[Federal Register Volume 89, Number 138 (Thursday, July 18, 2024)]
[Notices]
[Pages 58442-58444]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15769]



[[Page 58442]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100520; File No. SR-CBOE-2024-030]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Strike Interval for Options on SPDR[supreg] Gold Shares

July 12, 2024.
    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 July 1, 2024, 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 strike interval for options on SPDR[supreg] Gold Shares 
(``GLD''). The text of the proposed rule change is provided below.]

(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 4.5. Series of Option Contracts Open for Trading
* * * * *
Interpretations and Policies
* * * * *
    .07
* * * * *
    (b) Notwithstanding Interpretation and Policy .01 and 
Interpretation and Policy .07(a) above, the interval between strike 
prices of series of options on Units of the Standard & Poor's 
Depository Receipts Trust (``SPY''), iShares S&P 500 Index ETF 
(``IVV''), PowerShares QQQ Trust (``QQQ''), iShares Russell 2000 Index 
Fund (``IWM''), [and] The DIAMONDS Trust (``DIA''), and SPDR[supreg] 
Gold Shares (``GLD'') will be $1 or greater.
* * * * *
    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
    The Exchange proposes to amend Rule 4.5, ``Series of Options 
Contracts Open for Trading.'' Specifically, the Exchange proposes to 
amend Rule 4.5, Interpretation and Policy .07(b) to allow for the 
interval between strike prices of series of options on Exchange-Traded 
Fund Shares (``ETFs'' or ``Units'') of SPDR[supreg] Gold Shares or 
``GLD'' to be $1 or greater, including where the strike price is 
greater than $200.
    Currently Rule 4.5, Interpretation and Policy .07(a) provides that,

    Notwithstanding Interpretation and Policy .01 above, and except 
for options on Units covered under Interpretation and Policies .05 
and .06 above, the interval between strike prices of series of 
options on Units, as defined under Interpretation and Policy .06 to 
Rule 4.3, will be $1 or greater where the strike price is $200 or 
less and $5.00 or greater where the strike price is greater than 
$200. For options on Units that are used to calculate a volatility 
index, the Exchange may open for trading $0.50 strike price 
intervals as provided for in Interpretation and Policy .15 to this 
Rule 4.5.

    Further, current Rule 4.5, Interpretation and Policy .07(b) 
provides that the interval between strike prices of series of options 
on Units of the SPDR S&P 500 ETF (``SPY''), iShares Core S&P 500 ETF 
(``IVV''), PowerShares QQQ Trust (``QQQ''), iShares Russell 2000 Index 
Fund (``IWM''), and The DIAMONDS Trust (``DIA'') will be $1 or greater. 
At this time, the Exchange proposes to modify the interval setting 
regime to be $1 or greater for GLD options, similar to SPY, IVV, QQQ, 
IWM and DIA. The Exchange believes that the proposed rule change would 
make GLD options easier for investors and traders to use and more 
tailored to their investment needs. GLD is an Exchange-Traded Fund 
Share designed to closely track the price and performance of the price 
of gold bullion. GLD is widely quoted as an indicator of gold stock 
prices and is a significant indicator of overall economic health. 
Investors use GLD to diversify their portfolios and benefit from market 
trends. Additionally, GLD is a leading product in its asset class that 
trades within a ``complex'' where, in addition to the underlying 
security, there are multiple instruments available for hedging such as, 
COMEX Gold Futures; Gold Daily Futures; iShares GOLD Trust; SPDR GOLD 
Minishares Trust; Aberdeen Physical Gold Trust; and GraniteShares Gold 
Shares. Accordingly, the Exchange believes that offering a wider base 
of GLD options affords traders and investors important hedging and 
trading opportunities, particularly in the midst of current price 
trends. The Exchange believes that not having the proposed $1 strike 
price intervals above $200 in GLD significantly constricts investors' 
hedging and trading possibilities. The Exchange therefore believes that 
by having smaller strike intervals in GLD, investors would have more 
efficient hedging and trading opportunities due to the lower $1 
interval ascension. The proposed $1 interval above the $200 strike 
price, will result in having at-the-money series based upon the 
underlying ETF moving less than 1%. The Exchange believes that the 
proposed strike setting regime is in line with the slower movements of 
broad-based indices. Considering the fact that $1 intervals already 
exist below the $200 price point and that GLD have consistently 
inclined in price toward the $200 level, the Exchange believes that 
continuing to maintain the current $200 level (above which intervals 
increase 500% to $5), may have a negative effect on investing, trading 
and hedging opportunities, and volume. The Exchange believes that the 
investing, trading, and hedging opportunities available with GLD 
options far outweighs any potential negative impact of allowing GLD 
options to trade in more finely tailored intervals above the $200 price 
point. The proposed strike setting regime would permit strikes to be 
set to more closely reflect the

