Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Operation of Its Flexible Exchange Options Pilot Program Regarding Permissible Exercise Settlement Values for Flexible Exchange Index Options, 18100-18103 [2019-08500]

Download as PDF 18100 Federal Register / Vol. 84, No. 82 / Monday, April 29, 2019 / Notices explained in the application, the Investment Advisory Agreements will remain subject to shareholder approval while the role of the Sub-Advisers is substantially similar to that of individual portfolio managers, so that requiring shareholder approval of SubAdvisory Agreements would impose unnecessary delays and expenses on the Sub-Advised Series. Applicants believe that the requested relief from the Disclosure Requirements meets this standard because it will improve the Adviser’s ability to negotiate fees paid to the Sub-Advisers that are more advantageous for the Sub-Advised Series. 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 extend the operation of its Flexible Exchange Options (‘‘FLEX Options’’) pilot program regarding permissible exercise settlement values for FLEX Index Options. [The [sic] text of the proposed rule change is provided below. (additions are italicized; deletions are [bracketed]) * * * * * For the Commission, by the Division of Investment Management, under delegated authority. Eduardo A. Aleman, Deputy Secretary. Rule 24A.4. Terms of FLEX Options (a)–(c) (No change). . . . Interpretations and Policies: .01 FLEX Index Option PM Settlements Pilot Program: Notwithstanding subparagraph (a)(2)(iv) above, for a pilot period ending the earlier of [May 6]November 4, 2019 or the date on which the pilot program is approved on a permanent basis, a FLEX Index Option that expires on an Expiration Friday may have any exercise settlement value that is permissible pursuant to subparagraph (b)(3) above. .02 (No change). * * * * * 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. [FR Doc. 2019–08528 Filed 4–26–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–85707; File No. SR–CBOE– 2019–021] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Operation of Its Flexible Exchange Options Pilot Program Regarding Permissible Exercise Settlement Values for Flexible Exchange Index Options khammond on DSKBBV9HB2PROD with NOTICES April 23, 2019. 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 April 10, 2019, Cboe Exchange, Inc. (the ‘‘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 Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 16:56 Apr 26, 2019 * * * * * 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 On January 28, 2010, the Exchange received approval of a rule change that, 2 17 VerDate Sep<11>2014 Rules of Cboe Exchange, Inc. Jkt 247001 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 among other things, established a pilot program regarding permissible exercise settlement values for FLEX Index Options.5 The Exchange has extended the pilot period seven times, which is currently set to expire on the earlier of May 6, 2019 or the date on which the pilot program is approved on a permanent basis.6 The purpose of this rule change filing is to extend the pilot program through the earlier of November 4, 2019 or the date on which the pilot program is approved on a permanent basis. This filing simply seeks to extend the operation of the pilot program and does not propose any substantive changes to the pilot program. Under Rule 24A.4, Terms of FLEX Options, a FLEX Option may expire on any business day specified as to day, 5 Securities Exchange Act Release No. 61439 (January 28, 2010), 75 FR 5831 (February 4, 2010) (SR–CBOE–2009–087) (‘‘Approval Order’’). The initial pilot period was set to expire on March 28, 2011, which date was added to the rules in 2010. See Securities Exchange Act Release No. 61676 (March 9, 2010), 75 FR 13191 (March 18, 2010) (SR– CBOE–2010–026). 6 See Securities Exchange Act Release Nos. 64110 (March 23, 2011), 76 FR 17463 (March 29, 2011) (SR–CBOE–2011–024) (extending the pilot program through the earlier of March 30, 2012 or the date on which the pilot program is approved on the permanent basis); 66701 (March 30, 2012), 77 FR 20673 (April 5, 2012) (SR–CBOE–2012–027) (extending the pilot through the earlier of November 2, 2012 or the date on which the pilot program is approved on a permanent basis); 68145 (November 2, 2012), 77 FR 67044 (November 8, 2012) (SR–CBOE–2012–102) (extending the pilot program through the earlier of November 2, 2013 or the date on which the pilot program is approved on a permanent basis); 70752 (October 24, 2013), 78 FR 65023 (October 30, 2013) (SR–CBOE–2013–099) (extending the pilot program through the earlier of November 3, 2014 or the date on which the pilot program is approved on a permanent basis); 73460 (October 29, 2014), 79 FR 65464 (November 4, 2014) (SR–CBOE–2014–080) (extending the pilot program through the earlier of May 3, 2016 or the date on which the pilot program is approved on a permanent basis); 77742 (April 29, 2016), 81 FR 26857 (May 4, 2016) (SR–CBOE–2016–032) (extending the pilot program through the earlier of May 3, 2017 or the date on which the pilot program is approved on a permanent basis); 80443 (April 12, 2017), 82 FR 18331 (April 18, 2017) (SR–CBOE– 2017–032), 83 FR 21808 (May 10, 2018) (extending the pilot program through the earlier of May 3, 2018 or the date on which the pilot program is approved on a permanent basis); 83175 (May 4, 2018), 83 FR 21808 (May 10, 2018) (SR–CBOE–2018–037); and 84537 (November 5, 2018), 83 FR 56113 (November 9, 2018) (SR–CBOE–2018–071). At the same time the permissible exercise settlement values pilot was established for FLEX Index Options, the Exchange also established a pilot program eliminating the minimum value size requirements for all FLEX Options. See Approval Order, supra note 5. The pilot program eliminating the minimum value size requirements was extended twice pursuant to the same rule filings that extended the permissible exercise settlement values (for the same extended periods) and was approved on a permanent basis in a separate rule change filing. See id. and Securities Exchange Act Release No. 67624 (August 8, 2012), 77 FR 48580 (August 14, 2012) (SR–CBOE–2012– 040). E:\FR\FM\29APN1.SGM 29APN1 Federal Register / Vol. 84, No. 82 / Monday, April 29, 2019 / Notices khammond on DSKBBV9HB2PROD with NOTICES month and year, not to exceed a maximum term of fifteen years. In addition, the exercise settlement