Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 6.9 To Permit In-Kind Transfers of Positions Off of the Exchange in Connection With Unit Investment Trusts (“UITs”), 26998-27002 [2020-09638]
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Federal Register / Vol. 85, No. 88 / Wednesday, May 6, 2020 / Notices
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeEDGX–2020–019 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
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–09634 Filed 5–5–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release Nos. 33–10780; 34–88790; File No.
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Securities and Exchange
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[Release No. 34–88786; File No. SR–CBOE–
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Dated: May 1, 2020.
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[FR Doc. 2020–09662 Filed 5–5–20; 8:45 am]
BILLING CODE 8011–01–P
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19 17
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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 28,
2020, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
Rule 6.9 to permit in-kind transfers of
positions off of the Exchange in
connection with unit investment trusts
(‘‘UITs’’). The text of the proposed rule
change is provided below.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
Rules of Cboe Exchange, Inc.
*
*
*
*
*
Rule 6.9. In-Kind Exchange of Options
Positions and ETF Shares and UIT Units
Notwithstanding the prohibition set forth
in Rule 5.12, positions in options listed on
the Exchange may be transferred off the
Exchange by a Trading Permit Holder in
connection with transactions (a) to purchase
or redeem creation units of ETF shares
between an authorized participant and the
issuer of such ETF shares or (b) to create or
redeem units of a unit investment trust
(‘‘UIT’’) between a broker-dealer and the
issuer of such UIT units, which transfers
would occur at the price(s) used to calculate
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
CFR 200.30–3(a)(12).
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Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 6.9 To
Permit In-Kind Transfers of Positions
Off of the Exchange in Connection
With Unit Investment Trusts (‘‘UITs’’)
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the net asset value of such ETF shares or UIT
units, respectively. For purposes of this Rule:
(a) An ‘‘authorized participant’’ is an entity
that has a written agreement with the issuer
of ETF shares or one of its service providers,
which allows the authorized participant to
place orders for the purchase and redemption
of creation units (i.e., specified numbers of
ETF shares); [and]
(b) an ‘‘issuer of ETF shares’’ is an entity
registered with the Commission as an openend management investment company under
the Investment Company Act of 1940[.]; and
(c) an ‘‘issuer of UIT units’’ is a trust
registered with the Commission as a unit
investment trust under the Investment
Company Act of 1940.
*
*
*
*
*
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
The Exchange proposes to amend
Rule 6.9, which permits off-Exchange,
in-kind transfers of options positions in
connection with ETFs organized as
open-end management investment
companies under the Investment
Company Act of 1940 (the ‘‘1940 Act’’),
to also permit in-kind transfers of
options positions in connection with
entities registered as UITs under the
1940 Act.
Rule 6.9 is an exception to the
Exchange’s general requirement that
transfers of options contracts listed on
the Exchange be effected on an
exchange, as set forth in Rule 5.12.5
5 See Rule 5.12(a) (Transactions Off the
Exchange), which generally requires transactions of
option contracts listed on the Exchange for a
premium in excess of $1.00 to be effected on the
floor of the Exchange or on another exchange.
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Specifically, Rule 6.9 permits positions
in options listed on the Exchange to be
transferred off the Exchange by a
Trading Permit Holder in connection
with transactions to purchase or redeem
‘‘creation units’’ of ETF shares between
an authorized participant and the issuer
of such ETF shares. Such transfers
pursuant to Rule 6.9 occur between two
different parties, off the Exchange, and
are considered position transfers, as
opposed to transactions.6 Each of these
transfers occurs at the price used to
calculate the net asset value (‘‘NAV’’) of
such ETF shares. Rule 6.9 also currently
defines an ‘‘authorized participant’’ as
an entity that has a written agreement
with the issuer of ETF shares or one of
its service providers, which allows the
authorized participant to place orders
for the purchase and redemption of
creation units (i.e., specified numbers of
ETF shares), and an ‘‘issuer of ETF
shares’’ as an entity registered with the
Commission as an open-end
management investment company
under the 1940 Act. The ability to effect
in-kind transfers is a key component of
the operational structure of an ETF and
the exception under Rule 6.9 allows
options-based ETFs to be more taxefficient investment vehicles, to the
benefit of their shareholders, and
potentially result in transaction cost
savings, which may be passed along to
investors. The Exchange now proposes
to expand Rule 6.9 to provide the same
exemption from Rule 5.12 to off-floor,
in-kind transfers in connection with the
creation or redemption of units issued
by a UIT, another type of investment
company registered under the 1940 Act.
Although UITs operate differently than
ETFs in certain respects, as described
below, the anticipated potential benefits
to UIT investors (i.e., greater tax
efficiencies and transaction cost
savings) from the proposed exemption
would be similar as discussed below.
