[Federal Register Volume 88, Number 239 (Thursday, December 14, 2023)]
[Notices]
[Pages 86701-86705]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27397]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99119; File No. SR-CBOE-2023-063]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To Amend Its Rules Relating to 
Position and Exercise Limits

December 8, 2023.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 29, 2023, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 its rules relating to position and exercise limits. The text 
of the proposed rule change is 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
Background
    The Exchange proposes to amend its rules relating to position 
limits. By way of background, in March 2005, the Securities and 
Exchange Commission (the ``Commission'') approved the current position 
limit (and exercise limit) structure, which incorporates five 
categories of limits ranging from 25,000 to 250,000 contracts, based on 
two criteria: (1) the securities trading volume over the prior six 
months and (2) the number of shares outstanding.\3\ More specifically, 
Cboe Options Rule 8.30 sets forth the position limits for equity 
options. Specifically, Rule 8.30 provides that the position limits for 
equity options are 25,000 or 50,000 or 75,000 or 200,000 or 250,000 
option contracts (with adjustments for splits, re-capitalizations, 
etc.) on the same side of the market or such other number of option 
contracts as may be fixed from time to time by the Exchange. 
Interpretation and Policy .02 to Rule 8.30 describes how the Exchange 
determines which of the five position limit amounts will apply to an 
equity option class (i.e., the position limit applicable to a class is 
determined based on the trading volume and outstanding shares of the 
underlying security). These categories have remained unchanged for the 
last 18 years.\4\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 51244 (February 23, 
2005), 70 FR 10010 (March 1, 2005) (order approving SR-CBOE-2003-30, 
as amended), which adopted two pilot programs that increase position 
and exercise limits for equity options) (``Pilot Program Order''). 
The Pilot Programs were extended 5 times for 6-month periods by the 
Commission, and expired on March 1, 2008. See Securities Exchange 
Act Release No. 52262 (August 15, 2005), 70 FR 48995 (August 22, 
2005) (SR-CBOE-2005-61), Securities Exchange Act Release No. 53348 
(February 22, 2006), 71 FR 10574 (March 1, 2006) (SR-CBOE-2006-11), 
Securities Exchange Act Release No. 54336 (August 18, 2006), 71 FR 
50952 (August 28, 2006) (SR-CBOE-2006-69), Securities Exchange Act 
Release No. 55266 (February 9, 2007), 72 FR 7698 (February 16, 2007) 
(SR-CBOE-2007-12), and Securities Exchange Act Release No. 56266 
(August 15, 2007), 72 FR 47094 (August 22, 2007) (SR-CBOE-2007-97). 
The Pilot Programs were made permanent in 2008. See Securities 
Exchange Act Release No. 57352 (February 19, 2007), 73 FR 10076 
(February 25, 2008) (SR-CBOE-2008-007).
    \4\ See Cboe Options Rule 8.30. Pursuant to Rule 8.42, the 
exercise limit for an equity option is the same as the position 
limit established in Rule 8.30 for that equity option.
---------------------------------------------------------------------------

    By way of further background, position limits are designed to 
address potential manipulative schemes and adverse market impacts 
surrounding the use of options, such as disrupting the market in the 
security underlying the options. While position limits should address 
and discourage the potential for manipulative schemes and adverse 
market impact, if such limits are set too low, participation in the 
options market may be discouraged. The Exchange believes that position 
limits must therefore be balanced between mitigating concerns of any 
potential manipulation and the cost of inhibiting potential hedging 
activity that could be used for legitimate economic purposes.
Proposal
    To modernize the position limit rule, while minimizing impact of 
such change on industry participants, the Exchange is proposing the 
addition of three additional position limit categories: 500,000, 
1,000,000 and 2,000,000 option contracts. Particularly, the proposed 
rule would adopt new Rule 8.30.02(f) which would provide that in order 
to be eligible for the 500,000-option contract limit, either the most 
recent six-month trading volume of the underlying security must have 
totaled at least 500,000,000 shares; or the most recent six-month 
trading volume of the underlying security must have totaled at least 
375,000,000 shares and the underlying security must have

