Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing of a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Its Rules Regarding the Minimum Increments for Electronic Bids and Offers and Exercise Prices of Certain FLEX Options and Clarify in the Rules How the System Ranks FLEX Option Bids and Offers for Allocation Purposes, 78381-78389 [2020-26678]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 85, Number 234 (Friday, December 4, 2020)]
[Notices]
[Pages 78381-78389]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26678]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90536; File No. SR-CBOE-2020-106]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change, as Modified by Amendment No. 1, To 
Amend Its Rules Regarding the Minimum Increments for Electronic Bids 
and Offers and Exercise Prices of Certain FLEX Options and Clarify in 
the Rules How the System Ranks FLEX Option Bids and Offers for 
Allocation Purposes

November 30, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 16, Cboe Exchange, Inc. (``Exchange'' or ``Cboe Options'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change, and on November 30, 2020, the Exchange filed 
Amendment No. 1 to the proposed rule change, which amended and replaced 
the proposed rule change in its entirety. The proposed rule change, as 
modified by Amendment No. 1, as described in Items I, II, and III

[[Page 78382]]

below, which Items have been prepared by the Exchange. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change, as modified by Amendment No. 1, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend its Rules regarding the minimum increment for electronic bids 
and offers, as well as the minimum increment for exercise prices, of 
certain FLEX Options \3\ and clarify in the Rules how the System ranks 
FLEX Option bids and offers for allocation purposes (and make various 
other nonsubstantive, clarifying changes). This Amendment No. 1 
replaces the initial rule filing in its entirety. The text of the 
proposed rule change is provided in Exhibit 5.
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    \3\ The term ``FLEX Option'' means a flexible exchange option. 
See Rule 1.1.
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    The text of the proposed rule change is 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 the minimum increment for bids and 
offers, as well as the minimum increment for exercise prices, of FLEX 
options submitted to an electronic FLEX auction and make conforming 
changes in other Rules. The Exchange also proposes to make various 
clarifying and nonsubstantive changes, including how the System ranks 
FLEX Option bids and offers for allocation purposes.
    A FLEX Option \4\ series is eligible for trading on the Exchange 
upon submission to the system of a FLEX Order \5\ by a FLEX Trader (the 
``Submitting FLEX Trader'') \6\ for that series pursuant to Rules 5.72 
through 5.74.\7\ When submitting a FLEX Order into the system, the 
Submitting FLEX Trader must include the applicable terms of a FLEX 
Option series, including an exercise (or strike) price.\8\ The exercise 
price of a FLEX Option may currently be expressed as either (1) a fixed 
price expressed in terms of dollars and decimals or a specific index 
value, as applicable (which may not be smaller than $0.01), or (2) a 
percentage of the closing value of the underlying equity security or 
index, as applicable, on the trade date (which may not be smaller than 
0.01%).\9\
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    \4\ A ``FLEX Option'' is a flexible exchange option. See Rule 
1.1.
    \5\ A ``FLEX Order'' is an order submitted in a FLEX Option. See 
Rule 5.70.
    \6\ See Rules 4.21(a) and 5.72(b).
    \7\ Rules 5.72 through 5.74 describe the various auction 
mechanisms available for the trading of FLEX Options. A FLEX Order 
may be submitted for execution into an electronic or open outcry 
FLEX auction pursuant to Rule 5.72, or into a FLEX Automated 
Improvement Mechanism auction (``FLEX AIM Auction'') pursuant to 
Rule 5.73, or FLEX Solicitation Auction Mechanism auction (``FLEX 
SAM Auction'') pursuant to Rule 5.74.
    \8\ See Rule 4.21(b) for a description of the terms of a FLEX 
Option series that a Submitting FLEX Trader must include in a FLEX 
Order.
    \9\ See Rule 4.21(b)(6). While the specific minimums for the 
exercise price are not currently included in Rule 4.21(b)(6), that 
rule indicates that the System rounds the exercise price to the 
nearest minimum increment as set forth in Rule 5.4, and the Exchange 
has interpreted the rule to mean that the minimum increment for the 
exercise price of FLEX Options is the same as the minimum increment 
for bids and offers of FLEX Options. The term ``trade date'' as used 
in Rule 4.21(b)(6), as well as in the sentence for this footnote and 
throughout this rule filing, refers to the date on which the FLEX 
Option was bought or sold (i.e., the date on which the FLEX Option 
trade occurs). Note that the capped monthly return of a FLEX Index 
Option that is Cliquet-settled must be expressed in dollars and 
cents. See Rule 4.21(b)(5)(B)(iv) for a description of Cliquet-
settled FLEX Index Options.
