Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Amending Rule 5.5.04 To Permit the Exchange To List Additional Strike Prices Until the Close of Trading on the Second Business Day Prior to Monthly Expiration in Unusual Market Conditions, 3065-3067 [2013-00610]
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Federal Register / Vol. 78, No. 10 / Tuesday, January 15, 2013 / Notices
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:
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NYSE–2012–80 on the
subject line.
Paper Comments
srobinson on DSK4SPTVN1PROD with
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSE–2012–80. 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 Web site (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 Web site 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;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–NYSE–
2012–80 and should be submitted on or
before February 5, 2013.
17:00 Jan 14, 2013
[FR Doc. 2013–00679 Filed 1–14–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
VerDate Mar<15>2010
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
Jkt 229001
[Release No. 34–68606; File No. SR–CBOE–
2012–131]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Amending Rule 5.5.04 To
Permit the Exchange To List Additional
Strike Prices Until the Close of Trading
on the Second Business Day Prior to
Monthly Expiration in Unusual Market
Conditions
January 9, 2013.
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 December
28, 2012, the Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’) 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 which
renders the proposal effective upon
filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CBOE proposes to amend
Interpretation and Policy .04 to CBOE
Rule 5.5 to permit the Exchange to list
additional strike prices until the close of
trading on the second business day prior
to the expiration of a monthly, or
standard, option in the event of unusual
market conditions. The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.cboe.org/legal), at the Exchange’s
10 17
CFR 200.30–3(a)(12).
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).
1 15
PO 00000
Frm 00127
Fmt 4703
Sfmt 4703
3065
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
self-regulatory organization 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 those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to amend
Interpretation and Policy .04 to CBOE
Rule 5.5 to permit the Exchange to add
additional strikes until the close of
trading on the second business day prior
to a monthly expiration in the event of
unusual market conditions.
This is a competitive filing that is
based on two recently approved filings
submitted by NYSE MKT LLC (‘‘NYSE
MKT’’) and NYSE, Arca, Inc. (‘‘NYSE
Arca’’).5 The NYSE MKT and NYSE
Arca filings both made changes to their
respective rules governing the last day
on which strikes may be added for
individual stock and exchange-traded
fund (‘‘ETF’’) options. Similar to CBOE
Rule 5.5.04, NYSE MKT and NYSE Arca
had rules that permitted the opening of
additional series of individual stock and
ETF options until the first calendar day
of the month in which the option
expires or until the fifth business day
prior to expiration if unusual market
conditions exist. NYSE MKT and NYSE
Arca both amended their rules to permit
the opening of additional series of
individual stocks and ETF options until
the close of trading on the second
business day prior to the expiration of
a monthly, or standard, option in the
event of unusual market conditions.
Options market participants generally
prefer to focus their trading in strike
prices that immediately surround the
price of the underlying security.
However, if the price of the underlying
stock or ETF moves significantly, there
5 See Securities Exchange Act Release Nos. 68460
(December 18, 2012), (SR–NYSEMKT–2012–41)
(approval order) (‘‘NYSE MKT filing’’) and 68461
(December 18, 2012) (SR–NYSEArca–2012–94)
(approval order) (‘‘NYSE Arca filing’’).
E:\FR\FM\15JAN1.SGM
15JAN1
srobinson on DSK4SPTVN1PROD with
3066
Federal Register / Vol. 78, No. 10 / Tuesday, January 15, 2013 / Notices
may be a market need for additional
strike prices to adequately account for
market participants’ risk management
needs in a stock or ETF. In these
situations, the Exchange has the ability
to add additional series at strike prices
that are better tailored to the risk
management needs of market
participants. The Exchange may make
the determination to open additional
series for trading when the Exchange
deems it necessary to maintain an
orderly market, to meet customer
demand, or when the market price of
the underlying stock or ETF moves more
than five strike prices from the initial
exercise price or prices.6
If the market need occurs prior to five
business days prior to expiration, then
the market participants may have access
to an option contract that is more
tailored to the movement in the
underlying stock or ETF. Under current
CBOE Rule 5.5.04, however, the
Exchange is unable to open additional
series in response to unusual market
conditions that occur between five to
two days prior to expiration and market
participants may be left without a
contract that is tailored to manage their
risk. Because of the current five-daysbefore expiration restriction, investors
may be unable to tailor their hedging
activities in options and effectively
manage their risk going into expiration.
