Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make Minor Amendments to and Relocate Certain Rules Related to the Listing of Index Options (Including Binary and Range Options) From the Currently Effective Rulebook to Proposed Chapter 4, Section B of the Shell Structure for the Exchange's Rulebook That Will Become Effective Upon the Migration of the Exchange's Trading Platform to the Same System Used by the Cboe Affiliated Exchanges, 56879-56882 [2019-23056]
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Federal Register / Vol. 84, No. 205 / Wednesday, October 23, 2019 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87337; File No. SR–CBOE–
2019–092]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Make Minor
Amendments to and Relocate Certain
Rules Related to the Listing of Index
Options (Including Binary and Range
Options) From the Currently Effective
Rulebook to Proposed Chapter 4,
Section B of the Shell Structure for the
Exchange’s Rulebook That Will
Become Effective Upon the Migration
of the Exchange’s Trading Platform to
the Same System Used by the Cboe
Affiliated Exchanges
October 17, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
4, 2019, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I 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.
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 make
minor amendments to and relocate
certain rules related to the listing of
index options (including binary and
range options) from the currently
effective Rulebook (‘‘current Rulebook’’)
to proposed Chapter 4, Section B of the
shell structure for the Exchange’s
Rulebook that will become effective
upon the migration of the Exchange’s
trading platform to the same system
used by the Cboe Affiliated Exchanges
(as defined below) (‘‘shell Rulebook’’).
The text of the proposed rule change is
provided in Exhibit 5.
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
In 2016, the Exchange’s parent
company, Cboe Global Markets, Inc.
56879
(formerly named CBOE Holdings, Inc.)
(‘‘Cboe Global’’), which is also the
parent company of Cboe C2 Exchange,
Inc. (‘‘C2’’), acquired Cboe EDGA
Exchange, Inc. (‘‘EDGA’’), Cboe EDGX
Exchange, Inc. (‘‘EDGX’’ or ‘‘EDGX
Options’’), Cboe BZX Exchange, Inc.
(‘‘BZX’’ or ‘‘BZX Options’’), and Cboe
BYX Exchange, Inc. (‘‘BYX’’ and,
together with Cboe Options, C2, EDGX,
EDGA, and BZX, the ‘‘Cboe Affiliated
Exchanges’’). The Cboe Affiliated
Exchanges are working to align certain
system functionality, retaining only
intended differences, between the Cboe
Affiliated Exchanges, in the context of a
technology migration. Cboe Options
intends to migrate its trading platform to
the same system used by the Cboe
Affiliated Exchanges, which the
Exchange expects to complete on
October 7, 2019. In connection with this
technology migration and the related
reorganization of its Rulebook, the
Exchange has a shell Rulebook that
resides alongside its current Rulebook,
which shell Rulebook will contain the
Rules that will be in place upon
completion of the Cboe Options
technology migration.
The Exchange proposes to make
minor amendments to and relocate
certain rules related to the listing of
index options (including binary options
and range options) into proposed
Chapter 4, Section B of the shell
Rulebook.5 The Exchange notes that in
addition to making these amendments
and reorganizing the current rules, the
proposed rule change deletes these rules
from the current Rulebook. The
proposed rule change relocates and,
where applicable, reorganizes the rules
as follows:
Shell rule
Current rule
Chapter 4, Section B Introduction ......................
Chapter XXIV Introduction.
In addition to nonsubstantive changes, the proposed rule change adds that other Rules may
not apply if the context otherwise requires (for example, a rule that refers to the stock underlying an option would be inapplicable to an index option, which has an underlying index).
24.2 Designation of the Index.6
24.1 Definitions (except Interpretation and Policy .01).
The proposed rule change deletes the definitions of ‘‘underlying security’’ and ‘‘reporting authority,’’ as those terms are already defined in Rule 1.1 of the shell Rulebook, and therefore
the definitions in Rule 24.1 are redundant.7
24.3 Dissemination of Information.
24.1, Interpretation and Policy .01 Reporting Authorities.8
24.9 Terms of Index Option Contracts. 8.14, Interpretation and Policy .01.9
24.11A Debit Put Spread Cash Account Transactions.
