Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Operation of its SPXPM Pilot Program, 61099-61102 [2019-24498]
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Federal Register / Vol. 84, No. 218 / Tuesday, November 12, 2019 / Notices
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
amendments to relocate the Rules are
non-substantive. This rule change is
intended to bring greater clarity to the
Exchange’s Rules. Renumbering, relettering, deleting reserved rules and
amending cross-references will bring
greater transparency to BX’s Rule
structure.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 18 and Rule 19b–
4(f)(6) thereunder.19
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 20 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 21
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has
requested that the Commission waive
the 30-day operative delay so that the
Exchange could immediately relocate its
rules. According to the Exchange, the
proposal is intended to make it easier
for members to locate the various
Exchange rules, and is part of a larger
effort to reorganize the Exchange’s rules
and those of its Affiliated Exchanges.
For these reasons, the Commission
believes that waiver of the 30-day
operative delay is consistent with the
protection of investors and the public
interest. Accordingly, the Commission
hereby waives the operative delay and
designates the proposed rule change
operative upon filing.22
18 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The 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 30-day
operative delay, the Commission also has
19 17
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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–
BX–2019–039 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–BX–2019–039. 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–BX–2019–039, and should
be submitted on or before December 3,
2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–24499 Filed 11–8–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87464; File No. SR–CBOE–
2019–107]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Extend the Operation
of its SPXPM Pilot Program
November 5, 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 November
1, 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 extend
the operation of its SPXPM pilot
program. The text of the proposed rule
change is provided below.
23 17
CFR 200.30–3(a)(12).
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).
1 15
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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Federal Register / Vol. 84, No. 218 / Tuesday, November 12, 2019 / Notices
[(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
Rules of Cboe Exchange, Inc.
*
*
*
*
*
Rule 4.13. Series of Index Options
*
*
*
*
*
Interpretations and Policies
.01–.12 No change.
.13 In addition to A.M.-settled S&P
500 Stock Index options approved for
trading on the Exchange pursuant to
Rule 4.13, the Exchange may also list
options on the S&P 500 Index whose
exercise settlement value is derived
from closing prices on the last trading
day prior to expiration (P.M.-settled
third Friday-of-the-month SPX options
series). The Exchange may also list
options on the Mini-SPX Index (‘‘XSP’’)
whose exercise settlement value is
derived from closing prices on the last
trading day prior to expiration (‘‘P.M.settled’’). P.M.-settled third Friday-ofthe-month SPX options series and P.M.settled XSP options will be listed for
trading for a pilot period ending
[November 4, 2019]May 4, 2020.
*
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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 February 8, 2013, the Securities
and Exchange Commission (the
‘‘Commission’’) approved a rule change
that established a Pilot Program that
allows the Exchange to list options on
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the S&P 500 Index whose exercise
settlement value is derived from closing
prices on the last trading day prior to
expiration (‘‘SPXPM’’).5 On July 31,
2013, the Commission approved a rule
change that amended the Pilot Program
that allows the Exchange to list options
on the Mini-SPX Index (‘‘XSP’’) whose
exercise settlement value is derived
from closing prices on the last trading
day prior to expiration (‘‘P.M.-settled
XSP’’) 6 (together, SPXPM and P.M.settled XSP to be referred to herein as
the ‘‘Pilot Products’’).7 The Exchange
has extended the pilot period numerous
times, which, pursuant to Rule 4.13.13,8
is currently set to expire on the earlier
of November 4, 2019 or the date on
which the pilot program is approved on
a permanent basis.9 The Exchange
hereby proposes to further extend the
end date of the pilot period to May 4,
2020.
During the course of the Pilot Program
and in support of the extensions of the
Pilot Program, the Exchange submits
reports to the Commission regarding the
Pilot Program that detail the Exchange’s
experience with the Pilot Program,
pursuant to the SPXPM Approval
Order 10 and the P.M.-settled XSP
Approval Order.11 Specifically, the
Exchange submits annual Pilot Program
reports to the Commission that contain
5 See Securities Exchange Act Release No. 68888
(February 8, 2013), 78 FR 10668 (February 14, 2013)
(SR–CBOE–2012–120) (the ‘‘SPXPM Approval
Order’’). Pursuant to Securities Exchange Act
Release No. 80060 (February 17, 2017), 82 FR 11673
(February 24, 2017) (SR–CBOE–2016–091), the
Exchange moved third-Friday P.M.-settled options
into the S&P 500 Index options class, and as a
result, the trading symbol for P.M.-settled S&P 500
Index options that have standard third Friday-ofthe-month expirations changed from ‘‘SPXPM’’ to
‘‘SPXW.’’ This change went into effect on May 1,
2017, pursuant to Cboe Options Regulatory Circular
RG17–054.