The Exchange proposes to permit the
listing of additional strikes until the
close of trading on the second business
day prior to expiration in unusual
market conditions. Since expiration of
standard options on individual stocks
and ETFs is on a Saturday, the close of
trading on the second business day prior
to expiration will typically fall on a
Thursday. However, in the cases where
Friday is a holiday during which the
Exchange is closed, the close of trading
on the second business day will occur
on a Wednesday. The Exchange will
continue to make the determination to
open additional series for trading when
the Exchange deems it necessary to
maintain an orderly market, to meet
customer demand, or when certain price
movements take place in the underlying
market. The proposed change will
provide an additional four days to the
Exchange to gauge market impact of the
underlying stock or ETF and to react to
any market conditions that would
render additional series prior to
expiration beneficial to market
participants. The Exchange believes that
the impact on the market from the
proposed change will be very minimal
to market participants; however, it will
be extremely beneficial when unusual
6 See
CBOE Rule 5.5(c).
VerDate Mar<15>2010
17:00 Jan 14, 2013
Jkt 229001
market conditions occur during the five
to two days leading up to expiration. As
a result, the proposal would allow
participants to adjust their risk exposure
when an unusual market event occurred
on trading days 2, 3, 4, 5 prior to
expiration.
This proposal does not raise any
capacity concerns on the Exchange,
because the changes have no material
difference in impact from the current
rules. The Exchange notes the proposed
change allows for new strikes that
would otherwise be permitted to add
under existing rules either on the fifth
day prior or immediately after
expiration.7 A strike which opens two
days prior to expiration will have
minimal impact on quoting, as it adds
two series out of hundreds of thousands,
and only for a small number of days.8
Thus, any additional strikes that may be
added under the proposed change
would have no measurable effect on
systems capacity.
The Exchange understands that The
Options Clearing Corporation (‘‘OCC’’)
is able to accommodate the proposal
and would have no operational
concerns with adding new series on any
day except the last day of trading an
expiring series.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder, including the requirements
of Section 6(b) of the Act.9 In particular,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 10 requirements that the rules of
an exchange be designed to promote just
and equitable principles of trade, to
prevent fraudulent and manipulative
acts, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to and to perfect
the mechanism for a free and open
market and a national market system,
and, in general, to protect investors and
the public interest.
The Exchange believes that providing
an additional four days to the Exchange
to gauge market impact and to react to
any market conditions prior to
expiration is beneficial and will result
7 Any new strikes added under this proposal
would be added in a manner consistent with the
range limitations described in CBOE Rule 5.5A.
8 In the case of a multi-stock event where
multiple stocks may be subject to unusual market
conditions, a strike which opens two days prior to
expiration will also have minimal impact on
quoting, as it adds two series per stock out of
hundreds of thousands, and only for a small
number of days.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00128
Fmt 4703
Sfmt 4703
in a continuing benefit to investors by
giving them more flexibility to closely
tailor their investment decisions and
hedging decisions prior to expiration.
The Exchange also believes that the
additional four days will provide the
investing public and other market
participants with additional
opportunities to hedge their investment
thus allowing these investors to better
manage their risk exposure with
additional in the money series. While
the four additional days may generate
additional quote traffic, the Exchange
does not believe that this increased
traffic will become unmanageable since
the proposal remains limited to the
narrow situations when an unusual
market event occurred on trading days
2, 3, 4, 5 prior to expiration. The
Exchange also believes that the
proposed rule change will ensure
competition because CBOE will be able
to list additional equity and ETF series
up the second day before expiration in
the same manner that NYSE MKT and
NYSE Arca are currently able to do.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
This proposed rule change does not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
In this regard and as indicated above,
the Exchange notes that the rule change
is being proposed as a competitive
response to recently approved NYSE
MKT and NYSE Arca. CBOE believes
this proposed rule change is necessary
to permit fair competition among the
options exchanges.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
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 if
consistent with the protection of
investors and the public interest,
provided that the self-regulatory
organization has given the Commission
written notice of its intent to file the
proposed rule change at least five
business days prior to the date of filing
E:\FR\FM\15JAN1.SGM
15JAN1
Federal Register / Vol. 78, No. 10 / Tuesday, January 15, 2013 / Notices
of the proposed rule change or such
shorter time as designated by the
Commission, the proposed rule change
has become effective pursuant to
Section 19(b)(3)(A) of the Act 11 and
Rule 19b–4(f)(6) thereunder.12
The Exchange has requested that the
Commission waive the 30-day operative
delay. The Commission believes that
waiver of the operative delay is
consistent with the protection of
investors and the public interest
because the proposal is substantially
similar to those of other exchanges that
have been approved by the Commission
and would allow CBOE, also, to add
additional strikes until the close of
trading on the second business day prior
to a monthly expiration in the event of
unusual market conditions.13 Therefore,
the Commission designates the proposal
operative upon filing.14
At any time within 60 days of the
filing of such proposed rule change, the
Commission may summarily abrogate
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.
