Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving a Proposal To Amend Rule 24.7 To Add Factors for Determining Whether To Halt Volatility Index Options Trading, 60981-60982 [2013-24015]

Download as PDF Federal Register / Vol. 78, No. 191 / Wednesday, October 2, 2013 / Notices what the fees for such services will be (thereby eliminating any possible confusion). The Exchange believes that these fee amounts are reasonable because they reflect the amounts necessary to perform such services (and indeed, are the amounts assessed by electricians for such services). The Exchange believes that these fees are equitable and not unfairly discriminatory because they will apply to all TPHs equally. The Exchange believes that the proposal to delete the erroneous listing of the letter ‘‘M’’ from the ‘‘Origin Code’’ column of [sic] next to the ‘‘Electronic Access Permit’’ and ‘‘CBSX Trading Permit’’ rows of the Trading Permit and Tier Appointment Fees table of the Fees Schedule will eliminate possible investor confusion, thereby removing impediments to and perfecting the mechanism of a free and open market and a national market system. B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule changes 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 changes will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed changes apply to all TPHs equally, regardless of the type of market participant. The Exchange does does [sic] not believe that the proposed rule changes will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because these changes all apply to billing and fees that affect CBOE only (and not other exchanges). Further, to the extent that the proposed changes make CBOE more attractive to market participants on other exchanges, such market participants may elect to become CBOE market participants. tkelley on DSK3SPTVN1PROD with NOTICES 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 foregoing rule change has become effective pursuant to Section 19(b)(3)(A) VerDate Mar<15>2010 17:48 Oct 01, 2013 Jkt 232001 of the Act 11 and paragraph (f) of Rule 19b–4 12 thereunder. 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 will 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 (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CBOE–2013–090 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–2013–090. 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 Section, 100 F Street NE., Washington, DC 20549–1090 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the 11 15 12 17 PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). Frm 00166 Fmt 4703 Sfmt 4703 60981 filing will also 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–CBOE– 2013–090 and should be submitted on or before October 23, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–24013 Filed 10–1–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70524; File No. SR–CBOE– 2013–079] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving a Proposal To Amend Rule 24.7 To Add Factors for Determining Whether To Halt Volatility Index Options Trading September 26, 2013. I. Introduction On July 29, 2013, Chicago Board Options Exchange, Incorporated (‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend CBOE Rule 24.7 (Trading Halts, Suspensions, or Primary Market Closure) to add factors that may be considered when determining whether to halt trading in volatility index options. The proposed rule change was published for comment in the Federal Register on August 14, 2013.3 The Commission received no comment letters on the proposed rule change. This order approves the proposed rule change. II. Description of the Proposed Rule Change As described further below, CBOE Rule 24.7 sets forth several factors that CBOE may consider in determining whether to halt trading in an index 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 34– 70136 (August 8, 2013), 78 FR 49563 (‘‘Notice’’). 1 15 E:\FR\FM\02OCN1.SGM 02OCN1 60982 Federal Register / Vol. 78, No. 191 / Wednesday, October 2, 2013 / Notices option class. The Exchange proposes to amend CBOE Rule 24.7(a) to add additional factors that may be considered when determining whether to halt trading in volatility index options. First, CBOE proposes to amend CBOE Rule 24.7(a)(i), which permits consideration to be given to ‘‘the extent to which trading is not occurring in the stocks underlying the index[.]’’ Since volatility indexes are comprised of options, not stocks, CBOE proposes to amend CBOE Rule 24.7(a)(i) to permit consideration to be given (in determining whether to halt trading in a volatility index option class) to whether the component options in a volatility index are not trading.4 Similarly, the Exchange proposes to amend CBOE Rule 24.7(b) which sets forth factors that may be considered in determining whether to resume trading of a halted options class or series. The Exchange proposes to amend the factor regarding the ‘‘extent to which trading is occurring in stocks underlying the index’’ to also include options. Second, CBOE proposes to add a new factor (as subparagraph (iii) to CBOE Rule 24.7(a)) for consideration when determining whether to halt trading in volatility index options. Specifically, CBOE