Specifically, under the 1940 Act,7 a
UIT is an investment company
organized under a trust indenture or
similar instrument that issues
redeemable securities, each of which
represents an undivided interest in a
6 While the prices of options transactions effected
on the Exchange are disseminated to OPRA, backoffice transfers of options positions in clearing
accounts held at The Options Clearing Corporation
(‘‘OCC’’) (in accordance with OCC Rules) are not
disseminated to OPRA or otherwise publicly
available, as they are considered position transfers,
rather than executions. OCC has represented to the
Exchange that it has the operational capabilities to
effect the position transfers and all transfers
pursuant to Rule 6.9 are required to comply with
OCC rules. See Rule 8.2 (which requires all TPHs
that are members of OCC to comply with OCC’s
Rules).
7 15 U.S.C. 80a–4(2).
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26999
unit of specified securities.8 A UIT’s
investment portfolio is relatively fixed,
and, unlike an ETF, a UIT has a fixed
life (a termination date for the trust is
established when the trust is created).
Similar to other types of investment
companies (including ETFs), UITs
invest their assets in accordance with
their investment objectives and
investment strategies, and UIT units
represent interests in a UIT’s underlying
assets. Like ETFs, UITs do not sell or
redeem individual shares, but instead,
through the creation and redemption
process, a UIT’s sponsor (a brokerdealer) may purchase and redeem shares
directly from the UIT’s trustee in
aggregations known as ‘‘units.’’ A
broker-dealer purchases a unit of UIT
shares from the UIT’s trustee by
depositing a basket of securities and/or
other assets identified by the UIT. These
transactions are largely effected by ‘‘inkind’’ transfers, or the exchange of
securities, non-cash assets, and/or other
non-cash positions. The basket
deposited by the broker-dealer is
generally expected to be representative
of the UIT’s units and will be equal in
value to the aggregate NAV of the shares
of the UIT comprising a unit. 9 The UIT
then issues units that are publicly
offered and sold. Unlike ETFs, UITs
typically do not continuously offer their
shares for sale, but rather, make a onetime or limited public offering of only
a specific, fixed number of units like a
closed-end fund (i.e., the primary
period, which may range from a single
day to a few months). Similar to the
process for ETFs, UITs allow investorowners of units to redeem their units
back to the UIT’s trustee on a daily basis
and, upon redemption, such investorowners are entitled to receive the
redemption price at the UIT’s NAV.
While UITs provide for daily
redemptions directly with the UIT’s
trustee, UIT sponsors frequently
maintain a secondary market for units,
8 The Exchange also notes that, though a majority
of ETFs are structured as open-ended funds (i.e.,
those ETFs currently covered by Rule 6.9), some
ETFs are structured as UITs, and currently
represent a significant amount of assets within the
ETF industry. These include, for example, SPDR
S&P 500 ETF Trust (‘‘SPY’’) and PowerShares QQQ
Trust, Series 1 (‘‘QQQ’’).
9 The NAV is an investment company’s total
assets minus its total liabilities. UITs must calculate
their NAV at least once every business day,
typically after market close. See § 270.2a–4(c),
which provides that any interim determination of
current net asset value between calculations made
as of the close of the New York Stock Exchange on
the preceding business day and the current business
day may be estimated so as to reflect any change
in current net asset value since the closing
calculation on the preceding business day. This,
however, is notwithstanding the requirements of
§ 270.2a–4(a), which provides for other events that
would trigger computation of a UIT’s NAV.
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also like that of ETFs, and will buy back
units at the applicable redemption price
per unit. To satisfy redemptions, a UIT
typically sells securities and/or other
assets, which results in negative tax
implications and an incurrence of
trading costs borne by remaining unit
holders.
Although ETFs and UITs operate
differently in certain respects, the
ability to effect in-kind transfers is
significant to both types of investment
vehicles. Currently, in-kind transfers of
options pursuant to Rule 6.9 protect
ETF shareholders from certain
undesirable tax consequences and
improve the overall tax efficiency of the
products. Indeed, by effecting
redemptions on an in-kind basis, as
permitted by Rule 6.9, there is no need
for an ETF to sell assets and potentially
realize capital gains that would be
distributed to shareholders.
Additionally, by transacting on an inkind basis, ETFs may currently avoid
certain transaction costs they would
otherwise incur in connection with
purchases and sales of securities and
other assets (including options). As
stated, Rule 6.9 does not currently
permit these in-kind transfers for UITs,
as they are still generally required to sell
options on an exchange to obtain the
requisite cash when effecting
redemption transactions with brokerdealers. Thus, the Exchange proposes to
extend the Rule 6.9 exemption to UITs.