[[Page 58443]]

increasing value in the underlying and allows investors and traders to 
roll open positions from a lower strike to a higher strike in 
conjunction with the price movements of the underlying ETF. Under the 
current rule, where the next higher available series would be $5 away 
above a $200 strike price, the ability to roll such positions would be 
impaired. Accordingly, to move a position from a $200 strike to a $205 
strike under the current rule, an investor would need for the 
underlying product to move 2.5%, and would not be able to execute a 
roll up until such a large movement occurred. The Exchange believes 
that with the proposed rule change, the investor would be in a 
significantly safer position of being able to roll his open options 
position from a $200 to a $201 strike price, which is only a 0.5% move 
for the underlying. As a result, the proposed rule change will allow 
the Exchange to better respond to customer demand for GLD strike price 
more precisely aligned with the smaller, longer-term incremental 
increases in the underlying ETF. The Exchange believes that the 
proposed rule change, like the other strike price programs currently 
offered by the Exchange, will benefit investors by providing investors 
the flexibility to more closely tailor their investment and hedging 
decisions using GLD options. Moreover, by allowing series of GLD 
options to be listed in $1 intervals between strike prices over $200, 
the proposal will moderately augment the potential total number of 
options series available on the Exchange. However, the Exchange 
believes it and the Options Price Reporting Authority (``OPRA'') have 
the necessary systems capacity to handle any potential additional 
traffic associated with this proposed rule change. The Exchange also 
believes that Trading Permit Holders (``TPHs'') will not have a 
capacity issue due to the proposed rule change. In addition, the 
Exchange represents that it does not believe that this expansion will 
cause fragmentation of liquidity, but rather, believes that finer 
strike intervals will serve to increase liquidity available as well as 
price efficiency by providing more trading opportunities for all market 
participants.
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.\5\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \6\ 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) \7\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange also believes the proposed rule 
change is consistent with Section 6(b)(1) of the Act,\8\ which provides 
that the Exchange be organized and have the capacity to be able to 
carry out the purposes of the Act and to enforce compliance by the 
Exchange's TPHs and persons associated with its TPHs with the Act, the 
rules and regulations thereunder, and the rules of the Exchange.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ Id.
    \8\ 15 U.S.C. 78f(b)(1).
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    In particular, the proposed rule change will allow investors to 
more easily use GLD options. Moreover, the proposed rule change would 
allow investors to better trade and hedge positions in GLD options 
where the strike price is greater than $200, and ensure that investors 
in both options are not at a disadvantage simply because of the strike 
price. The Exchange believes the proposed rule change is consistent 
with Section 6(b)(1) of the Act, which provides that the Exchange be 
organized and have the capacity to be able to carry out the purposes of 
the Act and the rules and regulations thereunder, and the rules of the 
Exchange. The proposal allows the Exchange to respond to customer 
demand to allow GLD options to trade in $1 intervals above a $200 
strike price. The Exchange does not believe that the proposed rule 
would create additional capacity issues or affect market functionality. 
As noted above, ETF options trade in wider $5 intervals above a $200 
strike price, whereby options at or below a $200 strike price trade in 
$1 intervals. This creates a situation where contracts on the same 
option class effectively may not be able to execute certain strategies 
such as, for example, rolling to a higher strike price, simply because 
of the $200 strike price above which options intervals increase by 
500%. This proposal remedies the situation by establishing an exception 
to the current ETF interval regime for GLD options to allow such 
options to trade in $1 or greater intervals at all strike prices.
    The Exchange believes that the proposed rule change, like other 
strike price programs currently offered by the Exchange, will benefit 
investors by giving them increased flexibility to more closely tailor 
their investment and hedging decisions. By way of example, GLD is a 
leading product in its asset class and it trades within a ``complex'' 
where, in addition to the underlying security, there are multiple 
instruments available for hedging such as, COMEX Gold Futures; Gold 
Daily Futures; iShares GOLD Trust; SPDR GOLD Minishares Trust; Aberdeen 
Physical Gold Trust; and GraniteShares Gold Shares.
    With regard to the impact of this proposal on system capacity, the 
Exchange believes it and OPRA have the necessary systems capacity to 
handle any potential additional traffic associated with this proposed 
rule change. The Exchange believes that its TPHs will not have a 
capacity issue as a result of this proposal. Further, the Exchange does 
not believe the proposal does not unfairly discriminate among market 
participants, as all market participants will be treated in the same 
manner under this proposal.
    Finally, the Exchange notes the proposed rule change is 
substantively the same as a rule change proposed by Nasdaq ISE, LLC 
(``ISE'') which the Commission recently approved.\9\
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    \9\ See Securities Exchange Act Release No. 100447 (June 28, 
2024) (SR-ISE-2024-17).
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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. Rather, the Exchange 
believes that the proposed rule change will result in additional 
investment options and opportunities to achieve the investment and 
trading objectives of market participants seeking efficient trading and 
hedging vehicles, to the benefit of investors, market participants, and 
the marketplace in general. Specifically, the Exchange believes that 
GLD options investors and traders will significantly benefit from the 
availability of finer strike price intervals above a $200 price point. 
In addition, the interval setting regime the

