Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Pilot Programs in Connection With the Listing and Trading of P.M.-Settled Series on Certain Broad-Based Index Options, 27008-27011 [2020-09635]

Download as PDF 27008 Federal Register / Vol. 85, No. 88 / Wednesday, May 6, 2020 / 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 should be approved or disapproved. 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–2020–039 and should be submitted on or before May 27, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 J. Matthew DeLesDernier, Assistant Secretary. 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: [FR Doc. 2020–09632 Filed 5–5–20; 8:45 am] 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–2020–039 on the subject line. Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Pilot Programs in Connection With the Listing and Trading of P.M.-Settled Series on Certain Broad-Based Index Options 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–2020–039. 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 VerDate Sep<11>2014 19:08 May 05, 2020 Jkt 250001 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88788; File No. SR– CboeBZX–2020–038] April 30, 2020. 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 April 24, 2020, Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX 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 BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX Options’’) proposes to extend the pilot programs in connection with the listing and trading of P.M.-settled series on certain broadbased index options. The text of the proposed rule change is provided in Exhibit 5. 26 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 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ equities/regulation/rule_filings/bzx/), 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 The proposed rule change extends the listing and trading of P.M.-settled series on certain broad-based index options on a pilot basis.5 Rule 29.11(a)(6) currently permits the listing and trading of XSP options with third-Friday-of-the-month expiration dates, whose exercise settlement value will be based on the closing index value on the expiration day (‘‘P.M.-settled’’) on a pilot basis set to expire on May 4, 2020 (the ‘‘XSPPM Pilot Program’’). Rule 29.11(j)(3) also permits the listing and trading of P.M.settled options on broad-based indexes with weekly expirations (‘‘Weeklys’’) and end-of-month expirations (‘‘EOMs’’) on a pilot basis set to expire on May 4, 2020 (the ‘‘Nonstandard Expirations Pilot Program’’, and together with the XSPPM Pilot Program, the ‘‘Pilot 5 The Exchange is authorized to list for trading options that overlie the Mini-SPX Index (‘‘XSP’’) and the Russell 2000 Index (‘‘RUT’’). See Rule 29.11(a). See also Securities Exchange Act Release Nos. 84480 (October 24, 2018), 83 FR 54635 (October 30, 2018) (Notice of Filing of a Proposed Rule Change To Permit the Listing and Trading of P.M.-Settled Series on Certain Broad-Based Index Options on a Pilot Basis) (SR–CboeBZX–2018–066) (‘‘Notice’’); 85181 (February 22, 2019), 84 FR 6842 (February 28, 2019) (Notice of Deemed Approval of a Proposed Rule Change To Permit the Listing and Trading of P.M.-Settled Series on Certain BroadBased Index Options on a Pilot Basis) (SR– CboeBZX–2018–066); and 88052 (January 27, 2020), 85 FR 5753 (January 31, 2020) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Pilot Programs in Connection With the Listing and Trading of P.M.-Settled Series on Certain Broad-Based Index Options) (SR–CboeBZX– 2020–004). E:\FR\FM\06MYN1.SGM 06MYN1 Federal Register / Vol. 85, No. 88 / Wednesday, May 6, 2020 / Notices Programs’’). The Exchange proposes to extend the Pilot Programs through November 2, 2020. XSPPM Pilot Program Rule 29.11(a)(6) permits the listing and trading, in addition to A.M.-settled XSP options, of P.M.-settled XSP options with third-Friday-of-the-month expiration dates on a pilot basis. The Exchange believes that continuing to permit the trading of XSP options on a P.M.-settled basis will continue to encourage greater trading in XSP options. Other than settlement and closing time on the last trading day (pursuant to Rule 29.10(a)),6 contract terms for P.M.-settled XSP options are the same as the A.M.-settled XSP options. The contract uses a $100 multiplier and the minimum trading increments, strike price intervals, and expirations are the same as the A.M.settled XSP option series. P.M.-settled XSP options have European-style exercise. The Exchange also has flexibility to open for trading additional series in response to customer demand. If the Exchange were to propose another extension of the XSPPM Pilot Program or should the Exchange propose to make the XSPPM Pilot Program permanent, the Exchange would submit a filing proposing such amendments to the XSPPM Pilot Program. Further, any positions established under the XSPPM Pilot Program would not be impacted by the expiration of the XSPPM Pilot Program. For example, if the Exchange lists a P.M.