As described above, UITs and ETFs are
situated in substantially the same
manner; the key differences being a
UIT’s fixed duration, and that a UIT
generally makes a one-time public
offering of only a specific, fixed number
of units. Negative tax implication and
trading costs for remaining unit holders
would be mitigated by allowing a UIT
sponsor or another broker-dealer to
receive an in-kind distribution of
options upon redemption. Therefore,
permitting off-exchange in-kind
transfers for UITs would benefit
investors by potentially providing tax
efficiencies and transaction cost savings
similar to those that investors in ETFs
may enjoy today. The Exchange does
not believe the proposed extension of
Rule 6.9 to UITs will adversely impact
investors or the maintenance of a fair
and orderly market as it does not
circumvent the prohibition under Rule
5.12(a) nor does it compromise price
discovery or transparency. To note, Rule
6.9 is already applicable to options in
connection with ETF creations and
redemptions, previously approved by
the Commission.10 Although options
10 See Securities Exchange Act Release No. 87340
(October 17, 2019), 84 FR 56877 (October 23, 2019)
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positions in connection with ETF and
UIT (as proposed) creations and
redemptions are transferred off of the
Exchange, they are not closed or
‘‘traded’’, and instead, merely reside in
a different clearing account until closed
in a trade on the Exchange or until they
expire. The Exchange also notes that
Rule 6.9 will continue to be clearly
delineated and limited in scope, given
that the exception will continue to
apply only to transfers of options
effected in connection with the creation
and redemption process, and for certain
investment companies registered under
the 1940 Act. Moreover, the Exchange
notes that transfers of options in
connection with the creation or
redemption of open-end fund ETFs
constitute a minimal percentage of the
total average daily volume (‘‘ADV’’) of
options and the Exchange expects
options transfers in connection with
UITs to comprise a similar minimal
percentage of ADV. Additionally the
options transfers that would be
permitted by the exemption are
generally expected to include
corresponding transactions by a brokerdealer that would occur on an exchange
and would be reported to OPRA.11
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with 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,
Order Approving on an Accelerated Basis a
Proposed Rule Change, as Modified by Amendment
Nos. 2 and 3, To Adopt Rule 6.9 (In-Kind Exchange
of Options Positions and ETF Shares)) (SR–CBOE–
2019–048).
11 The Exchange notes that in conjunction with
depositing options with a UIT’s trustee and creating
units, the necessary options positions will be
acquired in an on-exchange transaction that is
reported to OPRA. In conjunction with
redemptions, the sponsor or other broker-dealer
will generally acquire both the units redeemed by
a redeeming unit holder and an options position to
offset the position that it will receive as proceeds
for the redemption. Such an options position is
likely acquired in an on-exchange transaction that
would be reported to OPRA. Thus, while the
transfer of options positions between the sponsor or
other broker-dealer and the UIT would not
necessarily be reported, there are generally
corresponding transactions that would be reported,
providing transparency into the transactions.
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(5).
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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.
The Exchange believes that permitting
off-floor transfers in connection with the
in-kind UIT creation and redemption
process promotes just and equitable
principles of trade and helps remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, as it
would permit UITs that invest in
options traded on the Exchange to
transfer options off of the Exchange in
connection with their in-kind creation
and redemption process as ETFs are
currently able to do under Rule 6.9, as
previously approved by the
Commission.14 Further, the Exchange
believes that permitting a comparable
investment vehicle, also registered as an
investment company under the 1940
Act, to be included in the Rule 6.9
exemption, removes impediments to
and perfect the mechanism of a free and
open market and national market system
as it would enable UITs to compete
more effectively with other investment
vehicles that, based on their portfolio
holdings, may effect in-kind creations
and redemptions without restriction.
The Exchange notes that the ability to
effect in-kind transfers is significant to
both ETFs and UITs as investment
vehicles. By permitting UITs that invest
in options traded on the Exchange to
benefit from potential tax efficiencies
and transaction cost savings similar to
those that ETFs may currently enjoy, the
proposed rule change would protect
investors and the public interest by
passing along such potential benefits to
investors that participate in UITs. The
Exchange does not believe that the
proposed rule change affects the
protection of investors or the
maintenance of a fair and orderly
market because the Rule 6.9 exception
would continue to be clearly delineated
and limited in scope. Rule 6.9 already
applies to ETFs, which operate in a
similar manner as UITs, and the
proposed rule change to make the
transfer exemption available to UITs is
based on a similar rationale and does
not raise any new or novel issues. In
this regard, as with in-kind, offexchange transfers of options in
connection with ETFs, those transfers in
connection with UITs would also occur
at a price related to the NAV of the
applicable UIT units, which removes
the need for price discovery on an
14 See
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exchange. As stated above, the Exchange
expects that off-exchange options
transfers in connection with the creation
and redemption process for UITs will
comprise a minimal percentage of ADV,
just as such transfers currently
permissible in connection with ETFs
comprise a minimal percentage of ADV.
