Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 5.8, Long-Term Equity Options Series (LEAPS), 62930-62932 [2018-26515]
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Federal Register / Vol. 83, No. 234 / Thursday, December 6, 2018 / Notices
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:
khammond on DSK30JT082PROD with NOTICES
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–
CboeEDGX–2018–057 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–CboeEDGX–2018–057. 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–CboeEDGX–2018–057 and
should be submitted on or before
December 27, 2018.
18 17
CFR 200.30–3(a)(12).
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20:35 Dec 04, 2018
Jkt 247001
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–26512 Filed 12–4–18; 8:45 am]
BILLING CODE 8011–01–P
compute a deduction for market risk on
some or all its positions instead of the
provisions of paragraphs (c)(2)(vi) and
(c)(2)(vii) of Rule 15c3–1.4
By the Commission.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–26404 Filed 12–4–18; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
BILLING CODE 8011–01–P
[Securities Exchange Act of 1934; Release
No. 84689/November 29, 2018]
SECURITIES AND EXCHANGE
COMMISSION
Order Regarding Alternative Net
Capital Computation for BofAML
Securities, Inc.
[Release No. 34–84698; File No. SR–CBOE–
2018–073]
BofAML Securities, Inc.
(‘‘BofAMLS’’), a broker-dealer registered
with the Securities and Exchange
Commission (‘‘Commission’’), has
submitted an application to the
Commission for authorization to use the
market risk standards of Appendix E of
Rule 15c3–1 to the Securities Exchange
Act of 1934 (‘‘Exchange Act’’).1
Based on a review of the application
that BofAMLS submitted, including an
assessment of the firm’s financial
position, the adequacy of the firm’s
internal risk management controls, and
the statistical models the firm will use
for internal risk management and
regulatory capital purposes, the
Commission has determined that the
application meets the requirements of
paragraphs (a), (b), (d)(1)(i)–(iv), and
(d)(2) of Appendix E.2 The Commission
also has determined that Bank of
America Corporation, BofAMLS’s
ultimate holding company, is in
compliance with the terms of its
undertakings, as provided to the
Commission under Appendix E.
Using the market-risk standards of
Appendix E of Rule 15c3–1 should help
BofAMLS align its supervisory risk
management practices and regulatory
capital requirements more closely, and
would adequately capture the material
risks. As a result, this also should help
to ensure that integrity of the risk
measurement, monitoring and
management process. The Commission,
therefore, finds that approval of the
application is necessary or appropriate
in the public interest or for the
protection of investors.
Accordingly, IT IS ORDERED, under
paragraph (a)(7) of Rule 15c3–1 3 to the
Exchange Act, that BofAMLS may
calculate net capital using the market
risk standards of Appendix E to
17 CFR 240.15c3–1e.
17 CFR 240.15c3–1e(a); 17 CFR 240.15c3–
1e(b); 17 CFR 240.15c3–1e(d)(i)–(iv); 17 CFR
240.15c3–1e(d)(2).
3 See 17 CFR 240.15c3–1(a)(7).
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 5.8,
Long-Term Equity Options Series
(LEAPS)
November 30, 2018.
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 November
23, 2018, Cboe Exchange, Inc.
(‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (‘‘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
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
Rule 5.8, Long-Term Equity Options
Series (LEAPS). The text of the
proposed rule change is provided
below.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
Rules of Cboe Exchange, Inc.
*
*
*
*
*
Rule 5.8. Long-Term Equity Option
Series (LEAPS)
(a) Notwithstanding conflicting
language in Exchange Rule 5.5, the
Exchange may list long-term equity
option series (LEAPS) that expire from
12 to 180 months from the time they are
listed. There may be up to ten
additional expiration months for
1 See
2 See
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
4 See 17 CFR 240.15c3–1(c)(2)(vi); 17 CFR
240.15c3–1(c)(2)(vii).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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Federal Register / Vol. 83, No. 234 / Thursday, December 6, 2018 / Notices
options on SPY and up to six additional
expiration months for all other option
classes.
*
*
*
*
*
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/CBOELegal
RegulatoryHome.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
khammond on DSK30JT082PROD with NOTICES
1. Purpose
The Exchange proposes to amend
Rule 5.8, Long-Term Equity Option
Series (LEAPS), to permit the listing and
trading of up to ten long-term expiration
months for long-term options on the
SPDR® S&P 500® exchange-traded fund
(‘‘SPY’’) in response to customer
demand.3 Rule 5.8 currently provides
that the Exchange may list long-term
option contracts that expire from 12 to
180 months from the time they are listed
(LEAPS). There may be up to six longterm expiration months per option class.