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    Pursuant to current Rule 5.4(c)(4)(B), the minimum increment for 
bids and offers on FLEX Options with (1) an exercise price expressed as 
a fixed price may not be smaller than $0.01 and (2) an exercise price 
expressed as a percentage of the closing value of the underlying equity 
security or index on the trade date may not be smaller than 0.01%.\10\ 
The proposed rule change amends Rule 5.4(c)(4) to provide that:
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    \10\ The Exchange determines the minimum increment for bids and 
offers on FLEX Options on a class-by-class basis. See Rule 
5.4(c)(4).
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    (1) The minimum increment for bids and offers on a FLEX Options 
series if the exercise price is expressed as a fixed price may not be 
smaller than $0.001 (for FLEX Orders and auction responses submitted to 
an electronic FLEX Auction); and
    (2) the minimum increment for bids and offers on a FLEX Options 
series if the exercise price is expressed as a percentage of the 
closing value of the underlying equity security or index on the trade 
date may not be smaller than 0.0001% (for FLEX Orders and auction 
responses submitted to an electronic FLEX Auction).\11\
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    \11\ The proposed rule change will have no impact on the minimum 
increment for bids and offers for open outcry FLEX Orders and 
auction responses, which minimum increment for bids and offers will 
continue to be $0.01 (if the exercise price for the FLEX Option 
series is a fixed price) or 0.01% (if the exercise price for the 
FLEX Option series is a percentage of the closing value of the 
underlying equity security or index on the trade date). The proposed 
rule change adds language to clarify that these minimum increments 
for bids and offers will continue to apply to FLEX Orders and 
auction responses submitted to an open outcry auction. See proposed 
Rule 5.4(c)(4)(B).
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    Similarly, the proposed rule change amends Rule 4.21(b)(6)(A) to 
provide that:
    (1) An exercise price expressed as a fixed price may not be in 
increments smaller than $0.001 (for FLEX Orders submitted to an 
electronic FLEX Auction); and
    (2) an exercise price expressed as a percentage of the closing 
value of the underlying equity security or index, as applicable, on the 
trade date may not be in increments smaller than 0.0001% (for FLEX 
Orders submitted to an electronic FLEX Auction).\12\
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    \12\ The proposed rule change will have no impact on the 
smallest increment for exercise prices for open outcry FLEX Orders 
and auction responses, which may be no smaller than $0.01 (if the 
exercise price for the FLEX Option series is a fixed price) or 0.01% 
(if the exercise price for the FLEX Option series is a percentage of 
the closing value of the underlying equity security or index on the 
trade date). The proposed rule change adds language to clarify that 
these minimum increments for bids and offers will continue to apply 
to FLEX Orders and auction responses submitted to an open outcry 
auction. See proposed Rule 4.21(b)(6)(A).
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    The Exchange believes there is a demand from customers for this 
additional precision regarding the exercise prices and premiums for 
FLEX Options series that are submitted into electronic FLEX Auctions. 
This additional level of precision will provide investors with 
additional flexibility regarding the prices at which they may execute 
and exercise their FLEX Options on the Exchange, as investors may 
execute and exercise over-the-counter options with similar precisions.
    Current Rule 4.21(b)(6) defines the permissible exercise prices for 
FLEX Options by referencing the minimum increments for bids and offers 
set forth in Rule 5.4. Specifically, the current rule states the 
exercise price (which the

[[Page 78383]]

System rounds to the nearest minimum increment for bids and offers, as 
set forth in Rule 5.4) may be a fixed price expressed in terms of 
dollars and decimals or a specific index value, as applicable, or a 
percentage of the closing value of the underlying equity security or 
index, as applicable, on the trade date. As noted above, current Rule 
5.4(c)(4) states that the Exchange may determine the minimum increment 
for bids and offers on a class-by-class basis, which may not be smaller 
than $0.01 or 0.01%, as applicable. The Exchange has historically 
interpreted that current Rule 4.21(b)(6), by reference to current Rule 
5.4(c)(4), provides that exercise prices may similarly be in increments 
no smaller than $0.01 or 0.01%, as applicable, which smallest increment 
for exercise prices the Exchange may determine on a class-by-class 
basis. The proposed rule change amends Rule 4.21(b)(6) to codify this 
longstanding interpretation by expressly stating the actual permissible 
smallest increments for exercise prices and that the Exchange may 
determine the smallest increment for exercise prices on a class-by-
class basis.
