Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Regarding the Short Term Option Series Program, 5602-5604 [2015-01862]
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5602
Federal Register / Vol. 80, No. 21 / Monday, February 2, 2015 / Notices
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
2015–09 and should be submitted on or
before February 23, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Jill M. Peterson,
Assistant Secretary.
IV. Solicitation of Comments
[FR Doc. 2015–01863 Filed 1–30–15; 8:45 am]
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:
BILLING CODE 8011–01–P
Electronic Comments
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–74144; File No. SR–CBOE–
2015–009]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Regarding the Short
Term Option Series Program
Paper Comments
mstockstill on DSK4VPTVN1PROD with NOTICES
• 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–Phlx–2015–09 on the
subject line.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 2 thereunder,
notice is hereby given that, on January
21, 2015, 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 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–Phlx–2015–09. 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–Phlx–
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19:24 Jan 30, 2015
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January 27, 2015.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CBOE proposes to amend Rule 5.5(d)
(Short Term Option Series Program) to
extend current $0.50 strike price
intervals in non-index options to short
term options with strike prices less than
$100.
The text of the proposed rule change
is available on the Exchange’s Web site
(https://www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
17 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
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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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
rules governing the Short Term Option
Series Program to introduce finer strike
price intervals for certain short term
options. In particular, the Exchange
proposes to amend Rule 5.5(d) to extend
$0.50 strike price intervals in non-index
options to short term options with strike
prices less than $100 instead of the
current $75. This proposed change is
intended to eliminate gapped strikes
between $75 and $100 that result from
conflicting strike price parameters
under the Short Term Option Series and
$2.50 Strike Price Programs as described
in more detail below. This is a
competitive filing that is based on a
recently approved filing by the
International Securities Exchange, LLC
(‘‘ISE’’).5
Under CBOE’s rules, the Exchange
may list short term options in up to fifty
option classes in addition to option
classes that are selected by other
securities exchanges that employ a
similar program under their respective
rules.6 On any Thursday or Friday that
is a business day, the Exchange may list
short term option series in designated
option classes that expire at the close of
business on each of the next five Fridays
that are business days and are not
Fridays in which monthly or quarterly
options expire.7 These short term option
series trade in $0.50, $1, or $2.50 strike
price intervals depending on the strike
price and whether the option trades in
dollar increments in the related monthly
5 See Securities Exchange Act Release No. 73999
(January 6, 2015), 80 FR 1559 (January 12, 2015)
(Order Granting Approval of Proposed Rule Change
Regarding the Short Term Option Series Program)
(SR–ISE–2014–52).
6 See Rule 5.5(d)(1).
7 See Rule 5.5(d).
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expiration.8 Specifically, short term
options in non-index option classes
admitted to the Short Term Options
Series Program currently trade in: (1)
$0.50 or greater strike price intervals
where the strike price is less than $75,
and $1 or greater where the strike price
is between $75 and $150 for all classes
that participate in the Short Term
Option Series Program; (ii) $0.50 strike
price intervals for classes that trade in
one dollar increments in non-Short
Term Options and that participate in the
Short Term Option Series Program; or
(iii) $2.50 or higher strike price intervals
where the strike price is above $150.
The Exchange also operates a $2.50
Strike Price Program that permits the
Exchange to select up to sixty options
classes on individual stocks to trade in
$2.50 strike price intervals, in addition
to option classes selected by other
securities exchanges that employ a
similar program under their respective
rules.9 Monthly expiration options in
classes admitted to the $2.50 Strike
Price Program trade in $2.50 intervals
where the strike price is (1) greater than
$25 but less than $50; or (2) between
$50 and $100 if the strikes are no more
than $10 from the closing price of the
underlying stock in its primary market
on the preceding day.10 These strike
price parameters conflict with strike
prices allowed for short term options as
dollar strikes between $75 and $100
otherwise allowed under the Short Term
Option Series Program may be within
$0.50 of strikes listed pursuant to the
$2.50 Strike Price Program. In order to
remedy this conflict, the Exchange
proposes to extend the $0.50 strike price
intervals currently allowed for short
term options with strike prices less than
$75 to short term options with strike
prices less than $100. With this
proposed change, short term options in
non-index option classes will trade in:
(1) $0.50 or greater strike price intervals
where the strike price is less than $100,
and $1 or greater where the strike price
is between $100 and $150 for all classes
that participate in the Short Term
Option Series Program; (ii) $0.50 strike
price intervals for classes that trade in
one dollar increments in non-Short
Term Options and that participate in the
Short Term Option Series Program; or
(iii) $2.50 or higher strike price intervals
where the strike price is above $150.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
Rule 5.5(d)(5).
