Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Financial Incentive Programs for Global Trading Hours Lead Market-Makers in VIX, 65859-65861 [2019-25836]
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Federal Register / Vol. 84, No. 230 / Friday, November 29, 2019 / Notices
other things, that the rules of OCC be
designed to promote the prompt and
accurate clearance and settlement of
securities transactions and to assure the
safeguarding of securities and funds
which are in the custody or control of
OCC or for which it is responsible.13
• Rule 17Ad–22(e)(15) of the
Exchange Act, which requires that a
covered clearing agency establish,
implement, maintain, and enforce
written policies and procedures
reasonably designed to identify,
monitor, and manage the covered
clearing agency’s general business risk
and hold sufficient liquid net assets
funded by equity to cover potential
general business losses so that the
covered clearing agency can continue
operations and services as a going
concern if those losses materialize,
including by taking the actions
described in Rules 17Ad–22(e)(15)(i)–
(iii) under the Exchange Act.14
IV. Request for Written Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the Proposed
Rule Change with respect to the issues
identified above, as well as any other
concerns they may have with the
Proposed Rule Change. In particular, the
Commission invites the written views of
interested persons concerning whether
the Proposed Rule Change is consistent
with Sections 17A(b)(3)(D) and
17A(b)(3)(F) of the Exchange Act and
Rule 17Ad–22(e)(15) thereunder, cited
above, or any other provision of the
Exchange Act, rules, and regulations
thereunder.
Although there do not appear to be
any issues relevant to approval or
disapproval that would be facilitated by
an oral presentation of views, data, and
arguments, the Commission will
consider, pursuant to Rule 19b–4, any
request for an opportunity to make an
oral presentation.15
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
Proposed Rule Change should be
approved or disapproved by December
16, 2019. Any person who wishes to file
13 15
U.S.C. 78q–1(b)(3)(F).
CFR 240.17Ad–22(e)(15).
15 Section 19(b)(2) of the Act, as amended by the
Securities Acts Amendments of 1975, Public Law
94–29, 89 Stat. 97 (1975), grants the Commission
flexibility to determine what type of proceeding—
either oral or notice and opportunity for written
comments—is appropriate for consideration of a
particular proposal by a self-regulatory
organization. See Securities Acts Amendments of
1975, Report of the Senate Committee on Banking,
Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
khammond on DSKJM1Z7X2PROD with NOTICES
14 17
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a rebuttal to any other person’s
submission must file that rebuttal by
December 20, 2019.
Comments may be submitted by any
of the following methods:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–25841 Filed 11–27–19; 8:45 am]
Electronic Comments
BILLING CODE 8011–01–P
• 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 No. SR–
OCC–2019–007 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 No.
SR–OCC–2019–007. 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 such
filing also will be available for
inspection and copying at the principal
office of OCC and on OCC’s website at
https://www.theocc.com/about/
publications/bylaws.jsp.
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
No. SR–OCC–2019–007 and should be
submitted on or before December 16,
2019. If comments are received, any
rebuttal comments should be submitted
on or before December 20, 2019.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87590; File No. SR–CBOE–
2019–109]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Financial
Incentive Programs for Global Trading
Hours Lead Market-Makers in VIX
November 22, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
15, 2019, Cboe Exchange, Inc.
(‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
its financial incentive programs for
Global Trading Hours Lead MarketMakers in VIX. 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/CBOELegal
RegulatoryHome.aspx), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
1 15
16 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00084
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65859
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2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 84, No. 230 / Friday, November 29, 2019 / Notices
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Global Trading Hours (‘‘GTH’’) VIX
Premium
day of the month) if the LMM(s): (1)
Provide continuous electronic quotes
during GTH that meet or exceed the
following heightened quoting standards
in at least 99% of the VIX series 90%
of the time in a given month:
Lead Market-Makers (‘‘LMMs’’)
Incentive Program, effective November
18, 2019.
Background
By way of background, pursuant to
the Fees Schedule, a LMM in VIX will
receive a rebate for that month in the
amount of a pro-rata share of a
compensation pool equal to $20,000
times the number of LMMs in that class
(or pro-rated amount if an appointment
begins after the first trading day of the
month or ends prior to the last trading
Expiring
Near term
Mid term
Long term
7 days or less
8 days to 60 days
61 days to 270 days
271 days or Greater
Width
Width
Level
Width
$0–$3.00 ..........................
$3.01–$5.00 .....................
$5.01–$10.00 ...................
$10.01–$30.00 .................
$30.01–$100.00 ...............
Greater than $100.00 .......