4.10
4.11
Designation of the Index ..........................
Definitions .................................................
4.12(a)—(b) Dissemination of Information. ......
4.12(c) Reporting Authorities ..............................
4.13 Series of Index Options Open .................
4.14 Debit Put Spread Cash Account Transactions.
4.15 Range Options:
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).
5 The Exchange notes it moved certain rules
related to index options from the current Rulebook
to the shell Rulebook (such as rules related to
trading hours and position and exercise limits) in
2 17
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other rule filings. See, e.g., Securities Exchange Act
Release No. 86173 (June 20, 2019), 84 FR 30267
(June 26, 2019) (SR–CBOE–2019–027); and SR–
CBOE–2019–088.
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Federal Register / Vol. 84, No. 205 / Wednesday, October 23, 2019 / Notices
Shell rule
Current rule
(a) General ..................................................
(b) Definitions ..............................................
(c) Designation of Range Option Contracts
(d) Maintenance Listing Standards .............
(e) Determination of the Settlement Value
of the Underlying Index.
4.16 Binary Options:
(a) General ..................................................
(b) Definitions ..............................................
(c) Designation of Binary Option Contracts
(d) Maintenance Listing Standards .............
(e) Determination of the Settlement Value
of the Underlying Index.
(f) Adjustment ..............................................
(g) FLEX Trading .........................................
6 The proposed rule change moves current Rule
24.2, Interpretation and Policy .01 into proposed
Rule 4.10(h) and (i), current Rule 24.2,
Interpretation and Policy .02 into proposed Rule
4.10(j) and (k), and current Rule 24.2, Interpretation
and Policy .03 into proposed Rule 4.10(l) and (m).
7 The proposed rule change also deletes reserved
paragraphs that contain no substantive rule text
from current Rule 24.1.
8 The proposed rule change updates the name of
certain reporting authorities to their current legal
names.
9 The Exchange previously deleted the rule text
from current Rule 8.14. See Securities Exchange Act
Release No. 87024 (September 19, 2019), 84 FR
50545 (September 25, 2019) (SR–CBOE–2019–059).
The Exchange is not adding to the shell Rulebook
the language from Rule 8.14, Interpretation and
Policy .01 that states the Exchange will have
authority to change the eligible categories of
Market-Maker participants for each group, as that
authority is covered by other rules. See Rules
3.55(a) (which states the Exchange may designate
one or more Market-Makers in good standing with
an appointment in a class for which a designated
primary market-maker (‘‘DPM’’) has not been
appointed as a Lead Market-Maker (‘‘LMM’’)),
5.50(h) (which permits the Exchange to determine
for each class traded on the Exchange whether a
DPM should be appointed to the class), and 5.50(l)
(which permits the Exchange to designate a class for
trading without a DPM or LMM). Additionally, the
language in current Rule 8.14, Interpretation and
Policy .01(a) was previously moved to Rule 5.5(l)(1)
of the shell Rulebook, .01(b) was previously moved
to 5.50(l)(2) of the shell Rulebook, and .01(c) was
previously moved to Rule 1.5(b) [sic] of the shell
Rulebook.
10 The proposed rule change simplifies the
current language, but makes no substantive
changes.
11 The proposed rule change simplifies the
current language, but makes no substantive
changes.
12 The proposed rule change deletes the definition
of ‘‘reporting authority,’’ as that term is already
defined in Rule 1.1 of the shell Rulebook, and
therefore the definition in Rule 22.1 is redundant.
13 See Securities Exchange Act Release No. 87024
(September 19, 2019), 84 FR 50545 (September 25,
2019) (SR–CBOE–2019–059) (in which filing the
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Chapter XX, Introduction.10
20.1 Definitions.
20.3 Designation of Range Option Contracts.
20.4 Maintenance Listing Standards.
20.9 Determination of the Settlement Value of the Underlying Index.
Chapter XXII, Introduction.11
22.1 Definitions.12
22.3 Designation of Binary Option Contracts.
22.4 Maintenance Listing Standards.
22.10 Determination of the Settlement Value of the Underlying Index.
22.13(c) Premium Bids and Offers; Minimum Increments; Priority and Allocation.