Rule 5.5.05(a) ($2.50 Strike Price Program).
10 See Rule 5.5.05(b).
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.11 In particular,
the proposal is consistent with Section
6(b)(5) of the Act,12 because it is
designed to promote just and equitable
principles of trade, remove
impediments to and perfect the
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
During the month prior to expiration,
the Exchange is permitted to list related
monthly option contracts in the
narrower strike price intervals available
for short term option series.13 After
transitioning to short term strike price
intervals, however, monthly options
that trade in $2.50 intervals between
$50 and $100 under the $2.50 Strike
Price Program, trade with dollar strikes
between $75 and $150. Due to the
overlap of $1 and $2.50 intervals, the
Exchange cannot list certain dollar
strikes between $75 and $100 that
conflict with the prior $2.50 strikes.
For example, if the Exchange initially
listed monthly options on ABC with
$75, $77.50, and $80 strikes, the
Exchange could list the $76 and $79
strikes when these transition to short
term intervals. The Exchange would not
be permitted to list the $77 and $78
strikes, however, as these are $0.50
away from the $77.50 strike already
listed on the Exchange. This creates
gapped strikes between $75 and $100,
where investors are not able to trade
otherwise allowable dollar strikes on the
Exchange. Similarly, these conflicting
strike price parameters create issues for
investors who want to roll their
positions from monthly to weekly
expirations.
In the example above, for instance, an
investor that purchased a monthly ABC
option with a $77.50 strike price would
not be able to roll that position into a
later short term expiration with the
same strike price as that strike is
unavailable under current Short Term
Option Series Program rules. Permitting
$0.50 intervals for short term options up
to $100 would remedy both of these
issues as strikes allowed under the
$2.50 Strike Price Program would not
conflict with the finer $0.50 strike price
interval.
The Short Term Option Series
Program has been well-received by
market participants and the Exchange
believes that introducing finer strike
price intervals for short term options
with strike prices between $75 and
8 See
11 15
9 See
12 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
13 See Rule 5.5(d)(6).
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5603
$100, and thereby eliminating the
gapped strikes described above, will
benefit these market participants by
giving them more flexibility to closely
tailor their investment and hedging
decisions.
With regard to the impact of this
proposal on system capacity, the
Exchange has analyzed its capacity and
represents that it and the Options Price
Reporting Authority (‘‘OPRA’’) have the
necessary systems capacity to handle
any potential additional traffic
associated with this proposed rule
change. The Exchange believes that its
members will not have a capacity issue
as a result of this proposal. The
Exchange also represents that it does not
believe this expansion will cause
fragmentation of liquidity.
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. As described
above, the current rule change is being
proposed as a competitive response to a
recently approved ISE filing. Also, the
Exchange believes that the proposed
rule change will result in additional
investment options and opportunities to
achieve the investment objectives of
market participants seeking efficient
trading and hedging vehicles, to the
benefit of investors, market participants,
and the marketplace in general. Finally,
the Exchange believes that the proposed
rule change is necessary to permit fair
competition among the options
exchanges with respect to the Short
Term Option Series Program.
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 written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change
does not (i) significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
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Federal Register / Vol. 80, No. 21 / Monday, February 2, 2015 / Notices
of the Act 14 and Rule 19b–4(f)(6)
thereunder.15
The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange stated that waiver
of this requirement will allow the
Exchange to compete with other
exchanges with similar provisions
without putting the Exchange at a
competitive disadvantage. For this
reason, the Commission believes that
the proposed rule change allowing the
Exchange to open additional series of
individual stock and ETF options in
$.50 strike price intervals up to $100 in
the same manner as other exchanges
presents no novel issues and that waiver
of the 30-day operative delay is
consistent with the protection of
investors and the public interest; and
will allow the Exchange to remain
competitive with other exchanges.
Therefore, the Commission designates
the proposed rule change to be operative
upon filing.16
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2015–009 on the subject line.
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the 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.