The proposal will add liquidity to the
SPY options market by allowing market
participants to hedge risks relating to
SPY positions over a longer period with
a known and limited cost.
The SPY options market today is
characterized by its tremendous daily
and annual liquidity. As a consequence,
the Exchange believes that the listing of
additional SPY long-term expiration
months would be well received by
3 In
contrast to Rule 5.8, Rule 24.9(b)(1)(B) (which
applies to index options) permits the Exchange to
list long-term index options series based on either
the full or reduced value of the underlying index,
adding up to ten (10) expiration months. The
Exchange seeks to list ten (10) long-term expiration
months on SPY, just as it now may list ten (10)
expiration months on long-term index option series,
in order to provide investors with a wider choice
of investments.
VerDate Sep<11>2014
20:35 Dec 04, 2018
Jkt 247001
investors. This proposal to expand the
number of permitted SPY long-term
expiration months would not apply to
long-term expiration months on any
other class of options.4
The Exchange proposes to implement
the proposed rule change on the date of
this rule filing.
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.5 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 6 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) 7 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the proposed rule
change offers market participants
additional long-term expiration months
on SPY options for their investment and
risk management purposes. The
proposal is intended simply to provide
additional trading opportunities which
have been requested by customers,
thereby facilitating transactions in
options and contributing to the
protection of investors and the
maintenance of fair and orderly markets.
The proposed rule change responds to
the continuing needs of market
participants, particularly portfolio
managers and other institutional
customers, by providing protection from
long-term market moves and by offering
an alternative to hedging portfolios with
future positions or off-exchange
customized derivative instruments.
Rule 5.8 has permitted up to six (6)
long-term expiration months in option
4 Historically, SPY is the largest and most actively
traded ETF in the United States as measured by its
assets under management and the value of shares
traded.
5 15 U.S.C. 78f(b).
6 15 U.S.C. 78f(b)(5).
7 Id.
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
62931
classes since 1991, when it increased
the number of permissible expiration
months from four to six.8 Other
exchanges, such as Nasdaq PHLX LLC
(‘‘Phlx’’), have similarly permitted up to
six ‘‘LEAPS’’ since 1991.9 When the
Securities and Exchange Commission
(the ‘‘Commission’’) approved the
increase to six expiration months, the
Commission stated that it did not
believe that increasing the number of
expiration months to six would cause,
by itself, a proliferation of expiration
months. The Commission also required
that the Exchange monitor the volume
of additional options series listed as a
result of the rule change, and the effect
on the Exchange’s system capacity and
quotation dissemination displays.10
The Exchange believes that the
addition today of four (4) additional
long-term expiration months on SPY
options likewise does not represent a
proliferation of expiration months, but
is instead a very modest expansion of
long-term options in response to stated
customer demand. Significantly, the
proposal would feature new long-term
expiration months in only a single class
of options that are very liquid and
heavily traded, as discussed above.
Additionally, the Exchange notes by
way of precedent, that ten (10)
expiration months are already permitted
for long-term index options series.
Further, the Exchange has the necessary
systems capacity to support the new
SPY long-term expiration months.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange 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 proposal
merely provides investors additional
investment and risk management
opportunities by providing flexibility to
the Exchange to list additional longterm options expiration series,
expanding the number of SPY long-term
expiration months offered on the
Exchange from six (6) long-term
expiration months to ten (10) long-term
expiration months. Other options
exchanges currently permit the listing of
8 See Securities Exchange Act Release No. 28890
(February 15, 1991), 56 FR 7439 (February 22, 1991)
(approving SR–CBOE–90–32).
9 See Securities Exchange Act Release No. 84449
(October 18, 2018), 83 FR 53699 (October 24, 2018)
(SR–Phlx–2018–64); see also Securities Exchange
Act Release No. 29103 (April 18, 1991), 56 FR
19132 (April 25, 1991) (approving SR–Phlx–91–18).
10 See Securities Exchange Act Release No. 28890
(February 15, 1991), 56 FR 7439 (February 22, 1991)
(approving SR–CBOE–90–32).