value for a FLEX Index Option can be specified as the index value determined by reference to the reported level of the index as derived from the opening or closing prices of the component securities (‘‘a.m. settlement’’ or ‘‘p.m. settlement,’’ respectively) or as a specified average, provided that the average index value must conform to the averaging parameters established by the Exchange.7 However, prior to the initiation of the exercise settlement values pilot, only a.m. settlements were permitted if a FLEX Index Option expired on, or within two business days of, a third Friday-of-the-month expiration (‘‘Expiration Friday’’).8 Under the exercise settlement values pilot, this restriction on p.m. and specified average price settlements in FLEX Index Options was eliminated.9 The exercise settlement values pilot is currently set to expire on the earlier of May 6, 2019 or the date on which the pilot program is approved on a permanent basis. Cboe Options is proposing to extend the pilot program through the earlier of November 4, 2019 or the date on which the pilot program is approved on a permanent basis. Cboe Options believes the pilot program has been successful and well received by its Trading Permit Holders and the investing public for the period that it has been in operation as a pilot. In support of the proposed extension of the pilot program, and as required by the pilot program’s Approval Order, the Exchange has submitted to the Securities and Exchange Commission (the ‘‘Commission’’) pilot program reports regarding the pilot, which detail the Exchange’s experience with the 7 See Rule 24A.4(b)(3); see also Securities Exchange Act Release No. 31920 (February 24, 1993), 58 FR 12280 (March 3, 1993) (SR–CBOE–92– 017). The Exchange has determined to limit the averaging parameters to three alternatives: The average of the opening and closing index values on the expiration date; the average of intra-day high and low index values on the expiration date; and the average of the opening, closing, and intra-day high and low index values on the expiration date. Any changes to the averaging parameters established by the Exchange would be announced to Trading Permit Holders via circular. 8 For example, prior to the pilot, the exercise settlement value of a FLEX Index Option that expires on the Tuesday before Expiration Friday could have an a.m., p.m. or specified average settlement. However, the exercise settlement value of a FLEX Index Option that expires on the Wednesday before Expiration Friday could only have an a.m. settlement. 9 No change was necessary or requested with respect to FLEX Equity Options. Regardless of the expiration date, FLEX Equity Options are settled by physical delivery of the underlying. VerDate Sep<11>2014 16:56 Apr 26, 2019 Jkt 247001 program. Specifically, the Exchange provided the Commission with annual reports analyzing volume and open interest for each broad-based FLEX Index Options class overlying an Expiration Friday, p.m.-settled FLEX Index Options series.10 The annual reports also contained information and analysis of FLEX Index Options trading patterns. The Exchange also provided the Commission, on a periodic basis, interim reports of volume and open interest. In providing the pilot reports to the Commission, the Exchange has previously requested confidential treatment of the pilot reports under the Freedom of Information Act (‘‘FOIA’’).11 The Exchange believes there is sufficient investor interest and demand in the pilot program to warrant its extension. The Exchange believes that, for the period that the pilot has been in operation, the program has provided investors with additional means of managing their risk exposures and carrying out their investment objectives. Furthermore, the Exchange believes that it has not experienced any adverse market effects with respect to the pilot program, including any adverse market volatility effects that might occur as a result of large FLEX exercises in FLEX Option series that expire near NonFLEX expirations and use a p.m. settlement (as discussed below). In that regard, based on the Exchange’s experience in trading FLEX Options to date and over the pilot period, Cboe Options continues to believe that the restrictions on exercise settlement values are no longer necessary to insulate Non-FLEX expirations from the potential adverse market impacts of FLEX expirations.12 10 The annual reports also contained certain pilot period and pre-pilot period analyses of volume and open interest for Expiration Friday, a.m.-settled FLEX Index series and Expiration Friday Non-FLEX Index series overlying the same index as an Expiration Friday, p.m.-settled FLEX Index option. 11 5 U.S.C. 552. 12 In further support, the Exchange also notes that the p.m. and specified average price settlements are already permitted for FLEX Index Options on any other business day except on, or within two business days of, Expiration Friday. The Exchange is not aware of any market disruptions or problems caused by the use of these settlement methodologies on these expiration dates (or on the expiration dates addressed under the pilot program). The Exchange is also not aware of any market disruptions or problems caused by the use of customized options in the over-the-counter (‘‘OTC’’) markets that expire on or near Expiration Friday and have a p.m. or specified average exercise settlement value. In addition, the Exchange believes the reasons for limiting expirations to a.m. settlement, which is something the SEC has imposed since the early 1990s for Non-FLEX Options, revolved around a concern about expiration pressure on the New York Stock Exchange (‘‘NYSE’’) at the close that are no longer relevant in today’s market. Today, the Exchange believes stock exchanges are able to better PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 18101 To the contrary, Cboe Options believes that the restriction actually places the Exchange at a competitive disadvantage to its OTC counterparts in the market for customized options, and unnecessarily limits market participants’ ability to trade in an exchange environment that offers the added benefits of transparency, price discovery, liquidity, and financial stability. The Exchange also notes that certain position limit, aggregation and exercise limit requirements continue to apply to FLEX Index Options in accordance with Rules 24A.7, Position Limits and Reporting Requirements and 24A.8, Exercise