-settled XSP option that expires after the XSPPM Pilot Program expires (and is not extended), then those positions would continue to exist. If the pilot were not extended, then the positions could continue to exist. However, any further trading in those series would be restricted to transactions where at least one side of the trade is a closing transaction. As part of the XSPPM Pilot Program, the Exchange submits a pilot report to the Commission at least two months prior to the expiration date of the pilot. This annual report contains an analysis of volume, open interest, and trading patterns. In proposing to extend the XSPPM Pilot Program, the Exchange will continue to abide by the reporting requirements described in the Notice.7 Additionally, the Exchange will provide 6 Rule 29.10(a) permits transactions in P.M.settled XSP options on their last trading day to be effected on the Exchange between the hours of 9:30 a.m. and 4:00 p.m. Eastern time. All other transactions in index options are effected on the Exchange between the hours of 9:30 a.m. and 4:15 p.m. Eastern time. 7 See supra note 5. VerDate Sep<11>2014 19:08 May 05, 2020 Jkt 250001 the Commission with any additional data or analyses the Commission requests because it deems such data or analyses necessary to determine whether the XSPPM 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 also notes that its affiliated options exchange, Cboe Exchange, Inc. (‘‘Cboe Options’’) currently has pilots that permit P.M.-settled third Friday-of-themonth XSP options.8 Nonstandard Expirations Pilot Program Rule 29.11(j)(1) permits the listing and trading, on a pilot basis, of P.M.settled options on broad-based indexes with nonstandard expiration dates and is currently set to expire on May 4, 2020. The Nonstandard Expirations Pilot Program permits both Weeklys and EOMs as discussed below. Contract terms for the Weekly and EOM expirations are similar to those of the A.M.-settled broad-based index options, except that the Weekly and EOM expirations are P.M.-settled. In particular, Rule 29.11(j)(1) permits the Exchange to open for trading Weeklys on any broad-based index eligible for standard options trading to expire on any Monday, Wednesday, or Friday (other than the third Friday-ofthe-month or days that coincide with an EOM). Weeklys are subject to all provisions of Rule 29.11 and are treated the same as options on the same underlying index that expire on the third Friday of the expiration month. However, under the Nonstandard Expirations Pilot Program, Weeklys are P.M.-settled, and new Weekly series may be added up to and including on the expiration date for an expiring Weekly. Rule 29.11(a)(2) permits the Exchange to open for trading EOMs on any broadbased index eligible for standard options trading to expire on the last trading day of the month. EOMs are subject to all provisions of Rule 29.11 and treated the same as options on the same underlying index that expire on the third Friday of the expiration month. However, under the Nonstandard Expirations Pilot Program, EOMs are P.M.-settled, and new series of EOMs may be added up to and including on the expiration date for an expiring EOM. As stated above, this proposed rule change extends the Nonstandard Expirations Pilot Program for broadbased index options on a pilot basis, for a period of six months. If the Exchange were to propose an additional extension of the Nonstandard Expirations Pilot Program or should the Exchange propose to make it permanent, the Exchange would submit additional filings proposing such amendments. Further, any positions established under the Nonstandard Expirations Pilot Program would not be impacted by the expiration of the pilot. For example, if the Exchange lists a Weekly or EOM that expires after the Nonstandard Expirations Pilot Program expires (and is not extended), then those positions would continue to exist. However, any further trading in those series would be restricted to transactions where at least one side of the trade is a closing transaction. As part of the Nonstandard Expirations Pilot Program, the Exchange submits a pilot report to the Commission at least two months prior to the expiration date of the pilot. This annual report contains an analysis of volume, open interest, and trading patterns. In proposing to extend the Nonstandard Expirations Pilot Program, the Exchange will continue to abide by the reporting requirements described in the Notice.9 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 Nonstandard Expirations 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 notes that other exchanges, including its affiliated exchange, Cboe Options, currently have pilots that have weekly and end-ofmonth expirations.10 Additional Information The Exchange believes there is sufficient investor interest and demand in the XSPPM and Nonstandard Expirations Pilot Programs to warrant their extension. The Exchange believes that the Programs have provided investors with additional means of managing their risk exposures and carrying out their investment objectives. 