22.16 FLEX Trading.
The proposed rule change deletes the language from this provision regarding the inapplicability of minimum quote widths (in current Rule 24A.9) to binary options, as there is no
longer a quote width obligation, so there is no longer a need to exclude its applicability to binary options.13 Since this quote width obligation did not apply to binary options, deletion of
that provision, and thus deletion of its reference in this proposed paragraph (g), would have
no impact on the trading of FLEX binary options. [sic].
The proposed rule change deletes
current Rules 22.11 and 22.13(d), as
those rules merely point to other rules
as applying to binary options. Pursuant
to proposed Rule 4.16(a), all rules apply
to binary options unless otherwise
provided or unless the context provides
otherwise. Therefore, these rules are
redundant and unnecessary.
The proposed rule change deletes the
introduction to current Chapter XXIV. It
is clear from the Chapter and Section
headings that the rules being moved
into the shell Rulebook relate to index
options. Any rules that apply differently
to index options specify that in the rules
in the shell Rulebook. [sic]
The proposed rule change deletes
indexes currently listed in current Rules
24.1, Interpretation and Policy .01 and
24.9(a)(3), (a)(4), (b)(2) and
Interpretation and Policy .01 14
(proposed Rules 4.12(c) and 4.13(a)(3),
(a)(4), and Interpretation and Policy .01,
respectively) on which the Exchange is
authorized to list options, but on which
the Exchange does not currently, and
does not intend, to list options. Because
there are currently no options listed on
any of these indexes, the proposed rule
change has no impact on how options
are listed on the Exchange or the
requirements for listing options on the
Exchange.
The proposed rule change deletes a
reference to Rule 8.14 from current Rule
24.9(d)(6) (proposed Rule 4.13(d)(6), as
that provision was deleted as
Exchange deleted the quote width obligation from
current Rule 24A.9 [sic]).
14 The proposed rule change also deletes a
reference to one of the indexes being deleted from
current Rule 24.9(c), and deletes current Rule 24.9,
Interpretation and Policy .01(f) and (g), which relate
to indexes being deleted from the rules.
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unnecessary.15 The Exchange may
determine eligible categories of MarketMaker participants for a class pursuant
to other rules.16 Additionally, the
proposed rule change deletes the
parenthetical that references public
customers whose orders would be
eligible to be placed on the book under
current Rule 7.4(a) from the
introductory paragraph of Rule 24.11A
(proposed Rule 4.14), as the orders of all
public customers are eligible to be
placed on the book in all classes, and
there no longer is a Rule 7.4 in the
current Rulebook.
The proposed rule change updates
references in current Rule 24.9,
Interpretations and Policies .01(b) and
.11(c) (proposed Rule 4.13,
Interpretations and Policies .01(b) and
.10(c)) to the EOW/EOM Pilot Program
in current Rule 24.9(e) (which the
proposed rule change moves to
proposed Rule 4.13(e)), to the
Nonstandard Expirations Pilot Program,
which is the current name of that
program.
The proposed rule changes make also
makes nonsubstantive changes to the
rules in order to add section headings,
update cross-references to other rules
and chapters that will be implemented
upon migration, update certain
technical text formatting that will be
used in the rules upon migration (e.g.,
using words for numbers below 10 in
the rule text and numerals for numbers
above 10 in the rule text), update times
from Chicago time to Eastern time (see
15 See Securities Exchange Act Release No. 87024
(September 19, 2019), 84 FR 50545 (September 25,
2019) (SR–CBOE–2019–059).
16 See, e.g., Rules 3.55 and 5.50 in the shell
Rulebook.
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Rule 1.6 of the shell Rulebook), delete
empty reserved rules, correct
punctuation, alphabetize definitions,
refer to Standard & Poor’s as S&P,
incorporate defined terms, and reformat
the paragraph lettering and numbering
to conform to that used in the shell
Rulebook.