Limits. Additionally, all FLEX Options remain subject to the position reporting requirements in paragraph (a) of Cboe Options Rule 4.13, Reports Related to Position Limits.13 Moreover, the Exchange and its Trading Permit Holder organizations each have the handle volume. There are multiple primary listing and unlisted trading privilege (‘‘UTP’’) markets, and trading is dispersed among several exchanges and alternative trading systems. In addition, the Exchange believes that surveillance techniques are much more robust and automated. In the early 1990s, it was also thought by some that opening procedures allow more time to attract contra-side interest to reduce imbalances. The Exchange believes, however, that today, order flow is predominantly electronic and the ability to smooth out openings and closes is greatly reduced (e.g., market-on-close procedures work just as well as openings). Also, other markets, such as the NASDAQ Stock Exchange, do not have the same type of pre-opening imbalance disseminations as NYSE, so many stocks are not subject to the same procedures on Expiration Friday. In addition, the Exchange believes that NYSE has reduced the required time a specialist has to wait after disseminating a pre-opening indication. So, in this respect, the Exchange believes there is less time to react in the opening than in the close. Moreover, to the extent there may be a risk of adverse market effects attributable to p.m. settled options (or certain average price settled options related to the closing price) that would otherwise be traded in a non-transparent fashion in the OTC market, the Exchange continues to believe that such risk would be lessened by making these customized options eligible for trading in an exchange environment because of the added transparency, price discovery, liquidity, and financial stability available. 13 Cboe Options Rule 4.13(a) provides that ‘‘[i]n a manner and form prescribed by the Exchange, each Trading Permit Holder shall report to the Exchange, the name, address, and social security or tax identification number of any customer who, acting alone, or in concert with others, on the previous business day maintained aggregate long or short positions on the same side of the market of 200 or more contracts of any single class of option contracts dealt in on the Exchange. The report shall indicate for each such class of options, the number of option contracts comprising each such position and, in the case of short positions, whether covered or uncovered.’’ For purposes of Rule 4.13, the term ‘‘customer’’ in respect of any Trading Permit Holder includes ‘‘the Trading Permit Holder, any general or special partner of the Trading Permit Holder, any officer or director of the Trading Permit Holder, or any participant, as such, in any joint, group or syndicate account with the Trading Permit Holder or with any partner, officer or director thereof.’’ Rule 4.13(d). E:\FR\FM\29APN1.SGM 29APN1 khammond on DSKBBV9HB2PROD with NOTICES 18102 Federal Register / Vol. 84, No. 82 / Monday, April 29, 2019 / Notices authority, pursuant to Cboe Options Rule 12.10, Margin Required is Minimum, to impose additional margin as deemed advisable. Cboe Options continues to believe these existing safeguards serve sufficiently to help monitor open interest in FLEX Option series and significantly reduce any risk of adverse market effects that might occur as a result of large FLEX exercises in FLEX Option series that expire near Non-FLEX expirations and use a p.m. settlement. Cboe Options is also cognizant of the OTC market, in which similar restrictions on exercise settlement values do not apply. Cboe Options continues to believe that the pilot program is appropriate and reasonable and provides market participants with additional flexibility in determining whether to execute their customized options in an exchange environment or in the OTC market. Cboe Options continues to believe that market participants benefit from being able to trade these customized options in an exchange environment in several ways, including, but not limited to, enhanced efficiency in initiating and closing out positions, increased market transparency, and heightened contraparty creditworthiness due to the role of the Options Clearing Corporation as issuer and guarantor of FLEX Options. If, in the future, the Exchange proposes an additional extension of the pilot program, or should the Exchange propose to make the pilot program permanent, the Exchange will submit, along with any filing proposing such amendments to the pilot program, an annual report (addressing the same areas referenced above and consistent with the pilot program’s Approval Order) to the Commission at least two months prior to the expiration date of the program. The Exchange will also continue, on a periodic basis, to submit interim reports of volume and open interest consistent with the terms of the exercise settlement values pilot program as described in the pilot program’s Approval Order. Additionally, the Exchange will provide the Commission with any additional data or analyses the Commission requests because it deems such data or analyses necessary to determine whether the pilot program is consistent with the Exchange Act. The Exchange is in the process of making public on its website data and analyses previously submitted to the Commission under the pilot program, and will make public any data and analyses it submits to the Commission under the pilot program in the future. As noted in the pilot program’s Approval Order, any positions VerDate Sep<11>2014 16:56 Apr 26, 2019 Jkt 247001 established under the pilot program would not be impacted by the expiration of the pilot program.14 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.15 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 16 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) 17 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. In particular, the Exchange believes that the proposed extension of the pilot program, which permits additional exercise settlement values, would provide greater opportunities for investors to manage risk through the use of FLEX Options. Further, the Exchange believes that it has not experienced any adverse effects from the operation of the pilot program, including any adverse market volatility effects that might occur as a result of large FLEX exercises in FLEX Option series that expire near Non-FLEX expirations and use a p.m. settlement. The Exchange also believes that the extension of the exercise settlement values pilot does not raise any unique regulatory concerns. In particular, although p.m. settlements may raise questions with the Commission, the Exchange believes that, based on the Exchange’s 14 For example, a position in a p.m.