Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 19.8, Long-Term Options Contracts, 62913-62915 [2018-26516]

Download as PDF Federal Register / Vol. 83, No. 234 / Thursday, December 6, 2018 / Notices 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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–CboeBZX–2018–084, and should be submitted on or before December 27, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–26513 Filed 12–4–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–84699; File No. SR– CboeEDGX–2018–056] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 19.8, Long-Term Options Contracts khammond on DSK30JT082PROD with NOTICES 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 EDGX Exchange, Inc. (‘‘Exchange’’ or ‘‘EDGX Options’’) filed 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 20:35 Dec 04, 2018 Jkt 247001 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 EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX Options’’) proposes to amend Rule 19.8, LongTerm Options Contracts. The text of the proposed rule change is provided below. (additions are italicized; deletions are [bracketed]) * * * * * Rules of Cboe EDGX Exchange, Inc. * * * * * Rule 19.8. Long-Term Options Contracts [(a)] Notwithstanding conflicting language in Rule 19.6 (Series of Options Contracts Open for Trading), the Exchange may list long-term options contracts that expire from twelve (12) to thirty-nine (39) months from the time they are listed. There may be up to ten (10) additional expiration months for options on SPY and up to six (6) additional expiration months for all other option classes. Strike price interval, bid/ask differential and continuity rules shall not apply to such options series until the time to expiration is less than nine (9) months. * * * * * The text of the proposed rule change is also available on the Exchange’s website (http://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. PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 62913 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 19.8, Long-Term Option Contracts, to permit the listing and trading of up to ten (10) 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 19.8 currently provides that the Exchange may list long-term option contracts that expire from twelve (12) to thirty-nine (39) months from the time they are listed (‘‘long-term expiration months’’). There may be up to six (6) long-term expiration months per option class.4 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 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.5 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.6 Specifically, the Exchange believes the proposed rule change is consistent with the Section 3 The proposed rule change also deletes the paragraph letter (a) in Rule 19.8, as there is only one paragraph in the Rule, making a paragraph letter unnecessary. In contrast to Rule 19.8, Rule 29.11(b)(1)(A) (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 longterm index option series, in order to provide investors with a wider choice of investments. 4 Pursuant to rule 19.8, strike price interval, bid/ ask differential, and continuity rules do not apply to such options series until the time to expiration is less than nine (9) months. 5 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. 6 15 U.S.C. 78f(b). E:\FR\FM\06DEN1.SGM 06DEN1 khammond on DSK30JT082PROD with NOTICES 62914 Federal Register / Vol. 83, No. 234 / Thursday, December 6, 2018 / Notices 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 the Section 6(b)(5) 8 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 19.8 has permitted up to six (6) long-term expiration months in option classes since the launch of EDGX Options in 2015. Other exchanges, such as Nasdaq PHLX LLC (‘‘Phlx’’), have permitted up to six ‘‘LEAPS’’ since 1991, when it increased the number of permissible expiration months from four to six. As noted by Phlx (in its recent proposal to permit up to ten LEAPS expiration months for options on SPY), 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 Phlx monitor the volume of additional options series listed as a result of the rule change, and 7 15 U.S.C. 78f(b)(5). 8 Id. VerDate Sep<11>2014 20:35 Dec 04, 2018 Jkt 247001 the effect on Phlx’s system capacity and quotation dissemination displays.9 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 ten (10) long-term expiration months for SPY.10 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 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, 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). PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 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 11 and Rule 19b– 4(f)(6) thereunder.12 A proposed rule change filed under Rule 19b–4(f)(6) 13 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),14 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.15 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.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. 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: 11 15 U.S.C. 78s(b)(3)(A). 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. 13 Id. 14 17 CFR 240.19b–4(f)(6)(iii). 15 See supra note 10. 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). 12 17 E:\FR\FM\06DEN1.SGM 06DEN1 Federal Register / Vol. 83, No. 234 / Thursday, December 6, 2018 / Notices Electronic Comments • Use the Commission’s internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CboeEDGX–2018–056 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. khammond on DSK30JT082PROD with NOTICES All submissions should refer to File Number SR–CboeEDGX–2018–056. 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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–2018–056, and should be submitted on or before December 27, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–26516 Filed 12–4–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–84696; File No. SR– NYSEArca–2018–82] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Regarding Certain Changes Relating to Investments of the PGIM Active High Yield Bond ETF November 30, 2018. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on November 16, 2018, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) 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 selfregulatory organization. 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 certain changes regarding investments of the PGIM Active High Yield Bond ETF (the ‘‘Fund’’), a series of PGIM ETF Trust (the ‘‘Trust’’). Shares of the Fund currently are listed and traded on the Exchange under NYSE Arca Rule 8.600– E (‘‘Managed Fund Shares’’). The proposed change is available on the Exchange’s website at www.nyse.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 self-regulatory organization 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 those 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 parts of such statements. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 17 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 20:35 Dec 04, 2018 Jkt 247001 PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 62915 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes certain changes, described below under ‘‘Application of Generic Listing Requirements’’, regarding investments of the Fund. The shares (‘‘Shares’’) of the Fund are currently listed and traded on the Exchange under Commentary .01 to NYSE Arca Rule 8.600–E,4 which provides generic criteria applicable to the listing and trading of Managed Fund Shares.5 PGIM Investments LLC (the ‘‘Adviser’’) is the investment adviser for the Fund. PGIM Fixed Income (the ‘‘Subadviser’’), a unit of PGIM, Inc., is the subadviser to the Fund. PIMS, the Adviser and the Subadviser are indirect wholly-owned subsidiaries of Prudential Financial, Inc. Brown Brothers Harriman & Co., which is unaffiliated with PIMS, the Adviser and the Subadviser, serves as the custodian, administrator, and transfer agent (‘‘Transfer Agent’’) for the Fund.6 Prudential Investment Management Services LLC (‘‘PIMS’’), a registered broker-dealer, acts as the distributor (the ‘‘Distributor’’) for the Fund’s Shares. Commentary .06 to Rule 8.600–E provides that, if the investment adviser to the investment company issuing Managed Fund Shares is affiliated with a broker-dealer, such investment adviser shall erect and maintain a ‘‘fire wall’’ between the investment adviser and the 4 Shares of the Fund commenced trading on the Exchange on April 10, 2018 pursuant to Commentary .01 to NYSE Arca Rule 8.600–E. 5 A Managed Fund Share is a security that represents an interest in an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a–1) (the ‘‘1940 Act’’) organized as an open-end investment company or similar entity that invests in a portfolio of securities selected by its investment adviser consistent with its investment objectives and policies. In contrast, an open-end investment company that issues Investment Company Units, listed and traded on the Exchange under NYSE Arca Rule 5.2–E(j)(3), seeks to provide investment results that correspond generally to the price and yield performance of a specific foreign or domestic stock index, fixed income securities index or combination thereof. 6 The Trust is registered under the 1940 Act. On June 28, 2018, the Trust filed with the Commission an amendment to its registration statement on Form N–1A under the Securities Act of 1933 (15 U.S.C. 77a) (‘‘Securities Act’’), and under the 1940 Act relating to the Fund (File Nos. 333–222469 and 811–23324) (‘‘Registration Statement’’). The Trust will file an amendment to the Registration Statement as necessary to conform to the representations in this filing. The description of the operation of the Trust and the Fund herein is based, in part, on the Registration Statement. In addition, the Commission has issued an order granting certain exemptive relief to the Trust under the1940 Act. See Investment Company Act Release No. 31095 (June 24, 2014) (File No. 812–14267). E:\FR\FM\06DEN1.SGM 06DEN1