E:\FR\FM\06DEN1.SGM
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62932
Federal Register / Vol. 83, No. 234 / Thursday, December 6, 2018 / Notices
ten (10) long-term expiration months for
SPY.11
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.
khammond on DSK30JT082PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 12 and Rule 19b–
4(f)(6) thereunder.13
A proposed rule change filed under
Rule 19b–4(f)(6) 14 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),15 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative upon filing. The
Exchange’s proposal would conform the
Exchange’s rules relating to the
permitted number of long term
expiration months for long-term options
on SPY to those of other exchanges.16
Accordingly, the Commission believes
that the proposal raises no new or novel
regulatory issues, and waiver of the 30day operative delay is consistent with
the protection of investors and the
public interest. The Commission
therefore waives the 30-day operative
delay and designates the proposal
operative upon filing.17
11 See, e.g., Phlx Rule 1012(a)(i)(D); Miami
International Securities Exchange, LLC (‘‘MIAX’’)
Rule 406(a); and NYSE Arca, Inc. (‘‘Arca’’) Rule
6.4–O(d)(i).
12 15 U.S.C. 78s(b)(3)(A).
13 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) 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 Commission
has waived this requirement in this case.
14 Id.
15 17 CFR 240.19b–4(f)(6)(iii).
16 See supra note 11.
17 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
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20:35 Dec 04, 2018
Jkt 247001
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.
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–2018–073 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–2018–073. 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
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CBOE–2018–073, and
should be submitted on or before
December 27, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–26515 Filed 12–4–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33310]
Notice of Applications for
Deregistration Under Section 8(f) of the
Investment Company Act of 1940
November 30, 2018.
The following is a notice of
applications for deregistration under
section 8(f) of the Investment Company
Act of 1940 for the month of November
2018. A copy of each application may be
obtained via the Commission’s website
by searching for the file number, or for
an applicant using the Company name
box, at https://www.sec.gov/search/
search.htm or by calling (202) 551–
8090. An order granting each
application will be issued unless the
SEC orders a hearing. Interested persons
may request a hearing on any
application by writing to the SEC’s
Secretary at the address below and
serving the relevant applicant with a
copy of the request, personally or by
mail. Hearing requests should be
received by the SEC by 5:30 p.m. on
December 26, 2018, and should be
accompanied by proof of service on
applicants, in the form of an affidavit or,
for lawyers, a certificate of service.
Pursuant to Rule 0–5 under the Act,
hearing requests should state the nature
of the writer’s interest, any facts bearing
upon the desirability of a hearing on the
matter, the reason for the request, and
the issues contested. Persons who wish
to be notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: The Commission: Secretary,
U.S. Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
FOR FURTHER INFORMATION CONTACT:
Shawn Davis, Branch Chief, at (202)
551–6413 or Chief Counsel’s Office at
18 17
E:\FR\FM\06DEN1.SGM
CFR 200.30–3(a)(12).
06DEN1
]]>Agencies
[Federal Register Volume 83, Number 234 (Thursday, December 6, 2018)]
[Notices]
[Pages 62930-62932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-26515]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84698; File No. SR-CBOE-2018-073]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 5.8, Long-Term Equity Options Series (LEAPS)
November 30, 2018.
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 November 23, 2018, Cboe Exchange, Inc. (``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission
(``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.
---------------------------------------------------------------------------
\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
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend Rule 5.8, Long-Term Equity Options Series (LEAPS). The text of
the proposed rule change is provided below.
(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 5.8. Long-Term Equity Option Series (LEAPS)
(a) Notwithstanding conflicting language in Exchange Rule 5.5, the
Exchange may list long-term equity option series (LEAPS) that expire
from 12 to 180 months from the time they are listed. There may be up to
ten additional expiration months for
[[Page 62931]]
options on SPY and up to six additional expiration months for all other
option classes.
* * * * *
The text of the proposed rule change is also 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 Rule 5.8, Long-Term Equity Option
Series (LEAPS), to permit the listing and trading of up to ten long-
term expiration months for long-term options on the SPDR[supreg] S&P
500[supreg] exchange-traded fund (``SPY'') in response to customer
demand.\3\ Rule 5.8 currently provides that the Exchange may list long-
term option contracts that expire from 12 to 180 months from the time
they are listed (LEAPS). There may be up to six long-term expiration
months per option class. The proposal will add liquidity to the SPY
options market by allowing market participants to hedge risks relating
to SPY positions over a longer period with a known and limited cost.
---------------------------------------------------------------------------
\3\ In contrast to Rule 5.8, Rule 24.9(b)(1)(B) (which applies
to index options) permits the Exchange to list long-term index
options series based on either the full or reduced value of the
underlying index, adding up to ten (10) expiration months. The
Exchange seeks to list ten (10) long-term expiration months on SPY,
just as it now may list ten (10) expiration months on long-term
index option series, in order to provide investors with a wider
choice of investments.