    In connection with this proposed change to add precision to 
exercise prices and pricing of FLEX Options, the proposed rule change 
makes the following nonsubstantive changes to Rules 4.21(b)(6) and Rule 
5.4(c)(4), which nonsubstantive changes further clarify differences 
between FLEX Option series with exercise prices expressed as fixed 
increments and percentages, as well as add current rule interpretations 
and general transparency to the Rules:
     The proposed rule change specifies the actual permissible 
minimum amounts for exercise prices for FLEX Equity Options or FLEX 
Index Options that are not Cliquet-settled rather than identifying them 
by reference to Rule 5.4, which defines permissible minimum increments 
for bids and offers. As noted above, current Rule 4.21(b)(6) states the 
exercise price (which the System rounds to the nearest minimum 
increment as set forth in Rule 5.4), which may be for a FLEX Equity 
Option or FLEX Index Option that is not Cliquet-settled, a fixed price 
expressed in terms of dollars and decimals or a specific index value, 
as applicable, or a percentage of the closing value of the underlying 
equity security or index, as applicable, on the trade date. As 
discussed above, the Exchange has historically interpreted this rule to 
mean that the smallest permissible increments for exercise prices of 
FLEX Options are the same as the minimum increments for bids and offers 
of FLEX Options, which smallest increments the Exchange may determine 
on a class-by-class basis (as the Exchange may do for minimum 
increments for bids and offers). Rather than identify the minimum 
increments for exercise prices by reference to the rule describing the 
minimum increments for bids and offers, the proposed rule change adds 
the language specifying the actual minimum increments for exercise 
prices for FLEX Equity Options and FLEX Index Options that are not 
Cliquet-settled, which minimum increments are the same as minimum 
increments for bids and offers. Specifically, the proposed rule change 
states that the exercise price may be in increments no smaller than 
(which language is taken from Rule 5.4(c)(4)) (1) for a FLEX Equity 
Option or FLEX Index Option that is not Cliquet-settled, (a) $0.001 
(for FLEX Orders submitted to an electronic FLEX Auction) or $0.01 (for 
FLEX Orders and auction responses submitted to an open outcry auction), 
if the exercise price for the FLEX Option series is a fixed price, or 
(b) 0.0001% (for FLEX Orders and auction responses submitted to an 
electronic auction) or 0.01% (for FLEX Orders and auction responses 
submitted to an open outcry auction), if the exercise price for the 
FLEX Option series is a percentage of the closing value of the 
underlying equity security or index on the trade date. As discussed 
above, the proposed rule change amends the permissible minimum amounts 
for exercise prices for FLEX Orders submitted to an electronic FLEX 
Auction. However, the minimum permissible amounts of $0.01 and 0.01% 
for FLEX Options with fixed exercise prices and percentage exercise 
prices, respectively, submitted into open outcry FLEX Auctions added to 
Rule 4.21(b)(6) are the current minimum increments permissible for 
these FLEX Options. Therefore, the proposed rule change makes no 
substantive changes to the minimum increments of exercise prices for 
FLEX Orders submitted into open outcry FLEX Auctions. The Exchange 
believes this will make the rule regarding permissible exercise prices 
for FLEX Options more transparent and thus may eliminate potential 
confusion regarding permissible exercise prices.
     The proposed rule change adds to the end of Rule 
4.21(b)(6) that the Exchange may determine the smallest increment for 
exercise prices of FLEX Options on a class-by-class basis. As discussed 
above, this is consistent with the Exchange's longstanding 
interpretation of the current Rule, which refers to the minimum 
increment for bids and offers as set forth in Rule 5.4 when identifying 
the minimum increments for exercise prices of FLEX Options. Rule 
5.4(c)(4) states that the Exchange may determine the minimum increment 
for bids and offers on FLEX Options on a class-by-class basis, which 
may be no smaller than the amounts specified in that rule. Therefore, 
the Exchange has interpreted Rule 4.21(b)(6) to mean that those same 
provisions apply to the minimum increments for exercise prices for FLEX 
Options. The proposed rule change codifies this longstanding 
interpretation in the Rules, which the Exchange believes will make the 
rule regarding permissible exercise prices for FLEX Options more 
transparent and thus may eliminate potential confusion regarding 
permissible exercise prices.\13\
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    \13\ The Exchange believes this flexibility is appropriate to 
permit the Exchange to make determinations based on the market 
characteristics of different classes. The Exchange notes the rules 
of another options exchange similarly permit that exchange to 
determine on a class-by-class basis both minimum increments for 
exercise prices and premiums (i.e., bids and offers) stated using a 
percentage-based methodology. See, e.g., NYSE Arca, Inc. (``Arca'') 
Rule 5.32-O(e)(2)(C).