-settled FLEX Index Option series that expires on Expiration Friday in January 2019 could be established during the exercise settlement values pilot. If the pilot program were not extended (or made permanent), then the position could continue to exist. However, the Exchange notes that any further trading in the series would be restricted to transactions where at least one side of the trade is a closing transaction. See Approval Order at footnotes 9 and 10, supra note 5. 15 15 U.S.C. 78f(b). 16 15 U.S.C. 78f(b)(5). 17 Id. PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 experience in trading FLEX Options to date and over the pilot period, market impact and investor protection concerns will not be raised by this rule change. The Exchange also believes that the proposed rule change would continue to provide Trading Permit Holders and investors with additional opportunities to trade customized options in an exchange environment (which offers the added benefits of transparency, price discovery, liquidity, and financial stability as compared to the over-thecounter market) and subject to exchange-based rules, and investors would benefit as a result. B. Self-Regulatory Organization’s Statement on Burden on Competition Cboe Options does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes there is sufficient investor interest and demand in the pilot program to warrant its extension. The Exchange believes that, for the period that the pilot has been in operation, the program has provided investors with additional means of managing their risk exposures and carrying out their investment objectives. Furthermore, the Exchange believes that it has not experienced any adverse market effects with respect to the pilot program, including any adverse market volatility effects that might occur as a result of large FLEX exercises in FLEX Option series that expire near Non-Flex expirations and use a p.m. settlement. Cboe Options believes that the restriction actually places the Exchange at a competitive disadvantage to its OTC counterparts in the market for customized options, and unnecessarily limits market participants’ ability to trade in an exchange environment that offers the added benefits of transparency, price discovery, liquidity, and financial stability. Therefore, the Exchange does not believe that the proposed rule change will impose any burden on competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not (i) significantly affect the protection of investors or the public E:\FR\FM\29APN1.SGM 29APN1 Federal Register / Vol. 84, No. 82 / Monday, April 29, 2019 / Notices 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 if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 18 and Rule 19b–4(f)(6) thereunder.19 A proposed rule change filed under Rule 19b–4(f)(6) 20 normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b–4(f)(6)(iii),21 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 immediately upon filing. The Exchange states that such waiver will allow the Exchange to extend the pilot program prior to its expiration on May 6, 2019, and maintain the status quo, thereby reducing market disruption. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest, as it will allow the pilot program to continue uninterrupted, thereby avoiding investor confusion that could result from a temporary interruption in the pilot program. For this reason, the Commission designates the proposed rule change to be operative upon filing.22 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. 18 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires the Exchange to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 20 17 CFR 240.19b–4(f)(6). 21 17 CFR 240.19b–4(f)(6)(iii). 22 For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). khammond on DSKBBV9HB2PROD with NOTICES 19 17 VerDate Sep<11>2014 16:56 Apr 26, 2019 Jkt 247001 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: 18103 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–08500 Filed 4–26–19; 8:45 am] BILLING CODE 8011–01–P Electronic Comments SMALL BUSINESS ADMINISTRATION • 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–2019–021 on the subject line. Reporting and Recordkeeping Requirements Under OMB Review 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–2019–021. 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–2019–021 and should be submitted on or before May 20, 2019. PO 00000 ACTION: The Small Business Administration (SBA) is publishing this notice to comply with requirements of the Paperwork Reduction Act (PRA) requires agencies to submit proposed reporting and recordkeeping requirements to OMB for review and approval, and to publish a notice in the Federal Register notifying the public that the agency has made such a submission. This notice also allows an additional 30 days for public comments. DATES: Submit comments on or before May 29, 2019. ADDRESSES: Comments should refer to the information collection by name and/ or OMB Control Number and should be sent to: Agency Clearance Officer, Curtis Rich, Small Business Administration, 409 3rd Street SW, 5th Floor, Washington, DC 20416; and SBA Desk Officer, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Washington, DC 20503. FOR FURTHER INFORMATION CONTACT: Curtis Rich, Agency Clearance Officer, (202) 205–7030 curtis.rich@sba.gov. Copies: A copy of the Form OMB 83– 1, supporting statement, and other documents submitted to OMB for review may be obtained from the Agency Clearance Officer. SUPPLEMENTARY INFORMATION: The servicing agent agreement is executed by the borrower, and the certified development company as the loan servicing agent. The agreement is primarily used by the certified development company as the loan servicing agent and acknowledges the imposition of various fees allowed in SBA’s 504 loan program. Title: Servicing Agent Agreement. Description of Respondents: Certified Development Companies. Form Number: 1506. Estimated Annual Responses: 6,151. SUMMARY: 23 17 Frm 00110 Fmt 4703 Sfmt 4703 Small Business Administration. 30-Day notice. AGENCY: E:\FR\FM\29APN1.SGM CFR 200.30–3(a)(12) and (59). 29APN1