[[Page 86702]]

at least 1,500,000,000 shares currently outstanding. The Exchange also 
proposes to adopt Rule 8.30.02(g) which would provide that in order to 
be eligible for the 1,000,000-option contract limit, either the most 
recent six-month trading volume of the underlying security must have 
totaled at least 1,000,000,000 shares; or the most recent six-month 
trading volume of the underlying security must have totaled at least 
750,000,000 shares and the underlying security must have at least 
3,000,000,000 shares currently outstanding. Finally, the Exchange 
proposes to adopt Rule 8.30.02(h) which provides that in order to be 
eligible for the 2,000,000-option contract limit, either the most 
recent six-month trading volume of the underlying security must have 
totaled at least 5,000,000,000 shares; or the most recent six-month 
trading volume of the underlying security must have totaled at least 
3,750,000,000 shares and the underlying security must have at least 
15,000,000,000 shares currently outstanding.\5\
---------------------------------------------------------------------------

    \5\ Current Rule 8.30.02(f) will be renumbered to Rule 
8.30.02(i).
---------------------------------------------------------------------------

    As noted above, the current position limit categories were last 
updated 18 years ago. Since that time, there has been a significant 
increase in the overall volume of exchange traded equity options and a 
steady increase in the number of accounts that approach the current 
highest position limit (i.e., 250,000 option contracts). The below 
chart demonstrates this growth in equity options trading industry-wide 
between 2005 and 2023.\6\ Indeed, annual equity options trading volume 
in recent years is nearly seven times the volume amount when the 
current position tier limits were adopted in 2005 and has more than 
doubled since 2017.
---------------------------------------------------------------------------

    \6\ See Options Clearing Corporation (``OCC''), Annual 
Historical Volume Statistics at https://www.theocc.com/market-data/market-data-reports/volume-and-open-interest/historical-volume-statistics. Annual Industry Options Trading Volume for 2023 is as of 
November 24, 2023.

------------------------------------------------------------------------
                                                              Annual
                                                             industry
                                                         equity  options
                          Year                                trading
                                                              volume
                                                           (contracts)
------------------------------------------------------------------------
2005...................................................    1,369,048,282
2006...................................................    1,844,181,918
2007...................................................    2,592,102,961
2008...................................................    3,284,761,345
2009...................................................    3,366,967,321
2010...................................................    3,610,436,931
2011...................................................    4,224,604,529
2012...................................................    3,681,820,659
2013...................................................    3,725,864,134
2014...................................................    3,845,073,167
2015...................................................    3,727,919,066
2016...................................................    3,626,455,947
2017...................................................    3,689,013,636
2018...................................................    4,572,482,342
2019...................................................    4,420,542,768
2020...................................................    7,004,304,148
2021...................................................    9,366,823,566
2022...................................................    9,599,301,629
2023...................................................    9,285,621,375
------------------------------------------------------------------------

    By way of further example, based on the proposed criteria, over 300 
equity options classes that currently are limited to the maximum 
position limit tier of 250,000 contracts would qualify for one of the 
three proposed position limit tiers. Particularly, the Exchange has 
determined that 182 equity options classes would be eligible for the 
500,000 contracts tier limit; 110 equity options classes would be 
eligible for the 1,000,000 contracts tier limit and 13 equity options 
classes would be eligible for the 2,000,000 tier limit.\7\
---------------------------------------------------------------------------

    \7\ As of October 12, 2023.
---------------------------------------------------------------------------