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 rulecomments@sec.gov. Please include File
Number SR–CBOE–2012–131 on the
subject line.
srobinson on DSK4SPTVN1PROD with
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–CBOE–2012–131. 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
11 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
13 See supra, note 5.
14 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
12 17
VerDate Mar<15>2010
18:16 Jan 14, 2013
Jkt 229001
3067
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (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 Web site 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 such
filing also will be available for
inspection and copying at the principal
office of the CBOE. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–CBOE–
2012–131 and should be submitted on
or before February 5, 2013.
imported from abroad for temporary
exhibition within the United States, are
of cultural significance. The objects are
imported pursuant to loan agreements
with the foreign owners or custodians.
I also determine that the exhibition or
display of the exhibit objects at The J.
Paul Getty Museum, Los Angeles, CA,
from on or about March 5, 2013, until
on or about June 9, 2013, and at possible
additional exhibitions or venues yet to
be determined, is in the national
interest. I have ordered that Public
Notice of these Determinations be
published in the Federal Register.
FOR FURTHER INFORMATION CONTACT: For
further information, including a list of
the exhibit objects, contact Julie
Simpson, Attorney-Adviser, Office of
the Legal Adviser, U.S. Department of
State (telephone: 202–632–6467). The
mailing address is U.S. Department of
State, SA–5, L/PD, Fifth Floor (Suite
5H03), Washington, DC 20522–0505.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Kevin M. O’Neill,
Deputy Secretary.
DEPARTMENT OF TRANSPORTATION
[FR Doc. 2013–00610 Filed 1–14–13; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice 8153]
Culturally Significant Objects Imported
for Exhibition Determinations:
‘‘Looking East: Rubens’s Encounter
With Asia’’
Notice is hereby given of the
following determinations: Pursuant to
the authority vested in me by the Act of
October 19, 1965 (79 Stat. 985; 22 U.S.C.
2459), Executive Order 12047 of March
27, 1978, the Foreign Affairs Reform and
Restructuring Act of 1998 (112 Stat.
2681, et seq.; 22 U.S.C. 6501 note, et
seq.), Delegation of Authority No. 234 of
October 1, 1999, Delegation of Authority
No. 236–3 of August 28, 2000 (and, as
appropriate, Delegation of Authority No.
257 of April 15, 2003), I hereby
determine that the objects to be
included in the exhibition ‘‘Looking
East: Rubens’s Encounter with Asia,’’
SUMMARY:
15 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00129
Fmt 4703
Sfmt 4703
Dated: January 8, 2013.
J. Adam Ereli,
Principal Deputy Assistant Secretary, Bureau
of Educational and Cultural Affairs,
Department of State.
[FR Doc. 2013–00721 Filed 1–14–13; 8:45 am]
BILLING CODE 4710–05–P
Office of the Secretary
Applications for Certificates of Public
Convenience and Necessity and
Foreign Air Carrier Permits
Notice of Applications for Certificates
of Public Convenience and Necessity
and Foreign Air Carrier Permits Filed
Under Subpart B (formerly Subpart Q)
during the Week Ending December 29,
2012. The following Applications for
Certificates of Public Convenience and
Necessity and Foreign Air Carrier
Permits were filed under Subpart B
(formerly Subpart Q) of the Department
of Transportation’s Procedural
Regulations (See 14 CFR 301.201 et.
seq.). The due date for Answers,
Conforming Applications, or Motions to
Modify Scope are set forth below for
each application. Following the Answer
period DOT may process the application
by expedited procedures. Such
procedures may consist of the adoption
of a show-cause order, a tentative order,
or in appropriate cases a final order
without further proceedings.
Docket Number: DOT–OST–2012–
0219.