Agencies

[Federal Register Volume 84, Number 82 (Monday, April 29, 2019)]
[Notices]
[Pages 18100-18103]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08500]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85707; File No. SR-CBOE-2019-021]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Extend 
the Operation of Its Flexible Exchange Options Pilot Program Regarding 
Permissible Exercise Settlement Values for Flexible Exchange Index 
Options

April 23, 2019.
    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 April 10, 2019, Cboe Exchange, Inc. (the ``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 Exchange 
filed the proposal as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to extend the operation of its Flexible Exchange Options (``FLEX 
Options'') pilot program regarding permissible exercise settlement 
values for FLEX Index Options. [The [sic] text of the proposed rule 
change is provided below.

(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 24A.4. Terms of FLEX Options
    (a)-(c) (No change).
    . . . Interpretations and Policies:
    .01 FLEX Index Option PM Settlements Pilot Program: Notwithstanding 
subparagraph (a)(2)(iv) above, for a pilot period ending the earlier of 
[May 6]November 4, 2019 or the date on which the pilot program is 
approved on a permanent basis, a FLEX Index Option that expires on an 
Expiration Friday may have any exercise settlement value that is 
permissible pursuant to subparagraph (b)(3) above.
    .02 (No change).
* * * * *
    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
    On January 28, 2010, the Exchange received approval of a rule 
change that, among other things, established a pilot program regarding 
permissible exercise settlement values for FLEX Index Options.\5\ The 
Exchange has extended the pilot period seven times, which is currently 
set to expire on the earlier of May 6, 2019 or the date on which the 
pilot program is approved on a permanent basis.\6\ The purpose of this 
rule change filing is to extend the pilot program through the earlier 
of November 4, 2019 or the date on which the pilot program is approved 
on a permanent basis. This filing simply seeks to extend the operation 
of the pilot program and does not propose any substantive changes to 
the pilot program.
---------------------------------------------------------------------------

    \5\ Securities Exchange Act Release No. 61439 (January 28, 
2010), 75 FR 5831 (February 4, 2010) (SR-CBOE-2009-087) (``Approval 
Order''). The initial pilot period was set to expire on March 28, 
2011, which date was added to the rules in 2010. See Securities 
Exchange Act Release No. 61676 (March 9, 2010), 75 FR 13191 (March 
18, 2010) (SR-CBOE-2010-026).
    \6\ See Securities Exchange Act Release Nos. 64110 (March 23, 
2011), 76 FR 17463 (March 29, 2011) (SR-CBOE-2011-024) (extending 
the pilot program through the earlier of March 30, 2012 or the date 
on which the pilot program is approved on the permanent basis); 
66701 (March 30, 2012), 77 FR 20673 (April 5, 2012) (SR-CBOE-2012-
027) (extending the pilot through the earlier of November 2, 2012 or 
the date on which the pilot program is approved on a permanent 
basis); 68145 (November 2, 2012), 77 FR 67044 (November 8, 2012) 
(SR-CBOE-2012-102) (extending the pilot program through the earlier 
of November 2, 2013 or the date on which the pilot program is 
approved on a permanent basis); 70752 (October 24, 2013), 78 FR 
65023 (October 30, 2013) (SR-CBOE-2013-099) (extending the pilot 
program through the earlier of November 3, 2014 or the date on which 
the pilot program is approved on a permanent basis); 73460 (October 
29, 2014), 79 FR 65464 (November 4, 2014) (SR-CBOE-2014-080) 
(extending the pilot program through the earlier of May 3, 2016 or 
the date on which the pilot program is approved on a permanent 
basis); 77742 (April 29, 2016), 81 FR 26857 (May 4, 2016) (SR-CBOE-
2016-032) (extending the pilot program through the earlier of May 3, 
2017 or the date on which the pilot program is approved on a 
permanent basis); 80443 (April 12, 2017), 82 FR 18331 (April 18, 
2017) (SR-CBOE-2017-032), 83 FR 21808 (May 10, 2018) (extending the 
pilot program through the earlier of May 3, 2018 or the date on 
which the pilot program is approved on a permanent basis); 83175 
(May 4, 2018), 83 FR 21808 (May 10, 2018) (SR-CBOE-2018-037); and 
84537 (November 5, 2018), 83 FR 56113 (November 9, 2018) (SR-CBOE-
2018-071). At the same time the permissible exercise settlement 
values pilot was established for FLEX Index Options, the Exchange 
also established a pilot program eliminating the minimum value size 
requirements for all FLEX Options. See Approval Order, supra note 5. 
The pilot program eliminating the minimum value size requirements 
was extended twice pursuant to the same rule filings that extended 
the permissible exercise settlement values (for the same extended 
periods) and was approved on a permanent basis in a separate rule 
change filing. See id. and Securities Exchange Act Release No. 67624 
(August 8, 2012), 77 FR 48580 (August 14, 2012) (SR-CBOE-2012-040).
---------------------------------------------------------------------------