proposes to add a provision that would permit consideration to be given (in determining whether to halt trading in a volatility index option class) to whether the ‘‘current index level’’ 5 for a volatility index option is not available or the spot (cash) 6 value for a volatility index option is not available. Third, the Exchange is proposing to make technical changes to CBOE Rule 24.7(a), CBOE Rule 24.7(d) and CBOE Rule 24.7.01 to make numbering changes. III. Discussion and Commission’s Findings tkelley on DSK3SPTVN1PROD with NOTICES After careful review, the Commission finds that the proposed rule change is consistent with the requirements of Section 6 of the Act 7 and the rules and regulations thereunder applicable to a 4 As an example, consider the CBOE Volatility Index (‘‘VIX’’), which is comprised of S&P 500 Index (‘‘SPX’’) options. Under the proposal, the Exchange may consider whether to halt trading in VIX options if trading in SPX options were not occurring. See Notice, supra note 3, at 49563. 5 CBOE proposes to define the term ‘‘current index level’’ in new Interpretation and Policy .03 to Rule 24.7 to mean the implied forward level based on corresponding volatility index (security) futures prices. See Notice, supra note 3, at 49563. 6 In the Notice, CBOE stated that the spot (cash) value of a volatility index is an instantaneous measure of the expected volatility in 30 days. See Notice, supra note 3, at 49564. 7 15 U.S.C. 78f. VerDate Mar<15>2010 17:48 Oct 01, 2013 Jkt 232001 national securities exchange.8 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,9 which requires, among other things, that the Exchange’s rules 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 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. The Exchange proposes to amend CBOE Rule 24.7 to add additional factors that may be considered when determining whether to halt trading in volatility index options. CBOE Rule 24.7 is currently predicated on indexes being comprised of stocks and includes factors that may be considered by the Exchange when determining whether to halt trading based on the index components being comprised of stocks. The current proposal amends CBOE Rule 24.7(a) to account for indexes comprised of options and allows the Exchange to consider the following factors when determining whether to halt trading: (1) Whether the component options are not trading; (2) whether the ‘‘current index level’’ (as measured by the implied forward level based on volatility index (security) futures prices) is not available; or (3) whether the spot (cash) value for a volatility index is not available. The Commission notes that the proposed change is designed to allow the Exchange to consider additional factors when determining whether to halt or resume trading in volatility index options. The Commission believes that the proposed change would grant discretion to the Exchange to halt trading in an index option class if component options are not trading and/ or the current index level or spot (cash) value for a volatility index is not available. The Commission further believes that the proposal is designed to provide CBOE with discretion to protect the integrity of its marketplace by permitting it to consider additional factors that are specifically relevant to volatility index options when determining whether to halt or resume trading in those products. Accordingly, the Commission finds that the Exchange’s proposal is 8 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 9 15 U.S.C. 78f(b)(5). PO 00000 Frm 00167 Fmt 4703 Sfmt 4703 consistent with the Act, including Section 6(b)(5) thereof, in that it is designed to remove impediments to and perfect the mechanism of a free and open market, and in general, protect investors and the public interest. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,10 that the proposed rule change (SR–CBOE–2013– 079) be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–24015 Filed 10–1–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70521; File No. SR–FINRA– 2013–033] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change to Amend FINRA Rule 9217 (Violations Appropriate for Disposition Under Plan Pursuant to Securities Exchange Act Rule 19d–1(c)(2)) September 26, 2013. I. Introduction On July 24, 2013, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘Commission’’) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend FINRA Rule 9217 (Violations Appropriate for Disposition Under Plan Pursuant to Exchange Act Rule 19d–1(c)(2)). The proposed rule change was published for comment in the Federal Register on August 13, 2013.3 The Commission received two comments on the proposal.4 On September 17, 2013, 10 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 70131 (Aug. 7, 2013), 78 FR 49313 (‘‘Notice’’). 4 See Letter to the Commission from David T. Bellaire, Esq., Executive Vice President & General Counsel, Financial Services Institute (‘‘FSI’’), dated September 3, 2013. The Commission also received another comment letter which does not address the substance of the proposed rule change. See Letter to the Commission from John Frattellone, dated September 3, 2013. 11 17 E:\FR\FM\02OCN1.SGM 02OCN1

