cross-reference in the table. The rule provision 
regarding the Exchange's ability to list SPX or VIX on a group basis is 
in Rule 4.13 rather Rule 4.14, so the proposed rule change updates the 
cross-reference accordingly.\7\ The proposed changes are of a non-
substantive nature and are only making changes to correct an formatting 
error that had resulted in an inaccurate row within the appointment 
weight table under shell Rule 5.50(g) and to remove references to 
indexes on which the Exchange does not list (and does not intend to 
list) options.
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    \5\ See Securities and Exchange Act Release No. 81879 (October 
16, 2017), 82 FR 48858 (October 20, 2017) (Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To List and Trade 
S&P Select Sector Index Options) (SR-CBOE-2017-065), wherein the 
Exhibit 5 to SR-CBOE-2017-065 it shows, correctly, Options on the 
iPath S&P 500 VIX Short-Term Futures Index ETN (VXX), as one product 
with an appointment cost (the prior term) of .10.
    \6\ See Cboe Options on Volatility-based ETPs (October 4, 2019), 
available at http://www.cboe.com/products/options-on-single-stocks-and-exchange-traded-products/options-on-exchange-traded-products/cboe-options-on-volatility-based-etps.
    \7\ See Rule 4.13(f) in the shell Rulebook.
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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.\8\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \9\ 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 facilitating 
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) \10\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Id.
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    As stated, the proposed rule change makes no substantive changes to 
the rules. The proposed rule change is merely intended to correct an 
inadvertent formatting error in the appointment weight table which 
mistakenly broke apart the product name ``Options on the iPath S&P 500 
VIX Short-Term Futures Index ETN (VXX)'' into two rows, delete 
references to indexes on which the Exchange does not list (and does not 
intend to list) options, and correct a cross-reference to another rule 
in order to avoid potential confusion and provide market participants 
with accurate rules within the shell Rulebook upon the technology 
migration on October 7, 2019. As such, the proposed rule change is 
designed to promote just and equitable principles of trade, 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, by providing market participants with rules of the 
Exchange that are clear and, thus, easy to understand.

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. The proposed rule change is 
not intended as a competitive change, but rather, seeks to make non-
substantive rule changes in amending a table formatting error, remove 
references to certain indexes no longer applicable to trading on the 
Exchange, and correct a cross-reference to shell Rule 5.50(g) in 
anticipation of the October 7, 2019 technology migration. The Exchange 
also does not believe that the proposed rule change will impose any 
undue burden on competition because, as stated, the proposed changes 
will not impact trading on the Exchange as they are non-substantive 
changes designed to correct rule formatting and provide an up-to-date 
list of indexes in order to alleviate any potential confusion and 
provide market participants with clear and accurate rules.

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 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 from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \11\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and 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. 
The Commission has waived that requirement in this case.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \13\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \14\ permits the 
Commission to 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 five day prefiling requirement 
and the 30-day operative delay so that it may implement the proposed 
rule change without delay. According to the Exchange, waiver of the 
prefiling requirement and the operative delay will help to avoid any 
potential confusion by providing market participants with accurate 
rules within the shell Rulebook upon the technology migration on 
October 7, 2019. The Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest because the proposed rule change raises no new or novel 
issues. Therefore, the Commission hereby waives the prefiling 
requirement and the operative delay and designates the proposal 
operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \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. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change 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

[[Page 55658]]

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-2019-098 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-2019-098. 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 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-2019-098 and should be submitted on 
or before November 7, 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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-22592 Filed 10-16-19; 8:45 am]
BILLING CODE 8011-01-P