    Under Rule 24A.4, Terms of FLEX Options, a FLEX Option may expire 
on any business day specified as to day,

[[Page 18101]]

month and year, not to exceed a maximum term of fifteen years. In 
addition, the exercise settlement value for a FLEX Index Option can be 
specified as the index value determined by reference to the reported 
level of the index as derived from the opening or closing prices of the 
component securities (``a.m. settlement'' or ``p.m. settlement,'' 
respectively) or as a specified average, provided that the average 
index value must conform to the averaging parameters established by the 
Exchange.\7\ However, prior to the initiation of the exercise 
settlement values pilot, only a.m. settlements were permitted if a FLEX 
Index Option expired on, or within two business days of, a third 
Friday-of-the-month expiration (``Expiration Friday'').\8\
---------------------------------------------------------------------------

    \7\ See Rule 24A.4(b)(3); see also Securities Exchange Act 
Release No. 31920 (February 24, 1993), 58 FR 12280 (March 3, 1993) 
(SR-CBOE-92-017). The Exchange has determined to limit the averaging 
parameters to three alternatives: The average of the opening and 
closing index values on the expiration date; the average of intra-
day high and low index values on the expiration date; and the 
average of the opening, closing, and intra-day high and low index 
values on the expiration date. Any changes to the averaging 
parameters established by the Exchange would be announced to Trading 
Permit Holders via circular.
    \8\ For example, prior to the pilot, the exercise settlement 
value of a FLEX Index Option that expires on the Tuesday before 
Expiration Friday could have an a.m., p.m. or specified average 
settlement. However, the exercise settlement value of a FLEX Index 
Option that expires on the Wednesday before Expiration Friday could 
only have an a.m. settlement.
---------------------------------------------------------------------------

    Under the exercise settlement values pilot, this restriction on 
p.m. and specified average price settlements in FLEX Index Options was 
eliminated.\9\ The exercise settlement values pilot is currently set to 
expire on the earlier of May 6, 2019 or the date on which the pilot 
program is approved on a permanent basis.
---------------------------------------------------------------------------

    \9\ No change was necessary or requested with respect to FLEX 
Equity Options. Regardless of the expiration date, FLEX Equity 
Options are settled by physical delivery of the underlying.
---------------------------------------------------------------------------

    Cboe Options is proposing to extend the pilot program through the 
earlier of November 4, 2019 or the date on which the pilot program is 
approved on a permanent basis. Cboe Options believes the pilot program 
has been successful and well received by its Trading Permit Holders and 
the investing public for the period that it has been in operation as a 
pilot. In support of the proposed extension of the pilot program, and 
as required by the pilot program's Approval Order, the Exchange has 
submitted to the Securities and Exchange Commission (the 
``Commission'') pilot program reports regarding the pilot, which detail 
the Exchange's experience with the program. Specifically, the Exchange 
provided the Commission with annual reports analyzing volume and open 
interest for each broad-based FLEX Index Options class overlying an 
Expiration Friday, p.m.-settled FLEX Index Options series.\10\ The 
annual reports also contained information and analysis of FLEX Index 
Options trading patterns. The Exchange also provided the Commission, on 
a periodic basis, interim reports of volume and open interest. In 
providing the pilot reports to the Commission, the Exchange has 
previously requested confidential treatment of the pilot reports under 
the Freedom of Information Act (``FOIA'').\11\
---------------------------------------------------------------------------

    \10\ The annual reports also contained certain pilot period and 
pre-pilot period analyses of volume and open interest for Expiration 
Friday, a.m.-settled FLEX Index series and Expiration Friday Non-
FLEX Index series overlying the same index as an Expiration Friday, 
p.m.-settled FLEX Index option.
    \11\ 5 U.S.C. 552.
---------------------------------------------------------------------------