6 See Securities Exchange Act Release No. 70087
(July 31, 2013), 78 FR 47809 (August 6, 2013) (SR–
CBOE–2013–055) (the ‘‘P.M.-settled XSP Approval
Order’’).
7 For more information on the Pilot Products or
the Pilot Program, see the SPXPM Approval Order
and the P.M.-settled XSP Approval Order.
8 The Exchange recently relocated prior Rule 24.9,
containing the provision which governs the Pilot
Program, to current Rule 4.13. See SR–CBOE–2019–
092 (October 4, 2019), which did not make any
substantive changes to prior Rule 24.9 and merely
relocated it to Rule 4.13.
9 See Securities Exchange Act Release Nos. 71424
(January 28, 2014), 79 FR 6249 (February 3, 2014)
(SR–CBOE–2014–004); 73338 (October 10, 2014), 79
FR 62502 (October 17, 2014) (SR–CBOE–2014–076);
77573 (April 8, 2016), 81 FR 22148 (April 14, 2016)
(SR–CBOE–2016–036); 80386 (April 6, 2017), 82 FR
17704 (April 12, 2017) (SR–CBOE–2017–025);
83166 (May 3, 2018), 83 FR 21324 (May 9, 2018)
(SR–CBOE–2018–036); 84535 (November 5, 2018),
83 FR 56129 (November 9, 2018) (SR–CBOE–2018–
069); and 85688 (April 18, 2019), 84 FR 17214
(April 24, 2019) (SR–CBOE–2019–023).
10 See supra note 5.
11 See supra note 6.
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an analysis of volume, open interest,
and trading patterns. The analysis
examines trading in Pilot Products as
well as trading in the securities that
comprise the underlying index.
Additionally, for series that exceed
certain minimum open interest
parameters, the annual reports provide
analysis of index price volatility and
share trading activity. The Exchange
also submits periodic interim reports
that contain some, but not all, of the
information contained in the annual
reports. In providing the annual and
periodic interim reports (the ‘‘pilot
reports’’) to the Commission, the
Exchange has previously requested
confidential treatment of the pilot
reports under the Freedom of
Information Act (‘‘FOIA’’).12
The pilot reports both contain the
following volume and open interest
data:
(1) Monthly volume aggregated for all
trades;
(2) monthly volume aggregated by
expiration date;
(3) monthly volume for each
individual series;
(4) month-end open interest
aggregated for all series;
(5) month-end open interest for all
series aggregated by expiration date; and
(6) month-end open interest for each
individual series.
The annual reports also contain the
information noted in Items (1) through
(6) above for Expiration Friday, A.M.settled, S&P 500 index options traded
on Cboe Options, as well as the
following analysis of trading patterns in
the Pilot Products options series in the
Pilot Program:
(1) A time series analysis of open
interest; and
(2) an analysis of the distribution of
trade sizes.
Finally, for series that exceed certain
minimum parameters, the annual
reports contain the following analysis
related to index price changes and
underlying share trading volume at the
close on Expiration Fridays:
(1) A comparison of index price
changes at the close of trading on a
given Expiration Friday with
comparable price changes from a control
sample. The data includes a calculation
of percentage price changes for various
time intervals and compare that
information to the respective control
sample. Raw percentage price change
data as well as percentage price change
data normalized for prevailing market
volatility, as measured by the Cboe
Volatility Index (VIX), is provided; and
12 5
U.S.C. 552.
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Federal Register / Vol. 84, No. 218 / Tuesday, November 12, 2019 / Notices
(2) a calculation of share volume for
a sample set of the component securities
representing an upper limit on share
trading that could be attributable to
expiring in-the-money series. The data
includes a comparison of the calculated
share volume for securities in the
sample set to the average daily trading
volumes of those securities over a
sample period.