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.17 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 18 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) 19 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The proposed rule change only
deletes redundant rules, deletes
references to indexes on which the
Exchange does not list (and does not
intend to list) options, and makes
nonsubstantive changes to the rules and
is merely intended to simplify,
consolidate, and reorganize the
Exchange’s Rules in anticipation of the
technology migration on October 7,
2019. The Exchange believes that these
proposed change will foster cooperation
and coordination with those facilitating
transactions in securities and remove
impediments to and perfect the
mechanism of a free and open market
and national market system by
simplifying the Rules and Rulebook as
a whole, and making its Rules easier to
follow and understand, which will also
result in less burdensome and more
efficient regulatory compliance.
17 15
18 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
19 Id.
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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
Exchange reiterates that the proposed
rule change is being proposed in the
context of a technology migration of the
Exchange’s trading platform to the same
system as the Cboe Affiliated Exchanges
and the related reorganization of the
Rulebook, and not as a competitive
filing. The Exchange does not believe
that the proposed rule change will
impose any burden on intramarket
competition because it only deletes
redundant rules, deletes references to
indexes on which the Exchange does
not list (and does not intend to list)
options, and makes nonsubstantive
changes to the rules and is merely
intended to simplify, consolidate,
reorganize the Exchange’s Rules in the
shell Rulebook that will be in place
come October 7, 2019. The Exchange
does not believe that the proposed rule
change will impose any burden on
intermarket competition because the
proposed rules are substantially the
same as the Exchange’s current rules, all
of which have all been previously filed
with the Commission.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 20 and Rule 19b–
4(f)(6) 21 thereunder. 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 22 and Rule 19b–
4(f)(6) 23 thereunder.
20 15
U.S.C. 78(b)(3)(A).
CFR 240.19b–4(f)(6).
22 15 U.S.C. 78s(b)(3)(A).
23 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
21 17
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56881
A proposed rule change filed under
Rule 19b–4(f)(6) 24 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),25 the
Commission may designate a shorter
time if such action is consistent with
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposed
rule change may become operative prior
to the Exchange’s proposed system
migration on October 7, 2019, in order
to permit the Exchange to provide a
complete Rulebook upon the
completion of the migration. According
to the Exchange, the proposed rule
change simplifies, consolidates, and
updates its rule text and does not
substantively alter any of its rules.
Moreover, the Exchange has represented
that the proposed rule change has no
impact on how options are listed on the
Exchange or the requirements for listing
options on the Exchange. The
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest because the proposal
does not raise any new or novel issues.
Further, notwithstanding the
introduction to Chapter 4, Section B,
that all rules apply unless the context
may otherwise require, the Commission
expects any rules that were previously
applicable will continue to apply in the
same manner. Therefore, the
Commission designates the proposed
rule change to be operative on upon
filing.26
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 will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
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.
24 17 CFR 240.19b–4(f)(6).
25 17 CFR 240.19b–4(f)(6).
26 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2019–092 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–2019–092. 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–2019–092 and
should be submitted on or before
November 13,2019.
27 17
CFR 200.30–3(a)(12)
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–23056 Filed 10–22–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87339; File No. SR–
CboeEDGX–2019–061]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Extend the
Pilot Related to the Market-Wide
Circuit Breaker in Rule 11.16
October 17, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
15, 2019, Cboe EDGX Exchange, Inc.
(the ‘‘Exchange’’ or ‘‘‘‘EDGX’’’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal as a ‘‘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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGX Exchange, Inc. (‘‘EDGX’’
or the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposal to
extend the pilot related to the marketwide circuit breaker in Rule 11.16. The
text of the proposed rule change is
enclosed as Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
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).