Size
$0.50
0.75
1.00
3.00
5.00
10.00
25
15
10
5
3
1
Additionally, a GTH LMM in VIX is
not currently obligated to satisfy the
heightened quoting standards described
in the table above. Rather, an LMM is
eligible to receive the rebate if they
satisfy the heightened quoting standards
above, which the Exchange believes
encourage LMMs to provide liquidity
during GTH. The Exchange may also
consider other exceptions to this
quoting standard based on demonstrated
legal or regulatory requirements or other
mitigating circumstances.
khammond on DSKJM1Z7X2PROD with NOTICES
Proposed Change
The Exchange now wishes to amend
the heighted quoting standard under the
GTH VIX LMM incentive program.
Particularly, the Exchange proposes to
eliminate the current size and width
requirements and in their place adopt a
maximum allowable width standard.
The Exchange notes that the proposed
change is designed to make the
heightened quoting standard easier to
attain. The Exchange believes that by
easing the standard, it will encourage
VIX GTH LMM(s) who cannot meet the
current standard to continue to provide
liquidity in VIX during GTH. As such,
the Exchange proposes to slightly ease
the criteria and amend the program to
provide that in order to receive the
rebate under the program, an LMM
must: provide continuous electronic
quotes during GTH that meet or exceed
the following heightened quoting
standards in at least 99% of the VIX
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Width
Size
$0.40
0.60
0.80
1.00
3.00
5.00
50
30
20
10
5
1
Size
$0.50
0.75
1.00
3.00
5.00
10.00
series 90% of the time in a given
month: 3
25
15
10
5
3
1
Size
$1.00
1.50
2.00
5.00
7.00
12.00
10
7
5
3
2
1
purchase more logical connectivity
based on its increased capacity needs.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
$0.00–$100.00 ............................
$10.00 ‘‘Act’’) and the rules and regulations
$100.01–$200.00 ........................
16.00 thereunder applicable to the Exchange
Greater than $200.00 .................
24.00 and, in particular, the requirements of
Section 6(b) of the Act.5 Specifically,
As is the case today, VIX GTH
the Exchange believes the proposed rule
LMM(s) will still not be obligated to
change is consistent with the Section
satisfy the amended heightened quoting 6(b)(5) 6 requirements that the rules of
an exchange be designed to prevent
standard. The Exchange believes the
fraudulent and manipulative acts and
program, as amended, will encourage
VIX GTH LMM(s) to provide liquidity in practices, to promote just and equitable
VIX during GTH. The Exchange believes principles of trade, to foster cooperation
and coordination with persons engaged
the rebate provided under the VIX GTH
in regulating, clearing, settling,
LMM program continues to encourage
VIX GTH LMM(s) to provide liquidity in processing information with respect to,
and facilitating transactions in
VIX options during GTH, including
securities, to remove impediments to
during the opening.4 Additionally, the
and perfect the mechanism of a free and
Exchange notes that a VIX GTH LMM
open market and a national market
may need to undertake expenses to be
system, and, in general, to protect
able to quote at a significantly
investors and the public interest.
heightened standard in VIX, such as
Additionally, the Exchange believes the
proposed rule change is consistent with
3 For the month of November 2019, the Exchange
Section 6(b)(4) of the Act,7 which
proposes to apply the heightened quoting standard
requires that Exchange rules provide for
from November 18 to November 30, in light of the
mid-month proposal to modify the heighted quoting the equitable allocation of reasonable
dues, fees, and other charges among its
standard. The Exchange also notes the previous
LMM term expired October 1, 2019, and the
Trading Permit Holders and other
Exchange intends to appoint a new LMM effective
persons using its facilities.
November 18, 2019. Such LMM will be eligible for
The Exchange believes amending the
the full financial payment for November 2019 if the
GTH
VIX LMM Incentive Program is
LMM meets the heightened quoting standard from
Maximum
allowable
width
Premium level
November 18 to November 30.
4 The Exchange notes that quotes qualify only
when the series is open (i.e., pre-open quotes do not
count).
PO 00000
Frm 00085
Fmt 4703
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5 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
7 15 U.S.C. 78f(b)(4).
6 15
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Federal Register / Vol. 84, No. 230 / Friday, November 29, 2019 / Notices
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reasonable as a VIX GTH LMM will still
be eligible to receive the proposed
financial payment. The Exchange
believes the monthly payment continues
to be commensurate with the
heightened quoting standard, even as
amended. The Exchange believes the
proposed changes to the heightened
quoting standard are reasonable and
appropriate as the changes result in a
more attainable incentive program,
while still acting as an incentive for a
VIX GTH LMM to provide liquid and
active markets in VIX during GTH. The
Exchange believes it is equitable and not
unfairly discriminatory to continue to
only offer this financial incentive to VIX
GTH LMM(s) because it benefits all
market participants trading VIX during
GTH to encourage the LMM(s) to satisfy
the heightened quoting standard, which
ensures, and may even provide
increased, liquidity, which thereby may
provide more trading opportunities and
tighter spreads. Indeed, the Exchange
notes that the VIX GTH LMM(s) serve a
crucial role in providing quotes and the
opportunity for market participants to
trade VIX, which can lead to increased
volume, providing a robust market. The
Exchange ultimately wishes to ensure a
GTH LMM is adequately incentivized to
provide liquid and active markets in
VIX during GTH to encourage liquidity.