    By way of further example, prior to the stock split in August 
2020,\8\ equity options class AAPL had approximately 4,000,000,000 
shares outstanding and the position limit of 250,000 contracts 
represented control of 25,000,000 shares or 0.625% of the shares 
outstanding. After the stock split, AAPL had approximately 
16,000,000,000 shares outstanding. The immediate adjustment of the 
position limit from 250,000 contracts to 1,000,000 contracts reflects 
control of 100,000,000 shares or 0.625% of the shares outstanding which 
retains the pre-stock split ratio. When the last AAPL option listed at 
the time of the stock split in 2020 expired in September 2022, the OCC 
reverted back to the original position limit for AAPL of 25,000,000 
shares (250,000 contracts), which is the maximum stock option position 
limits permitted under the Exchange's rules.\9\ Although this position 
limit technically adheres to the Exchange's rules, it is more 
restrictive than the original position limit. Particularly, readjusting 
the position limit back to 25,000,000 shares (250,000 contracts) when 
there are 16,000,000,000 shares outstanding reduces the position limit 
to 0.156% of the shares outstanding, making the post-stock split 
position limit more restrictive than the pre-stock split position limit 
and would [sic] arguably no longer be meaningfully related to the 
current shares outstanding. Further, the Exchange notes that the 
current 250,000 position limit for AAPL forces market participants to 
reduce trading activity because the maximum position limit only 
represents 0.156% of the total shares outstanding. This reduction in 
trading volume also represents a reduction in available liquidity and 
negatively impacts liquidity, trading volume, and possibly execution 
prices. By comparison, under the proposed criteria, AAPL options would 
qualify for the 2,000,000 contract position limit, which is over 12% 
higher than the current maximum position limit. The adjustment of the 
position limit from 250,000 contracts to 2,000,000 contracts reflects 
control of 200,000,000 shares or 1.25% of the shares outstanding, which 
is well within ratios provided by the prior methodology and the 
Exchange believes would lead to a more liquid and competitive market 
environment for these options, which will benefit customers that trade 
these options. Further, given the total increased volume in trading, 
the Exchange believes it is reasonable to conclude that in addition to 
AAPL, position limits for many classes is [sic] currently more 
restrictive than they were when adopted in 2005.
---------------------------------------------------------------------------

    \8\ See Notice, 88 FR at 29728, citing OCC Memo #47509, Apple 
Inc.--4 for 1 Stock Split (August 28, 2020).
    \9\ Position limit increases that result in the case of a stock 
split remain in effect until the expiration of all listed options 
that existed at the time of the split, at which time the position 
limits revert to pre-split levels. This is an industry practice 
applied by OCC, which currently administers position limit levels on 
behalf of U.S. options exchanges.
---------------------------------------------------------------------------

    The Exchange also believes that the increase in options volume and 
lack of evidence of market manipulation occurrences over the past 
twenty years justifies the proposed increases in the position and 
exercise limits. Moreover, several market participants across the 
industry have petitioned the industry to increase the current levels.
    The Commission has previously stated,

    Since the inception of standardized options trading, the options 
exchanges have had rules imposing limits on the aggregate number of 
options contracts that a member or customer could hold or exercise. 
These rules are intended to prevent the establishment of options 
positions that can be used or might create incentives to manipulate 
or disrupt the underlying market so as to benefit the options 
position. In particular, position and exercise limits are designed 
to minimize the potential for mini-manipulations and for corners or 
squeezes of the underlying market. In addition, such limits serve to 
reduce the possibility for

[[Page 86703]]

disruption of the options market itself, especially in illiquid 
options classes.\10\
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 39489 (December 24, 
1997), 63 FR 276 (January 5, 1998) (SR-CBOE-1997-11).

    The Exchange believes that the existing surveillance procedures and 
reporting requirements at the Exchange are adequate to identify 
violative trading activity. These procedures include daily monitoring 
of market activity via automated surveillance techniques to identify 
unusual activities in both options and underlying stocks and Exchange 
Traded Products (``ETPs'').
    The Exchange believes that increasing the position limits for 
qualifying equity options would lead to a more liquid and competitive 
market environment for these options, which will benefit customers that 
trade these options. Further, the reporting requirement for such 
options would remain unchanged. Thus, the Exchange will still require 
that each TPH or TPH organization that maintains positions in impacted 
options on the same side of the market, for its own account or for the 
account of a customer, report certain information to the Exchange. This 
information includes, but would not be limited to, the options' 
positions, whether such positions are hedged and, if so, a description 
of the hedge(s). Market-Makers (including Designated Primary Market-
Makers (``DPMs'')) would continue to be exempt from this reporting 
requirement, however, the Exchange may access Market-Maker position 
information.\11\ Moreover, the Exchange's requirement that TPHs file 
reports with the Exchange for any customer who held aggregate large 
long or short positions on the same side of the market of 200 or more 
option contracts of any single class for the previous day will remain 
at this level and will continue to serve as an important part of the 
Exchange's surveillance efforts.\12\
---------------------------------------------------------------------------