Date Filed: December 27, 2012.
Due Date for Answers, Conforming
Applications, or Motion to Modify
Scope: January 17, 2012.
E:\FR\FM\15JAN1.SGM
15JAN1
]]>Agencies
[Federal Register Volume 78, Number 10 (Tuesday, January 15, 2013)]
[Notices]
[Pages 3065-3067]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-00610]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68606; File No. SR-CBOE-2012-131]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Amending Rule 5.5.04 To Permit the Exchange To
List Additional Strike Prices Until the Close of Trading on the Second
Business Day Prior to Monthly Expiration in Unusual Market Conditions
January 9, 2013.
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 December 28, 2012, the Chicago Board Options Exchange,
Incorporated (the ``Exchange'' or ``CBOE'') 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\
which renders the proposal effective upon filing with the Commission.
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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CBOE proposes to amend Interpretation and Policy .04 to CBOE Rule
5.5 to permit the Exchange to list additional strike prices until the
close of trading on the second business day prior to the expiration of
a monthly, or standard, option in the event of unusual market
conditions. The text of the proposed rule change is available on the
Exchange's Web site (https://www.cboe.org/legal), 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 self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to amend Interpretation and Policy
.04 to CBOE Rule 5.5 to permit the Exchange to add additional strikes
until the close of trading on the second business day prior to a
monthly expiration in the event of unusual market conditions.
This is a competitive filing that is based on two recently approved
filings submitted by NYSE MKT LLC (``NYSE MKT'') and NYSE, Arca, Inc.
(``NYSE Arca'').\5\ The NYSE MKT and NYSE Arca filings both made
changes to their respective rules governing the last day on which
strikes may be added for individual stock and exchange-traded fund
(``ETF'') options. Similar to CBOE Rule 5.5.04, NYSE MKT and NYSE Arca
had rules that permitted the opening of additional series of individual
stock and ETF options until the first calendar day of the month in
which the option expires or until the fifth business day prior to
expiration if unusual market conditions exist. NYSE MKT and NYSE Arca
both amended their rules to permit the opening of additional series of
individual stocks and ETF options until the close of trading on the
second business day prior to the expiration of a monthly, or standard,
option in the event of unusual market conditions.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release Nos. 68460 (December 18,
2012), (SR-NYSEMKT-2012-41) (approval order) (``NYSE MKT filing'')
and 68461 (December 18, 2012) (SR-NYSEArca-2012-94) (approval order)
(``NYSE Arca filing'').
---------------------------------------------------------------------------
Options market participants generally prefer to focus their trading
in strike prices that immediately surround the price of the underlying
security. However, if the price of the underlying stock or ETF moves
significantly, there
[[Page 3066]]
may be a market need for additional strike prices to adequately account
for market participants' risk management needs in a stock or ETF. In
these situations, the Exchange has the ability to add additional series
at strike prices that are better tailored to the risk management needs
of market participants. The Exchange may make the determination to open
additional series for trading when the Exchange deems it necessary to
maintain an orderly market, to meet customer demand, or when the market
price of the underlying stock or ETF moves more than five strike prices
from the initial exercise price or prices.\6\
---------------------------------------------------------------------------
\6\ See CBOE Rule 5.5(c).
---------------------------------------------------------------------------
If the market need occurs prior to five business days prior to
expiration, then the market participants may have access to an option
contract that is more tailored to the movement in the underlying stock
or ETF. Under current CBOE Rule 5.5.04, however, the Exchange is unable
to open additional series in response to unusual market conditions that
occur between five to two days prior to expiration and market
participants may be left without a contract that is tailored to manage
their risk. Because of the current five-days-before expiration
restriction, investors may be unable to tailor their hedging activities
in options and effectively manage their risk going into expiration.
The Exchange proposes to permit the listing of additional strikes
until the close of trading on the second business day prior to
expiration in unusual market conditions. Since expiration of standard
options on individual stocks and ETFs is on a Saturday, the close of
trading on the second business day prior to expiration will typically
fall on a Thursday. However, in the cases where Friday is a holiday
during which the Exchange is closed, the close of trading on the second
business day will occur on a Wednesday. The Exchange will continue to
make the determination to open additional series for trading when the
Exchange deems it necessary to maintain an orderly market, to meet
customer demand, or when certain price movements take place in the
underlying market. The proposed change will provide an additional four
days to the Exchange to gauge market impact of the underlying stock or
ETF and to react to any market conditions that would render additional
series prior to expiration beneficial to market participants. The
Exchange believes that the impact on the market from the proposed
change will be very minimal to market participants; however, it will be
extremely beneficial when unusual market conditions occur during the
five to two days leading up to expiration. As a result, the proposal
would allow participants to adjust their risk exposure when an unusual
market event occurred on trading days 2, 3, 4, 5 prior to expiration.