Further, the general price at which UITrelated transfers are effected will be
publicly available as they are based on
the disseminated closing prices and are
generally expected to include
corresponding, transactions by a brokerdealer that would occur on an exchange
and be reported to OPRA.15
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 the proposed
rule change will impose any burden on
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because
invoking the exception under Rule 6.9
in connection with UITs is voluntary
and the proposed exception for UITs is
not intended as a competitive trading
tool. Instead, it is intended as an
alternative to the normal auction
process to provide market participants
with an efficient and effective means to
transfer option positions as part of the
UIT creation and redemption process
under the same specified circumstances
currently applicable to ETFs in
connection with creating and redeeming
units of UITs. The proposed expansion
of the Rule 6.9 exception to UITs would
enable this investment vehicle, which is
comparable to ETFs, to enjoy the
potential benefits of off-exchange, inkind transfers of option positions in
connection with creating and
redeeming, and to pass these benefits
along to investors. Use of the in-kind,
off-exchange transfer process in
connection with creating UIT units and
the redemption process would be
voluntary and would apply in the same
manner to all broker-dealers choosing to
invoke such process.
The Exchange does not believe the
proposed rule change will impose any
burden on intermarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act,
because the in-kind transfer rule would
continue to provide a clearly delineated
and limited exception to the
requirement that options positions in
connection with certain entities
15 See
supra note 11.
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registered as a type of investment
company under the 1940 Act be
transferred on the floor of an exchange.
The proposed rule change merely
extends the Rule 6.9 exemption (and
any potential benefits) to UITs. The
Exchange again notes that Rule 6.9 was
previously approved by the
Commission 16 and is currently
applicable to ETFs that are similarly
situated and also in invest in options.
Also, as indicated above, in light of the
significant benefits provided (e.g.,
potential tax efficiencies and transaction
cost savings), the proposed exception
may lead to further development of
UITs that invest in options, thereby
fostering competition and resulting in
additional choices for investors, which
ultimately benefits the marketplace and
the public. Other options exchanges in
their discretion may pursue the
adoption of similar exceptions.
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 written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change
does not: (i) Significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 17 and
subparagraph (f)(6) of Rule 19b–4
thereunder.18
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
16 See
supra note 10.
U.S.C. 78s(b)(3)(A).
18 17 CFR 240.19b–4(f)(6). In addition, Rule19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
17 15
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change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2020–042 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–2020–042. 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–2020–042, and
should be submitted on or before May
27, 2020.
E:\FR\FM\06MYN1.SGM
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27002
Federal Register / Vol. 85, No. 88 / Wednesday, May 6, 2020 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–09638 Filed 5–5–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88778; File No. SR–
CboeBZX–2020–034]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Fees Applicable to Securities Listed on
the Exchange, Which Are Set Forth in
BZX Rule 14.13 (Company Listing
Fees)
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 16,
2020, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) is filing with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
to amend the fees applicable to
securities listed on the Exchange, which
are set forth in BZX Rule 14.13,
Company Listing Fees. 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.
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
19:08 May 05, 2020
Jkt 250001
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On August 30, 2011, the Exchange
received approval of rules applicable to
the qualification, listing, and delisting
of companies on the Exchange,3 which
it modified on February 8, 2012 in order
to adopt pricing for the listing of
exchange-traded products (‘‘ETPs’’) 4 on
the Exchange.5 On July 3, 2017, the
Exchange made certain changes to Rule
14.13 such that there were no entry fees
or annual fees for ETPs listed on the
Exchange.6 Effective January 1, 2019,
the Exchange made certain changes to
Rule 14.13 in order to charge an entry
fee for ETPs that are not GenericallyListed ETPs 7 and to add annual listing
fees for ETPs listed on the Exchange.8
The Exchange then made certain
additional modifications to Rule 14.13
in May 2019 related to listings that are
transferring to the Exchange and to
make certain changes to the fees
associated with Linked Securities.9 10
3 See Securities Exchange Act Release No. 65225
(August 30, 2011), 76 FR 55148 (September 6, 2011)
(SR–BATS–2011–018).
4 As defined in Rule 11.8(e)(1)(A), the term ‘‘ETP’’
means any security listed pursuant to Exchange
Rule 14.11.
5 See Securities Exchange Act Release No. 66422
(February 17, 2012), 77 FR 11179 (February 24,
2012) (SR–BATS–2012–010).
6 See Securities Exchange Act Release No. 81152
(July 14, 2017), 82 FR 33525 (July 20, 2017) (SR–
BatsBZX–2017–45).
7 As defined in Rule 14.13(b)(1)(C)(i), the term
‘‘Generically-Listed ETPs’’ means Index Fund
Shares, Portfolio Depositary Receipts, Managed
Fund Shares, Linked Securities, and Currency Trust
Shares that are listed on the Exchange pursuant to
Rule 19b–4(e) under the Exchange Act and for
which a proposed rule change pursuant to Section
19(b) of the Exchange Act is not required to be filed
with the Commission.