2 17
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
EDGX Rules 11.16(a) through (d), (f)
and (g) describe the methodology for
determining when to halt trading in all
stocks due to extraordinary market
volatility, i.e., market-wide circuit
breakers. The market-wide circuit
breaker (‘‘MWCB’’) mechanism was
approved by the Commission to operate
on a pilot basis, the term of which was
to coincide with the pilot period for the
Plan to Address Extraordinary Market
Volatility Pursuant to Rule 608 of
Regulation NMS (the ‘‘LULD Plan’’),5
including any extensions to the pilot
period for the LULD Plan. The
Commission recently approved an
amendment to the LULD Plan for it to
operate on a permanent, rather than
pilot, basis.6 In light of the proposal to
make the LULD Plan permanent, the
Exchange amended Rule 11.16 to untie
the pilot’s effectiveness from that of the
LULD Plan and to extend the pilot’s
effectiveness to the close of business on
October 18, 2019.7
The Exchange now proposes to amend
Rule 11.16 to extend the pilot to the
close of business on October 18, 2020.
This filing does not propose any
substantive or additional changes to
Rule 11.16. The Exchange will use the
extension period to develop with the
other SROs rules and procedures that
would allow for the periodic testing of
the performance of the MWCB
mechanism, with industry member
participation in such testing. The
5 See Securities Exchange Act Release No. 67091
(May 31, 2012), 77 FR 33498 (June 6, 2012). The
LULD Plan provides a mechanism to address
extraordinary market volatility in individual
securities.
6 See Securities Exchange Act Release No. 85623
(April 11, 2019), 84 FR 16086 (April 17, 2019).
7 See Securities Exchange Act Release No. 85667
(April 16, 2019), 84 FR 16736 (April 22, 2019) (SR–
CboeEDGX–2019–023).
E:\FR\FM\23OCN1.SGM
23OCN1
]]>Agencies
[Federal Register Volume 84, Number 205 (Wednesday, October 23, 2019)]
[Notices]
[Pages 56879-56882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23056]
[[Page 56879]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87337; File No. SR-CBOE-2019-092]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Make
Minor Amendments to and Relocate Certain Rules Related to the Listing
of Index Options (Including Binary and Range Options) From the
Currently Effective Rulebook to Proposed Chapter 4, Section B of the
Shell Structure for the Exchange's Rulebook That Will Become Effective
Upon the Migration of the Exchange's Trading Platform to the Same
System Used by the Cboe Affiliated Exchanges
October 17, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on October 4, 2019, Cboe Exchange, Inc. (the ``Exchange'' or
``Cboe Options'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
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.
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\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 make minor amendments to and relocate certain rules related to the
listing of index options (including binary and range options) from the
currently effective Rulebook (``current Rulebook'') to proposed Chapter
4, Section B of the shell structure for the Exchange's Rulebook that
will become effective upon the migration of the Exchange's trading
platform to the same system used by the Cboe Affiliated Exchanges (as
defined below) (``shell Rulebook''). The text of the proposed rule
change is provided in Exhibit 5.
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
In 2016, the Exchange's parent company, Cboe Global Markets, Inc.
(formerly named CBOE Holdings, Inc.) (``Cboe Global''), which is also
the parent company of Cboe C2 Exchange, Inc. (``C2''), acquired Cboe
EDGA Exchange, Inc. (``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX'' or
``EDGX Options''), Cboe BZX Exchange, Inc. (``BZX'' or ``BZX
Options''), and Cboe BYX Exchange, Inc. (``BYX'' and, together with
Cboe Options, C2, EDGX, EDGA, and BZX, the ``Cboe Affiliated
Exchanges''). The Cboe Affiliated Exchanges are working to align
certain system functionality, retaining only intended differences,
between the Cboe Affiliated Exchanges, in the context of a technology
migration. Cboe Options intends to migrate its trading platform to the
same system used by the Cboe Affiliated Exchanges, which the Exchange
expects to complete on October 7, 2019. In connection with this
technology migration and the related reorganization of its Rulebook,
the Exchange has a shell Rulebook that resides alongside its current
Rulebook, which shell Rulebook will contain the Rules that will be in
place upon completion of the Cboe Options technology migration.
The Exchange proposes to make minor amendments to and relocate
certain rules related to the listing of index options (including binary
options and range options) into proposed Chapter 4, Section B of the
shell Rulebook.\5\ The Exchange notes that in addition to making these
amendments and reorganizing the current rules, the proposed rule change
deletes these rules from the current Rulebook. The proposed rule change
relocates and, where applicable, reorganizes the rules as follows:
---------------------------------------------------------------------------
\5\ The Exchange notes it moved certain rules related to index
options from the current Rulebook to the shell Rulebook (such as
rules related to trading hours and position and exercise limits) in
other rule filings. See, e.g., Securities Exchange Act Release No.
