Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule To Adopt a Financial Incentive Program for Lead Market-Makers Appointed in MSCI EAFE Index Options and MSCI Emerging Markets Index Options, 31825-31827 [2018-14550]
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31825
Federal Register / Vol. 83, No. 131 / Monday, July 9, 2018 / Notices
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
Pamela Dyson, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: July 3, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–14650 Filed 7–6–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83585; File No. SR–CBOE–
2018–050]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fees
Schedule To Adopt a Financial
Incentive Program for Lead MarketMakers Appointed in MSCI EAFE Index
Options and MSCI Emerging Markets
Index Options
July 2, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 2,
2018, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III 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 proposes to amend its
Fees Schedule to adopt a financial
incentive program for Lead MarketMakers appointed in MSCI EAFE Index
(MXEA) options and MSCI Emerging
Markets Index (MXEF) options
(collectively, MSCI options), effective
July 2, 2018.
The text of the proposed rule change
is available on the Exchange’s website
(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
Fees Schedule to adopt a financial
Expiring 7 days or less
Near term 8 days to 60
days
Premium level
Width
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$3.00
6.00
15.00
25.00
40.00
60.00
The Exchange may consider other
exceptions to this quoting standard
based on demonstrated legal or
regulatory requirements or other
mitigating circumstances. For purposes
of the financial benefit, MSCI LMM(s)
will not be obligated to satisfy the
heightened quoting standard shown
above. Rather, the MSCI LMM(s) will
only receive the financial benefit if they
U.S.C. 78s(b)(1).
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days
Width
$0–$5.00 ...........................................................
$5.01–$15.00 ....................................................
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$100.01–$200.00 ..............................................
Greater Than $200.01 .......................................
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incentive program for Lead MarketMakers appointed in MSCI EAFE Index
(MXEA) options and MSCI Emerging
Markets Index (MXEF) options
(collectively, MSCI options), effective
July 2, 2018. More specifically, the
Exchange proposes to provide a
financial incentive to any Market-Maker
that is appointed as a Lead MarketMaker (‘‘LMM’’) in MXEA and/or MXEF
(‘‘MSCI LMM’’) and meet a heightened
quoting standard, to be set forth in the
Fees Schedule.3 MSCI LMM(s) that meet
the heightened quoting standard (which
shall be explained herein), will receive
$20,000 per month/per product.
By way of background, pursuant to
Rule 8.15(a), the Exchange may approve
one or more Market-Makers to act as
LMMs in a class for which a Designated
Primary Market-Maker (‘‘DPM’’) has not
been appointed, for a term of no less
than the time until the end of the thencurrent expiration cycle. In addition to
a LMM’s requirement to fulfill all
obligations of a Market-Maker under the
Exchange Rules, a LMM must also
satisfy heightened quoting obligations
set forth in Rule 8.15(b).
The Exchange proposes to provide in
the Fees Schedule that through
December 31, 2018, if a MSIC LMM
meets the heightened standard
described below, the LMM in each class
will receive $20,000 per month, per
their respective appointed class.
Specifically, the LMM will receive
$20,000 per month/per class if it
provides continuous electronic quotes
that meet or exceed the following
heightened quoting standards in at least
90% of the MXEA and/or MXEF series
it must quote pursuant to Rule 8.15(b)
90% of the time in a given month:
20
15
10
7
3
1
Size
$2.50
5.00
10.00
20.00
35.00
50.00
Long term 271 days or
greater
Width
15
10
7
5
3
1
$5.00
10.00
20.00
30.00
48.00
72.00
Size
10
7
5
3
2
1
satisfy the abovementioned heightened
quoting standard. If a MSCI LMM does
not meet the heightened quoting
standard, then it simply will not receive
the financial benefit for that month. The
3 MSCI LMMs would serve as MSCI LMMs during
the RTH session only.
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Federal Register / Vol. 83, No. 131 / Monday, July 9, 2018 / Notices
Exchange notes however, that with
respect to quoting obligations, MSCI
LMM(s) must still comply with the
continuous quoting obligation and other
obligations of Market-Makers and LMMs
described in Cboe Options Rules.4 The
Exchange believes the proposed
financial incentive for the additional
quoting standard set forth in the Fees
Schedule and described above, will
further encourage MSCI LMMs to
provide significant liquidity in MSCI
options. Additionally, the Exchange
notes that it expects that TPHs may
need to undertake expenses to be able
to quote at a significantly heightened
standard in these classes, such as
purchase additional bandwidth. The
Exchange notes that the proposed
financial incentive program for MSCI
LMM(s) is similar to the rebate program
adopted for ETH LMMs and SPX Select
Market-Makers, as both programs offer
financial benefits for meeting
heightened quoting standards.5
sradovich on DSK3GMQ082PROD with NOTICES
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.6 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 7 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
Section 6(b)(4) of the Act,8 which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Trading Permit Holders and other
persons using its facilities.