8 See Securities Exchange Act Release No. 83597
(July 5, 2018), 83 FR 32164 (July 11, 2018) (SR–
CboeBZX–2018–46).
9 As defined in Rule 14.11(d), the term ‘‘Linked
Securities’’ includes any product listed pursuant to
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
Finally, on August 30, 2019, the
Exchange amended Rule 14.13(b)(2) in
order to create annual pricing cap for
Outcome Strategy Series 11 that are
listed on the Exchange.12 Now, the
Exchange submits this proposal in order
to amend Rule 14.13(b)(1)(C)(i) to
exclude generically-listed ExchangeTraded Fund Shares from entry fees.
By way of background, on April 6,
2020, the Exchange received approval
by the Commission to generically list
and trade Exchange-Traded Fund Shares
that are permitted to operate in reliance
of Rule 6c–11 (‘‘Rule 6c–11’’) under the
Investment Company Act of 1940 (the
‘‘1940 Act’’).13 The Commission
recently adopted Rule 6c–11 to permit
exchange-traded funds (‘‘ETFs’’) that
satisfy certain conditions to operate
without obtaining an exemptive order
from the Commission under the 1940
Act.14 Since the first ETF was approved
by the Commission in 1992, the
Commission has routinely granted
exemptive orders permitting ETFs to
operate under the 1940 Act because
there was no ETF specific rule in place
and they have characteristics that
distinguish them from the types of
structures contemplated and included
in the 1940 Act. After such an extended
period operating without a specific rule
set and only under exemptive relief,
Rule 6c–11 is designed to provide a
consistent, transparent, and efficient
regulatory framework for ETFs.15 Given
Rule 14.11(d), but specifically includes Equity
Index-Linked Securities, Commodity-Linked
Securities, Fixed Income Index-Linked Securities,
Futures-Linked Securities, and Multifactor IndexLinked Securities.
10 See Securities Exchange Act Release No. 85881
(May 16, 2019), 84 FR 23607 (May 22, 2019) (SR–
CboeBZX–2019–042).
11 As defined in Rule 14.13(b)(2)(C)(iv), an
Outcome Strategy Series is a series of ETPs that are
each designed to (i) a pre-defined set of returns; (ii)
over a specified outcome period; (iii) based on the
performance of the same underlying instrument;
and (iv) each employ the same outcome strategy for
achieving the predefined set of returns (each an
‘‘Outcome Strategy ETP’’ and, collectively, an
‘‘Outcome Strategy Series’’).
12 See Securities Exchange Act No. 86956
(September 12, 2019) 84 FR 49128 (September 18,
2019) (SR–CboeBZX–2019–081).
13 15 U.S.C. 80a–1.
14 See Release Nos. 33–10695; IC–33646; File No.
S7–15–18 (Exchange-Traded Funds) (September 25,
2019), 84 FR 57162 (October 24, 2019) (the ‘‘Rule
6c–11 Release’’).
15 In approving the rule, the Commission stated
that the ‘‘rule will modernize the regulatory
framework for ETFs to reflect our more than two
decades of experience with these investment
products. The rule is designed to further important
Commission objectives, including establishing a
consistent, transparent, and efficient regulatory
framework for ETFs and facilitating greater
competition and innovation among ETFs.’’ Rule 6c–
11 Release, at 57163. The Commission also stated
the following regarding the rule’s impact: ‘‘We
believe rule 6c–11 will establish a regulatory
E:\FR\FM\06MYN1.SGM
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]]>Agencies
[Federal Register Volume 85, Number 88 (Wednesday, May 6, 2020)]
[Notices]
[Pages 26998-27002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09638]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88786; File No. SR-CBOE-2020-042]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 6.9 To Permit In-Kind Transfers of Positions Off of the Exchange
in Connection With Unit Investment Trusts (``UITs'')
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 28, 2020, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend Rule 6.9 to permit in-kind transfers of positions off of the
Exchange in connection with unit investment trusts (``UITs''). The text
of the proposed rule change is provided below.
(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 6.9. In-Kind Exchange of Options Positions and ETF Shares and UIT
Units
Notwithstanding the prohibition set forth in Rule 5.12,
positions in options listed on the Exchange may be transferred off
the Exchange by a Trading Permit Holder in connection with
transactions (a) to purchase or redeem creation units of ETF shares
between an authorized participant and the issuer of such ETF shares
or (b) to create or redeem units of a unit investment trust
(``UIT'') between a broker-dealer and the issuer of such UIT units,
which transfers would occur at the price(s) used to calculate
[[Page 26999]]
the net asset value of such ETF shares or UIT units, respectively.
For purposes of this Rule:
(a) An ``authorized participant'' is an entity that has a
written agreement with the issuer of ETF shares or one of its
service providers, which allows the authorized participant to place
orders for the purchase and redemption of creation units (i.e.,
specified numbers of ETF shares); [and]
(b) an ``issuer of ETF shares'' is an entity registered with the
Commission as an open-end management investment company under the
Investment Company Act of 1940[.]; and
(c) an ``issuer of UIT units'' is a trust registered with the
Commission as a unit investment trust under the Investment Company
Act of 1940.