The minimum open interest
parameters, control sample, time
intervals, method for randomly selecting
the component securities, and sample
periods are determined by the Exchange
and the Commission. In proposing to
extend the Pilot Program, the Exchange
will continue to abide by the reporting
requirements described herein, as well
as in the SPXPM Approval Order and
the P.M.-settled XSP Approval Order.13
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.
The Exchange proposes the extension
of the Pilot Program in order to continue
to give the Commission more time to
consider the impact of the Pilot
Program. To this point, Cboe Options
believes that the Pilot Program has been
well-received by its Trading Permit
Holders and the investing public, and
the Exchange would like to continue to
provide investors with the ability to
trade SPXPM and P.M.-settled XSP
options. All terms regarding the trading
of the Pilot Products shall continue to
operate as described in the SPXPM
Approval Order and the P.M.-settled
XSP Approval Order. The Exchange
merely proposes herein to extend the
term of the Pilot Program to May 4,
2020.
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
13 Pursuant to Securities Exchange Act Release
No. 75914 (September 14, 2015), 80 FR 56522
(September 18, 2015) (SR–CBOE–2015–079), the
Exchange added SPXPM and P.M.-settled XSP
options to the list of products approved for trading
during Extended Trading Hours (‘‘ETH’’). The
Exchange will also include the applicable
information regarding SPXPM and P.M.-settled XSP
options that trade during ETH in its annual and
interim reports.
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thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.14 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 15 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) 16 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 will continue to provide greater
opportunities for investors. Further, the
Exchange believes that it has not
experienced any adverse effects or
meaningful regulatory concerns from
the operation of the Pilot Program. As
such, the Exchange believes that the
extension of the Pilot Program does not
raise any unique or prohibitive
regulatory concerns. Also, the Exchange
believes that such trading has not, and
will not, adversely impact fair and
orderly markets on Expiration Fridays
for the underlying stocks comprising the
S&P 500 index. The extension of the
Pilot Program will continue to provide
investors with the opportunity to trade
the desirable products of SPXPM and
P.M.-settled XSP, while also providing
the Commission further opportunity to
observe such trading of the Pilot
Products.
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 does not believe the
continuation of the Pilot Program will
impose any unnecessary or
inappropriate burden on intramarket
competition because it will continue to
apply equally to all Cboe Options
market participants, and the Pilot
Products will be available to all Cboe
14 15
15 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
16 Id.
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61101
Options market participants. 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 Program has been
in operation, it has provided investors
with desirable products with which to
trade. Furthermore, the Exchange
believes that it has not experienced any
adverse market effects or regulatory
concerns with respect to the Pilot
Program. The Exchange further does not
believe that the proposed extension of
the Pilot Program will impose any
burden on intermarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because it only applies to trading on
Cboe Options. To the extent that the
continued trading of the Pilot Products
may make Cboe Options a more
attractive marketplace to market
participants at other exchanges, such
market participants may elect to become
Cboe Options market participants.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the 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 17 and
subparagraph (f)(6) of Rule 19b–4
thereunder.18
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 19 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 20
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
17 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
19 17 CFR 240.19b–4(f)(6).
20 17 CFR 240.19b–4(f)(6)(iii).
18 17
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Federal Register / Vol. 84, No. 218 / Tuesday, November 12, 2019 / Notices
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 waiver
of the 30-day operative delay will allow
it to extend the Pilot Program prior to
its expiration on November 4, 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.
Accordingly, the Commission hereby
waives the operative delay and
designates the proposed rule change
operative upon filing.21
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2019–107 on the subject line.
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–2019–107 and
should be submitted on or before
December 3, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–24498 Filed 11–8–19; 8:45 am]
BILLING CODE 8011–01–P
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[Release No. 34–87470; File No. SR–FINRA–
2019–022]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Partial Amendment No. 1 and Order
Granting Accelerated Approval of a
Proposed Rule Change, as Modified by
Partial Amendment No. 1, To Amend
FINRA Rule 5130 (Restrictions on the
Purchase and Sale of Initial Equity
Public Offerings) and FINRA Rule 5131
(New Issue Allocations and
Distributions)
November 5, 2019.
