Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Extending the FLEX Exercise Settlement Values Pilot, 65023-65026 [2013-25645]

Download as PDF emcdonald on DSK67QTVN1PROD with NOTICES Federal Register / Vol. 78, No. 210 / Wednesday, October 30, 2013 / Notices annually, to determine whether the purchases were influenced by the investment by the Investing Fund in the Fund. The Board will consider, among other things: (i) Whether the purchases were consistent with the investment objectives and policies of the Fund; (ii) how the performance of securities purchased in an Affiliated Underwriting compares to the performance of comparable securities purchased during a comparable period of time in underwritings other than Affiliated Underwritings or to a benchmark such as a comparable market index; and (iii) whether the amount of securities purchased by the Fund in Affiliated Underwritings and the amount purchased directly from an Underwriting Affiliate have changed significantly from prior years. The Board will take any appropriate actions based on its review, including, if appropriate, the institution of procedures designed to assure that purchases of securities in Affiliated Underwritings are in the best interest of shareholders of the Fund. 8. Each Fund will maintain and preserve permanently in an easily accessible place a written copy of the procedures described in the preceding condition, and any modifications to such procedures, and will maintain and preserve for a period of not less than six years from the end of the fiscal year in which any purchase in an Affiliated Underwriting occurred, the first two years in an easily accessible place, a written record of each purchase of securities in Affiliated Underwritings once an investment by an Investing Fund in the securities of the Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth from whom the securities were acquired, the identity of the underwriting syndicate’s members, the terms of the purchase, and the information or materials upon which the Board’s determinations were made. 9. Before investing in a Fund in excess of the limits in section 12(d)(1)(A), an Investing Fund will execute a FOF Participation Agreement with the Fund stating that their respective boards of directors or trustees and their investment advisers, or Trustee and Sponsor, as applicable, understand the terms and conditions of the order, and agree to fulfill their responsibilities under the order. At the time of its investment in Shares of a Fund in excess of the limit in section 12(d)(1)(A)(i), an Investing Fund will notify the Fund of the investment. At such time, the Investing Fund will also transmit to the Fund a list of the names of each Investing Fund Affiliate and VerDate Mar<15>2010 16:58 Oct 29, 2013 Jkt 232001 Underwriting Affiliate. The Investing Fund will notify the Fund of any changes to the list as soon as reasonably practicable after a change occurs. The Fund and the Investing Fund will maintain and preserve a copy of the order, the FOF Participation Agreement, and the list with any updated information for the duration of the investment and for a period of not less than six years thereafter, the first two years in an easily accessible place. 10. Before approving any advisory contract under section 15 of the Act, the board of directors or trustees of each Investing Management Company, including a majority of the independent directors or trustees, will find that the advisory fees charged under such contract are based on services provided that will be in addition to, rather than duplicative of, the services provided under the advisory contract(s) of any Fund in which the Investing Management Company may invest. These findings and their basis will be recorded fully in the minute books of the appropriate Investing Management Company. 11. Any sales charges and/or service fees charged with respect to shares of an Investing Fund will not exceed the limits applicable to a fund of funds as set forth in NASD Conduct Rule 2830. 12. No Fund relying on the section 12(d)(1) relief will acquire securities of any investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act, except to the extent permitted by exemptive relief from the Commission permitting the Fund to purchase shares of other investment companies for short-term cash management purposes. For the Commission, by the Division of Investment Management, under delegated authority. Kevin M. O’Neill, Deputy Secretary. 65023 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on October 11, 2013, the Chicago Board Options Exchange, Incorporated (‘‘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 has designated the proposal as a ‘‘noncontroversial’’ proposed rule change pursuant to Section 19(b)(3)(A) 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend the operation of its Flexible Exchange Options (‘‘FLEX Options’’) pilot program regarding permissible exercise settlement values for FLEX Index Options.5 The text of the proposed rule change is available on the Exchange’s Web site (http://www.cboe.com/ AboutCBOE/CBOELegalRegulatory Home.aspx), at the Exchange’s Office of the Secretary and at the Commission. 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. [FR Doc. 2013–25648 Filed 10–29–13; 8:45 am] 1 15 BILLING CODE 8011–01–P U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). 5 FLEX Options provide investors with the ability to customize basic option features including size, expiration date, exercise style, and certain exercise prices. FLEX Options can be FLEX Index Options or FLEX Equity Options. In addition, other products are permitted to be traded pursuant to the FLEX trading procedures. For example, credit options are eligible for trading as FLEX Options pursuant to the FLEX rules in Chapters XXIVA and XXIVB. See CBOE Rules 24A.1(e) and (f), 24A.4(b)(1) and (c)(1), 24B.1(f) and (g), 24B.4(b)(1) and (c)(1), and 28.17. The rules governing the trading of FLEX Options on the FLEX Request for Quote (‘‘RFQ’’) System platform are contained in Chapter XXIVA. The rules governing the trading of FLEX Options on the FLEX Hybrid Trading System platform are contained in Chapter XXIVB. 2 17 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70752; File No. SR–CBOE– 2013–099] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Extending the FLEX Exercise Settlement Values Pilot October 24, 2013. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 E:\FR\FM\30OCN1.SGM 30OCN1 65024 Federal Register / Vol. 78, No. 210 / Wednesday, October 30, 2013 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change emcdonald on DSK67QTVN1PROD with NOTICES 1. Purpose On January 28, 2010, the Exchange received approval of a rule change that, among other things, established a pilot program regarding permissible exercise settlement values for FLEX Index Options. The pilot program is currently set to expire on the earlier of November 2, 2013 or the date on which the pilot program is approved on a permanent basis.6 The purpose of this rule change filing is to extend the pilot program through the earlier of November 3, 2014 or the date on which the pilot program is approved on a permanent basis. This filing simply seeks to extend the operation of the pilot program and does not propose any substantive changes to the pilot program. Under Rules 24A.4, Terms of FLEX Options, and 24B.4, Terms of FLEX Options, a FLEX Option may expire on any business day specified as to day, month and year, not to exceed a maximum term of fifteen years. In addition, the exercise settlement value for a FLEX Index Option can be specified as the index value determined by reference to the reported level of the index as derived from the opening or closing prices of the component securities (‘‘a.m. settlement’’ or ‘‘p.m. settlement,’’ respectively) or as a specified average, provided that the average index value must conform to the averaging parameters established by the Exchange.7 However, prior to the 6 At the same time the permissible exercise settlement values pilot was established for FLEX Index Options, the Exchange also established a pilot program eliminating the minimum value size requirements for all FLEX Options. See Securities Exchange Act Release Nos. 61439 (January 28, 2010), 75 FR 5831 (February 4, 2010)(SR–CBOE– 2009–087)(Approval Order); 61676 (March 9, 2010), 75 FR 13191 (March 18, 2010)(SR–CBOE–2010– 026)(technical rule change to include original pilots’ conclusion date of March 28, 2011 in the rule text); 64110 (March 24, 2011), 76 FR17463 (March 29, 2011)(SR–CBOE–2011–024)(extending the pilots through March 30, 2012), 77 FR 20673 (April 5, 2012)(SR–CBOE–2012–027)(extending the pilots through the earlier of November 2, 2012 or the date on which the respective pilot program is approved on a permanent basis). The pilot program eliminating the minimum value size requirements was approved on a permanent basis in a separate rule change filing. See Securities Exchange Act Release No. 67624 (August 8, 2012), 77 FR 48580 (August 14, 2012)(SR–CBOE–2012–040). The permissible exercise settlement values pilot, however, has been extended. See Securities Exchange Act Release No. 68145 (November 2, 2012), 77 FR 67044 (November 8, 2012)(SR–CBOE– 2012–102)(extending the pilot through the earlier of November 2, 2013 or the date on which the pilot program is approved on a permanent basis). 7 See Rules 24A.4(b)(3) and 24B.4(b)(3); see also Securities Exchange Act Release No. 31920 VerDate Mar<15>2010 16:58 Oct 29, 2013 Jkt 232001 initiation of the exercise settlement values pilot, only a.m. settlements were permitted if a FLEX Index Option expires on, or within two business days of, a third Friday-of-the-month expiration (‘‘Expiration Friday’’).8 Under the exercise settlement values pilot, this restriction on p.m. and specified average price settlements in FLEX Index Options was eliminated.9 The exercise settlement values pilot is currently set to expire on the earlier of November 2, 2013 or the date on which the pilot program is approved on a permanent basis. CBOE is proposing to extend the pilot program through the earlier of November 3, 2014 or the date on which the pilot program is approved on a permanent basis. CBOE believes the pilot program has been successful and well received by its membership and the investing public for the period that it has been in operation as a pilot. In support of the proposed extension of the pilot program, and as required by the pilot program’s Approval Order, the Exchange has submitted to the Commission pilot program reports regarding the pilot, which detail the Exchange’s experience with the program. Specifically, the Exchange provided the Commission an annual report analyzing volume and open interest for each broad-based FLEX Index Options class overlying an Expiration Friday, p.m.-settled FLEX (February 24, 1993), 58 FR 12280 (March 3, 1993)(SR–CBOE–92–17). The Exchange has determined to limit the averaging parameters to three alternatives: the average of the opening and closing index values on the expiration date; the average of intra-day high and low index values on the expiration date; and the average of the opening, closing, and intra-day high and low index values on the expiration date. Any changes to the averaging parameters established by the Exchange would be announced to Trading Permit Holders via circular. The Commission notes that its initial approval of specified average exercise settlement values for FLEX Index Options that expire on, or within two business days of, a third Friday-of-the-month expiration was based on the averaging parameters being limited to these three alternatives. See Securities Exchange Act Release No. 61439 (January 28, 2010), 75 FR 5831, 5832 n.17 (February 4, 2010). The Commission expects that, if the Exchange were to seek to change these averaging parameters, it would file a proposed rule change pursuant to Section 19(b) under the Act. See Securities Exchange Act Release No. 59417 (February 18, 2009), 74 FR 8591, 8593 n.21 (February 25, 2009). 8 For example, prior to the pilot, the exercise settlement value of a FLEX Index Option that expires on the Tuesday before Expiration Friday could have an a.m., p.m. or specified average settlement. However, the exercise settlement value of a FLEX Index Option that expires on the Wednesday before Expiration Friday could only have an a.m. settlement. 