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     The proposed rule change moves the parenthetical regarding 
the System rounding the exercise price to the nearest minimum increment 
for bids and offers in the class (as set forth in Rule 5.4) from the 
introductory clause in Rule 4.21(b)(6) to the end of subclause (A)(ii), 
and makes corresponding changes to Rules 5.3(e)(3) and 5.4(c)(4) by 
enclosing that language in a parenthetical so that it applies only to 
subclause (B) of each subparagraph. While not specified in the Rules, 
such rounding would only occur for exercise prices and bids and offers 
(as discussed below, the proposed rule change replaces ``bids and 
offers'' with ``transaction prices''), respectively, expressed as a 
percentage, so the proposed rule clarifies that it applies only for 
exercise prices and bids and offers, respectively, expressed as a 
percentage and specifies that the System rounds the actual exercise 
prices and final transaction prices,\14\ respectively, to the nearest 
fixed price minimum increment for bids and offers in the class.
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    \14\ Amendment No. 1 replaces the phrase ``bids and offers'' in 
this sentence with ``transaction prices'' to reflect the updated 
term in the rule text.
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    The proposed rule change also adds to the parenthetical in Rule 
4.21(b)(6)(A)(ii) that the System rounds the ``actual'' exercise price 
to the nearest fixed price minimum increment to provide additional 
clarity to the provision, as the dollar value of an exercise price 
expressed as a percentage

[[Page 78384]]

determined after the closing value is available would be rounded to the 
nearest minimum dollar value increment, which dollar value would 
represent the ultimate, ``actual'' exercise price.\15\ Similarly, the 
proposed rule change adds to the proposed parentheticals in Rules 
5.3(e)(3)(B) and 5.4(c)(4)(B) that the System rounds the ``final 
transaction prices'' to the fixed price minimum increment to the class, 
as the dollar value of the transaction price of a FLEX Option for which 
the bids and offers were expressed as a percentage (the ``final'') 
determined after the closing value is available would be rounded to the 
nearest fixed price minimum increment for the class (e.g., the nearest 
$0.01, if that is the minimum determined for the class). This is the 
same rounding process that applies today for these options. The 
Exchange notes current Rules 5.3(e)(3)(B) and 5.4(c)(4)(B) indicate the 
System rounds bids and offers to the nearest minimum increment. 
However, because bids and offers during a FLEX Auction are ranked based 
on the percentage amounts of bids and offers (as discussed below), and 
thus the transaction price(s) at the conclusion of the auction will be 
a percentage amount, there will no longer be bids and offers to round 
once the closing value of the underlying on the trade date is 
available. Rather, the transaction price is rounded. The proposed rule 
change corrects this term in these parentheticals to more accurately 
reflect how the System currently works.
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    \15\ As discussed above, the dollar value minimum increment for 
bids and offers is either $0.001 (for FLEX Orders submitted into 
electronic FLEX Auctions) (as proposed) or $0.01 (for FLEX Orders 
submitted into open outcry FLEX Auctions).
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    Currently, as clarified by these proposed rule changes (and the 
additional description regarding rankings of bids and offers in FLEX 
Auction, as discussed below), bids and offers expressed as a percentage 
of the closing value of the underlying on the trade date are ranked by 
the percentage amount for FLEX Option series for which the exercise 
price is expressed as such a percentage. As a result, the transaction 
``price(s)'' at the conclusion of a FLEX Auction will be a percentage 
amount(s). Once the closing value of the underlying on the trade date 
is available, the System determines the exercise price and transaction 
price in a dollar amount using that closing value, and rounds each to 
the minimum dollar amount increment at that time. For example, suppose 
a FLEX Trader submits an order to buy 100 contracts of FLEX Option 
series ABC Mar 50.24% into a FLEX Auction. There are two responses, 
each to sell 100, with response 1 offering to sell at 7.01% and 
response 2 to sell at 7.03%. Response 1 is a better price for the buy 
order (i.e. is ranked higher than response 2), so response 1 executes 
against the buy order at the conclusion of the auction for a 
transaction price of 7.01% of the closing value of the underlying on 
that date. Following the close of trading, the closing price of ABC on 
the day of that trade is $47.63. At that time, the System determines 
the actual exercise price in dollars to be $23.93 (rounded from 
23.929).\16\ At that time, the System also determines the final 
transaction price in dollars to be $3.34 (rounded from 3.338).\17\ The 
System currently works this way and will continue to work in this way 
upon implementation of the proposed rule change (if approved), except 
rounding will occur to three decimals instead of two for electronic 
FLEX Orders.