The Exchange believes it is reasonable
to offer MSCI LMM(s) that meet a
certain heightened quoting standard
(described above) $20,000 per month,
4 See
5 See
e.g., Cboe Options Rule 8.7 and Rule 8.15.
Cboe Options Fees Schedule, Footnotes 38
and 49.
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
8 15 U.S.C. 78f(b)(4).
VerDate Sep<11>2014
18:00 Jul 06, 2018
per product, given the potential added
costs that MSCI LMM(s) may need to
undertake in order to satisfy that
heightened quoting standard (e.g.,
having to purchase additional
bandwidth). The Exchange also wishes
to ensure the LMM(s) is incentivized to
provide liquid and active markets in the
MSCI products to encourage its growth.
Additionally, if a MSCI LMM does not
satisfy the heightened quoting standard,
then it simply will not receive the
$20,000 per class for that month.
The Exchange believes it is equitable
and not unfairly discriminatory to only
offer the financial incentive to MSCI
LMM(s) because it benefits all market
participants trading in MSCI options to
encourage MSCI LMMs to satisfy the
heightened quoting standards, which
may increase liquidity and provide
more trading opportunities and tighter
spreads. Indeed, the Exchange notes that
the LMM provides a crucial role in
providing quotes and the opportunity
for market participants to trade MSCI
products, which can lead to increased
volume, thereby providing a robust
market.
The Exchange notes that without the
proposed financial incentive, there
would not be sufficient incentive for
Trading Permit Holders to undertake an
obligation to quote an heightened levels,
which could result in lower levels of
liquidity. The MSCI LMM incentive
program is also reasonable, as it
designed to encourage increased quoting
to add liquidity in MSCI products,
thereby protecting investors and the
public interest.
The Exchange lastly notes that a
similar financial incentive program was
adopted for appointed LMMs in ETH
and SPX Select Market-Makers.9
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule changes will impose
any burden on competition that are not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe that the
proposed rule change will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because, while the financial incentive is
offered only to certain market
participants (i.e., appointed MSCI
LMM(s) that meet a heightened quoting
standard), those market participants
must meet heightened quoting standards
to receive the financial incentive.
Additionally, MSCI LMM(s) may incur
9 See Cboe Options Fees Schedule, Footnote 38,
Cboe Options Rule 6.1A and Footnote 49.
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additional costs to meet the heightened
quoting standard. The Exchange
believes the proposed financial
incentive encourages those market
participants to bring liquidity to the
Exchange in MSCI options (which
benefits all market participants).
The Exchange does not believe that
the proposed rule changes will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because MSCI options are proprietary
products that will only be traded on
Cboe Options. To the extent that the
proposed changes make Cboe Options a
more attractive marketplace for market
participants at other exchanges, such
market participants are welcome to
become Cboe Options market
participants.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 10 and paragraph (f) of Rule
19b–4 11 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
10 15
11 17
E:\FR\FM\09JYN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
09JYN1
Federal Register / Vol. 83, No. 131 / Monday, July 9, 2018 / Notices
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2018–050 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-2018–050. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CBOE–2018–050 and
should be submitted on or before July
30, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–14550 Filed 7–6–18; 8:45 am]
sradovich on DSK3GMQ082PROD with NOTICES
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
12 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
18:00 Jul 06, 2018
Jkt 244001
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
31827
Dated: July 3, 2018.
Eduardo A. Aleman,
Assistant Secretary.
Extension:
Form SE, SEC File No. 270–289, OMB
Control No. 3235–0327
[FR Doc. 2018–14654 Filed 7–6–18; 8:45 am]
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Form SE (17 CFR 239.64) is used by
registrants to file paper copies of
exhibits, reports or other documents
that would be difficult or impossible to
submit electronically, as provided in
Rule 311 of Regulation S–T (17 CFR
232.311). The information contained in
Form SE is used by the Commission to
identify paper copies of exhibits. Form
SE is filed by individuals, companies or
other entities that are required to file
documents electronically.
Approximately 19 registrants file Form
SE and it takes an estimated 0.10 hours
per response for a total annual burden
of 2 hours (0.10 hours per response × 19
responses).