9 No change was necessary or requested with respect to FLEX Equity Options. Regardless of the expiration date, FLEX Equity Options are settled by physical delivery of the underlying. PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 Index Options series.10 The annual report also contained information and analysis of FLEX Index Options trading patterns. The Exchange also provided the Commission, on a periodic basis, interim reports of volume and open interest. In providing the pilot reports to the Commission, the Exchange has requested confidential treatment of the pilot reports under the Freedom of Information Act (‘‘FOIA’’).11 The confidentiality of the pilot reports is subject to the provisions of FOIA. The Exchange believes there is sufficient investor interest and demand in the pilot program to warrant its extension. The Exchange believes that, for the period that the pilot has been in operation, the program has provided investors with additional means of managing their risk exposures and carrying out their investment objectives. Furthermore, the Exchange believes that it has not experienced any adverse market effects with respect to the pilot program, including any adverse market volatility effects that might occur as a result of large FLEX exercises in FLEX Option series that expire near NonFLEX expirations and use a p.m. settlement (as discussed below). In that regard, based on the Exchange’s experience in trading FLEX Options to date and over the pilot period, CBOE continues to believe that the restrictions on exercise settlement values are no longer necessary to insulate Non-FLEX expirations from the potential adverse market impacts of FLEX expirations.12 To the contrary, 10 The annual report also contained certain pilot period and pre-pilot period analyses of volume and open interest for Expiration Friday, a.m.-settled FLEX Index series and Expiration Friday Non-FLEX Index series overlying the same index as an Expiration Friday, p.m.-settled FLEX Index option. 11 5 U.S.C. 552. 12 In further support, the Exchange also notes that the p.m. and specified average price settlements are already permitted for FLEX Index Options on any other business day except on, or within two business days of, Expiration Friday. The Exchange is not aware of any market disruptions or problems caused by the use of these settlement methodologies on these expiration dates (or on the expiration dates addressed under the pilot program). The Exchange is also not aware of any market disruptions or problems caused by the use of customized options in the OTC markets that expire on or near Expiration Friday and have a p.m. or specified average exercise settlement value. In addition, the Exchange believes the reasons for limiting expirations to a.m. settlement, which is something the SEC has imposed since the early 1990s for NonFLEX Options, revolved around a concern about expiration pressure on the New York Stock Exchange (‘‘NYSE’’) at the close that are no longer relevant in today’s market. Today, however, the Exchange believes stock exchanges are much better able to handle volume. There are multiple primary listing and unlisted trading privilege (‘‘UTP’’) markets, and trading is dispersed among several exchanges and alternative trading systems. In addition, the Exchange believes that surveillance E:\FR\FM\30OCN1.SGM 30OCN1 Federal Register / Vol. 78, No. 210 / Wednesday, October 30, 2013 / Notices emcdonald on DSK67QTVN1PROD with NOTICES CBOE believes that the restriction actually places the Exchange at a competitive disadvantage to its OTC counterparts in the market for customized options, and unnecessarily limits market participants’ ability to trade in an exchange environment that offers the added benefits of transparency, price discovery, liquidity, and financial stability. The Exchange also notes that certain position limit, aggregation and exercise limit requirements continue to apply to FLEX Index Options in accordance with Rules 24A.7, Position Limits and Reporting Requirements, 24A.8, Exercise Limits, 24B.7, Position Limits and Reporting Requirements, and 24B.8, Exercise Limits. Additionally, all FLEX Options remain subject to the position reporting requirements in paragraph (a) of CBOE Rule 4.13, Reports Related to Position Limits.13 Moreover, the Exchange and its Trading Permit Holder organizations each have the authority, pursuant to CBOE Rule 12.10, Margin Required is Minimum, to impose techniques are much more robust and automated. In the early 1990s, it was also thought by some that opening procedures allow more time to attract contra-side interest to reduce imbalances. The Exchange believes, however, that today order flow is predominantly electronic and the ability to smooth out openings and closes is greatly reduced (e.g., market-on-close procedures work just as well as openings). Also other markets, such as the NASDAQ Stock Exchange, do not have the same type of pre-opening imbalance disseminations as the NYSE, so many stocks are not subject to the same procedures on Expiration Friday. In addition, the Exchange believes that the NYSE has reduced the required time a specialist has to wait after disseminating a pre-opening indication. So, in this respect, the Exchange believes there is less time to react in the opening than in the close. Moreover, to the extent there may be a risk of adverse market effects attributable to p.m. settled options (or certain average price settled options related to the closing price) that would otherwise be traded in a non-transparent fashion in the OTC market, the Exchange continues to believe that such risk would be lessened by making these customized options eligible for trading in an exchange environment because of the added transparency, price discovery, liquidity, and financial stability available. 13 CBOE Rule 4.13(a) provides that ‘‘[i]n a manner and form prescribed by the Exchange, each Trading Permit Holder shall report to the Exchange, the name, address, and social security or tax identification number of any customer who, acting alone, or in concert with others, on the previous business day maintained aggregate long or short positions on the same side of the market of 200 or more contracts of any single class of option contracts dealt in on the Exchange. The report shall indicate for each such class of options, the number of option contracts comprising each such position and, in the case of short positions, whether covered or uncovered.’’ For purposes of this Rule, the term ‘‘customer’’ in respect of any Trading Permit Holder includes ‘‘the Trading Permit Holder, any general or special partner of the Trading Permit Holder, any officer or director of the Trading Permit Holder, or any participant, as such, in any joint, group or syndicate account with the Trading Permit Holder or with any partner, officer or director thereof.’’ Rule 4.13(d). VerDate Mar<15>2010 16:58 Oct 29, 2013 Jkt 232001 additional margin as deemed advisable. CBOE continues to believe these existing safeguards serve sufficiently to help monitor open interest in FLEX Option series and significantly reduce any risk of adverse market effects that might occur as a result of large FLEX exercises in FLEX Option series that expire near Non-FLEX expirations and use a p.m. settlement. CBOE is also cognizant of the OTC market, in which similar restrictions on exercise settlement values do not apply. CBOE continues to believe that the pilot program is appropriate and reasonable and provides market participants with additional flexibility in determining whether to execute their customized options in an exchange environment or in the OTC market. CBOE continues to believe that market participants benefit from being able to trade these customized options in an exchange environment in several ways, including, but not limited to, enhanced efficiency in initiating and closing out positions, increased market transparency, and heightened contra-party creditworthiness due to the role of OCC as issuer and guarantor of FLEX Options. If, in the future, the Exchange proposes an additional extension of the pilot program, or should the Exchange propose to make the pilot program permanent (which the Exchange currently intends to do), the Exchange will submit, along with any filing proposing such amendments to the pilot program, an additional pilot program report covering the extended period during which the pilot program was in effect and including the details referenced above and consistent with the pilot program’s Approval Order. The pilot program report would be submitted to the Commission at least two months prior to the new expiration date of the pilot program. The Exchange will also continue, on a periodic basis, to submit interim reports of volume and open interest consistent with the terms of the exercise settlement values pilot program as described in the pilot program’s Approval Order. All such pilot reports would continue to be provided by the Exchange along with a request for confidential treatment under FOIA.14 As noted in the pilot program’s Approval Order, any positions established under the pilot program 14 See, note 11, supra, and surrounding discussion. If the Exchange seeks permanent approval of the pilot program, the Exchange recognizes that certain information in the pilot reports may need to be made available on a public basis. PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 65025 would not be impacted by the expiration of the pilot program.15 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.16 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 17 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) 18 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. In particular, the Exchange believes that the proposed extension of the pilot program, which permits additional exercise settlement values, would provide greater opportunities for investors to manage risk through the use of FLEX Options. Further, the Exchange believes that it has not experienced any adverse effects from the operation of the pilot program, including any adverse market volatility effects that might occur as a result of large FLEX exercises in FLEX Option series that expire near Non-FLEX expirations and use a p.m. settlement. The Exchange also believes that the extension of the exercise settlement values pilot does not raise any unique regulatory concerns. In particular, although p.m. settlements may raise questions with the Commission, the Exchange believes that, based on the Exchange’s experience in trading FLEX Options to date and over the pilot period, market 15 For example, a position in a pm-settled FLEX Index Option series that expires on Expiration Friday in January 2015 could be established during the exercise settlement values pilot. If the pilot program were not extended (or made permanent), then the position could continue to exist. However, the Exchange notes that any further trading in the series would be restricted to transactions where at least one side of the trade is a closing transaction. See Approval Order, supra note 6, footnotes 9 and 10. 16 15 U.S.C. 78f(b). 17 15 U.S.C. 78f(b)(5). 18 Id. E:\FR\FM\30OCN1.SGM 30OCN1 65026 Federal Register / Vol. 78, No. 210 / Wednesday, October 30, 2013 / Notices impact and investor protection concerns will not be raised by this rule change. The Exchange also believes that the proposed rule change would continue to provide Trading Permit Holders and investors with additional opportunities to trade customized options in an exchange environment (which offers the added benefits of transparency, price discovery, liquidity, and financial stability as compared to the over-thecounter market) and subject to exchange-based rules, and investors would benefit as a result. B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes there is sufficient investor interest and demand in the pilot program to warrant its extension. The Exchange believes that, for the period that the pilot has been in operation, the program has provided investors with additional means of managing their risk exposures and carrying out their investment objectives. Furthermore, the Exchange believes that it has not experienced any adverse market effects with respect to the pilot program, including any adverse market volatility effects that might occur as a result of large FLEX exercises in FLEX Option series that expire near Non-Flex expirations and use a p.m. settlement. CBOE believes that the restriction actually places the Exchange at a competitive disadvantage to its OTC counterparts in the market for customized options, and unnecessarily limits market participants’ ability to trade in an exchange environment that offers