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    \16\ This Amendment No. 1 corrects a typo in the parenthetical 
in this sentence by updating ``23.939'' to ``23.929'' to reflect the 
actual calculated exercise price, which rounds to $23.93. 
Additionally, Amendment No. 1 adds the following sentence in this 
footnote to describe how the actual exercise price is calculated. 
Specifically, as set forth in Rule 4.21(b)(6), a FLEX Option series 
with a percentage exercise price reflects a percentage of the 
closing value of the underlying equity security or index, as 
applicable, on the trade date. Therefore, in this example, the 
actual exercise price is the percentage (50.24%) of the closing 
value of underlying ABC on the trade date ($47.63), which is 23.929, 
which the System rounds to $23.93. Contract multipliers are applied 
after any rounding occurs.
    \17\ This Amendment No. 1 adds this footnote to describe how the 
actual transaction price is calculated. Specifically, as set forth 
in Rule 5.4(c)(4), a FLEX Option series with a percentage bid or 
offer reflects a percentage of the closing value of the underlying 
equity security or index, as applicable, on the trade date. 
Therefore, in this example, the actual transaction price is the 
percentage (7.01%) of the closing value of underlying ABC on the 
trade date ($47.63), which is 3.338, which the System rounds to 
$3.34.
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     In addition, the proposed rule change makes a clarifying, 
nonsubstantive change to Rule 5.3(e)(3). Rule 5.3(e)(3) currently 
states that bids and offers for FLEX Options must be expressed in (a) 
U.S. dollars and decimals, if the exercise price for the FLEX Option 
series is a fixed price, or (b) a percentage, if the exercise price for 
the FLEX Option series is a percentage of the closing value of the 
underlying equity security or index on the trade date, per unit of the 
underlying security or index, as applicable. The System rounds bids and 
offers to the nearest minimum increment. The proposed rule change 
clarifies in the proposed parenthetical in Rule 5.3(e)(3)(B) (described 
in the preceding bulleted paragraphs) that bids and offers would be in 
the applicable minimum increment as set forth in Rule 5.4. This is true 
today and merely incorporates a cross-reference to Rule 5.4, which 
describes permissible minimum increments for bids and offers. The 
Exchange believes the addition of this cross-reference will provide 
additional transparency and clarity to this Rule.
    The proposed rule change also codifies in Rules 5.72(c)(3)(A) and 
(d)(2), 5.73(e), and 5.74(e) how FLEX Auction response bids and offers 
(as well as Initiating Orders and Solicitation Orders with respect to 
FLEX AIM Auctions and FLEX SAM Auctions, respectively) are ranked 
during the allocation process following each type of FLEX Auction 
(i.e., electronic FLEX Auction, open outcry FLEX Auction, FLEX AIM 
Auction, and FLEX SAM Auction, respectively). FLEX Orders will always 
first be allocated to responses at the best price, as applicable.\18\ 
With respect to responses to all types of FLEX Auctions for a FLEX 
Option series with an exercise price expressed as a dollar and decimal, 
the ``prices'' at which FLEX Traders submitting responses are competing 
are the dollar and decimal amounts of the response bids and offers 
entered as fixed amounts (as is the case with all non-FLEX Options), 
and the proposed rule change codifies this in the Rules. With respect 
to responses to all types of FLEX Auctions for a FLEX Option series 
with an exercise price expressed as a percentage, the ``prices'' at 
which FLEX Traders submitting responses are competing are the 
percentage values of the response bids and offers entered as 
percentages (which ultimately become a dollar value after the closing 
value for the underlying security or index, as applicable, is 
available), and the proposed rule change codifies this in the Rules. 
These are nonsubstantive changes, as they reflect how ranking following 
FLEX Auctions occurs today, and the Exchange believes these changes 
will provide additional transparency in the Rules.