9 See supra note 5. Cboe Options Rule 4.13(e); and Phlx Rule 1101A(b)(5). 10 See 8 See PO 00000 Cboe Options Rule 4.13.13. Frm 00087 Fmt 4703 Sfmt 4703 27009 E:\FR\FM\06MYN1.SGM 06MYN1 27010 Federal Register / Vol. 85, No. 88 / Wednesday, May 6, 2020 / Notices The proposed extensions will continue to offer investors the benefit of added transparency, price discovery, and stability, as well as the continued expanded trading opportunities in connection with different expiration times. The Exchange proposes the extension of the Pilot Programs in order to continue to give the Commission more time to consider the impact of the Pilot Programs. To this point, the Exchange believes that the Pilot Programs have been well-received by its Members and the investing public, and the Exchange would like to continue to provide investors with the ability to trade P.M.-settled XSP options and contracts with nonstandard expirations. All terms regarding the trading of the Pilot Products shall continue to operate as described in the XSPPM and Nonstandard Expirations Notice.11 The Exchange merely proposes herein to extend the terms of the Pilot Programs to November 2, 2020. Furthermore, the Exchange has not experienced any adverse market effects with respect to the Programs. The Exchange will continue to monitor for any such disruptions or the development of any factors that would cause such disruptions. The Exchange represents it continues to have an adequate surveillance program in place for index options and that the proposed extension will not have an adverse impact on capacity. 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.12 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 13 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. In particular, the Exchange believes that the proposed extension of the Pilot Programs will continue to provide 11 See supra note 5. U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). 12 15 VerDate Sep<11>2014 19:08 May 05, 2020 Jkt 250001 greater opportunities for investors. The Exchange believes that the Pilot Programs have been successful to date. The proposed rule change allows for an extension of the Program for the benefit of market participants. The Exchange believes that there is demand for the expirations offered under the Program and believes that P.M.-settled XSP, Weekly Expirations and EOMs will continue to provide the investing public and other market participants with the opportunities to trade desirable products and to better manage their risk exposure. The proposed extension will also provide the Commission further opportunity to observe such trading of the Pilot Products. Further, the Exchange has not encountered any problems with the Programs; it has not experienced any adverse effects or meaningful regulatory or capacity concerns from the operation of the Pilot Programs. Also, the Exchange believes that such trading pursuant to the XSPPM Pilot Program has not, and will not, adversely impact fair and orderly markets on Expiration Fridays for the underlying stocks comprising the S&P 500 index. 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. Specifically, the Exchange believes that, by extending the expiration of the Pilot Programs, the proposed rule change will allow for further analysis of the Program and a determination of how the Program shall be structured in the future. In doing so, the proposed rule change will also serve to promote regulatory clarity and consistency, thereby reducing burdens on the marketplace and facilitating investor protection. Specifically, 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 BZX Options market participants, and the Pilot Products will continue to be available to all BZX Options market participants. The Exchange believes there is sufficient investor interest and demand in the Pilot Programs to warrant its extension. The Exchange believes that, for the period that the Pilot Programs has been in operation, it has provided investors with desirable products with which to trade. Furthermore, as stated above, the Exchange maintains that it has not experienced any adverse market effects or regulatory concerns with respect to PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 the Pilot Programs. The Exchange further does not believe that the proposed extension of the Pilot Programs 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 BZX Options. To the extent that the continued trading of the Pilot Products may make BZX Options a more attractive marketplace to market participants at other exchanges, such market participants may elect to become BZX 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 14 and subparagraph (f)(6) of Rule 19b–4 thereunder.15 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 16 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 17 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 asked the Commission to waive the 30-day operative delay so that investors may continue to trade options that are part of the Pilot Programs on an uninterrupted basis. 