Agencies

[Federal Register Volume 83, Number 234 (Thursday, December 6, 2018)]
[Notices]
[Pages 62913-62915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-26516]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84699; File No. SR-CboeEDGX-2018-056]


Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Rule 19.8, Long-Term Options Contracts

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 EDGX Exchange, Inc. (``Exchange'' or ``EDGX 
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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX Options'') 
proposes to amend Rule 19.8, Long-Term Options Contracts. The text of 
the proposed rule change is provided below.
    (additions are italicized; deletions are [bracketed])
* * * * *
    Rules of Cboe EDGX Exchange, Inc.
* * * * *
    Rule 19.8. Long-Term Options Contracts
    [(a)] Notwithstanding conflicting language in Rule 19.6 (Series of 
Options Contracts Open for Trading), the Exchange may list long-term 
options contracts that expire from twelve (12) to thirty-nine (39) 
months from the time they are listed. There may be up to ten (10) 
additional expiration months for options on SPY and up to six (6) 
additional expiration months for all other option classes. Strike price 
interval, bid/ask differential and continuity rules shall not apply to 
such options series until the time to expiration is less than nine (9) 
months.
* * * * *
    The text of the proposed rule change is also available on the 
Exchange's website (http://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 19.8, Long-Term Option 
Contracts, to permit the listing and trading of up to ten (10) 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 19.8 currently provides that the Exchange may list 
long-term option contracts that expire from twelve (12) to thirty-nine 
(39) months from the time they are listed (``long-term expiration 
months''). There may be up to six (6) long-term expiration months per 
option class.\4\ 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\ The proposed rule change also deletes the paragraph letter 
(a) in Rule 19.8, as there is only one paragraph in the Rule, making 
a paragraph letter unnecessary. In contrast to Rule 19.8, Rule 
29.11(b)(1)(A) (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.
    \4\ Pursuant to rule 19.8, strike price interval, bid/ask 
differential, and continuity rules do not apply to such options 
series until the time to expiration is less than nine (9) months.
---------------------------------------------------------------------------

    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.\5\
---------------------------------------------------------------------------

    \5\ 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.\6\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section

[[Page 62914]]

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 the Section 
6(b)(5) \8\ requirement that the rules of an exchange not be designed 
to permit unfair discrimination between customers, issuers, brokers, or 
dealers.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 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 19.8 has permitted up to six (6) long-term expiration months 
in option classes since the launch of EDGX Options in 2015. Other 
exchanges, such as Nasdaq PHLX LLC (``Phlx''), have permitted up to six 
``LEAPS'' since 1991, when it increased the number of permissible 
expiration months from four to six. As noted by Phlx (in its recent 
proposal to permit up to ten LEAPS expiration months for options on 
SPY), 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 Phlx monitor the volume of additional 
options series listed as a result of the rule change, and the effect on 
Phlx's system capacity and quotation dissemination displays.\9\
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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 ten (10) long-term 
expiration months for SPY.\10\
---------------------------------------------------------------------------

    \10\ 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).
---------------------------------------------------------------------------

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 \11\ and Rule 19b-
4(f)(6) thereunder.\12\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ 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.\15\ 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.\16\
---------------------------------------------------------------------------

    \13\ Id.
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ See supra note 10.
    \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).
---------------------------------------------------------------------------

    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:

[[Page 62915]]

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CboeEDGX-2018-056 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-2018-056. 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 (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for 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-2018-056, and should be 
submitted on or before December 27, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-26516 Filed 12-4-18; 8:45 am]
 BILLING CODE 8011-01-P