Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Amend Rule 5.31, Opening Auction Process, 67985-67987 [2019-26810]
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Federal Register / Vol. 84, No. 239 / Thursday, December 12, 2019 / Notices
correlated with the creditworthiness of
the Clearing Member. OCC proposes to
cover its exposure to such SWWR
posted by its Clearing Members through
the introduction of the SWWR Add-on.
The SWWR Add-on consists of three
components. Two of those
components—the SWWR Equity Charge
and SWWR ETN Charge—are designed
to produce margin levels commensurate
with the particular attributes of certain
products that OCC clears in terms of the
likely recovery available in the event of
a default by the issuing Clearing
Member. Further, the SWWR Residual
would ensure that the introduction of
the SWWR Add-on could not
inadvertently weaken OCC’s current
margin methodology due to the
potential existence of ‘‘right-way risk’’
in a Clearing Member’s accounts.37
Accordingly, and for the reasons stated
above, the Commission believes the
adoption of a margin add-on charge
designed to cover exposures arising out
of SWWR is consistent with Rule 17Ad–
22(e)(6)(i) under the Exchange Act.38
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
Rule 5.31.
(additions are in italics; deletions are
[bracketed])
*
*
*
*
*
Rules of Cboe Exchange, Inc.
*
*
*
*
*
Rule 5.31. Opening Auction Process
By the Commission.
Jill M. Peterson,
Assistant Secretary.
(a)–(c) No change.
(d) Opening Rotation Triggers. Upon the
occurrence of one of the following triggers for
a class, the System initiates the opening
rotation for the series in that class, and the
Exchange disseminates a message to market
participants indicating the initiation of the
opening rotation.
(1) Regular Trading Hours. The System
initiates the opening rotation (A) [A]after a
time period (which the Exchange determines
for all classes) following the System’s
observation after 9:30 a.m. of the first
disseminated ([A]i) transaction on the
primary market in the security underlying an
equity option or ([B]ii) index value for the
index underlying an index option (except for
VIX Index options)[, the System initiates the
opening rotation] or (B) at 9:30 a.m. for VIX
Index options.
[FR Doc. 2019–26727 Filed 12–11–19; 8:45 am]
*
IV. Conclusion
It is therefore noticed, pursuant to
Section 806(e)(1)(I) of the Clearing
Supervision Act, that the Commission
does not object to Advance Notice (SR–
OCC–2019–807) and that OCC is
authorized to implement the proposed
change as of the date of this notice or
the date of an order by the Commission
approving proposed rule change SR–
OCC–2019–010 whichever is later.
*
*
*
*
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87682; File No. SR–CBOE–
2019–110]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating To Amend Rule
5.31, Opening Auction Process
khammond on DSKJM1Z7X2PROD with NOTICES
December 9, 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 December
2, 2019, Cboe Exchange, Inc. (‘‘Cboe
Options’’ or ‘‘Exchange’’) filed with the
37 See
infra at note 14.
CFR 240.17Ad–22(e)(6)(i).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
38 17
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The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/CBOELegalRegulatory
Home.aspx), at the Exchange’s Office of
the Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
PO 00000
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67985
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Prior to the Exchange’s technology
migration, which occurred on October 7,
2019, the Exchange’s System initiated
the opening rotation procedure for
index options either at a specified time
or at the time the Exchange received a
disseminated index value (determined
on a class-by-class basis).3 The
Exchange determined that options on
the Cboe Volatility Index (the ‘‘VIX
Index’’) would be one of the classes to
open at a specified time rather than after
it received the first disseminated VIX
Index value. The Exchange proposes to
revert to opening VIX options at a
specified time. Specifically, the
Exchange proposes to amend Rule
5.31(d)(1) to provide that the System
will initiate the opening rotation for VIX
options at 9:30 a.m. Eastern time, rather
than after the System’s observation after
9:30 a.m. Eastern time of the first
disseminated value of the VIX Index.4
The System generally does not receive
the first disseminated value of the VIX
Index until approximately 9:31 a.m.,
which means the System cannot initiate
the opening rotation procedure for VIX
options until after that time. This delay
prevents investors from being able to
effect trades in VIX options while
trading in other products, which may
prevent investors from being able to
engage in their standard trading,
hedging, and volatility risk management
activities during that time.