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 Programs to continue uninterrupted, 14 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. 16 17 CFR 240.19b–4(f)(6). 17 17 CFR 240.19b–4(f)(6)(iii). 15 17 E:\FR\FM\06MYN1.SGM 06MYN1 Federal Register / Vol. 85, No. 88 / Wednesday, May 6, 2020 / Notices 27011 thereby avoiding investor confusion that could result from a temporary interruption in the Pilot Programs. Accordingly, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.18 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. 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–CboeBZX–2020–038, and should be submitted on or before May 27, 2020. 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 J. Matthew DeLesDernier, Assistant Secretary. for up to 12 months of particular exclusions granted under these initial 11 product exclusion notices. The Office of the U.S. Trade Representative (USTR) invites public comment on whether to extend particular exclusions. DATES: May 1, 2020: The public docket on the web portal at https:// comments.USTR.gov will open for parties to submit comments on the possible extension of particular exclusions. June 8, 2020 at 11:59 p.m. ET: To be assured of consideration, submit written comments on the public docket by this deadline. ADDRESSES: You must submit all comments through the online portal: https://comments.USTR.gov. FOR FURTHER INFORMATION CONTACT: Associate General Counsel Philip Butler or Assistant General Counsel Benjamin Allen at (202) 395–5725. SUPPLEMENTARY INFORMATION: [FR Doc. 2020–09635 Filed 5–5–20; 8:45 am] A. Background 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– CboeBZX–2020–038 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–CboeBZX–2020–038. 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 18 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). VerDate Sep<11>2014 19:08 May 05, 2020 Jkt 250001 BILLING CODE 8011–01–P OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE [Docket Number USTR–2020–0015] Request for Comments Concerning the Extension of Particular Exclusions Granted Under the $200 Billion Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation Office of the United States Trade Representative. ACTION: Notice and request for comments. AGENCY: Effective September 24, 2018, the U.S. Trade Representative imposed additional duties on goods of China with an annual trade value of approximately $200 billion as part of the action in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. The U.S. Trade Representative initiated an exclusion process for the $200 billion action in June 2019, and as of March 26, 2020, has issued 11 product exclusion notices under this action. The product exclusions granted under these notices are scheduled to expire on August 7, 2020. The U.S. Trade Representative has decided to consider a possible extension SUMMARY: 19 17 PO 00000 CFR 200.30–3(a)(12). Frm 00089 Fmt 4703 Sfmt 4703 For background on the proceedings in this investigation, please see prior notices including 82 FR 40213 (August 24, 2017), 83 FR 14906 (April 6, 2018), 83 FR 28710 (June 20, 2018), 83 FR 33608 (July 17, 2018), 83 FR 38760 (August 7, 2018), 83 FR 47974 (September 21, 2018), 83 FR 49153 (September 28, 2018), 83 FR 65198 (December 19, 2018), 84 FR 7966 (March 5, 2019), 84 FR 20459 (May 9, 2019), 84 FR 29576 (June 24, 2019), 84 FRN 38717 (August 7, 2019), 84 FR 46212 (September 3, 2019), 84 FR 49591 (September 20, 2019), 84 FR 57803 (October 28, 2019), 84 FR 61674 (November 13, 2019), 84 FR 65882 (November 29, 2019), 84 FR 69012 (December 17, 2019), 85 FR 549 (January 6, 2020), 85 FR 6674 (February 5, 2020), 85 FR 9921 (February 20, 2020), 85 FR 15015 (March 16, 2020), and 85 FR 17158 (March 26, 2020). Effective September 24, 2018, the U.S. Trade Representative imposed additional 10 percent duties on goods of China classified in 5,757 full and partial subheading of the Harmonized Tariff Schedule of the United States (HTSUS) with an approximate annual trade value of $200 billion. See 83 FR 47974, as modified by 83 FR 49153. In May 2019, the U.S. Trade Representative increased the additional duty to 25 percent. See 84 FR 20459. On June 24, 2019, the Trade Representative established a process by which U.S. stakeholders could request exclusion of particular products classified within an 8-digit HTSUS subheading covered by the $200 billion E:\FR\FM\06MYN1.SGM 06MYN1