    \11\ The Options Clearing Corporation (``OCC'') through the 
Large option Position Reporting (``LOPR'') system acts as a 
centralized service provider for TPH compliance with position 
reporting requirements by collecting data from each TPH or TPH 
organization, consolidating the information, and ultimately 
providing detailed listings of each TPH's report to the Exchange, as 
well as Financial Industry Regulatory Authority, Inc. (``FINRA''), 
acting as its agent pursuant to a regulatory services agreement 
(``RSA'').
    \12\ See Rule 8.43 for reporting requirements.
---------------------------------------------------------------------------

    The Exchange believes that the existing surveillance procedures and 
reporting requirements at the Exchange and other SROs are capable of 
properly identifying disruptive and/or manipulative trading activity. 
The Exchange also represents that it has adequate surveillances in 
place to detect potential manipulation, as well as reviews in place to 
identify continued compliance with the Exchange's listing standards. 
These procedures utilize daily monitoring of market activity via 
automated surveillance techniques to identify unusual activity in both 
options and the underlyings, as applicable. The Exchange also notes 
that large stock holdings must be disclosed to the Commission by way of 
Schedules 13D or 13G,\13\ which are used to report ownership of stock 
which exceeds 5% of a company's total stock issue and may assist in 
providing information in monitoring for any potential manipulative 
schemes.
---------------------------------------------------------------------------

    \13\ 17 CFR 240.13d-1.
---------------------------------------------------------------------------

    The Exchange believes that the current financial requirements 
imposed by the Exchange and by the Commission adequately address 
concerns regarding potentially large, unhedged positions in equity 
options. Current margin and risk-based haircut methodologies serve to 
limit the size of positions maintained by any one account by increasing 
the margin and/or capital that a TPH must maintain for a large position 
held by itself or by its customer.\14\ In addition, Rule 15c3-1 \15\ 
imposes a capital charge on TPHs to the extent of any margin deficiency 
resulting from the higher margin requirement.
---------------------------------------------------------------------------

    \14\ See Rule 10.3 for a description of margin requirements.
    \15\ 17 CFR 240.15c3-1.
---------------------------------------------------------------------------

    The Exchange also has no reason to believe that the growth in 
trading volume in equity options will not continue. Rather, the 
Exchange expects continued options volume growth as opportunities for 
investors to participate in the options markets increase and evolve. 
The Exchange believes that the current position and exercise limits are 
restrictive, and not adopting increased position and exercise limit 
categories will hamper the listed options markets from being able to 
compete fairly and effectively with the over-the-counter (``OTC'') 
markets. OTC transactions occur through bilateral agreements, the terms 
of which are not publicly disclosed to the marketplace. As such, OTC 
transactions do not contribute to the price discovery process on a 
public exchange or other lit markets. In fact, the Commission 
previously highlighted competition with the OTC markets as a reason for 
increasing the standard position and exercise limits.\16\ Specifically, 
the Commission stated,
---------------------------------------------------------------------------

    \16\ See Securities Exchange Act Release No. 40875 (December 31, 
1998), 64 FR 1842 (January 12, 1999) (SR-CBOE-1998-25).

    The increase in position and exercise limits for standardized 
equity options should allow the Exchanges to better compete with the 
growing OTC market in customized equity options, thereby encouraging 
fair competition among brokers and exchange markets.\17\
---------------------------------------------------------------------------

    \17\ Id.