The value of the VIX Index is
calculated using the bid and ask quotes
of SPX options listed on the Exchange.
Pursuant to Rule 5.31(d)(1), the System
will initiate the opening rotation
procedure for SPX options following the
receipt of the first disseminated SPX
value after 9:30 a.m., which as noted
above, generally occurs at 9:30:01.
Therefore, the opening rotation for SPX
options will generally begin a few
seconds after 9:30 a.m. The VIX Index
value cannot be calculated, and thus
disseminated, until the SPX option
3 See Securities Exchange Act Release No. 86879
(September 5, 2019), 84 FR 47984 (September 11,
2019) (SR–CBOE–2019–034) (which proposed rule
filing amended and relocated the Exchange’s rule
regarding the opening process, included former
Rule 6.2(b)(i)(A)(2), which stated that with respect
to index options, at 8:30 a.m. Central time, or at the
later of 8:30 a.m. Central time and the time the
Exchange receives a disseminated index value for
classes determined by the Exchange, the System
initiated the opening rotation procedure for regular
trading hours).
4 The proposed rule change also makes
nonsubstantive changes to the structure of Rule
5.31(d)(1).
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Federal Register / Vol. 84, No. 239 / Thursday, December 12, 2019 / Notices
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series used to calculate the value are all
open for trading. Once that occurs, and
the VIX Index value is disseminated, the
Exchange can then initiate the opening
rotation for VIX Index options. As a
result, VIX Index options are not eligible
to open for trading for a longer amount
of time than other index options. The
Exchange understands that market
participants generally do not use the
spot value of the VIX Index for pricing
VIX options but rather use the pricing
of VIX Index futures (‘‘VX futures’’) that
trade on the Cboe Futures Exchange
(‘‘CFE’’), which are trading at 9:30 a.m.
Thus, the Exchange does not believe it
is necessary to delay the opening of
trading of VIX Index options until the
Exchange receives a disseminated value
of the VIX Index.5
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.6 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 7 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 8 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
the proposed rule change will remove
impediments to and perfect the
mechanism of a free and open market
and protect investors, because it will
permit VIX Index options to open, and
thus permit market participants to begin
trading these options, at an earlier time.
The Exchange believes opening VIX
Index options earlier will permit
5 The Exchange notes the opening rotation for VIX
Index options during the Global Trading Hours
session begins at a specified time, rather than after
dissemination of the VIX Index value. See Rule
5.31(d)(2).
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
8 Id.
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investors to begin effecting trades in
these options at a similar time as they
may begin effecting trades in other
options. Investors will therefore be able
to use VIX Index options as part of their
trading, hedging, and portfolio risk
management activities during that time,
which ultimately benefits investors. The
Exchange notes the opening rotation for
VIX Index options during the Global
Trading Hours session begins at a
specified time, rather than after
dissemination of the VIX Index value.9
Additionally, the rules of another
options exchange permit index options
to open at 9:30 a.m., rather than wait for
the dissemination of the underlying
index value.10
The proposed rule change does not
modify the opening auction process, but
rather makes it possible for it to begin
in a timelier manner for one option
class. Therefore, the Exchange believes
its opening process will continue to
contribute to a fair and orderly opening
of VIX options.
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 does not believe that the
proposed rule change will impose any
burden on intramarket competition,
because the proposed rule change will
apply in the same manner to all Users.
Trading in VIX Index options will open
and be available to all Users at the same
time; the proposed rule change merely
makes it possible for trading in these
options to open earlier. The Exchange
does not believe that the proposed rule
change will impose any burden on
intermarket competition, because the
rules of another options exchange
permit index options to open at 9:30
a.m., rather than wait to open until the
exchange receives the first disseminated
value of the underlying index value.11
The Exchange notes the opening
rotation for VIX Index options during
the Global Trading Hours session begins
at a specified time, rather than after
dissemination of the VIX Index value.12
The proposed rule change relates
solely to the time at which trading in
VIX Index options (which are a
proprietary product that only trades on
the Exchange) may begin. To the extent
that the proposed changes make the
Exchange a more attractive marketplace
9 See
Rule 5.31(d)(2).