    The Exchange believes there is sufficient investor interest and 
demand in the pilot program to warrant its extension. The Exchange 
believes that, for the period that the pilot has been in operation, the 
program has provided investors with additional means of managing their 
risk exposures and carrying out their investment objectives. 
Furthermore, the Exchange believes that it has not experienced any 
adverse market effects with respect to the pilot program, including any 
adverse market volatility effects that might occur as a result of large 
FLEX exercises in FLEX Option series that expire near Non-FLEX 
expirations and use a p.m. settlement (as discussed below).
    In that regard, based on the Exchange's experience in trading FLEX 
Options to date and over the pilot period, Cboe Options continues to 
believe that the restrictions on exercise settlement values are no 
longer necessary to insulate Non-FLEX expirations from the potential 
adverse market impacts of FLEX expirations.\12\ To the contrary, Cboe 
Options believes that the restriction actually places the Exchange at a 
competitive disadvantage to its OTC counterparts in the market for 
customized options, and unnecessarily limits market participants' 
ability to trade in an exchange environment that offers the added 
benefits of transparency, price discovery, liquidity, and financial 
stability.
---------------------------------------------------------------------------

    \12\ In further support, the Exchange also notes that the p.m. 
and specified average price settlements are already permitted for 
FLEX Index Options on any other business day except on, or within 
two business days of, Expiration Friday. The Exchange is not aware 
of any market disruptions or problems caused by the use of these 
settlement methodologies on these expiration dates (or on the 
expiration dates addressed under the pilot program). The Exchange is 
also not aware of any market disruptions or problems caused by the 
use of customized options in the over-the-counter (``OTC'') markets 
that expire on or near Expiration Friday and have a p.m. or 
specified average exercise settlement value. In addition, the 
Exchange believes the reasons for limiting expirations to a.m. 
settlement, which is something the SEC has imposed since the early 
1990s for Non-FLEX Options, revolved around a concern about 
expiration pressure on the New York Stock Exchange (``NYSE'') at the 
close that are no longer relevant in today's market. Today, the 
Exchange believes stock exchanges are able to better handle volume. 
There are multiple primary listing and unlisted trading privilege 
(``UTP'') markets, and trading is dispersed among several exchanges 
and alternative trading systems. In addition, the Exchange believes 
that surveillance techniques are much more robust and automated. In 
the early 1990s, it was also thought by some that opening procedures 
allow more time to attract contra-side interest to reduce 
imbalances. The Exchange believes, however, that today, order flow 
is predominantly electronic and the ability to smooth out openings 
and closes is greatly reduced (e.g., market-on-close procedures work 
just as well as openings). Also, other markets, such as the NASDAQ 
Stock Exchange, do not have the same type of pre-opening imbalance 
disseminations as NYSE, so many stocks are not subject to the same 
procedures on Expiration Friday. In addition, the Exchange believes 
that NYSE has reduced the required time a specialist has to wait 
after disseminating a pre-opening indication. So, in this respect, 
the Exchange believes there is less time to react in the opening 
than in the close. Moreover, to the extent there may be a risk of 
adverse market effects attributable to p.m. settled options (or 
certain average price settled options related to the closing price) 
that would otherwise be traded in a non-transparent fashion in the 
OTC market, the Exchange continues to believe that such risk would 
be lessened by making these customized options eligible for trading 
in an exchange environment because of the added transparency, price 
discovery, liquidity, and financial stability available.
---------------------------------------------------------------------------

    The Exchange also notes that certain position limit, aggregation 
and exercise limit requirements continue to apply to FLEX Index Options 
in accordance with Rules 24A.7, Position Limits and Reporting 
Requirements and 24A.8, Exercise Limits. Additionally, all FLEX Options 
remain subject to the position reporting requirements in paragraph (a) 
of Cboe Options Rule 4.13, Reports Related to Position Limits.\13\ 
Moreover, the Exchange and its Trading Permit Holder organizations each 
have the

[[Page 18102]]

authority, pursuant to Cboe Options Rule 12.10, Margin Required is 
Minimum, to impose additional margin as deemed advisable. Cboe Options 
continues to believe these existing safeguards serve sufficiently to 
help monitor open interest in FLEX Option series and significantly 
reduce any risk of adverse market effects that might occur as a result 
of large FLEX exercises in FLEX Option series that expire near Non-FLEX 
expirations and use a p.m. settlement.
---------------------------------------------------------------------------