    In addition, the Exchange believes that without the proposed 
changes to position and exercise limits, market participants will find 
the standard equity position limits an impediment to their business and 
investment objectives. As such, market participants may find the less 
transparent OTC markets a more attractive alternative to achieve their 
investment and hedging objectives, leading to a retreat from the listed 
options markets, where trades are subject to reporting requirements and 
daily surveillance.
Implementation Date
    Given this is an industry-wide proposal, implementation will 
require that all U.S. listed options exchanges adopt similar rule 
language regarding position limits. The Exchange will wait to announce 
implementation date for the proposed rule change (via Exchange Notice) 
until all exchanges have received regulatory approval for similar rule 
language.
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.\18\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \19\ 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) \20\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(5).
    \20\ Id.
---------------------------------------------------------------------------

    The Exchange believes that the proposed adoption of three increased

[[Page 86704]]

position limit categories will remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, protect investors and the public interest, because it will 
provide market participants with the ability to more effectively 
execute their trading and hedging activities. Also, adopting increased 
position limit categories for equity options may allow Market-Makers to 
maintain their liquidity in these options in amounts commensurate with 
the continued high consumer demand in the impacted underlyings' options 
market. The proposed higher position limits may also encourage other 
liquidity providers to continue to trade on the Exchange rather than 
shift their volume to OTC markets, which will enhance the process of 
price discovery conducted on the Exchange through increased order flow.
    In addition, the Exchange believes that the current liquidity in 
shares of and options on the underlyings will mitigate concerns 
regarding potential manipulation of the products and/or disruption of 
the underlying markets upon increasing the relevant position limits. As 
a general principle, increases in active trading volume and deep 
liquidity of the underlying securities do not lead to manipulation and/
or disruption. This general principle applies to the recently observed 
increased levels of trading volume and liquidity in shares of and 
options on the underlyings (as described above), and, as a result, the 
Exchange does not believe that the options markets or underlying 
markets would become susceptible to manipulation and/or disruption as a 
result of the proposed higher position limit categories. Further, as 
noted above, the Exchange has no reason to believe that the growth in 
trading volume in equity options will not continue. Rather, the 
Exchange expects continued options volume growth as opportunities for 
investors to participate in the options markets continue to increase 
and evolve. Additionally, the Exchange continues to maintain a process 
in which every six-months, the status of the underlying securities are 
reviewed to determine what limit should apply.\21\ Accordingly, in the 
event stock trading volume and/or outstanding shares for particular 
securities significantly declines in the future, such overlying options 
classes will merely be moved to a lower corresponding, position tier 
limit under the rules at the next regularly scheduled review.
---------------------------------------------------------------------------

    \21\ See Current Cboe Options Rule 8.30.02(f).
---------------------------------------------------------------------------

    Further, the Exchange notes that the proposed rule change to adopt 
increased position limits for actively traded options is not novel. 
Indeed, the Commission has previously expressed the belief that not 
just increasing, but removing, position and exercise limits may bring 
additional depth and liquidity to the options markets without 
increasing concerns regarding intermarket manipulation or disruption of 
the options or the underlying securities.\22\ The Commission also has 
approved similar proposed rule changes by the Exchange to increase 
position limits for options on highly liquid and actively traded ETPs 
(e.g., iShares Russell 2000 ETF (``IWM''), the iShares MSCI Emerging 
Markets ETF (``EEM''), iShares China Large-Cap ETF (``FXI''), and 
iShares MSCI EAFE ETF (``EFA''), VanEck Vectors Gold Miners ETF 
(``GDX''), and iShares iBoxx $ Investment Grade Corporate Bond ETF 
(``LQD'')).\23\ While those are ETPs and the current proposal applies 
to equity options, pursuant to Rule 8.30, the position limits for 
options on stock and ETPs are generally calculated in the same manner 
and based in part on trading volume of the underlying. Further, by way 
of comparison, the outstanding shares of AAPL stock is significantly 
higher than that of IWM, EEM, FXI and EFA, which have an overlying 
options position limit of 1,000,000 (as compared to the 250,000 
position limit for AAPL options).\24\ Particularly, while the 
outstanding shares of AAPL is currently nearly 16 billion shares, the 
outstanding shares of IWM, EEM, FXI and EFA range between approximately 
187 million and 673 million. The Exchange notes that the criteria under 
the proposed new position limit tier categories of 1,000,000 and 
2,000,000 for equity options require the most recent six-month trading 
volume of the underlying security to have totaled at least 1 billion or 
5 billion shares, respectively or have at least 3 billion or 15 billion 
shares, respectively, of the underlying security outstanding.\25\ The 
proposed criteria under the 500,000 position limit category requires 
the most recent six-month trading volume of the underlying security to 
have totaled at least 500 million shares or have at least 1.5 billion 
shares of the underlying security outstanding \26\ (by comparison, LQD 
and GDX, have approximately 275 million shares and 395 million shares 
outstanding, and have an overlying options position limit of 500,000). 
The Exchange therefore believes it is reasonable and appropriate to 
increase the position limit of options as proposed to similar position 
limits that apply for certain ETPs.
---------------------------------------------------------------------------