* * * * *
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
The Exchange proposes to amend Rule 6.9, which permits off-
Exchange, in-kind transfers of options positions in connection with
ETFs organized as open-end management investment companies under the
Investment Company Act of 1940 (the ``1940 Act''), to also permit in-
kind transfers of options positions in connection with entities
registered as UITs under the 1940 Act.
Rule 6.9 is an exception to the Exchange's general requirement that
transfers of options contracts listed on the Exchange be effected on an
exchange, as set forth in Rule 5.12.\5\ Specifically, Rule 6.9 permits
positions in options listed on the Exchange to be transferred off the
Exchange by a Trading Permit Holder in connection with transactions to
purchase or redeem ``creation units'' of ETF shares between an
authorized participant and the issuer of such ETF shares. Such
transfers pursuant to Rule 6.9 occur between two different parties, off
the Exchange, and are considered position transfers, as opposed to
transactions.\6\ Each of these transfers occurs at the price used to
calculate the net asset value (``NAV'') of such ETF shares. Rule 6.9
also currently defines an ``authorized participant'' as an entity that
has a written agreement with the issuer of ETF shares or one of its
service providers, which allows the authorized participant to place
orders for the purchase and redemption of creation units (i.e.,
specified numbers of ETF shares), and an ``issuer of ETF shares'' as an
entity registered with the Commission as an open-end management
investment company under the 1940 Act. The ability to effect in-kind
transfers is a key component of the operational structure of an ETF and
the exception under Rule 6.9 allows options-based ETFs to be more tax-
efficient investment vehicles, to the benefit of their shareholders,
and potentially result in transaction cost savings, which may be passed
along to investors. The Exchange now proposes to expand Rule 6.9 to
provide the same exemption from Rule 5.12 to off-floor, in-kind
transfers in connection with the creation or redemption of units issued
by a UIT, another type of investment company registered under the 1940
Act. Although UITs operate differently than ETFs in certain respects,
as described below, the anticipated potential benefits to UIT investors
(i.e., greater tax efficiencies and transaction cost savings) from the
proposed exemption would be similar as discussed below.
---------------------------------------------------------------------------
\5\ See Rule 5.12(a) (Transactions Off the Exchange), which
generally requires transactions of option contracts listed on the
Exchange for a premium in excess of $1.00 to be effected on the
floor of the Exchange or on another exchange.
\6\ While the prices of options transactions effected on the
Exchange are disseminated to OPRA, back-office transfers of options
positions in clearing accounts held at The Options Clearing
Corporation (``OCC'') (in accordance with OCC Rules) are not
disseminated to OPRA or otherwise publicly available, as they are
considered position transfers, rather than executions. OCC has
represented to the Exchange that it has the operational capabilities
to effect the position transfers and all transfers pursuant to Rule
6.9 are required to comply with OCC rules. See Rule 8.2 (which
requires all TPHs that are members of OCC to comply with OCC's
Rules).
---------------------------------------------------------------------------
Specifically, under the 1940 Act,\7\ a UIT is an investment company
organized under a trust indenture or similar instrument that issues
redeemable securities, each of which represents an undivided interest
in a unit of specified securities.\8\ A UIT's investment portfolio is
relatively fixed, and, unlike an ETF, a UIT has a fixed life (a
termination date for the trust is established when the trust is
created). Similar to other types of investment companies (including
ETFs), UITs invest their assets in accordance with their investment
objectives and investment strategies, and UIT units represent interests
in a UIT's underlying assets. Like ETFs, UITs do not sell or redeem
individual shares, but instead, through the creation and redemption
process, a UIT's sponsor (a broker-dealer) may purchase and redeem
shares directly from the UIT's trustee in aggregations known as
``units.'' A broker-dealer purchases a unit of UIT shares from the
UIT's trustee by depositing a basket of securities and/or other assets
identified by the UIT. These transactions are largely effected by ``in-
kind'' transfers, or the exchange of securities, non-cash assets, and/
or other non-cash positions. The basket deposited by the broker-dealer
is generally expected to be representative of the UIT's units and will
be equal in value to the aggregate NAV of the shares of the UIT
comprising a unit. \9\ The UIT then issues units that are publicly
offered and sold. Unlike ETFs, UITs typically do not continuously offer
their shares for sale, but rather, make a one-time or limited public
offering of only a specific, fixed number of units like a closed-end
fund (i.e., the primary period, which may range from a single day to a
few months). Similar to the process for ETFs, UITs allow investor-
owners of units to redeem their units back to the UIT's trustee on a
daily basis and, upon redemption, such investor-owners are entitled to
receive the redemption price at the UIT's NAV. While UITs provide for
daily redemptions directly with the UIT's trustee, UIT sponsors
frequently maintain a secondary market for units,
[[Page 27000]]
also like that of ETFs, and will buy back units at the applicable
redemption price per unit. To satisfy redemptions, a UIT typically
sells securities and/or other assets, which results in negative tax
implications and an incurrence of trading costs borne by remaining unit
holders.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 80a-4(2).