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
Pamela Dyson, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
SECURITIES AND EXCHANGE
COMMISSION
PO 00000
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BILLING CODE 8011–01–P
[Release No. 34–83588; File No. SR–
NASDAQ–2017–128]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Designation of a Longer Period for
Commission Action on Proceedings To
Determine Whether To Approve or
Disapprove a Proposed Rule Change
To List and Trade the Shares of the
Western Asset Total Return ETF
July 3, 2018.
On December 20, 2017, The Nasdaq
Stock Market LLC (‘‘Nasdaq’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares of the
Western Asset Total Return ETF, a
series of Legg Mason ETF Investment
Trust, under Nasdaq Rule 5735. The
proposed rule change was published for
comment in the Federal Register on
January 9, 2018.3 The Commission has
received no comments on the proposed
rule change.
On February 21, 2018, pursuant to
Section 19(b)(2) of the Act,4 the
Commission designated a longer period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to disapprove the
proposed rule change.5 On April 6,
2018, the Commission instituted
proceedings under Section 19(b)(2)(B) of
the Act 6 to determine whether to
approve or disapprove the proposed
rule change.7 The Commission has
received no comments on the proposed
rule change.
Section 19(b)(2) of the Act 8 provides
that, after initiating disapproval
proceedings, the Commission shall issue
an order approving or disapproving the
proposed rule change not later than 180
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 82439
(Jan. 3, 2018), 83 FR 1062.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 82757,
83 FR 8532 (Feb. 27, 2018).
6 15 U.S.C. 78s(b)(2)(B).
7 See Securities Exchange Act Release No. 83007,
83 FR 15883 (Apr. 12, 2018).
8 15 U.S.C. 78s(b)(2).
2 17
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]]>Agencies
[Federal Register Volume 83, Number 131 (Monday, July 9, 2018)]
[Notices]
[Pages 31825-31827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14550]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83585; File No. SR-CBOE-2018-050]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule To Adopt a Financial Incentive Program for Lead
Market-Makers Appointed in MSCI EAFE Index Options and MSCI Emerging
Markets Index Options
July 2, 2018.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 2, 2018, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Fees Schedule to adopt a
financial incentive program for Lead Market-Makers appointed in MSCI
EAFE Index (MXEA) options and MSCI Emerging Markets Index (MXEF)
options (collectively, MSCI options), effective July 2, 2018.
The text of the proposed rule change is available on the Exchange's
website (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 Fees Schedule to adopt a
financial incentive program for Lead Market-Makers appointed in MSCI
EAFE Index (MXEA) options and MSCI Emerging Markets Index (MXEF)
options (collectively, MSCI options), effective July 2, 2018. More
specifically, the Exchange proposes to provide a financial incentive to
any Market-Maker that is appointed as a Lead Market-Maker (``LMM'') in
MXEA and/or MXEF (``MSCI LMM'') and meet a heightened quoting standard,
to be set forth in the Fees Schedule.\3\ MSCI LMM(s) that meet the
heightened quoting standard (which shall be explained herein), will
receive $20,000 per month/per product.
---------------------------------------------------------------------------
\3\ MSCI LMMs would serve as MSCI LMMs during the RTH session
only.
---------------------------------------------------------------------------
By way of background, pursuant to Rule 8.15(a), the Exchange may
approve one or more Market-Makers to act as LMMs in a class for which a
Designated Primary Market-Maker (``DPM'') has not been appointed, for a
term of no less than the time until the end of the then-current
expiration cycle. In addition to a LMM's requirement to fulfill all
obligations of a Market-Maker under the Exchange Rules, a LMM must also
satisfy heightened quoting obligations set forth in Rule 8.15(b).
The Exchange proposes to provide in the Fees Schedule that through
December 31, 2018, if a MSIC LMM meets the heightened standard
described below, the LMM in each class will receive $20,000 per month,
per their respective appointed class. Specifically, the LMM will
receive $20,000 per month/per class if it provides continuous
electronic quotes that meet or exceed the following heightened quoting
standards in at least 90% of the MXEA and/or MXEF series it must quote
pursuant to Rule 8.15(b) 90% of the time in a given month:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Expiring 7 days or less Near term 8 days to 60 Mid term 61 days to 270 Long term 271 days or
-------------------------- days days greater
Premium level -----------------------------------------------------------------------------
Width Size Width Size Width Size Width Size
--------------------------------------------------------------------------------------------------------------------------------------------------------
$0-$5.00........................................ $3.00 5 $1.50 20 $2.50 15 $5.00 10
$5.01-$15.00.................................... 6.00 3 3.00 15 5.00 10 10.00 7
$15.01-$50.00................................... 15.00 2 7.50 10 10.00 7 20.00 5
$50.01-$100.00.................................. 25.00 1 15.00 7 20.00 5 30.00 3
$100.01-$200.00................................. 40.00 1 25.00 3 35.00 3 48.00 2
Greater Than $200.01............................ 60.00 1 40.00 1 50.00 1 72.00 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Exchange may consider other exceptions to this quoting standard
based on demonstrated legal or regulatory requirements or other
mitigating circumstances. For purposes of the financial benefit, MSCI
LMM(s) will not be obligated to satisfy the heightened quoting standard
shown above. Rather, the MSCI LMM(s) will only receive the financial
benefit if they satisfy the abovementioned heightened quoting standard.