86173 (June 20, 2019), 84 FR 30267 (June 26, 2019) (SR-CBOE-2019-
027); and SR-CBOE-2019-088.
------------------------------------------------------------------------
Shell rule Current rule
------------------------------------------------------------------------
Chapter 4, Section B Chapter XXIV Introduction.
Introduction. In addition to nonsubstantive changes,
the proposed rule change adds that other
Rules may not apply if the context
otherwise requires (for example, a rule
that refers to the stock underlying an
option would be inapplicable to an index
option, which has an underlying index).
4.10 Designation of the Index 24.2 Designation of the Index.\6\
4.11 Definitions............. 24.1 Definitions (except Interpretation
and Policy .01).
The proposed rule change deletes the
definitions of ``underlying security''
and ``reporting authority,'' as those
terms are already defined in Rule 1.1 of
the shell Rulebook, and therefore the
definitions in Rule 24.1 are
redundant.\7\
4.12(a)--(b) Dissemination of 24.3 Dissemination of Information.
Information.. 24.1, Interpretation and Policy .01
4.12(c) Reporting Authorities Reporting Authorities.\8\
4.13 Series of Index Options 24.9 Terms of Index Option Contracts.
Open. 8.14, Interpretation and Policy .01.\9\
4.14 Debit Put Spread Cash 24.11A Debit Put Spread Cash Account
Account Transactions. Transactions.
4.15 Range Options:
[[Page 56880]]
Chapter XX, Introduction.\10\
(a) General.............. 20.1 Definitions.
(b) Definitions.......... 20.3 Designation of Range Option
Contracts.
(c) Designation of Range 20.4 Maintenance Listing Standards.
Option Contracts.
(d) Maintenance Listing 20.9 Determination of the Settlement
Standards. Value of the Underlying Index.
(e) Determination of the
Settlement Value of the
Underlying Index.
4.16 Binary Options:
(a) General.............. Chapter XXII, Introduction.\11\
(b) Definitions.......... 22.1 Definitions.\12\
(c) Designation of Binary 22.3 Designation of Binary Option
Option Contracts. Contracts.
(d) Maintenance Listing 22.4 Maintenance Listing Standards.
Standards.
(e) Determination of the 22.10 Determination of the Settlement
Settlement Value of the Value of the Underlying Index.
Underlying Index.
(f) Adjustment........... 22.13(c) Premium Bids and Offers; Minimum
Increments; Priority and Allocation.
(g) FLEX Trading......... 22.16 FLEX Trading.
The proposed rule change deletes the
language from this provision regarding
the inapplicability of minimum quote
widths (in current Rule 24A.9) to binary
options, as there is no longer a quote
width obligation, so there is no longer
a need to exclude its applicability to
binary options.\13\ Since this quote
width obligation did not apply to binary
options, deletion of that provision, and
thus deletion of its reference in this
proposed paragraph (g), would have no
impact on the trading of FLEX binary
options. [sic].
------------------------------------------------------------------------
---------------------------------------------------------------------------
\6\ The proposed rule change moves current Rule 24.2,
Interpretation and Policy .01 into proposed Rule 4.10(h) and (i),
current Rule 24.2, Interpretation and Policy .02 into proposed Rule
4.10(j) and (k), and current Rule 24.2, Interpretation and Policy
.03 into proposed Rule 4.10(l) and (m).
\7\ The proposed rule change also deletes reserved paragraphs
that contain no substantive rule text from current Rule 24.1.
\8\ The proposed rule change updates the name of certain
reporting authorities to their current legal names.