the added benefits of transparency, price discovery, liquidity, and financial stability. Therefore, the Exchange does not believe that the proposed rule change will impose any burden on competition. emcdonald on DSK67QTVN1PROD 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 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 VerDate Mar<15>2010 16:58 Oct 29, 2013 Jkt 232001 operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 19 and Rule 19b–4(f)(6) thereunder.20 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 21 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 22 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requested that the Commission waive the 30-day operative delay so that the proposed rule change may become operative upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. The Commission notes that waiving the 30day operative delay would prevent the expiration of the pilot program on November 2, 2013, prior to the extension of the pilot program becoming operative. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.23 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: 19 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) 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. 21 17 CFR 240.19b–4(f)(6). 22 17 CFR 240.19b–4(f)(6)(iii). 23 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). 20 17 PO 00000 Frm 00120 Fmt 4703 Sfmt 9990 Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CBOE–2013–099 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–2013–099. 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 (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 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–CBOE– 2013–099 and should be submitted on or before November 20, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.24 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–25645 Filed 10–29–13; 8:45 am] BILLING CODE 8011–01–P 24 17 E:\FR\FM\30OCN1.SGM CFR 200.30–3(a)(12). 30OCN1

Agencies

[Federal Register Volume 78, Number 210 (Wednesday, October 30, 2013)]
[Notices]
[Pages 65023-65026]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-25645]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70752; File No. SR-CBOE-2013-099]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Related to Extending the FLEX Exercise Settlement Values 
Pilot

October 24, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 11, 2013, the Chicago Board Options Exchange, Incorporated 
(``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 has designated the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 19(b)(3)(A) 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).
    \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

    The Exchange proposes to extend the operation of its Flexible 
Exchange Options (``FLEX Options'') pilot program regarding permissible 
exercise settlement values for FLEX Index Options.\5\ The text of the 
proposed rule change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's 
Office of the Secretary and at the Commission.
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    \5\ FLEX Options provide investors with the ability to customize 
basic option features including size, expiration date, exercise 
style, and certain exercise prices. FLEX Options can be FLEX Index 
Options or FLEX Equity Options. In addition, other products are 
permitted to be traded pursuant to the FLEX trading procedures. For 
example, credit options are eligible for trading as FLEX Options 
pursuant to the FLEX rules in Chapters XXIVA and XXIVB. See CBOE 
Rules 24A.1(e) and (f), 24A.4(b)(1) and (c)(1), 24B.1(f) and (g), 
24B.4(b)(1) and (c)(1), and 28.17. The rules governing the trading 
of FLEX Options on the FLEX Request for Quote (``RFQ'') System 
platform are contained in Chapter XXIVA. The rules governing the 
trading of FLEX Options on the FLEX Hybrid Trading System platform 
are contained in Chapter XXIVB.
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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.

[[Page 65024]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On January 28, 2010, the Exchange received approval of a rule 
change that, among other things, established a pilot program regarding 
permissible exercise settlement values for FLEX Index Options. The 
pilot program is currently set to expire on the earlier of November 2, 
2013 or the date on which the pilot program is approved on a permanent 
basis.\6\ The purpose of this rule change filing is to extend the pilot 
program through the earlier of November 3, 2014 or the date on which 
the pilot program is approved on a permanent basis. This filing simply 
seeks to extend the operation of the pilot program and does not propose 
any substantive changes to the pilot program.
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    \6\ At the same time the permissible exercise settlement values 
pilot was established for FLEX Index Options, the Exchange also 
established a pilot program eliminating the minimum value size 
requirements for all FLEX Options. See Securities Exchange Act 
Release Nos. 61439 (January 28, 2010), 75 FR 5831 (February 4, 
2010)(SR-CBOE-2009-087)(Approval Order); 61676 (March 9, 2010), 75 
FR 13191 (March 18, 2010)(SR-CBOE-2010-026)(technical rule change to 
include original pilots' conclusion date of March 28, 2011 in the 
rule text); 64110 (March 24, 2011), 76 FR17463 (March 29, 2011)(SR-
CBOE-2011-024)(extending the pilots through March 30, 2012), 77 FR 
20673 (April 5, 2012)(SR-CBOE-2012-027)(extending the pilots through 
the earlier of November 2, 2012 or the date on which the respective 
pilot program is approved on a permanent basis). The pilot program 
eliminating the minimum value size requirements was approved on a 
permanent basis in a separate rule change filing. See Securities 
Exchange Act Release No. 67624 (August 8, 2012), 77 FR 48580 (August 
14, 2012)(SR-CBOE-2012-040). The permissible exercise settlement 
values pilot, however, has been extended. See Securities Exchange 
Act Release No. 68145 (November 2, 2012), 77 FR 67044 (November 8, 
2012)(SR-CBOE-2012-102)(extending the pilot through the earlier of 
November 2, 2013 or the date on which the pilot program is approved 
on a permanent basis).