\8\ The Exchange also notes that, though a majority of ETFs are
structured as open-ended funds (i.e., those ETFs currently covered
by Rule 6.9), some ETFs are structured as UITs, and currently
represent a significant amount of assets within the ETF industry.
These include, for example, SPDR S&P 500 ETF Trust (``SPY'') and
PowerShares QQQ Trust, Series 1 (``QQQ'').
\9\ The NAV is an investment company's total assets minus its
total liabilities. UITs must calculate their NAV at least once every
business day, typically after market close. See Sec. 270.2a-4(c),
which provides that any interim determination of current net asset
value between calculations made as of the close of the New York
Stock Exchange on the preceding business day and the current
business day may be estimated so as to reflect any change in current
net asset value since the closing calculation on the preceding
business day. This, however, is notwithstanding the requirements of
Sec. 270.2a-4(a), which provides for other events that would
trigger computation of a UIT's NAV.
---------------------------------------------------------------------------
Although ETFs and UITs operate differently in certain respects, the
ability to effect in-kind transfers is significant to both types of
investment vehicles. Currently, in-kind transfers of options pursuant
to Rule 6.9 protect ETF shareholders from certain undesirable tax
consequences and improve the overall tax efficiency of the products.
Indeed, by effecting redemptions on an in-kind basis, as permitted by
Rule 6.9, there is no need for an ETF to sell assets and potentially
realize capital gains that would be distributed to shareholders.
Additionally, by transacting on an in-kind basis, ETFs may currently
avoid certain transaction costs they would otherwise incur in
connection with purchases and sales of securities and other assets
(including options). As stated, Rule 6.9 does not currently permit
these in-kind transfers for UITs, as they are still generally required
to sell options on an exchange to obtain the requisite cash when
effecting redemption transactions with broker-dealers. Thus, the
Exchange proposes to extend the Rule 6.9 exemption to UITs. As
described above, UITs and ETFs are situated in substantially the same
manner; the key differences being a UIT's fixed duration, and that a
UIT generally makes a one-time public offering of only a specific,
fixed number of units. Negative tax implication and trading costs for
remaining unit holders would be mitigated by allowing a UIT sponsor or
another broker-dealer to receive an in-kind distribution of options
upon redemption. Therefore, permitting off-exchange in-kind transfers
for UITs would benefit investors by potentially providing tax
efficiencies and transaction cost savings similar to those that
investors in ETFs may enjoy today. The Exchange does not believe the
proposed extension of Rule 6.9 to UITs will adversely impact investors
or the maintenance of a fair and orderly market as it does not
circumvent the prohibition under Rule 5.12(a) nor does it compromise
price discovery or transparency. To note, Rule 6.9 is already
applicable to options in connection with ETF creations and redemptions,
previously approved by the Commission.\10\ Although options positions
in connection with ETF and UIT (as proposed) creations and redemptions
are transferred off of the Exchange, they are not closed or ``traded'',
and instead, merely reside in a different clearing account until closed
in a trade on the Exchange or until they expire. The Exchange also
notes that Rule 6.9 will continue to be clearly delineated and limited
in scope, given that the exception will continue to apply only to
transfers of options effected in connection with the creation and
redemption process, and for certain investment companies registered
under the 1940 Act. Moreover, the Exchange notes that transfers of
options in connection with the creation or redemption of open-end fund
ETFs constitute a minimal percentage of the total average daily volume
(``ADV'') of options and the Exchange expects options transfers in
connection with UITs to comprise a similar minimal percentage of ADV.
Additionally the options transfers that would be permitted by the
exemption are generally expected to include corresponding transactions
by a broker-dealer that would occur on an exchange and would be
reported to OPRA.\11\
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 87340 (October 17,
2019), 84 FR 56877 (October 23, 2019) Order Approving on an
Accelerated Basis a Proposed Rule Change, as Modified by Amendment
Nos. 2 and 3, To Adopt Rule 6.9 (In-Kind Exchange of Options
Positions and ETF Shares)) (SR-CBOE-2019-048).
\11\ The Exchange notes that in conjunction with depositing
options with a UIT's trustee and creating units, the necessary
options positions will be acquired in an on-exchange transaction
that is reported to OPRA. In conjunction with redemptions, the
sponsor or other broker-dealer will generally acquire both the units
redeemed by a redeeming unit holder and an options position to
offset the position that it will receive as proceeds for the
redemption. Such an options position is likely acquired in an on-
exchange transaction that would be reported to OPRA. Thus, while the
transfer of options positions between the sponsor or other broker-
dealer and the UIT would not necessarily be reported, there are
generally corresponding transactions that would be reported,
providing transparency into the transactions.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
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).