I. Introduction
On July 26, 2019, Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to amend FINRA
Rule 5130 (Restrictions on the Purchase
and Sale of Initial Equity Public
Offerings) and FINRA Rule 5131 (New
Issue Allocations and Distributions) to
exempt additional persons and
offerings, modify current exemptions to
enhance regulatory consistency, and
address unintended operational
impediments. The proposed rule change
was published for comment in the
Federal Register on August 8, 2019.3
The Commission received six comment
letters on the proposal.4 On September
10, 2019, FINRA extended the time
period in which the Commission must
approve the proposed rule change,
disapprove the proposed rule change or
institute proceedings to determine
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 86558
(August 2, 2019), 84 FR 39029 (August 8, 2019)
(Notice of Filing of File No. SR–FINRA–2019–022)
(‘‘Original Notice’’).
4 See Letter from Robert E. Buckholz, Chair,
Federal Regulation of Securities Committee,
American Bar Association Business Law Section, to
Vanessa Countryman, Secretary, SEC, dated August
27, 2019 (‘‘ABA’’); letter from Elliott R. Curzon,
Dechert LLP, to Jill M. Peterson, Assistant
Secretary, SEC, dated August 29, 2019 (‘‘Dechert
1’’); letter from Dechert LLP, to Jill M. Peterson,
Assistant Secretary, SEC, dated August 29, 2019
(‘‘Dechert 2’’); letter from Gail C. Bernstein, General
Counsel, Investment Adviser Association, to
Vanessa Countryman, Secretary, SEC, dated August
29, 2019 (‘‘IAA’’); letter from Aseel M. Rabie,
Managing Director and Associate General Counsel,
Securities Industry and Financial Markets
Association, to Vanessa Countryman, Secretary,
SEC, dated August 29, 2019 (‘‘SIFMA’’); and letter
from Chris Peterson, to Vanessa Countryman,
Secretary, SEC, dated September 13, 2019
(‘‘Peterson’’).
2 17
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–2019–107. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
21 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).
SECURITIES AND EXCHANGE
COMMISSION
22 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00098
Fmt 4703
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]]>Agencies
[Federal Register Volume 84, Number 218 (Tuesday, November 12, 2019)]
[Notices]
[Pages 61099-61102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24498]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87464; File No. SR-CBOE-2019-107]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Extend
the Operation of its SPXPM Pilot Program
November 5, 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 November 1, 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 extend the operation of its SPXPM pilot program. The text of the
proposed rule change is provided below.
[[Page 61100]]
[(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 4.13. Series of Index Options
* * * * *
Interpretations and Policies
.01-.12 No change.
.13 In addition to A.M.-settled S&P 500 Stock Index options
approved for trading on the Exchange pursuant to Rule 4.13, the
Exchange may also list options on the S&P 500 Index whose exercise
settlement value is derived from closing prices on the last trading day
prior to expiration (P.M.-settled third Friday-of-the-month SPX options
series). The Exchange may also list options on the Mini-SPX Index
(``XSP'') whose exercise settlement value is derived from closing
prices on the last trading day prior to expiration (``P.M.-settled'').
P.M.-settled third Friday-of-the-month SPX options series and P.M.-
settled XSP options will be listed for trading for a pilot period
ending [November 4, 2019]May 4, 2020.
* * * * *
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 February 8, 2013, the Securities and Exchange Commission (the
``Commission'') approved a rule change that established a Pilot Program
that allows the Exchange to list options on the S&P 500 Index whose
exercise settlement value is derived from closing prices on the last
trading day prior to expiration (``SPXPM'').\5\ On July 31, 2013, the
Commission approved a rule change that amended the Pilot Program that
allows the Exchange to list options on the Mini-SPX Index (``XSP'')
whose exercise settlement value is derived from closing prices on the
last trading day prior to expiration (``P.M.-settled XSP'') \6\
(together, SPXPM and P.M.-settled XSP to be referred to herein as the
``Pilot Products'').\7\ The Exchange has extended the pilot period
numerous times, which, pursuant to Rule 4.13.13,\8\ is currently set to
expire on the earlier of November 4, 2019 or the date on which the
pilot program is approved on a permanent basis.\9\ The Exchange hereby
proposes to further extend the end date of the pilot period to May 4,
2020.