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    Under Rules 24A.4, Terms of FLEX Options, and 24B.4, Terms of FLEX 
Options, a FLEX Option may expire on any business day specified as to 
day, month and year, not to exceed a maximum term of fifteen years. In 
addition, the exercise settlement value for a FLEX Index Option can be 
specified as the index value determined by reference to the reported 
level of the index as derived from the opening or closing prices of the 
component securities (``a.m. settlement'' or ``p.m. settlement,'' 
respectively) or as a specified average, provided that the average 
index value must conform to the averaging parameters established by the 
Exchange.\7\ However, prior to the initiation of the exercise 
settlement values pilot, only a.m. settlements were permitted if a FLEX 
Index Option expires on, or within two business days of, a third 
Friday-of-the-month expiration (``Expiration Friday'').\8\
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    \7\ See Rules 24A.4(b)(3) and 24B.4(b)(3); see also Securities 
Exchange Act Release No. 31920 (February 24, 1993), 58 FR 12280 
(March 3, 1993)(SR-CBOE-92-17). The Exchange has determined to limit 
the averaging parameters to three alternatives: the average of the 
opening and closing index values on the expiration date; the average 
of intra-day high and low index values on the expiration date; and 
the average of the opening, closing, and intra-day high and low 
index values on the expiration date. Any changes to the averaging 
parameters established by the Exchange would be announced to Trading 
Permit Holders via circular. The Commission notes that its initial 
approval of specified average exercise settlement values for FLEX 
Index Options that expire on, or within two business days of, a 
third Friday-of-the-month expiration was based on the averaging 
parameters being limited to these three alternatives. See Securities 
Exchange Act Release No. 61439 (January 28, 2010), 75 FR 5831, 5832 
n.17 (February 4, 2010). The Commission expects that, if the 
Exchange were to seek to change these averaging parameters, it would 
file a proposed rule change pursuant to Section 19(b) under the Act. 
See Securities Exchange Act Release No. 59417 (February 18, 2009), 
74 FR 8591, 8593 n.21 (February 25, 2009).
    \8\ For example, prior to the pilot, the exercise settlement 
value of a FLEX Index Option that expires on the Tuesday before 
Expiration Friday could have an a.m., p.m. or specified average 
settlement. However, the exercise settlement value of a FLEX Index 
Option that expires on the Wednesday before Expiration Friday could 
only have an a.m. settlement.
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    Under the exercise settlement values pilot, this restriction on 
p.m. and specified average price settlements in FLEX Index Options was 
eliminated.\9\ The exercise settlement values pilot is currently set to 
expire on the earlier of November 2, 2013 or the date on which the 
pilot program is approved on a permanent basis.
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    \9\ No change was necessary or requested with respect to FLEX 
Equity Options. Regardless of the expiration date, FLEX Equity 
Options are settled by physical delivery of the underlying.
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    CBOE is proposing to extend the pilot program through the earlier 
of November 3, 2014 or the date on which the pilot program is approved 
on a permanent basis. CBOE believes the pilot program has been 
successful and well received by its membership and the investing public 
for the period that it has been in operation as a pilot. In support of 
the proposed extension of the pilot program, and as required by the 
pilot program's Approval Order, the Exchange has submitted to the 
Commission pilot program reports regarding the pilot, which detail the 
Exchange's experience with the program. Specifically, the Exchange 
provided the Commission an annual report analyzing volume and open 
interest for each broad-based FLEX Index Options class overlying an 
Expiration Friday, p.m.-settled FLEX Index Options series.\10\ The 
annual report also contained information and analysis of FLEX Index 
Options trading patterns. The Exchange also provided the Commission, on 
a periodic basis, interim reports of volume and open interest. In 
providing the pilot reports to the Commission, the Exchange has 
requested confidential treatment of the pilot reports under the Freedom 
of Information Act (``FOIA'').\11\ The confidentiality of the pilot 
reports is subject to the provisions of FOIA.
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    \10\ The annual report also contained certain pilot period and 
pre-pilot period analyses of volume and open interest for Expiration 
Friday, a.m.-settled FLEX Index series and Expiration Friday Non-
FLEX Index series overlying the same index as an Expiration Friday, 
p.m.-settled FLEX Index option.
    \11\ 5 U.S.C. 552.
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    The Exchange believes there is sufficient investor interest and 
demand in the pilot program to warrant its extension. The Exchange 
believes that, for the period that the pilot has been in operation, the 
program has provided investors with additional means of managing their 
risk exposures and carrying out their investment objectives. 
Furthermore, the Exchange believes that it has not experienced any 
adverse market effects with respect to the pilot program, including any 
adverse market volatility effects that might occur as a result of large 
FLEX exercises in FLEX Option series that expire near Non-FLEX 
expirations and use a p.m. settlement (as discussed below).