    \22\ See Securities Exchange Act Release No. 40969 (January 22, 
1999), 64 FR 4911, 4913 (February 1, 1999) (SR-CBOE-98-23).
    \23\ See Securities Exchange Act Release Nos. 93525 (November 4, 
2021), 86 FR 62584 (November 10, 2021) (SR-CBOE-2021-029); 88768 
(April 29, 2020), 85 FR 26736 (May 5, 2020) (SR-CBOE-2020-015); 
83415 (June 12, 2018), 83 FR 28274 (June 18, 2018) (SR-CBOE-2018-
042); and 68086 (October 23, 2012), 77 FR 65600 (October 29, 2012) 
(SR-CBOE-2012-066).
    \24\ See Securities Exchange Act Release Nos. 93525 (November 4, 
2021), 86 FR 62584 (November 10, 2021) (SR-CBOE-2021-029); 88768 
(April 29, 2020), 85 FR 26736 (May 5, 2020) (SR-CBOE-2020-015); 
83415 (June 12, 2018), 83 FR 28274 (June 18, 2018) (SR-CBOE-2018-
042); and 68086 (October 23, 2012), 77 FR 65600 (October 29, 2012) 
(SR-CBOE-2012-066).
    \25\ There is also a corresponding recent six-month volume of 
the underlying security requirement that must be satisfied in 
addition to the requirement relating to total outstanding shares.
    \26\ There is also a corresponding recent six-month volume of 
the underlying security requirement that must be satisfied in 
addition to the requirement relating to total outstanding shares.
---------------------------------------------------------------------------

    Finally, as discussed above, the Exchange's surveillance and 
reporting safeguards continue to be designed to deter and detect 
possible manipulative behavior that might arise from increasing or 
eliminating position and exercise limits in certain classes. The 
Exchange believes that the current financial requirements imposed by 
the Exchange and by the Commission adequately address concerns 
regarding potentially large, unhedged positions in the options on the 
underlying securities, further promoting just and equitable principles 
of trading, the maintenance of a fair and orderly market, and the 
protection of investors.

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 Exchange does not believe that the proposed rule change will 
impose any burden on intra-market competition as the rules of the 
Exchange apply equally to all TPHs of the Exchange and all TPHs of the 
Exchange are required to adhere to the position limits established by 
the Exchange's rules. The Exchange believes that the proposed rule 
change will also provide additional opportunities for market 
participants to continue to efficiently achieve their investment and 
trading objectives for equity options on the Exchange.
    The Exchange does not believe that the proposed rule change will 
impose any burden on inter-market competition as the proposal is not 
competitive in

[[Page 86705]]

nature. The Exchange expects that all option exchanges will adopt 
substantively similar proposals for adopting the additional position 
limit tiers, such that the Exchange's proposal would benefit 
competition. For these reasons, the Exchange does not believe that the 
proposed rule change will impose any burden on competition not 
necessary or appropriate in furtherance of the purposes of the Act.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. by order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CBOE-2023-063 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-2023-063. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CBOE-2023-063 and should be 
submitted on or before January 4, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27397 Filed 12-13-23; 8:45 am]
BILLING CODE 8011-01-P