[[Page 58444]]

Exchange proposes to apply to GLD options is currently applied to SPY, 
IVV, QQQ, IWM and DIA options, which are similarly popular and widely 
traded ETF products and track indexes at similarly high price levels. 
Thus, the proposed strike setting regime for GLD options will allow 
options on this an actively traded ETF with index levels at 
corresponding price levels to trade pursuant to the same strike setting 
regime. This will permit investors to employ similar investment and 
hedging strategies for each of these options.
    The Exchange does not believe the proposal will impose any burden 
on inter-market competition, as nothing prevents other options 
exchanges from proposing similar rules to make a finer strike price 
intervals above a $200 price point available for GLD options. The 
Exchange notes that the proposed rule change is not a novel proposal, 
as the Commission recently approved a substantively identical proposal 
of another exchange.\10\ Further, the Exchange does not believe the 
proposal will impose any burden on intramarket competition, as all 
market participants will be treated in the same manner under this 
proposal.
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    \10\ See Securities Exchange Act Release No. 100447 (June 28, 
2024) (SR-ISE-2024-17).
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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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
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 \13\ and subparagraph (f)(6) of 
Rule 19b-4 thereunder.\14\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 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 Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. According to 
the Exchange, the proposed rule change is a competitive response to a 
filing submitted by ISE that was recently approved by the 
Commission.\17\ The Exchange has stated that waiver of the 30-day 
operative delay would allow the Exchange to implement the proposal at 
the same time as its competitor exchange, thus creating competition 
among GLD options. The Commission believes that the proposed rule 
change presents no novel issues and that waiver of the 30-day operative 
delay is consistent with the protection of investors and the public 
interest. Accordingly, the Commission hereby waives the operative delay 
and designates the proposed rule change as operative upon filing.\18\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ See supra note 9.
    \18\ 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 shall institute proceedings to 
determine whether the proposed rule 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CBOE-2024-030 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-2024-030. 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-2024-030 and should be 
submitted on or before August 8, 2024.

    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), (59).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15769 Filed 7-17-24; 8:45 am]
BILLING CODE 8011-01-P