BOX Exchange LLC (‘‘BOX’’) Rule 6080(b).
10 See
11 Id.
12 See
PO 00000
Rule 5.31(d)(2).
Frm 00076
Fmt 4703
Sfmt 4703
for market participants at other
exchanges, such market participants are
welcome to become Exchange 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 Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 13 and Rule
19b–4(f)(6) thereunder.14 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, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 15 and Rule 19b–4(f)(6)
thereunder.16
A proposed rule change filed under
Rule 19b–4(f)(6) 17 normally does not
become operative for 30 days after the
date of the filing. However, pursuant to
Rule 19b–4(f)(6)(iii),18 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
Exchange has asked the Commission to
waive the 30-day operative delay so that
the proposed rule change may become
operative immediately. The Exchange
states that it believes the proposed rule
change will protect investors by
permitting investors to begin trading
VIX Index options at a similar time at
which they may begin to trade other
options, thus allowing investors to use
VIX Index options as part of their
trading, hedging, and portfolio risk
management activities. The Exchange
also represents that the proposed rule
13 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
15 15 U.S.C. 78s(b)(3)(A).
16 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.
17 17 CFR 240.19b–4(f)(6).
18 17 CFR 240.19b–4(f)(6)(iii).
14 17
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Federal Register / Vol. 84, No. 239 / Thursday, December 12, 2019 / Notices
change does not modify the opening
auction process, but rather makes it
possible for this process to begin in a
timelier manner for one option class.
Therefore, the Exchange believes its
opening process will continue to
contribute to a fair and orderly opening
of VIX options. The Exchange further
notes that initiating the opening process
for an index option at a specified time,
rather than following dissemination of
the first value of the underlying index,
is not novel or unique. The Exchange
represents that prior to October 7, 2019,
VIX Index options opened at a specified
time, rather than after dissemination of
the VIX Index value. The opening
rotation for VIX Index options during
the Global Trading Hours session also
begins at a specified time, rather than
after dissemination of the VIX Index
value.19 Additionally, the Exchange
notes that the rules of another options
exchange permit index options to open
at 9:30 a.m., rather than waiting for the
dissemination of the underlying index
value.20 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 30-day
operative delay and designates the
proposal 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:
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2019–110 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–2019–110. 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–2019–110, and
should be submitted on or before
January 2, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–26810 Filed 12–11–19; 8:45 am]
BILLING CODE 8011–01–P
khammond on DSKJM1Z7X2PROD with NOTICES
Cboe Options Rule 5.31(d)(2).
20 See BOX Rule 6080(b).
21 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
17:56 Dec 11, 2019
Jkt 250001
Dated: December 10, 2019.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2019–26955 Filed 12–10–19; 4:15 pm]
BILLING CODE 8011–01–P
SOCIAL SECURITY ADMINISTRATION
SECURITIES AND EXCHANGE
COMMISSION
Rate for Assessment on Direct
Payment of Fees to Representatives in
2020
Sunshine Act Meetings
AGENCY:
19 See
VerDate Sep<11>2014
The meeting will be held at the
Commission’s headquarters, 100 F
Street NE, Washington, DC 20549.
STATUS: This meeting will be closed to
the public.
MATTERS TO BE CONSIDERED:
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the closed meeting. Certain
staff members who have an interest in
the matters also may be present.
In the event that the time, date, or
location of this meeting changes, an
announcement of the change, along with
the new time, date, and/or place of the
meeting will be posted on the
Commission’s website at https://
www.sec.gov.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B)
and (10) and 17 CFR 200.402(a)(3),
(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and
(a)(10), permit consideration of the
scheduled matters at the closed meeting.
The subject matters of the closed
meeting will consist of the following
topics:
Institution and settlement of injunctive
actions;
Institution and settlement of
administrative proceedings;
Resolution of litigation claims; and
Other matters relating to enforcement
proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting agenda items that
may consist of adjudicatory,
examination, litigation, or regulatory
matters.
CONTACT PERSON FOR MORE INFORMATION:
For further information; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
PLACE:
[Docket No. SSA–2019–0047]
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
67987
2:00 p.m. on Tuesday,
December 17, 2019.
