[Federal Register Volume 85, Number 78 (Wednesday, April 22, 2020)]
[Notices]
[Pages 22507-22509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08494]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88673; File No. SR-CBOE-2020-035]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Renew
an Existing Pilot Program Until November 2, 2020
April 16, 2020.
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 April 13, 2020, 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 November 2, 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 [May
4]November 2, 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
[[Page 22508]]
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 May 4, 2020. 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 Exchange hereby proposes to extend the Program until
November 2, 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), 83 FR 56119 (November 9, 2018) (SR-CBOE-2018-070) (extending
the Program through May 6, 2019); 85650 (April 15, 2019), 84 FR
16552 (April 19, 2019) (SR-CBOE-2019-022) (extending the Program
through November 4, 2019); and 87462 (November 5, 2019), 84 FR 61108
(November 12, 2019) (SR-CBOE-2019-104) (extending the Program
through May 4, 2020).
\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 makes
public all data and analyses previously submitted to the Commission
under the Program,\11\ and will make public any data and analyses it
makes to the Commission under the Program in the future.
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\11\ Available at https://www.cboe.com/aboutcboe/legal-regulatory/national-market-system-plans/non-standard-expiration-data.
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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.\12\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \13\ 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) \14\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ 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 \15\ and subparagraph (f)(6) of Rule 19b-4
thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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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[[Page 22509]]
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \17\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \18\ 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 Program prior to its expiration on May 4, 2020, 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
Program to continue uninterrupted, thereby avoiding investor confusion
that could result from a temporary interruption in the Program.
Accordingly, the Commission hereby waives the operative delay and
designates the proposed rule change operative upon filing.\19\
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6)(iii).
\19\ 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 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-2020-035 on the subject line. HD2>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-2020-035. 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-2020-035, and should be submitted
on or before May 13, 2020.
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\20\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-08494 Filed 4-21-20; 8:45 am]
BILLING CODE 8011-01-P