Agencies

[Federal Register Volume 85, Number 88 (Wednesday, May 6, 2020)]
[Notices]
[Pages 27008-27011]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09635]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88788; File No. SR-CboeBZX-2020-038]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Extend 
the Pilot Programs in Connection With the Listing and Trading of P.M.-
Settled Series on Certain Broad-Based Index Options

April 30, 2020.
    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 April 24, 2020, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX Options'') 
proposes to extend the pilot programs in connection with the listing 
and trading of P.M.-settled series on certain broad-based index 
options. 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://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), 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
    The proposed rule change extends the listing and trading of P.M.-
settled series on certain broad-based index options on a pilot 
basis.\5\ Rule 29.11(a)(6) currently permits the listing and trading of 
XSP options with third-Friday-of-the-month expiration dates, whose 
exercise settlement value will be based on the closing index value on 
the expiration day (``P.M.-settled'') on a pilot basis set to expire on 
May 4, 2020 (the ``XSPPM Pilot Program''). Rule 29.11(j)(3) also 
permits the listing and trading of P.M.-settled options on broad-based 
indexes with weekly expirations (``Weeklys'') and end-of-month 
expirations (``EOMs'') on a pilot basis set to expire on May 4, 2020 
(the ``Nonstandard Expirations Pilot Program'', and together with the 
XSPPM Pilot Program, the ``Pilot

[[Page 27009]]

Programs''). The Exchange proposes to extend the Pilot Programs through 
November 2, 2020.
---------------------------------------------------------------------------

    \5\ The Exchange is authorized to list for trading options that 
overlie the Mini-SPX Index (``XSP'') and the Russell 2000 Index 
(``RUT''). See Rule 29.11(a). See also Securities Exchange Act 
Release Nos. 84480 (October 24, 2018), 83 FR 54635 (October 30, 
2018) (Notice of Filing of a Proposed Rule Change To Permit the 
Listing and Trading of P.M.-Settled Series on Certain Broad-Based 
Index Options on a Pilot Basis) (SR-CboeBZX-2018-066) (``Notice''); 
85181 (February 22, 2019), 84 FR 6842 (February 28, 2019) (Notice of 
Deemed Approval of a Proposed Rule Change To Permit the Listing and 
Trading of P.M.-Settled Series on Certain Broad-Based Index Options 
on a Pilot Basis) (SR-CboeBZX-2018-066); and 88052 (January 27, 
2020), 85 FR 5753 (January 31, 2020) (Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change To Extend the Pilot Programs 
in Connection With the Listing and Trading of P.M.-Settled Series on 
Certain Broad-Based Index Options) (SR-CboeBZX-2020-004).
---------------------------------------------------------------------------

XSPPM Pilot Program
    Rule 29.11(a)(6) permits the listing and trading, in addition to 
A.M.-settled XSP options, of P.M.-settled XSP options with third-
Friday-of-the-month expiration dates on a pilot basis. The Exchange 
believes that continuing to permit the trading of XSP options on a 
P.M.-settled basis will continue to encourage greater trading in XSP 
options. Other than settlement and closing time on the last trading day 
(pursuant to Rule 29.10(a)),\6\ contract terms for P.M.-settled XSP 
options are the same as the A.M.-settled XSP options. The contract uses 
a $100 multiplier and the minimum trading increments, strike price 
intervals, and expirations are the same as the A.M.-settled XSP option 
series. P.M.-settled XSP options have European-style exercise. The 
Exchange also has flexibility to open for trading additional series in 
response to customer demand.
---------------------------------------------------------------------------

    \6\ Rule 29.10(a) permits transactions in P.M.-settled XSP 
options on their last trading day to be effected on the Exchange 
between the hours of 9:30 a.m. and 4:00 p.m. Eastern time. All other 
transactions in index options are effected on the Exchange between 
the hours of 9:30 a.m. and 4:15 p.m. Eastern time.
---------------------------------------------------------------------------