The Exchange believes that the program,
even as amended, will continue to
encourage increased quoting to add
liquidity in VIX, thereby protecting
investors and the public interest. The
Exchange also notes that a VIX GTH
LMM may have added costs each month
that it needs to undertake in order to
satisfy that heightened quoting standard
(e.g., having to purchase additional
logical connectivity). The Exchange
believes the proposed amendments are
equitable and not unfairly
discriminatory because they apply to
any TPH that is appointed as a VIX GTH
LMM equally. Additionally, if a VIX
GTH LMM does not satisfy the
heightened quoting standard for any
given month, then it simply will not
receive the offered payment for that
month.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule changes will impose
any burden on competition that are not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe that the
proposed rule change will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because it applies uniformly to similarly
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16:49 Nov 27, 2019
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situated VIX GTH LMMs, which market
participants play a crucial role in
providing active and liquid markets in
VIX during GTH. The Exchange does
not believe that the proposed rule
change will impose any burden on
intermarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because VIX
options are a proprietary product that
will only be traded on Cboe Options. To
the extent that the proposed changes
make Cboe Options a more attractive
marketplace for market participants at
other exchanges, such market
participants are welcome 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
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 8 and paragraph (f) of Rule
19b–4 9 thereunder. 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.
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–2019–109 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
8 15
9 17
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
Frm 00086
Fmt 4703
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CBOE–2019–109. 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–2019–109 and
should be submitted on or before
December 20, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–25836 Filed 11–27–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Extension:
Rule 17a–6, SEC File No. 270–506, OMB
Control No. 3235–0564.
10 17
Sfmt 4703
65861
E:\FR\FM\29NON1.SGM
CFR 200.30–3(a)(12).
29NON1
]]>Agencies
[Federal Register Volume 84, Number 230 (Friday, November 29, 2019)]
[Notices]
[Pages 65859-65861]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25836]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87590; File No. SR-CBOE-2019-109]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Financial Incentive Programs for Global Trading Hours Lead Market-
Makers in VIX
November 22, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on November 15, 2019, Cboe Exchange, Inc. (``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend its financial incentive programs for Global Trading Hours Lead
Market-Makers in VIX. 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
[[Page 65860]]
statements may be examined at the places specified in Item IV below.
The Exchange has prepared summaries, set forth in sections A, B, and C
below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Global Trading Hours (``GTH'')
VIX Lead Market-Makers (``LMMs'') Incentive Program, effective November
18, 2019.
Background
By way of background, pursuant to the Fees Schedule, a LMM in VIX
will receive a rebate for that month in the amount of a pro-rata share
of a compensation pool equal to $20,000 times the number of LMMs in
that class (or pro-rated amount if an appointment begins after the
first trading day of the month or ends prior to the last trading day of
the month) if the LMM(s): (1) Provide continuous electronic quotes
during GTH that meet or exceed the following heightened quoting
standards in at least 99% of the VIX series 90% of the time in a given
month:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Premium Expiring Near term Mid term Long term
--------------------------------------------------------------------------------------------------------------------------------------------------------
7 days or less 8 days to 60 days 61 days to 270 days 271 days or Greater
Level -------------------------------------------------------------------------------------------------------
Width Size Width Size Width Size Width Size
--------------------------------------------------------------------------------------------------------------------------------------------------------
$0-$3.00........................................ $0.50 25 $0.40 50 $0.50 25 $1.00 10
$3.01-$5.00..................................... 0.75 15 0.60 30 0.75 15 1.50 7
$5.01-$10.00.................................... 1.00 10 0.80 20 1.00 10 2.00 5
$10.01-$30.00................................... 3.00 5 1.00 10 3.00 5 5.00 3
$30.01-$100.00.................................. 5.00 3 3.00 5 5.00 3 7.00 2
Greater than $100.00............................ 10.00 1 5.00 1 10.00 1 12.00 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Additionally, a GTH LMM in VIX is not currently obligated to
satisfy the heightened quoting standards described in the table above.
Rather, an LMM is eligible to receive the rebate if they satisfy the
heightened quoting standards above, which the Exchange believes
encourage LMMs to provide liquidity during GTH. The Exchange may also
consider other exceptions to this quoting standard based on
demonstrated legal or regulatory requirements or other mitigating
circumstances.