\9\ The Exchange previously deleted the rule text from current
Rule 8.14. See Securities Exchange Act Release No. 87024 (September
19, 2019), 84 FR 50545 (September 25, 2019) (SR-CBOE-2019-059). The
Exchange is not adding to the shell Rulebook the language from Rule
8.14, Interpretation and Policy .01 that states the Exchange will
have authority to change the eligible categories of Market-Maker
participants for each group, as that authority is covered by other
rules. See Rules 3.55(a) (which states the Exchange may designate
one or more Market-Makers in good standing with an appointment in a
class for which a designated primary market-maker (``DPM'') has not
been appointed as a Lead Market-Maker (``LMM'')), 5.50(h) (which
permits the Exchange to determine for each class traded on the
Exchange whether a DPM should be appointed to the class), and
5.50(l) (which permits the Exchange to designate a class for trading
without a DPM or LMM). Additionally, the language in current Rule
8.14, Interpretation and Policy .01(a) was previously moved to Rule
5.5(l)(1) of the shell Rulebook, .01(b) was previously moved to
5.50(l)(2) of the shell Rulebook, and .01(c) was previously moved to
Rule 1.5(b) [sic] of the shell Rulebook.
\10\ The proposed rule change simplifies the current language,
but makes no substantive changes.
\11\ The proposed rule change simplifies the current language,
but makes no substantive changes.
\12\ The proposed rule change deletes the definition of
``reporting authority,'' as that term is already defined in Rule 1.1
of the shell Rulebook, and therefore the definition in Rule 22.1 is
redundant.
\13\ See Securities Exchange Act Release No. 87024 (September
19, 2019), 84 FR 50545 (September 25, 2019) (SR-CBOE-2019-059) (in
which filing the Exchange deleted the quote width obligation from
current Rule 24A.9 [sic]).
---------------------------------------------------------------------------
The proposed rule change deletes current Rules 22.11 and 22.13(d),
as those rules merely point to other rules as applying to binary
options. Pursuant to proposed Rule 4.16(a), all rules apply to binary
options unless otherwise provided or unless the context provides
otherwise. Therefore, these rules are redundant and unnecessary.
The proposed rule change deletes the introduction to current
Chapter XXIV. It is clear from the Chapter and Section headings that
the rules being moved into the shell Rulebook relate to index options.
Any rules that apply differently to index options specify that in the
rules in the shell Rulebook. [sic]
The proposed rule change deletes indexes currently listed in
current Rules 24.1, Interpretation and Policy .01 and 24.9(a)(3),
(a)(4), (b)(2) and Interpretation and Policy .01 \14\ (proposed Rules
4.12(c) and 4.13(a)(3), (a)(4), and Interpretation and Policy .01,
respectively) on which the Exchange is authorized to list options, but
on which the Exchange does not currently, and does not intend, to list
options. Because there are currently no options listed on any of these
indexes, the proposed rule change has no impact on how options are
listed on the Exchange or the requirements for listing options on the
Exchange.
---------------------------------------------------------------------------
\14\ The proposed rule change also deletes a reference to one of
the indexes being deleted from current Rule 24.9(c), and deletes
current Rule 24.9, Interpretation and Policy .01(f) and (g), which
relate to indexes being deleted from the rules.
---------------------------------------------------------------------------
The proposed rule change deletes a reference to Rule 8.14 from
current Rule 24.9(d)(6) (proposed Rule 4.13(d)(6), as that provision
was deleted as unnecessary.\15\ The Exchange may determine eligible
categories of Market-Maker participants for a class pursuant to other
rules.\16\ Additionally, the proposed rule change deletes the
parenthetical that references public customers whose orders would be
eligible to be placed on the book under current Rule 7.4(a) from the
introductory paragraph of Rule 24.11A (proposed Rule 4.14), as the
orders of all public customers are eligible to be placed on the book in
all classes, and there no longer is a Rule 7.4 in the current Rulebook.
---------------------------------------------------------------------------
\15\ See Securities Exchange Act Release No. 87024 (September
19, 2019), 84 FR 50545 (September 25, 2019) (SR-CBOE-2019-059).
\16\ See, e.g., Rules 3.55 and 5.50 in the shell Rulebook.