If a MSCI LMM does not meet the heightened quoting standard, then it
simply will not receive the financial benefit for that month. The
[[Page 31826]]
Exchange notes however, that with respect to quoting obligations, MSCI
LMM(s) must still comply with the continuous quoting obligation and
other obligations of Market-Makers and LMMs described in Cboe Options
Rules.\4\ The Exchange believes the proposed financial incentive for
the additional quoting standard set forth in the Fees Schedule and
described above, will further encourage MSCI LMMs to provide
significant liquidity in MSCI options. Additionally, the Exchange notes
that it expects that TPHs may need to undertake expenses to be able to
quote at a significantly heightened standard in these classes, such as
purchase additional bandwidth. The Exchange notes that the proposed
financial incentive program for MSCI LMM(s) is similar to the rebate
program adopted for ETH LMMs and SPX Select Market-Makers, as both
programs offer financial benefits for meeting heightened quoting
standards.\5\
---------------------------------------------------------------------------
\4\ See e.g., Cboe Options Rule 8.7 and Rule 8.15.
\5\ See Cboe Options Fees Schedule, Footnotes 38 and 49.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ 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
Section 6(b)(4) of the Act,\8\ which requires that Exchange rules
provide for the equitable allocation of reasonable dues, fees, and
other charges among its Trading Permit Holders and other persons using
its facilities.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ 15 U.S.C. 78f(b)(4).
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The Exchange believes it is reasonable to offer MSCI LMM(s) that
meet a certain heightened quoting standard (described above) $20,000
per month, per product, given the potential added costs that MSCI
LMM(s) may need to undertake in order to satisfy that heightened
quoting standard (e.g., having to purchase additional bandwidth). The
Exchange also wishes to ensure the LMM(s) is incentivized to provide
liquid and active markets in the MSCI products to encourage its growth.
Additionally, if a MSCI LMM does not satisfy the heightened quoting
standard, then it simply will not receive the $20,000 per class for
that month.
The Exchange believes it is equitable and not unfairly
discriminatory to only offer the financial incentive to MSCI LMM(s)
because it benefits all market participants trading in MSCI options to
encourage MSCI LMMs to satisfy the heightened quoting standards, which
may increase liquidity and provide more trading opportunities and
tighter spreads. Indeed, the Exchange notes that the LMM provides a
crucial role in providing quotes and the opportunity for market
participants to trade MSCI products, which can lead to increased
volume, thereby providing a robust market.
The Exchange notes that without the proposed financial incentive,
there would not be sufficient incentive for Trading Permit Holders to
undertake an obligation to quote an heightened levels, which could
result in lower levels of liquidity. The MSCI LMM incentive program is
also reasonable, as it designed to encourage increased quoting to add
liquidity in MSCI products, thereby protecting investors and the public
interest.
The Exchange lastly notes that a similar financial incentive
program was adopted for appointed LMMs in ETH and SPX Select Market-
Makers.\9\
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\9\ See Cboe Options Fees Schedule, Footnote 38, Cboe Options
Rule 6.1A and Footnote 49.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition that are not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because, while the financial
incentive is offered only to certain market participants (i.e.,
appointed MSCI LMM(s) that meet a heightened quoting standard), those
market participants must meet heightened quoting standards to receive
the financial incentive. Additionally, MSCI LMM(s) may incur additional
costs to meet the heightened quoting standard. The Exchange believes
the proposed financial incentive encourages those market participants
to bring liquidity to the Exchange in MSCI options (which benefits all
market participants).
The Exchange does not believe that the proposed rule changes will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because MSCI
options are proprietary products that will only be traded on Cboe
Options. To the extent that the proposed changes make Cboe Options a
more attractive marketplace for market participants at other exchanges,
such market participants are welcome to become Cboe Options market
participants.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \10\ and paragraph (f) of Rule 19b-4 \11\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f).
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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
[[Page 31827]]
Send an email to [email protected]. Please include
File Number SR-CBOE-2018-050 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-2018-050. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CBOE-2018-050 and should be submitted on
or before July 30, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14550 Filed 7-6-18; 8:45 am]
BILLING CODE P