---------------------------------------------------------------------------
The SPY options market today is characterized by its tremendous
daily and annual liquidity. As a consequence, the Exchange believes
that the listing of additional SPY long-term expiration months would be
well received by investors. This proposal to expand the number of
permitted SPY long-term expiration months would not apply to long-term
expiration months on any other class of options.\4\
---------------------------------------------------------------------------
\4\ Historically, SPY is the largest and most actively traded
ETF in the United States as measured by its assets under management
and the value of shares traded.
---------------------------------------------------------------------------
The Exchange proposes to implement the proposed rule change on the
date of this rule filing.
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.\5\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \6\ 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) \7\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
\7\ Id.
---------------------------------------------------------------------------
In particular, the proposed rule change offers market participants
additional long-term expiration months on SPY options for their
investment and risk management purposes. The proposal is intended
simply to provide additional trading opportunities which have been
requested by customers, thereby facilitating transactions in options
and contributing to the protection of investors and the maintenance of
fair and orderly markets. The proposed rule change responds to the
continuing needs of market participants, particularly portfolio
managers and other institutional customers, by providing protection
from long-term market moves and by offering an alternative to hedging
portfolios with future positions or off-exchange customized derivative
instruments.
Rule 5.8 has permitted up to six (6) long-term expiration months in
option classes since 1991, when it increased the number of permissible
expiration months from four to six.\8\ Other exchanges, such as Nasdaq
PHLX LLC (``Phlx''), have similarly permitted up to six ``LEAPS'' since
1991.\9\ When the Securities and Exchange Commission (the
``Commission'') approved the increase to six expiration months, the
Commission stated that it did not believe that increasing the number of
expiration months to six would cause, by itself, a proliferation of
expiration months. The Commission also required that the Exchange
monitor the volume of additional options series listed as a result of
the rule change, and the effect on the Exchange's system capacity and
quotation dissemination displays.\10\
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\8\ See Securities Exchange Act Release No. 28890 (February 15,
1991), 56 FR 7439 (February 22, 1991) (approving SR-CBOE-90-32).
\9\ See Securities Exchange Act Release No. 84449 (October 18,
2018), 83 FR 53699 (October 24, 2018) (SR-Phlx-2018-64); see also
Securities Exchange Act Release No. 29103 (April 18, 1991), 56 FR
19132 (April 25, 1991) (approving SR-Phlx-91-18).
\10\ See Securities Exchange Act Release No. 28890 (February 15,
1991), 56 FR 7439 (February 22, 1991) (approving SR-CBOE-90-32).
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The Exchange believes that the addition today of four (4)
additional long-term expiration months on SPY options likewise does not
represent a proliferation of expiration months, but is instead a very
modest expansion of long-term options in response to stated customer
demand. Significantly, the proposal would feature new long-term
expiration months in only a single class of options that are very
liquid and heavily traded, as discussed above. Additionally, the
Exchange notes by way of precedent, that ten (10) expiration months are
already permitted for long-term index options series. Further, the
Exchange has the necessary systems capacity to support the new SPY
long-term expiration months.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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 proposal merely provides
investors additional investment and risk management opportunities by
providing flexibility to the Exchange to list additional long-term
options expiration series, expanding the number of SPY long-term
expiration months offered on the Exchange from six (6) long-term
expiration months to ten (10) long-term expiration months. Other
options exchanges currently permit the listing of
[[Page 62932]]
ten (10) long-term expiration months for SPY.\11\
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\11\ See, e.g., Phlx Rule 1012(a)(i)(D); Miami International
Securities Exchange, LLC (``MIAX'') Rule 406(a); and NYSE Arca, Inc.
(``Arca'') Rule 6.4-O(d)(i).
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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 foregoing 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, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
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 Commission has waived this requirement in this case.
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A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative upon filing. The Exchange's proposal would conform
the Exchange's rules relating to the permitted number of long term
expiration months for long-term options on SPY to those of other
exchanges.\16\ Accordingly, the Commission believes that the proposal
raises no new or novel regulatory issues, and waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest. The Commission therefore waives the 30-day operative
delay and designates the proposal operative upon filing.\17\
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\14\ Id.
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ See supra note 11.
\17\ 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.
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 [email protected]. Please include
File Number SR-CBOE-2018-073 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-2018-073. 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-2018-073, and should be submitted
on or before December 27, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-26515 Filed 12-4-18; 8:45 am]
BILLING CODE 8011-01-P