---------------------------------------------------------------------------
The proposed rule change updates references in current Rule 24.9,
Interpretations and Policies .01(b) and .11(c) (proposed Rule 4.13,
Interpretations and Policies .01(b) and .10(c)) to the EOW/EOM Pilot
Program in current Rule 24.9(e) (which the proposed rule change moves
to proposed Rule 4.13(e)), to the Nonstandard Expirations Pilot
Program, which is the current name of that program.
The proposed rule changes make also makes nonsubstantive changes to
the rules in order to add section headings, update cross-references to
other rules and chapters that will be implemented upon migration,
update certain technical text formatting that will be used in the rules
upon migration (e.g., using words for numbers below 10 in the rule text
and numerals for numbers above 10 in the rule text), update times from
Chicago time to Eastern time (see
[[Page 56881]]
Rule 1.6 of the shell Rulebook), delete empty reserved rules, correct
punctuation, alphabetize definitions, refer to Standard & Poor's as
S&P, incorporate defined terms, and reformat the paragraph lettering
and numbering to conform to that used in the shell Rulebook.
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.\17\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \18\ 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) \19\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(5).
\19\ Id.
---------------------------------------------------------------------------
The proposed rule change only deletes redundant rules, deletes
references to indexes on which the Exchange does not list (and does not
intend to list) options, and makes nonsubstantive changes to the rules
and is merely intended to simplify, consolidate, and reorganize the
Exchange's Rules in anticipation of the technology migration on October
7, 2019. The Exchange believes that these proposed change will foster
cooperation and coordination with those facilitating transactions in
securities and remove impediments to and perfect the mechanism of a
free and open market and national market system by simplifying the
Rules and Rulebook as a whole, and making its Rules easier to follow
and understand, which will also result in less burdensome and more
efficient regulatory compliance.
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 Exchange reiterates that
the proposed rule change is being proposed in the context of a
technology migration of the Exchange's trading platform to the same
system as the Cboe Affiliated Exchanges and the related reorganization
of the Rulebook, and not as a competitive filing. The Exchange does not
believe that the proposed rule change will impose any burden on
intramarket competition because it only deletes redundant rules,
deletes references to indexes on which the Exchange does not list (and
does not intend to list) options, and makes nonsubstantive changes to
the rules and is merely intended to simplify, consolidate, reorganize
the Exchange's Rules in the shell Rulebook that will be in place come
October 7, 2019. The Exchange does not believe that the proposed rule
change will impose any burden on intermarket competition because the
proposed rules are substantially the same as the Exchange's current
rules, all of which have all been previously filed with the Commission.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \20\ and Rule 19b-4(f)(6) \21\ thereunder.
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 \22\ and Rule 19b-4(f)(6) \23\
thereunder.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78(b)(3)(A).
\21\ 17 CFR 240.19b-4(f)(6).
\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's 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) \24\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\25\ the Commission
may designate a shorter time if such action is consistent with
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative prior to the Exchange's proposed
system migration on October 7, 2019, in order to permit the Exchange to
provide a complete Rulebook upon the completion of the migration.
According to the Exchange, the proposed rule change simplifies,
consolidates, and updates its rule text and does not substantively
alter any of its rules. Moreover, the Exchange has represented that the
proposed rule change has no impact on how options are listed on the
Exchange or the requirements for listing options on the Exchange. The
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest
because the proposal does not raise any new or novel issues. Further,
notwithstanding the introduction to Chapter 4, Section B, that all
rules apply unless the context may otherwise require, the Commission
expects any rules that were previously applicable will continue to
apply in the same manner. Therefore, the Commission designates the
proposed rule change to be operative on upon filing.\26\
---------------------------------------------------------------------------
\24\ 17 CFR 240.19b-4(f)(6).
\25\ 17 CFR 240.19b-4(f)(6).
\26\ For purposes only of waiving the 30-day operative delay,
the Commission also 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 will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
[[Page 56882]]
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-2019-092 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-2019-092. 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-2019-092 and should be submitted on
or before November 13, 2019.
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\27\ 17 CFR 200.30-3(a)(12)
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-23056 Filed 10-22-19; 8:45 am]
BILLING CODE 8011-01-P