Proposed Change
The Exchange now wishes to amend the heighted quoting standard
under the GTH VIX LMM incentive program. Particularly, the Exchange
proposes to eliminate the current size and width requirements and in
their place adopt a maximum allowable width standard. The Exchange
notes that the proposed change is designed to make the heightened
quoting standard easier to attain. The Exchange believes that by easing
the standard, it will encourage VIX GTH LMM(s) who cannot meet the
current standard to continue to provide liquidity in VIX during GTH. As
such, the Exchange proposes to slightly ease the criteria and amend the
program to provide that in order to receive the rebate under the
program, an LMM must: provide continuous electronic quotes during GTH
that meet or exceed the following heightened quoting standards in at
least 99% of the VIX series 90% of the time in a given month: \3\
---------------------------------------------------------------------------
\3\ For the month of November 2019, the Exchange proposes to
apply the heightened quoting standard from November 18 to November
30, in light of the mid-month proposal to modify the heighted
quoting standard. The Exchange also notes the previous LMM term
expired October 1, 2019, and the Exchange intends to appoint a new
LMM effective November 18, 2019. Such LMM will be eligible for the
full financial payment for November 2019 if the LMM meets the
heightened quoting standard from November 18 to November 30.
------------------------------------------------------------------------
Maximum
Premium level allowable
width
------------------------------------------------------------------------
$0.00-$100.00............................................... $10.00
$100.01-$200.00............................................. 16.00
Greater than $200.00........................................ 24.00
------------------------------------------------------------------------
As is the case today, VIX GTH LMM(s) will still not be obligated to
satisfy the amended heightened quoting standard. The Exchange believes
the program, as amended, will encourage VIX GTH LMM(s) to provide
liquidity in VIX during GTH. The Exchange believes the rebate provided
under the VIX GTH LMM program continues to encourage VIX GTH LMM(s) to
provide liquidity in VIX options during GTH, including during the
opening.\4\ Additionally, the Exchange notes that a VIX GTH LMM may
need to undertake expenses to be able to quote at a significantly
heightened standard in VIX, such as purchase more logical connectivity
based on its increased capacity needs.
---------------------------------------------------------------------------
\4\ The Exchange notes that quotes qualify only when the series
is open (i.e., pre-open quotes do not count).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\5\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \6\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with
Section 6(b)(4) of the Act,\7\ which requires that Exchange rules
provide for the equitable allocation of reasonable dues, fees, and
other charges among its Trading Permit Holders and other persons using
its facilities.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
\7\ 15 U.S.C. 78f(b)(4).
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The Exchange believes amending the GTH VIX LMM Incentive Program is
[[Page 65861]]
reasonable as a VIX GTH LMM will still be eligible to receive the
proposed financial payment. The Exchange believes the monthly payment
continues to be commensurate with the heightened quoting standard, even
as amended. The Exchange believes the proposed changes to the
heightened quoting standard are reasonable and appropriate as the
changes result in a more attainable incentive program, while still
acting as an incentive for a VIX GTH LMM to provide liquid and active
markets in VIX during GTH. The Exchange believes it is equitable and
not unfairly discriminatory to continue to only offer this financial
incentive to VIX GTH LMM(s) because it benefits all market participants
trading VIX during GTH to encourage the LMM(s) to satisfy the
heightened quoting standard, which ensures, and may even provide
increased, liquidity, which thereby may provide more trading
opportunities and tighter spreads. Indeed, the Exchange notes that the
VIX GTH LMM(s) serve a crucial role in providing quotes and the
opportunity for market participants to trade VIX, which can lead to
increased volume, providing a robust market. The Exchange ultimately
wishes to ensure a GTH LMM is adequately incentivized to provide liquid
and active markets in VIX during GTH to encourage liquidity. The
Exchange believes that the program, even as amended, will continue to
encourage increased quoting to add liquidity in VIX, thereby protecting
investors and the public interest. The Exchange also notes that a VIX
GTH LMM may have added costs each month that it needs to undertake in
order to satisfy that heightened quoting standard (e.g., having to
purchase additional logical connectivity). The Exchange believes the
proposed amendments are equitable and not unfairly discriminatory
because they apply to any TPH that is appointed as a VIX GTH LMM
equally. Additionally, if a VIX GTH LMM does not satisfy the heightened
quoting standard for any given month, then it simply will not receive
the offered payment for that month.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition that are not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because it applies uniformly to
similarly situated VIX GTH LMMs, which market participants play a
crucial role in providing active and liquid markets in VIX during GTH.
The Exchange does not believe that the proposed rule change will impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because VIX
options are a proprietary product that will only be traded on Cboe
Options. To the extent that the proposed changes make Cboe Options a
more attractive marketplace for market participants at other exchanges,
such market participants are welcome 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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \8\ and paragraph (f) of Rule 19b-4 \9\
thereunder. 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.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(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 [email protected]. Please include
File Number SR-CBOE-2019-109 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-2019-109. 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-2019-109 and should be submitted on
or before December 20, 2019.
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\10\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-25836 Filed 11-27-19; 8:45 am]
BILLING CODE 8011-01-P
