[Federal Register Volume 84, Number 218 (Tuesday, November 12, 2019)]
[Notices]
[Pages 61108-61110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24505]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87462; File No. SR-CBOE-2019-104]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Extend 
the Nonstandard Expirations Pilot Program

November 5, 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 31, 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 May 4, 2020. The text of the 
proposed rule change is provided below.

(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *

Rule 4.13. Series of Index Options

    (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 [November 4, 
2019] May 4, 2020.
* * * * *
    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 Securities and Exchange Commission (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\ 
Pursuant to Rule 4.13(e)(3),\10\ the Program is scheduled to expire on 
November 4, 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

[[Page 61109]]

Exchange hereby proposes to extend the Program until May 4, 2020. 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); 84534 (November 5, 
2019 [sic]), 83 FR 56119 (November 9, 2018) (SR-CBOE-2018-070) 
(extending the Program through May 6, 2019); and 85650 (April 15, 
2019), 84 FR 16552 (April 19, 2019) (SR-CBOE-2019-022) (extending 
the Program through November 4, 2019).
    \10\ The Exchange recently relocated prior Rule 24.9, containing 
the provision which governs the Program, to current Rule 4.13. See 
SR-CBOE-2019-092 (October 4, 2019), which did not make any 
substantive changes to prior Rule 24.9 and merely relocated it to 
Rule 4.13.
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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 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. The Exchange will also make this report public. 
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.\11\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \12\ 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) \13\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 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, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \14\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule19b-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 Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \16\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \17\ 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 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 Pilot Program prior to its expiration on November 4, 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 pilot program to continue uninterrupted, thereby 
avoiding investor confusion that could result from a temporary 
interruption in the pilot program. Accordingly, the Commission hereby 
waives the operative delay and designates the proposed rule change 
operative upon filing.\18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission also 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

[[Page 61110]]

the purposes of the Act. If the Commission takes such action, the 
Commission shall 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 
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-2019-104 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-2019-104. 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-2019-104 and should be submitted on 
or before December 3, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-24505 Filed 11-8-19; 8:45 am]
BILLING CODE 8011-01-P