TIME AND DATE:
Social Security Administration
(SSA).
ACTION:
Notice.
We are announcing that the
assessment percentage rate under the
SUMMARY:
22 17
PO 00000
CFR 200.30–3(a)(12), (59).
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]]>Agencies
[Federal Register Volume 84, Number 239 (Thursday, December 12, 2019)]
[Notices]
[Pages 67985-67987]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26810]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87682; File No. SR-CBOE-2019-110]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Amend Rule 5.31, Opening Auction Process
December 9, 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 December 2, 2019, Cboe Exchange, Inc. (``Cboe Options'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend Rule 5.31.
(additions are in italics; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 5.31. Opening Auction Process
(a)-(c) No change.
(d) Opening Rotation Triggers. Upon the occurrence of one of the
following triggers for a class, the System initiates the opening
rotation for the series in that class, and the Exchange disseminates
a message to market participants indicating the initiation of the
opening rotation.
(1) Regular Trading Hours. The System initiates the opening
rotation (A) [A]after a time period (which the Exchange determines
for all classes) following the System's observation after 9:30 a.m.
of the first disseminated ([A]i) transaction on the primary market
in the security underlying an equity option or ([B]ii) index value
for the index underlying an index option (except for VIX Index
options)[, the System initiates the opening rotation] or (B) at 9:30
a.m. for VIX Index options.
* * * * *
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
Prior to the Exchange's technology migration, which occurred on
October 7, 2019, the Exchange's System initiated the opening rotation
procedure for index options either at a specified time or at the time
the Exchange received a disseminated index value (determined on a
class-by-class basis).\3\ The Exchange determined that options on the
Cboe Volatility Index (the ``VIX Index'') would be one of the classes
to open at a specified time rather than after it received the first
disseminated VIX Index value. The Exchange proposes to revert to
opening VIX options at a specified time. Specifically, the Exchange
proposes to amend Rule 5.31(d)(1) to provide that the System will
initiate the opening rotation for VIX options at 9:30 a.m. Eastern
time, rather than after the System's observation after 9:30 a.m.
Eastern time of the first disseminated value of the VIX Index.\4\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 86879 (September 5,
2019), 84 FR 47984 (September 11, 2019) (SR-CBOE-2019-034) (which
proposed rule filing amended and relocated the Exchange's rule
regarding the opening process, included former Rule 6.2(b)(i)(A)(2),
which stated that with respect to index options, at 8:30 a.m.
Central time, or at the later of 8:30 a.m. Central time and the time
the Exchange receives a disseminated index value for classes
determined by the Exchange, the System initiated the opening
rotation procedure for regular trading hours).
\4\ The proposed rule change also makes nonsubstantive changes
to the structure of Rule 5.31(d)(1).
---------------------------------------------------------------------------
The System generally does not receive the first disseminated value
of the VIX Index until approximately 9:31 a.m., which means the System
cannot initiate the opening rotation procedure for VIX options until
after that time. This delay prevents investors from being able to
effect trades in VIX options while trading in other products, which may
prevent investors from being able to engage in their standard trading,
hedging, and volatility risk management activities during that time.
The value of the VIX Index is calculated using the bid and ask
quotes of SPX options listed on the Exchange. Pursuant to Rule
5.31(d)(1), the System will initiate the opening rotation procedure for
SPX options following the receipt of the first disseminated SPX value
after 9:30 a.m., which as noted above, generally occurs at 9:30:01.