16 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CBOE–2015–009. 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–CBOE–
2015–009 and should be submitted on
or before February 23, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015–01862 Filed 1–30–15; 8:45 am]
BILLING CODE 8011–01–P
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15 17
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–74147; File No. SR–BX–
2015–006]
Self-Regulatory Organizations;
NASDAQ OMX BX; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Regarding the Short
Term Option Series Program
January 27, 2015.
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 January
21, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II below, which Items have been
prepared by the Exchange. 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 is proposing changes to
amend Chapter IV, Section 6 (Series of
Options Contracts Open for Trading) to
introduce finer $.50 strike price
intervals in non-index Short Term
Options with strike prices less than
$100.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxbx.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change. 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.
1 15
17 17
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CFR 200.30–3(a)(12).
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2 17
E:\FR\FM\02FEN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
02FEN1
Agencies
[Federal Register Volume 80, Number 21 (Monday, February 2, 2015)]
[Notices]
[Pages 5602-5604]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-01862]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74144; File No. SR-CBOE-2015-009]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Regarding the Short Term Option Series Program
January 27, 2015.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that, on January 21, 2015, 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\ 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CBOE proposes to amend Rule 5.5(d) (Short Term Option Series
Program) to extend current $0.50 strike price intervals in non-index
options to short term options with strike prices less than $100.
The text of the proposed rule change is available on the Exchange's
Web site (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx),
at the Exchange's Office of the Secretary, and at the Commission's
Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its rules governing the Short Term
Option Series Program to introduce finer strike price intervals for
certain short term options. In particular, the Exchange proposes to
amend Rule 5.5(d) to extend $0.50 strike price intervals in non-index
options to short term options with strike prices less than $100 instead
of the current $75. This proposed change is intended to eliminate
gapped strikes between $75 and $100 that result from conflicting strike
price parameters under the Short Term Option Series and $2.50 Strike
Price Programs as described in more detail below. This is a competitive
filing that is based on a recently approved filing by the International
Securities Exchange, LLC (``ISE'').\5\
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\5\ See Securities Exchange Act Release No. 73999 (January 6,
2015), 80 FR 1559 (January 12, 2015) (Order Granting Approval of
Proposed Rule Change Regarding the Short Term Option Series Program)
(SR-ISE-2014-52).
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Under CBOE's rules, the Exchange may list short term options in up
to fifty option classes in addition to option classes that are selected
by other securities exchanges that employ a similar program under their
respective rules.\6\ On any Thursday or Friday that is a business day,
the Exchange may list short term option series in designated option
classes that expire at the close of business on each of the next five
Fridays that are business days and are not Fridays in which monthly or
quarterly options expire.\7\ These short term option series trade in
$0.50, $1, or $2.50 strike price intervals depending on the strike
price and whether the option trades in dollar increments in the related
monthly
[[Page 5603]]
expiration.\8\ Specifically, short term options in non-index option
classes admitted to the Short Term Options Series Program currently
trade in: (1) $0.50 or greater strike price intervals where the strike
price is less than $75, and $1 or greater where the strike price is
between $75 and $150 for all classes that participate in the Short Term
Option Series Program; (ii) $0.50 strike price intervals for classes
that trade in one dollar increments in non-Short Term Options and that
participate in the Short Term Option Series Program; or (iii) $2.50 or
higher strike price intervals where the strike price is above $150.
---------------------------------------------------------------------------
\6\ See Rule 5.5(d)(1).
\7\ See Rule 5.5(d).
\8\ See Rule 5.5(d)(5).
---------------------------------------------------------------------------
The Exchange also operates a $2.50 Strike Price Program that
permits the Exchange to select up to sixty options classes on
individual stocks to trade in $2.50 strike price intervals, in addition
to option classes selected by other securities exchanges that employ a
similar program under their respective rules.\9\ Monthly expiration
options in classes admitted to the $2.50 Strike Price Program trade in
$2.50 intervals where the strike price is (1) greater than $25 but less
than $50; or (2) between $50 and $100 if the strikes are no more than
$10 from the closing price of the underlying stock in its primary
market on the preceding day.\10\ These strike price parameters conflict
with strike prices allowed for short term options as dollar strikes
between $75 and $100 otherwise allowed under the Short Term Option
Series Program may be within $0.50 of strikes listed pursuant to the
$2.50 Strike Price Program. In order to remedy this conflict, the
Exchange proposes to extend the $0.50 strike price intervals currently
allowed for short term options with strike prices less than $75 to
short term options with strike prices less than $100. With this
proposed change, short term options in non-index option classes will
trade in: (1) $0.50 or greater strike price intervals where the strike
price is less than $100, and $1 or greater where the strike price is
between $100 and $150 for all classes that participate in the Short
Term Option Series Program; (ii) $0.50 strike price intervals for
classes that trade in one dollar increments in non-Short Term Options
and that participate in the Short Term Option Series Program; or (iii)
$2.50 or higher strike price intervals where the strike price is above
$150.