This proposal does not raise any capacity concerns on the Exchange,
because the changes have no material difference in impact from the
current rules. The Exchange notes the proposed change allows for new
strikes that would otherwise be permitted to add under existing rules
either on the fifth day prior or immediately after expiration.\7\ A
strike which opens two days prior to expiration will have minimal
impact on quoting, as it adds two series out of hundreds of thousands,
and only for a small number of days.\8\ Thus, any additional strikes
that may be added under the proposed change would have no measurable
effect on systems capacity.
---------------------------------------------------------------------------
\7\ Any new strikes added under this proposal would be added in
a manner consistent with the range limitations described in CBOE
Rule 5.5A.
\8\ In the case of a multi-stock event where multiple stocks may
be subject to unusual market conditions, a strike which opens two
days prior to expiration will also have minimal impact on quoting,
as it adds two series per stock out of hundreds of thousands, and
only for a small number of days.
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The Exchange understands that The Options Clearing Corporation
(``OCC'') is able to accommodate the proposal and would have no
operational concerns with adding new series on any day except the last
day of trading an expiring series.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder, including the
requirements of Section 6(b) of the Act.\9\ In particular, the Exchange
believes the proposed rule change is consistent with the Section
6(b)(5) \10\ requirements that the rules of an exchange be designed to
promote just and equitable principles of trade, to prevent fraudulent
and manipulative acts, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and to perfect the mechanism for a free and open market
and a national market system, and, in general, to protect investors and
the public interest.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that providing an additional four days to the
Exchange to gauge market impact and to react to any market conditions
prior to expiration is beneficial and will result in a continuing
benefit to investors by giving them more flexibility to closely tailor
their investment decisions and hedging decisions prior to expiration.
The Exchange also believes that the additional four days will provide
the investing public and other market participants with additional
opportunities to hedge their investment thus allowing these investors
to better manage their risk exposure with additional in the money
series. While the four additional days may generate additional quote
traffic, the Exchange does not believe that this increased traffic will
become unmanageable since the proposal remains limited to the narrow
situations when an unusual market event occurred on trading days 2, 3,
4, 5 prior to expiration. The Exchange also believes that the proposed
rule change will ensure competition because CBOE will be able to list
additional equity and ETF series up the second day before expiration in
the same manner that NYSE MKT and NYSE Arca are currently able to do.
B. Self-Regulatory Organization's Statement on Burden on Competition
This proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. In this regard and as indicated above, the Exchange notes that
the rule change is being proposed as a competitive response to recently
approved NYSE MKT and NYSE Arca. CBOE believes this proposed rule
change is necessary to permit fair competition among the options
exchanges.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule 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 if consistent with the protection of
investors and the public interest, provided that the self-regulatory
organization has given the Commission written notice of its intent to
file the proposed rule change at least five business days prior to the
date of filing
[[Page 3067]]
of the proposed rule change or such shorter time as designated by the
Commission, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6)
thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
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The Exchange has requested that the Commission waive the 30-day
operative delay. The Commission believes that waiver of the operative
delay is consistent with the protection of investors and the public
interest because the proposal is substantially similar to those of
other exchanges that have been approved by the Commission and would
allow CBOE, also, to add additional strikes until the close of trading
on the second business day prior to a monthly expiration in the event
of unusual market conditions.\13\ Therefore, the Commission designates
the proposal operative upon filing.\14\
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\13\ See supra, note 5.
\14\ For purposes only of waiving the 30-day operative delay,
the Commission 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 such proposed rule
change, the Commission may summarily abrogate 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.
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 rule-comments@sec.gov. Please include
File Number SR-CBOE-2012-131 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2012-131. 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 Web site (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 Web site 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 such filing also will be available
for inspection and copying at the principal office of the CBOE. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2012-131 and should be
submitted on or before February 5, 2013.
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\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-00610 Filed 1-14-13; 8:45 am]
BILLING CODE 8011-01-P