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\5\ See Securities Exchange Act Release No. 68888 (February 8,
2013), 78 FR 10668 (February 14, 2013) (SR-CBOE-2012-120) (the
``SPXPM Approval Order''). Pursuant to Securities Exchange Act
Release No. 80060 (February 17, 2017), 82 FR 11673 (February 24,
2017) (SR-CBOE-2016-091), the Exchange moved third-Friday P.M.-
settled options into the S&P 500 Index options class, and as a
result, the trading symbol for P.M.-settled S&P 500 Index options
that have standard third Friday-of-the-month expirations changed
from ``SPXPM'' to ``SPXW.'' This change went into effect on May 1,
2017, pursuant to Cboe Options Regulatory Circular RG17-054.
\6\ See Securities Exchange Act Release No. 70087 (July 31,
2013), 78 FR 47809 (August 6, 2013) (SR-CBOE-2013-055) (the ``P.M.-
settled XSP Approval Order'').
\7\ For more information on the Pilot Products or the Pilot
Program, see the SPXPM Approval Order and the P.M.-settled XSP
Approval Order.
\8\ The Exchange recently relocated prior Rule 24.9, containing
the provision which governs the Pilot Program, to current Rule 4.13.
See SR-CBOE-2019-092 (October 4, 2019), which did not make any
substantive changes to prior Rule 24.9 and merely relocated it to
Rule 4.13.
\9\ See Securities Exchange Act Release Nos. 71424 (January 28,
2014), 79 FR 6249 (February 3, 2014) (SR-CBOE-2014-004); 73338
(October 10, 2014), 79 FR 62502 (October 17, 2014) (SR-CBOE-2014-
076); 77573 (April 8, 2016), 81 FR 22148 (April 14, 2016) (SR-CBOE-
2016-036); 80386 (April 6, 2017), 82 FR 17704 (April 12, 2017) (SR-
CBOE-2017-025); 83166 (May 3, 2018), 83 FR 21324 (May 9, 2018) (SR-
CBOE-2018-036); 84535 (November 5, 2018), 83 FR 56129 (November 9,
2018) (SR-CBOE-2018-069); and 85688 (April 18, 2019), 84 FR 17214
(April 24, 2019) (SR-CBOE-2019-023).
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During the course of the Pilot Program and in support of the
extensions of the Pilot Program, the Exchange submits reports to the
Commission regarding the Pilot Program that detail the Exchange's
experience with the Pilot Program, pursuant to the SPXPM Approval Order
\10\ and the P.M.-settled XSP Approval Order.\11\ Specifically, the
Exchange submits annual Pilot Program reports to the Commission that
contain an analysis of volume, open interest, and trading patterns. The
analysis examines trading in Pilot Products as well as trading in the
securities that comprise the underlying index. Additionally, for series
that exceed certain minimum open interest parameters, the annual
reports provide analysis of index price volatility and share trading
activity. The Exchange also submits periodic interim reports that
contain some, but not all, of the information contained in the annual
reports. In providing the annual and periodic interim reports (the
``pilot reports'') to the Commission, the Exchange has previously
requested confidential treatment of the pilot reports under the Freedom
of Information Act (``FOIA'').\12\
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\10\ See supra note 5.
\11\ See supra note 6.
\12\ 5 U.S.C. 552.
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The pilot reports both contain the following volume and open
interest data:
(1) Monthly volume aggregated for all trades;
(2) monthly volume aggregated by expiration date;
(3) monthly volume for each individual series;
(4) month-end open interest aggregated for all series;
(5) month-end open interest for all series aggregated by expiration
date; and
(6) month-end open interest for each individual series.
The annual reports also contain the information noted in Items (1)
through (6) above for Expiration Friday, A.M.-settled, S&P 500 index
options traded on Cboe Options, as well as the following analysis of
trading patterns in the Pilot Products options series in the Pilot
Program:
(1) A time series analysis of open interest; and
(2) an analysis of the distribution of trade sizes.