    In that regard, based on the Exchange's experience in trading FLEX 
Options to date and over the pilot period, CBOE continues to believe 
that the restrictions on exercise settlement values are no longer 
necessary to insulate Non-FLEX expirations from the potential adverse 
market impacts of FLEX expirations.\12\ To the contrary,

[[Page 65025]]

CBOE believes that the restriction actually places the Exchange at a 
competitive disadvantage to its OTC counterparts in the market for 
customized options, and unnecessarily limits market participants' 
ability to trade in an exchange environment that offers the added 
benefits of transparency, price discovery, liquidity, and financial 
stability.
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    \12\ In further support, the Exchange also notes that the p.m. 
and specified average price settlements are already permitted for 
FLEX Index Options on any other business day except on, or within 
two business days of, Expiration Friday. The Exchange is not aware 
of any market disruptions or problems caused by the use of these 
settlement methodologies on these expiration dates (or on the 
expiration dates addressed under the pilot program). The Exchange is 
also not aware of any market disruptions or problems caused by the 
use of customized options in the OTC markets that expire on or near 
Expiration Friday and have a p.m. or specified average exercise 
settlement value. In addition, the Exchange believes the reasons for 
limiting expirations to a.m. settlement, which is something the SEC 
has imposed since the early 1990s for Non-FLEX Options, revolved 
around a concern about expiration pressure on the New York Stock 
Exchange (``NYSE'') at the close that are no longer relevant in 
today's market. Today, however, the Exchange believes stock 
exchanges are much better able to handle volume. There are multiple 
primary listing and unlisted trading privilege (``UTP'') markets, 
and trading is dispersed among several exchanges and alternative 
trading systems. In addition, the Exchange believes that 
surveillance techniques are much more robust and automated. In the 
early 1990s, it was also thought by some that opening procedures 
allow more time to attract contra-side interest to reduce 
imbalances. The Exchange believes, however, that today order flow is 
predominantly electronic and the ability to smooth out openings and 
closes is greatly reduced (e.g., market-on-close procedures work 
just as well as openings). Also other markets, such as the NASDAQ 
Stock Exchange, do not have the same type of pre-opening imbalance 
disseminations as the NYSE, so many stocks are not subject to the 
same procedures on Expiration Friday. In addition, the Exchange 
believes that the NYSE has reduced the required time a specialist 
has to wait after disseminating a pre-opening indication. So, in 
this respect, the Exchange believes there is less time to react in 
the opening than in the close. Moreover, to the extent there may be 
a risk of adverse market effects attributable to p.m. settled 
options (or certain average price settled options related to the 
closing price) that would otherwise be traded in a non-transparent 
fashion in the OTC market, the Exchange continues to believe that 
such risk would be lessened by making these customized options 
eligible for trading in an exchange environment because of the added 
transparency, price discovery, liquidity, and financial stability 
available.
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    The Exchange also notes that certain position limit, aggregation 
and exercise limit requirements continue to apply to FLEX Index Options 
in accordance with Rules 24A.7, Position Limits and Reporting 
Requirements, 24A.8, Exercise Limits, 24B.7, Position Limits and 
Reporting Requirements, and 24B.8, Exercise Limits. Additionally, all 
FLEX Options remain subject to the position reporting requirements in 
paragraph (a) of CBOE Rule 4.13, Reports Related to Position 
Limits.\13\ Moreover, the Exchange and its Trading Permit Holder 
organizations each have the authority, pursuant to CBOE Rule 12.10, 
Margin Required is Minimum, to impose additional margin as deemed 
advisable. CBOE continues to believe these existing safeguards serve 
sufficiently to help monitor open interest in FLEX Option series and 
significantly reduce any risk of adverse market effects that might 
occur as a result of large FLEX exercises in FLEX Option series that 
expire near Non-FLEX expirations and use a p.m. settlement.
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    \13\ CBOE Rule 4.13(a) provides that ``[i]n a manner and form 
prescribed by the Exchange, each Trading Permit Holder shall report 
to the Exchange, the name, address, and social security or tax 
identification number of any customer who, acting alone, or in 
concert with others, on the previous business day maintained 
aggregate long or short positions on the same side of the market of 
200 or more contracts of any single class of option contracts dealt 
in on the Exchange. The report shall indicate for each such class of 
options, the number of option contracts comprising each such 
position and, in the case of short positions, whether covered or 
uncovered.'' For purposes of this Rule, the term ``customer'' in 
respect of any Trading Permit Holder includes ``the Trading Permit 
Holder, any general or special partner of the Trading Permit Holder, 
any officer or director of the Trading Permit Holder, or any 
participant, as such, in any joint, group or syndicate account with 
the Trading Permit Holder or with any partner, officer or director 
thereof.'' Rule 4.13(d).