---------------------------------------------------------------------------
\9\ See Rule 5.5.05(a) ($2.50 Strike Price Program).
\10\ See Rule 5.5.05(b).
---------------------------------------------------------------------------
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.\11\ In particular, the proposal is consistent with Section 6(b)(5)
of the Act,\12\ because it is designed to promote just and equitable
principles of trade, remove impediments to and perfect the mechanisms
of a free and open market and a national market system and, in general,
to protect investors and the public interest.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
During the month prior to expiration, the Exchange is permitted to
list related monthly option contracts in the narrower strike price
intervals available for short term option series.\13\ After
transitioning to short term strike price intervals, however, monthly
options that trade in $2.50 intervals between $50 and $100 under the
$2.50 Strike Price Program, trade with dollar strikes between $75 and
$150. Due to the overlap of $1 and $2.50 intervals, the Exchange cannot
list certain dollar strikes between $75 and $100 that conflict with the
prior $2.50 strikes.
---------------------------------------------------------------------------
\13\ See Rule 5.5(d)(6).
---------------------------------------------------------------------------
For example, if the Exchange initially listed monthly options on
ABC with $75, $77.50, and $80 strikes, the Exchange could list the $76
and $79 strikes when these transition to short term intervals. The
Exchange would not be permitted to list the $77 and $78 strikes,
however, as these are $0.50 away from the $77.50 strike already listed
on the Exchange. This creates gapped strikes between $75 and $100,
where investors are not able to trade otherwise allowable dollar
strikes on the Exchange. Similarly, these conflicting strike price
parameters create issues for investors who want to roll their positions
from monthly to weekly expirations.
In the example above, for instance, an investor that purchased a
monthly ABC option with a $77.50 strike price would not be able to roll
that position into a later short term expiration with the same strike
price as that strike is unavailable under current Short Term Option
Series Program rules. Permitting $0.50 intervals for short term options
up to $100 would remedy both of these issues as strikes allowed under
the $2.50 Strike Price Program would not conflict with the finer $0.50
strike price interval.
The Short Term Option Series Program has been well-received by
market participants and the Exchange believes that introducing finer
strike price intervals for short term options with strike prices
between $75 and $100, and thereby eliminating the gapped strikes
described above, will benefit these market participants by giving them
more flexibility to closely tailor their investment and hedging
decisions.
With regard to the impact of this proposal on system capacity, the
Exchange has analyzed its capacity and represents that it and the
Options Price Reporting Authority (``OPRA'') have the necessary systems
capacity to handle any potential additional traffic associated with
this proposed rule change. The Exchange believes that its members will
not have a capacity issue as a result of this proposal. The Exchange
also represents that it does not believe this expansion will cause
fragmentation of liquidity.
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. As described above, the current
rule change is being proposed as a competitive response to a recently
approved ISE filing. Also, the Exchange believes that the proposed rule
change will result in additional investment options and opportunities
to achieve the investment objectives of market participants seeking
efficient trading and hedging vehicles, to the benefit of investors,
market participants, and the marketplace in general. Finally, the
Exchange believes that the proposed rule change is necessary to permit
fair competition among the options exchanges with respect to the Short
Term Option Series Program.
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 written comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change does not (i) significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A)
[[Page 5604]]
of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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.
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The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Exchange stated that waiver of this requirement will allow
the Exchange to compete with other exchanges with similar provisions
without putting the Exchange at a competitive disadvantage. For this
reason, the Commission believes that the proposed rule change allowing
the Exchange to open additional series of individual stock and ETF
options in $.50 strike price intervals up to $100 in the same manner as
other exchanges presents no novel issues and that waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest; and will allow the Exchange to remain competitive with
other exchanges. Therefore, the Commission designates the proposed rule
change to be operative upon filing.\16\
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\16\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-CBOE-2015-009 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2015-009. 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-CBOE-2015-009 and should be
submitted on or before February 23, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-01862 Filed 1-30-15; 8:45 am]
BILLING CODE 8011-01-P