---------------------------------------------------------------------------
The Exchange believes that permitting off-floor transfers in
connection with the in-kind UIT creation and redemption process
promotes just and equitable principles of trade and helps remove
impediments to and perfect the mechanism of a free and open market and
a national market system, as it would permit UITs that invest in
options traded on the Exchange to transfer options off of the Exchange
in connection with their in-kind creation and redemption process as
ETFs are currently able to do under Rule 6.9, as previously approved by
the Commission.\14\ Further, the Exchange believes that permitting a
comparable investment vehicle, also registered as an investment company
under the 1940 Act, to be included in the Rule 6.9 exemption, removes
impediments to and perfect the mechanism of a free and open market and
national market system as it would enable UITs to compete more
effectively with other investment vehicles that, based on their
portfolio holdings, may effect in-kind creations and redemptions
without restriction. The Exchange notes that the ability to effect in-
kind transfers is significant to both ETFs and UITs as investment
vehicles. By permitting UITs that invest in options traded on the
Exchange to benefit from potential tax efficiencies and transaction
cost savings similar to those that ETFs may currently enjoy, the
proposed rule change would protect investors and the public interest by
passing along such potential benefits to investors that participate in
UITs. The Exchange does not believe that the proposed rule change
affects the protection of investors or the maintenance of a fair and
orderly market because the Rule 6.9 exception would continue to be
clearly delineated and limited in scope. Rule 6.9 already applies to
ETFs, which operate in a similar manner as UITs, and the proposed rule
change to make the transfer exemption available to UITs is based on a
similar rationale and does not raise any new or novel issues. In this
regard, as with in-kind, off-exchange transfers of options in
connection with ETFs, those transfers in connection with UITs would
also occur at a price related to the NAV of the applicable UIT units,
which removes the need for price discovery on an
[[Page 27001]]
exchange. As stated above, the Exchange expects that off-exchange
options transfers in connection with the creation and redemption
process for UITs will comprise a minimal percentage of ADV, just as
such transfers currently permissible in connection with ETFs comprise a
minimal percentage of ADV. Further, the general price at which UIT-
related transfers are effected will be publicly available as they are
based on the disseminated closing prices and are generally expected to
include corresponding, transactions by a broker-dealer that would occur
on an exchange and be reported to OPRA.\15\
---------------------------------------------------------------------------
\14\ See supra note 10.
\15\ See supra note 11.
---------------------------------------------------------------------------
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 the proposed rule change will impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because invoking the exception under Rule 6.9 in
connection with UITs is voluntary and the proposed exception for UITs
is not intended as a competitive trading tool. Instead, it is intended
as an alternative to the normal auction process to provide market
participants with an efficient and effective means to transfer option
positions as part of the UIT creation and redemption process under the
same specified circumstances currently applicable to ETFs in connection
with creating and redeeming units of UITs. The proposed expansion of
the Rule 6.9 exception to UITs would enable this investment vehicle,
which is comparable to ETFs, to enjoy the potential benefits of off-
exchange, in-kind transfers of option positions in connection with
creating and redeeming, and to pass these benefits along to investors.
Use of the in-kind, off-exchange transfer process in connection with
creating UIT units and the redemption process would be voluntary and
would apply in the same manner to all broker-dealers choosing to invoke
such process.
The Exchange does not believe the proposed rule change will impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act, because the in-
kind transfer rule would continue to provide a clearly delineated and
limited exception to the requirement that options positions in
connection with certain entities registered as a type of investment
company under the 1940 Act be transferred on the floor of an exchange.
The proposed rule change merely extends the Rule 6.9 exemption (and any
potential benefits) to UITs. The Exchange again notes that Rule 6.9 was
previously approved by the Commission \16\ and is currently applicable
to ETFs that are similarly situated and also in invest in options.
Also, as indicated above, in light of the significant benefits provided
(e.g., potential tax efficiencies and transaction cost savings), the
proposed exception may lead to further development of UITs that invest
in options, thereby fostering competition and resulting in additional
choices for investors, which ultimately benefits the marketplace and
the public. Other options exchanges in their discretion may pursue the
adoption of similar exceptions.
---------------------------------------------------------------------------
\16\ See supra note 10.
---------------------------------------------------------------------------
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 written comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change does not: (i) Significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act \17\ and subparagraph (f)(6) of Rule 19b-4
thereunder.\18\
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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-2020-042 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-2020-042. 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-2020-042, and should be submitted
on or before May 27, 2020.
[[Page 27002]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-09638 Filed 5-5-20; 8:45 am]
BILLING CODE 8011-01-P