    If the Exchange were to propose another extension of the XSPPM 
Pilot Program or should the Exchange propose to make the XSPPM Pilot 
Program permanent, the Exchange would submit a filing proposing such 
amendments to the XSPPM Pilot Program. Further, any positions 
established under the XSPPM Pilot Program would not be impacted by the 
expiration of the XSPPM Pilot Program. For example, if the Exchange 
lists a P.M.-settled XSP option that expires after the XSPPM Pilot 
Program expires (and is not extended), then those positions would 
continue to exist. If the pilot were not extended, then the positions 
could continue to exist. However, any further trading in those series 
would be restricted to transactions where at least one side of the 
trade is a closing transaction.
    As part of the XSPPM Pilot Program, the Exchange submits a pilot 
report to the Commission at least two months prior to the expiration 
date of the pilot. This annual report contains an analysis of volume, 
open interest, and trading patterns. In proposing to extend the XSPPM 
Pilot Program, the Exchange will continue to abide by the reporting 
requirements described in the Notice.\7\ 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 XSPPM 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 also notes that its affiliated options exchange, Cboe 
Exchange, Inc. (``Cboe Options'') currently has pilots that permit 
P.M.-settled third Friday-of-the-month XSP options.\8\
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    \7\ See supra note 5.
    \8\ See Cboe Options Rule 4.13.13.
---------------------------------------------------------------------------

Nonstandard Expirations Pilot Program
    Rule 29.11(j)(1) permits the listing and trading, on a pilot basis, 
of P.M.-settled options on broad-based indexes with nonstandard 
expiration dates and is currently set to expire on May 4, 2020. The 
Nonstandard Expirations Pilot Program permits both Weeklys and EOMs as 
discussed below. Contract terms for the Weekly and EOM expirations are 
similar to those of the A.M.-settled broad-based index options, except 
that the Weekly and EOM expirations are P.M.-settled.
    In particular, Rule 29.11(j)(1) permits the Exchange to open for 
trading Weeklys on any broad-based index eligible for standard options 
trading to expire on any Monday, Wednesday, or Friday (other than the 
third Friday-of-the-month or days that coincide with an EOM). Weeklys 
are subject to all provisions of Rule 29.11 and are treated the same as 
options on the same underlying index that expire on the third Friday of 
the expiration month. However, under the Nonstandard Expirations Pilot 
Program, Weeklys are P.M.-settled, and new Weekly series may be added 
up to and including on the expiration date for an expiring Weekly.
    Rule 29.11(a)(2) permits the Exchange to open for trading EOMs on 
any broad-based index eligible for standard options trading to expire 
on the last trading day of the month. EOMs are subject to all 
provisions of Rule 29.11 and treated the same as options on the same 
underlying index that expire on the third Friday of the expiration 
month. However, under the Nonstandard Expirations Pilot Program, EOMs 
are P.M.-settled, and new series of EOMs may be added up to and 
including on the expiration date for an expiring EOM.
    As stated above, this proposed rule change extends the Nonstandard 
Expirations Pilot Program for broad-based index options on a pilot 
basis, for a period of six months. If the Exchange were to propose an 
additional extension of the Nonstandard Expirations Pilot Program or 
should the Exchange propose to make it permanent, the Exchange would 
submit additional filings proposing such amendments. Further, any 
positions established under the Nonstandard Expirations Pilot Program 
would not be impacted by the expiration of the pilot. For example, if 
the Exchange lists a Weekly or EOM that expires after the Nonstandard 
Expirations Pilot Program expires (and is not extended), then those 
positions would continue to exist. However, any further trading in 
those series would be restricted to transactions where at least one 
side of the trade is a closing transaction.
    As part of the Nonstandard Expirations Pilot Program, the Exchange 
submits a pilot report to the Commission at least two months prior to 
the expiration date of the pilot. This annual report contains an 
analysis of volume, open interest, and trading patterns. In proposing 
to extend the Nonstandard Expirations Pilot Program, the Exchange will 
continue to abide by the reporting requirements described in the 
Notice.\9\ 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 
Nonstandard Expirations 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 
notes that other exchanges, including its affiliated exchange, Cboe 
Options, currently have pilots that have weekly and end-of-month 
expirations.\10\
---------------------------------------------------------------------------

    \9\ See supra note 5.
    \10\ See Cboe Options Rule 4.13(e); and Phlx Rule 1101A(b)(5).
---------------------------------------------------------------------------

Additional Information
    The Exchange believes there is sufficient investor interest and 
demand in the XSPPM and Nonstandard Expirations Pilot Programs to 
warrant their extension. The Exchange believes that the Programs have 
provided investors with additional means of managing their risk 
exposures and carrying out their investment objectives.