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    CBOE is also cognizant of the OTC market, in which similar 
restrictions on exercise settlement values do not apply. CBOE continues 
to believe that the pilot program is appropriate and reasonable and 
provides market participants with additional flexibility in determining 
whether to execute their customized options in an exchange environment 
or in the OTC market. CBOE continues to believe that market 
participants benefit from being able to trade these customized options 
in an exchange environment in several ways, including, but not limited 
to, enhanced efficiency in initiating and closing out positions, 
increased market transparency, and heightened contra-party 
creditworthiness due to the role of OCC as issuer and guarantor of FLEX 
Options.
    If, in the future, the Exchange proposes an additional extension of 
the pilot program, or should the Exchange propose to make the pilot 
program permanent (which the Exchange currently intends to do), the 
Exchange will submit, along with any filing proposing such amendments 
to the pilot program, an additional pilot program report covering the 
extended period during which the pilot program was in effect and 
including the details referenced above and consistent with the pilot 
program's Approval Order. The pilot program report would be submitted 
to the Commission at least two months prior to the new expiration date 
of the pilot program. The Exchange will also continue, on a periodic 
basis, to submit interim reports of volume and open interest consistent 
with the terms of the exercise settlement values pilot program as 
described in the pilot program's Approval Order. All such pilot reports 
would continue to be provided by the Exchange along with a request for 
confidential treatment under FOIA.\14\ As noted in the pilot program's 
Approval Order, any positions established under the pilot program would 
not be impacted by the expiration of the pilot program.\15\
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    \14\ See, note 11, supra, and surrounding discussion. If the 
Exchange seeks permanent approval of the pilot program, the Exchange 
recognizes that certain information in the pilot reports may need to 
be made available on a public basis.
    \15\ For example, a position in a pm-settled FLEX Index Option 
series that expires on Expiration Friday in January 2015 could be 
established during the exercise settlement values pilot. If the 
pilot program were not extended (or made permanent), then the 
position could continue to exist. However, the Exchange notes that 
any further trading in the series would be restricted to 
transactions where at least one side of the trade is a closing 
transaction. See Approval Order, supra note 6, footnotes 9 and 10.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\16\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \17\ 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) \18\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ Id.
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    In particular, the Exchange believes that the proposed extension of 
the pilot program, which permits additional exercise settlement values, 
would provide greater opportunities for investors to manage risk 
through the use of FLEX Options. Further, the Exchange believes that it 
has not experienced any adverse effects from the operation of the pilot 
program, including any adverse market volatility effects that might 
occur as a result of large FLEX exercises in FLEX Option series that 
expire near Non-FLEX expirations and use a p.m. settlement. The 
Exchange also believes that the extension of the exercise settlement 
values pilot does not raise any unique regulatory concerns. In 
particular, although p.m. settlements may raise questions with the 
Commission, the Exchange believes that, based on the Exchange's 
experience in trading FLEX Options to date and over the pilot period, 
market

[[Page 65026]]

impact and investor protection concerns will not be raised by this rule 
change. The Exchange also believes that the proposed rule change would 
continue to provide Trading Permit Holders and investors with 
additional opportunities to trade customized options in an exchange 
environment (which offers the added benefits of transparency, price 
discovery, liquidity, and financial stability as compared to the over-
the-counter market) and subject to exchange-based rules, and investors 
would benefit as a result.

B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.
    The Exchange believes there is sufficient investor interest and 
demand in the pilot program to warrant its extension. The Exchange 
believes that, for the period that the pilot has been in operation, the 
program has provided investors with additional means of managing their 
risk exposures and carrying out their investment objectives. 
Furthermore, the Exchange believes that it has not experienced any 
adverse market effects with respect to the pilot program, including any 
adverse market volatility effects that might occur as a result of large 
FLEX exercises in FLEX Option series that expire near Non-Flex 
expirations and use a p.m. settlement. CBOE believes that the 
restriction actually places the Exchange at a competitive disadvantage 
to its OTC counterparts in the market for customized options, and 
unnecessarily limits market participants' ability to trade in an 
exchange environment that offers the added benefits of transparency, 
price discovery, liquidity, and financial stability. Therefore, the 
Exchange does not believe that the proposed rule change will impose any 
burden on competition.

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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \19\ and Rule 19b-
4(f)(6) thereunder.\20\
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
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 pursuant to Rule 19b-4(f)(6) under the 
Act \21\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \22\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
requested that the Commission waive the 30-day operative delay so that 
the proposed rule change may become operative upon filing. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
The Commission notes that waiving the 30-day operative delay would 
prevent the expiration of the pilot program on November 2, 2013, prior 
to the extension of the pilot program becoming operative. Therefore, 
the Commission hereby waives the 30-day operative delay and designates 
the proposal operative upon filing.\23\
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    \21\ 17 CFR 240.19b-4(f)(6).
    \22\ 17 CFR 240.19b-4(f)(6)(iii).
    \23\ 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 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2013-099 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-2013-099. 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 (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 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-CBOE-2013-099 and should be 
submitted on or before November 20, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-25645 Filed 10-29-13; 8:45 am]
BILLING CODE 8011-01-P