Therefore, the opening rotation for SPX options will generally begin a
few seconds after 9:30 a.m. The VIX Index value cannot be calculated,
and thus disseminated, until the SPX option
[[Page 67986]]
series used to calculate the value are all open for trading. Once that
occurs, and the VIX Index value is disseminated, the Exchange can then
initiate the opening rotation for VIX Index options. As a result, VIX
Index options are not eligible to open for trading for a longer amount
of time than other index options. The Exchange understands that market
participants generally do not use the spot value of the VIX Index for
pricing VIX options but rather use the pricing of VIX Index futures
(``VX futures'') that trade on the Cboe Futures Exchange (``CFE''),
which are trading at 9:30 a.m. Thus, the Exchange does not believe it
is necessary to delay the opening of trading of VIX Index options until
the Exchange receives a disseminated value of the VIX Index.\5\
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\5\ The Exchange notes the opening rotation for VIX Index
options during the Global Trading Hours session begins at a
specified time, rather than after dissemination of the VIX Index
value. See Rule 5.31(d)(2).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \8\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
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In particular, the Exchange believes the proposed rule change will
remove impediments to and perfect the mechanism of a free and open
market and protect investors, because it will permit VIX Index options
to open, and thus permit market participants to begin trading these
options, at an earlier time. The Exchange believes opening VIX Index
options earlier will permit investors to begin effecting trades in
these options at a similar time as they may begin effecting trades in
other options. Investors will therefore be able to use VIX Index
options as part of their trading, hedging, and portfolio risk
management activities during that time, which ultimately benefits
investors. The Exchange notes the opening rotation for VIX Index
options during the Global Trading Hours session begins at a specified
time, rather than after dissemination of the VIX Index value.\9\
Additionally, the rules of another options exchange permit index
options to open at 9:30 a.m., rather than wait for the dissemination of
the underlying index value.\10\
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\9\ See Rule 5.31(d)(2).
\10\ See BOX Exchange LLC (``BOX'') Rule 6080(b).
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The proposed rule change does not modify the opening auction
process, but rather makes it possible for it to begin in a timelier
manner for one option class. Therefore, the Exchange believes its
opening process will continue to contribute to a fair and orderly
opening of VIX options.
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 does not
believe that the proposed rule change will impose any burden on
intramarket competition, because the proposed rule change will apply in
the same manner to all Users. Trading in VIX Index options will open
and be available to all Users at the same time; the proposed rule
change merely makes it possible for trading in these options to open
earlier. The Exchange does not believe that the proposed rule change
will impose any burden on intermarket competition, because the rules of
another options exchange permit index options to open at 9:30 a.m.,
rather than wait to open until the exchange receives the first
disseminated value of the underlying index value.\11\ The Exchange
notes the opening rotation for VIX Index options during the Global
Trading Hours session begins at a specified time, rather than after
dissemination of the VIX Index value.\12\
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\11\ Id.
\12\ See Rule 5.31(d)(2).
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The proposed rule change relates solely to the time at which
trading in VIX Index options (which are a proprietary product that only
trades on the Exchange) may begin. To the extent that the proposed
changes make the Exchange a more attractive marketplace for market
participants at other exchanges, such market participants are welcome
to become Exchange 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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
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, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-
4(f)(6) thereunder.\16\
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6).
\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative immediately. The Exchange states that
it believes the proposed rule change will protect investors by
permitting investors to begin trading VIX Index options at a similar
time at which they may begin to trade other options, thus allowing
investors to use VIX Index options as part of their trading, hedging,
and portfolio risk management activities. The Exchange also represents
that the proposed rule
[[Page 67987]]
change does not modify the opening auction process, but rather makes it
possible for this process to begin in a timelier manner for one option
class. Therefore, the Exchange believes its opening process will
continue to contribute to a fair and orderly opening of VIX options.
The Exchange further notes that initiating the opening process for an
index option at a specified time, rather than following dissemination
of the first value of the underlying index, is not novel or unique. The
Exchange represents that prior to October 7, 2019, VIX Index options
opened at a specified time, rather than after dissemination of the VIX
Index value. The opening rotation for VIX Index options during the
Global Trading Hours session also begins at a specified time, rather
than after dissemination of the VIX Index value.\19\ Additionally, the
Exchange notes that the rules of another options exchange permit index
options to open at 9:30 a.m., rather than waiting for the dissemination
of the underlying index value.\20\ 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 30-day operative delay and designates the
proposal operative upon filing.\21\
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6)(iii).
\19\ See Cboe Options Rule 5.31(d)(2).
\20\ See BOX Rule 6080(b).
\21\ For purposes only of waiving the 30-day operative delay,
the Commission 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-2019-110 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-2019-110. 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-2019-110, and should be submitted
on or before January 2, 2020.
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\22\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-26810 Filed 12-11-19; 8:45 am]
BILLING CODE 8011-01-P