Finally, for series that exceed certain minimum parameters, the
annual reports contain the following analysis related to index price
changes and underlying share trading volume at the close on Expiration
Fridays:
(1) A comparison of index price changes at the close of trading on
a given Expiration Friday with comparable price changes from a control
sample. The data includes a calculation of percentage price changes for
various time intervals and compare that information to the respective
control sample. Raw percentage price change data as well as percentage
price change data normalized for prevailing market volatility, as
measured by the Cboe Volatility Index (VIX), is provided; and
[[Page 61101]]
(2) a calculation of share volume for a sample set of the component
securities representing an upper limit on share trading that could be
attributable to expiring in-the-money series. The data includes a
comparison of the calculated share volume for securities in the sample
set to the average daily trading volumes of those securities over a
sample period.
The minimum open interest parameters, control sample, time
intervals, method for randomly selecting the component securities, and
sample periods are determined by the Exchange and the Commission. In
proposing to extend the Pilot Program, the Exchange will continue to
abide by the reporting requirements described herein, as well as in the
SPXPM Approval Order and the P.M.-settled XSP Approval Order.\13\
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.
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\13\ Pursuant to Securities Exchange Act Release No. 75914
(September 14, 2015), 80 FR 56522 (September 18, 2015) (SR-CBOE-
2015-079), the Exchange added SPXPM and P.M.-settled XSP options to
the list of products approved for trading during Extended Trading
Hours (``ETH''). The Exchange will also include the applicable
information regarding SPXPM and P.M.-settled XSP options that trade
during ETH in its annual and interim reports.
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The Exchange proposes the extension of the Pilot Program in order
to continue to give the Commission more time to consider the impact of
the Pilot Program. To this point, Cboe Options believes that the Pilot
Program has been well-received by its Trading Permit Holders and the
investing public, and the Exchange would like to continue to provide
investors with the ability to trade SPXPM and P.M.-settled XSP options.
All terms regarding the trading of the Pilot Products shall continue to
operate as described in the SPXPM Approval Order and the P.M.-settled
XSP Approval Order. The Exchange merely proposes herein to extend the
term of the Pilot Program to May 4, 2020.
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.\14\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \15\ 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) \16\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
\16\ Id.
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In particular, the Exchange believes that the proposed extension of
the Pilot Program will continue to provide greater opportunities for
investors. Further, the Exchange believes that it has not experienced
any adverse effects or meaningful regulatory concerns from the
operation of the Pilot Program. As such, the Exchange believes that the
extension of the Pilot Program does not raise any unique or prohibitive
regulatory concerns. Also, the Exchange believes that such trading has
not, and will not, adversely impact fair and orderly markets on
Expiration Fridays for the underlying stocks comprising the S&P 500
index. The extension of the Pilot Program will continue to provide
investors with the opportunity to trade the desirable products of SPXPM
and P.M.-settled XSP, while also providing the Commission further
opportunity to observe such trading of the Pilot Products.
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 does not
believe the continuation of the Pilot Program will impose any
unnecessary or inappropriate burden on intramarket competition because
it will continue to apply equally to all Cboe Options market
participants, and the Pilot Products will be available to all Cboe
Options market participants. 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
Program has been in operation, it has provided investors with desirable
products with which to trade. Furthermore, the Exchange believes that
it has not experienced any adverse market effects or regulatory
concerns with respect to the Pilot Program. The Exchange further does
not believe that the proposed extension of the Pilot Program will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because it only
applies to trading on Cboe Options. To the extent that the continued
trading of the Pilot Products may make Cboe Options a more attractive
marketplace to market participants at other exchanges, such market
participants may elect to become Cboe Options market participants.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the 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 \17\ and subparagraph (f)(6) of Rule 19b-4
thereunder.\18\
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \19\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \20\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the
[[Page 61102]]
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 waiver of the 30-day
operative delay will allow it to extend the Pilot Program prior to its
expiration on November 4, 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. Accordingly, the
Commission hereby waives the operative delay and designates the
proposed rule change operative upon filing.\21\
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\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6)(iii).
\21\ 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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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CBOE-2019-107 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-2019-107. 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-2019-107 and should be submitted on
or before December 3, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-24498 Filed 11-8-19; 8:45 am]
BILLING CODE 8011-01-P