Agencies

[Federal Register Volume 78, Number 191 (Wednesday, October 2, 2013)]
[Notices]
[Pages 60981-60982]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-24015]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70524; File No. SR-CBOE-2013-079]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving a Proposal To Amend Rule 24.7 To Add 
Factors for Determining Whether To Halt Volatility Index Options 
Trading

September 26, 2013.

I. Introduction

    On July 29, 2013, Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend CBOE Rule 24.7 (Trading 
Halts, Suspensions, or Primary Market Closure) to add factors that may 
be considered when determining whether to halt trading in volatility 
index options. The proposed rule change was published for comment in 
the Federal Register on August 14, 2013.\3\ The Commission received no 
comment letters on the proposed rule change. This order approves the 
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 34-70136 (August 8, 
2013), 78 FR 49563 (``Notice'').
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II. Description of the Proposed Rule Change

    As described further below, CBOE Rule 24.7 sets forth several 
factors that CBOE may consider in determining whether to halt trading 
in an index

[[Page 60982]]

option class. The Exchange proposes to amend CBOE Rule 24.7(a) to add 
additional factors that may be considered when determining whether to 
halt trading in volatility index options.
    First, CBOE proposes to amend CBOE Rule 24.7(a)(i), which permits 
consideration to be given to ``the extent to which trading is not 
occurring in the stocks underlying the index[.]'' Since volatility 
indexes are comprised of options, not stocks, CBOE proposes to amend 
CBOE Rule 24.7(a)(i) to permit consideration to be given (in 
determining whether to halt trading in a volatility index option class) 
to whether the component options in a volatility index are not 
trading.\4\ Similarly, the Exchange proposes to amend CBOE Rule 24.7(b) 
which sets forth factors that may be considered in determining whether 
to resume trading of a halted options class or series. The Exchange 
proposes to amend the factor regarding the ``extent to which trading is 
occurring in stocks underlying the index'' to also include options.
---------------------------------------------------------------------------

    \4\ As an example, consider the CBOE Volatility Index (``VIX''), 
which is comprised of S&P 500 Index (``SPX'') options. Under the 
proposal, the Exchange may consider whether to halt trading in VIX 
options if trading in SPX options were not occurring. See Notice, 
supra note 3, at 49563.
---------------------------------------------------------------------------

    Second, CBOE proposes to add a new factor (as subparagraph (iii) to 
CBOE Rule 24.7(a)) for consideration when determining whether to halt 
trading in volatility index options. Specifically, CBOE proposes to add 
a provision that would permit consideration to be given (in determining 
whether to halt trading in a volatility index option class) to whether 
the ``current index level'' \5\ for a volatility index option is not 
available or the spot (cash) \6\ value for a volatility index option is 
not available.
---------------------------------------------------------------------------

    \5\ CBOE proposes to define the term ``current index level'' in 
new Interpretation and Policy .03 to Rule 24.7 to mean the implied 
forward level based on corresponding volatility index (security) 
futures prices. See Notice, supra note 3, at 49563.
    \6\ In the Notice, CBOE stated that the spot (cash) value of a 
volatility index is an instantaneous measure of the expected 
volatility in 30 days. See Notice, supra note 3, at 49564.
---------------------------------------------------------------------------

    Third, the Exchange is proposing to make technical changes to CBOE 
Rule 24.7(a), CBOE Rule 24.7(d) and CBOE Rule 24.7.01 to make numbering 
changes.

III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of Section 6 of the Act \7\ 
and the rules and regulations thereunder applicable to a national 
securities exchange.\8\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\9\ 
which requires, among other things, that the Exchange's rules 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 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.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange proposes to amend CBOE Rule 24.7 to add additional 
factors that may be considered when determining whether to halt trading 
in volatility index options. CBOE Rule 24.7 is currently predicated on 
indexes being comprised of stocks and includes factors that may be 
considered by the Exchange when determining whether to halt trading 
based on the index components being comprised of stocks. The current 
proposal amends CBOE Rule 24.7(a) to account for indexes comprised of 
options and allows the Exchange to consider the following factors when 
determining whether to halt trading: (1) Whether the component options 
are not trading; (2) whether the ``current index level'' (as measured 
by the implied forward level based on volatility index (security) 
futures prices) is not available; or (3) whether the spot (cash) value 
for a volatility index is not available.
    The Commission notes that the proposed change is designed to allow 
the Exchange to consider additional factors when determining whether to 
halt or resume trading in volatility index options. The Commission 
believes that the proposed change would grant discretion to the 
Exchange to halt trading in an index option class if component options 
are not trading and/or the current index level or spot (cash) value for 
a volatility index is not available. The Commission further believes 
that the proposal is designed to provide CBOE with discretion to 
protect the integrity of its marketplace by permitting it to consider 
additional factors that are specifically relevant to volatility index 
options when determining whether to halt or resume trading in those 
products.
    Accordingly, the Commission finds that the Exchange's proposal is 
consistent with the Act, including Section 6(b)(5) thereof, in that it 
is designed to remove impediments to and perfect the mechanism of a 
free and open market, and in general, protect investors and the public 
interest.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-CBOE-2013-079) be, and 
hereby is, approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24015 Filed 10-1-13; 8:45 am]
BILLING CODE 8011-01-P