[[Page 27010]]

The proposed extensions will continue to offer investors the benefit of 
added transparency, price discovery, and stability, as well as the 
continued expanded trading opportunities in connection with different 
expiration times. The Exchange proposes the extension of the Pilot 
Programs in order to continue to give the Commission more time to 
consider the impact of the Pilot Programs. To this point, the Exchange 
believes that the Pilot Programs have been well-received by its Members 
and the investing public, and the Exchange would like to continue to 
provide investors with the ability to trade P.M.-settled XSP options 
and contracts with nonstandard expirations. All terms regarding the 
trading of the Pilot Products shall continue to operate as described in 
the XSPPM and Nonstandard Expirations Notice.\11\ The Exchange merely 
proposes herein to extend the terms of the Pilot Programs to November 
2, 2020.
---------------------------------------------------------------------------

    \11\ See supra note 5.
---------------------------------------------------------------------------

    Furthermore, the Exchange has not experienced any adverse market 
effects with respect to the Programs. The Exchange will continue to 
monitor for any such disruptions or the development of any factors that 
would cause such disruptions. The Exchange represents it continues to 
have an adequate surveillance program in place for index options and 
that the proposed extension will not have an adverse impact on 
capacity.
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.\12\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \13\ 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the Exchange believes that the proposed extension of 
the Pilot Programs will continue to provide greater opportunities for 
investors. The Exchange believes that the Pilot Programs have been 
successful to date. The proposed rule change allows for an extension of 
the Program for the benefit of market participants. The Exchange 
believes that there is demand for the expirations offered under the 
Program and believes that P.M.-settled XSP, Weekly Expirations and EOMs 
will continue to provide the investing public and other market 
participants with the opportunities to trade desirable products and to 
better manage their risk exposure. The proposed extension will also 
provide the Commission further opportunity to observe such trading of 
the Pilot Products. Further, the Exchange has not encountered any 
problems with the Programs; it has not experienced any adverse effects 
or meaningful regulatory or capacity concerns from the operation of the 
Pilot Programs. Also, the Exchange believes that such trading pursuant 
to the XSPPM Pilot Program has not, and will not, adversely impact fair 
and orderly markets on Expiration Fridays for the underlying stocks 
comprising the S&P 500 index.

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. Specifically, the Exchange 
believes that, by extending the expiration of the Pilot Programs, the 
proposed rule change will allow for further analysis of the Program and 
a determination of how the Program shall be structured in the future. 
In doing so, the proposed rule change will also serve to promote 
regulatory clarity and consistency, thereby reducing burdens on the 
marketplace and facilitating investor protection.
    Specifically, 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 BZX Options market participants, and the Pilot Products will 
continue to be available to all BZX Options market participants. The 
Exchange believes there is sufficient investor interest and demand in 
the Pilot Programs to warrant its extension. The Exchange believes 
that, for the period that the Pilot Programs has been in operation, it 
has provided investors with desirable products with which to trade. 
Furthermore, as stated above, the Exchange maintains that it has not 
experienced any adverse market effects or regulatory concerns with 
respect to the Pilot Programs. The Exchange further does not believe 
that the proposed extension of the Pilot Programs 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 BZX Options. To the extent that the continued trading of the 
Pilot Products may make BZX Options a more attractive marketplace to 
market participants at other exchanges, such market participants may 
elect to become BZX 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 \14\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \16\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \17\ 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 asked the Commission to waive the 30-day operative delay so that 
investors may continue to trade options that are part of the Pilot 
Programs on an uninterrupted basis. 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 Programs 
to continue uninterrupted,

[[Page 27011]]

thereby avoiding investor confusion that could result from a temporary 
interruption in the Pilot Programs. Accordingly, the Commission hereby 
waives the operative delay and designates the proposed rule change 
operative upon filing.\18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission 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-CboeBZX-2020-038 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-CboeBZX-2020-038. 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-CboeBZX-2020-038, and should be 
submitted on or before May 27, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-09635 Filed 5-5-20; 8:45 am]
 BILLING CODE 8011-01-P
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