[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