    \13\ Cboe Options Rule 4.13(a) provides that ``[i]n a manner and 
form prescribed by the Exchange, each Trading Permit Holder shall 
report to the Exchange, the name, address, and social security or 
tax identification number of any customer who, acting alone, or in 
concert with others, on the previous business day maintained 
aggregate long or short positions on the same side of the market of 
200 or more contracts of any single class of option contracts dealt 
in on the Exchange. The report shall indicate for each such class of 
options, the number of option contracts comprising each such 
position and, in the case of short positions, whether covered or 
uncovered.'' For purposes of Rule 4.13, the term ``customer'' in 
respect of any Trading Permit Holder includes ``the Trading Permit 
Holder, any general or special partner of the Trading Permit Holder, 
any officer or director of the Trading Permit Holder, or any 
participant, as such, in any joint, group or syndicate account with 
the Trading Permit Holder or with any partner, officer or director 
thereof.'' Rule 4.13(d).
---------------------------------------------------------------------------

    Cboe Options is also cognizant of the OTC market, in which similar 
restrictions on exercise settlement values do not apply. Cboe Options 
continues to believe that the pilot program is appropriate and 
reasonable and provides market participants with additional flexibility 
in determining whether to execute their customized options in an 
exchange environment or in the OTC market. Cboe Options continues to 
believe that market participants benefit from being able to trade these 
customized options in an exchange environment in several ways, 
including, but not limited to, enhanced efficiency in initiating and 
closing out positions, increased market transparency, and heightened 
contra-party creditworthiness due to the role of the Options Clearing 
Corporation as issuer and guarantor of FLEX Options.
    If, in the future, the Exchange proposes an additional extension of 
the pilot program, or should the Exchange propose to make the pilot 
program permanent, the Exchange will submit, along with any filing 
proposing such amendments to the pilot program, an annual report 
(addressing the same areas referenced above and consistent with the 
pilot program's Approval Order) to the Commission at least two months 
prior to the expiration date of the program. The Exchange will also 
continue, on a periodic basis, to submit interim reports of volume and 
open interest consistent with the terms of the exercise settlement 
values pilot program as described in the pilot program's Approval 
Order. Additionally, the Exchange will provide the Commission with any 
additional data or analyses the Commission requests because it deems 
such data or analyses necessary to determine whether the pilot program 
is consistent with the Exchange Act. The Exchange is in the process of 
making public on its website data and analyses previously submitted to 
the Commission under the pilot program, and will make public any data 
and analyses it submits to the Commission under the pilot program in 
the future.
    As noted in the pilot program's Approval Order, any positions 
established under the pilot program would not be impacted by the 
expiration of the pilot program.\14\
---------------------------------------------------------------------------

    \14\ For example, a position in a p.m.-settled FLEX Index Option 
series that expires on Expiration Friday in January 2019 could be 
established during the exercise settlement values pilot. If the 
pilot program were not extended (or made permanent), then the 
position could continue to exist. However, the Exchange notes that 
any further trading in the series would be restricted to 
transactions where at least one side of the trade is a closing 
transaction. See Approval Order at footnotes 9 and 10, supra note 5.
---------------------------------------------------------------------------

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.\15\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \16\ 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) \17\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
    \17\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes that the proposed extension of 
the pilot program, which permits additional exercise settlement values, 
would provide greater opportunities for investors to manage risk 
through the use of FLEX Options. Further, the Exchange believes that it 
has not experienced any adverse effects from the operation of the pilot 
program, including any adverse market volatility effects that might 
occur as a result of large FLEX exercises in FLEX Option series that 
expire near Non-FLEX expirations and use a p.m. settlement. The 
Exchange also believes that the extension of the exercise settlement 
values pilot does not raise any unique regulatory concerns. In 
particular, although p.m. settlements may raise questions with the 
Commission, the Exchange believes that, based on the Exchange's 
experience in trading FLEX Options to date and over the pilot period, 
market impact and investor protection concerns will not be raised by 
this rule change. The Exchange also believes that the proposed rule 
change would continue to provide Trading Permit Holders and investors 
with additional opportunities to trade customized options in an 
exchange environment (which offers the added benefits of transparency, 
price discovery, liquidity, and financial stability as compared to the 
over-the-counter market) and subject to exchange-based rules, and 
investors would benefit as a result.

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

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

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public

[[Page 18103]]

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 if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\18\ and Rule 19b-4(f)(6) thereunder.\19\
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of its 
intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\21\ 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 immediately upon filing. The Exchange states that 
such waiver will allow the Exchange to extend the pilot program prior 
to its expiration on May 6, 2019, and maintain the status quo, thereby 
reducing market disruption.
---------------------------------------------------------------------------

    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, as 
it will allow the pilot program to continue uninterrupted, thereby 
avoiding investor confusion that could result from a temporary 
interruption in the pilot program. For this reason, the Commission 
designates the proposed rule change to be operative upon filing.\22\
---------------------------------------------------------------------------

    \22\ For purposes only of waiving the operative delay for this 
proposal, the Commission has 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CBOE-2019-021 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-2019-021. 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-2019-021 and should be submitted on 
or before May 20, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
---------------------------------------------------------------------------

    \23\ 17 CFR 200.30-3(a)(12) and (59).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-08500 Filed 4-26-19; 8:45 am]
 BILLING CODE 8011-01-P
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