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    \18\ The proposed rule change also clarifies this in Rule 
5.72(d)(2) by adding a cross-reference to Rule 5.85(a)(1), which 
states that, with respect to open outcry trading on the Exchange's 
trading floor, bids and offers with the highest bid and lowest offer 
have priority. This is a nonsubstantive change that is currently 
true for open outcry FLEX Auctions, and the proposed rule change 
merely makes this explicit in Rule 5.72(d)(2), which cross-reference 
was previously inadvertently omitted from the Rules.
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    The Exchange notes that responses to the Exchange's electronic FLEX 
Auctions are not visible to other FLEX Traders, and therefore FLEX 
Traders will not be able to compete by increasing or decreasing bids 
and offers, respectively, of other FLEX Traders by

[[Page 78385]]

a minute increment.\19\ The Exchange does not currently propose to add 
more precision for bids and offers and exercise prices for open outcry 
FLEX Auctions to avoid the risk of such competition because FLEX 
Traders in the trading crowd can hear the responses of others in the 
crowd. The Exchange understands that demand for the additional 
precision is primarily for electronic trading.
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    \19\ See Rules 5.72(c)(2)(D)(iv), 5.73(c)(5)(E), and 
5.74(c)(5)(E).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\20\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \21\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \22\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \20\ 15 U.S.C. 78f(b).
    \21\ 15 U.S.C. 78f(b)(5).
    \22\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes the proposed rule change will 
protect investors and the public interest by providing investors with 
the ability to obtain more precise premiums and exercise prices for 
FLEX Options in electronic FLEX trading. Given the various trading and 
hedging strategies employed by investors and the importance of every 
penny, particularly with larger orders and orders in classes with 
significant notional values, this additional precision may provide them 
with more control over the prices at which their FLEX Orders trade and 
are exercised. The total price of an order for 10,000 contracts of a 
series will be much greater than (i.e., 100 times) the total price of 
an order for 100 contracts of the same series, and therefore additional 
precision may impact that price. For example, suppose a FLEX Trader 
buys 1 ABC Mar 20 at 1.05%, and the closing price of ABC on the day of 
that trade is $50, making the final purchase price $0.53 (rounded from 
0.525),\23\ for a total of $53 after applying the 100 contract 
multiplier. Suppose another FLEX Trader buys 10,000 of the same series 
at the same price, making the total purchase price $530,000. With the 
proposed rule change, suppose each FLEX Trader instead paid 1.0455% 
(which decimal is currently not permissible and would have needed to be 
input as 1.05%), for a purchase price of $0.523 (rounded from 
0.52275).\24\ The total purchase price of the first trade would be 
$52.30 (down from $53), and the total purchase price of the second 
trade would be $523,000 (down from $530,000). The additional precision 
for the smaller order permitted the FLEX Trader to pay $0.70 less, 
while the additional precision for the larger order permitted the FLEX 
Trader to pay $7,000 less. This example demonstrates how the impact on 
larger-sized orders may be particularly significant given the larger 
total purchase price. The larger impact is similar for options with 
larger notional values. While additional decimals may be available for 
bids and offers and exercise prices for FLEX Options submitted into 
electronic auctions pursuant to the proposed rule change, FLEX options 
will otherwise continue to trade in the same manner as they do today.
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    \23\ As described in the prior example above, any rounding of 
the final transaction price to the minimum fixed increment occurs 
following the close of trading on the trade date once the closing 
value of the underlying on that date is available, after the 
percentage of the underlying closing value is calculated.
    \24\ Id.
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    By permitting FLEX Options to trade with similar precision 
currently available to customized options in the OTC market, the 
Exchange believes the proposed rule change will remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system by further improving a comparable alternative to the OTC 
market in customized options. By enhancing our FLEX trading platform to 
provide additional terms available in the OTC market but not currently 
available in the listed options market, the Exchange believes it may be 
a more attractive alternative to the OTC market. The Exchange believes 
market participants benefit from being able to trade customized options 
in an exchange environment in several ways, including but not limited 
to the following: (1) Enhanced efficiency in initiating and closing out 
positions; (2) increased market transparency; and (3) heightened 
contra-party creditworthiness due to the role of The Options Clearing 
Corporation (``OCC'') as issuer and guarantor of FLEX Options.
    The Exchange does not believe that the proposed rule change to 
permit FLEX Traders to submit bids and offers in a ``sub-increment'' as 
small as $0.001 or 0.0001% (which bids and offers would be ranked for 
allocation purposes based on that four-decimal percentage value) as 
opposed to the current minimum of $0.01 or 0.01% for electronic FLEX 
auctions raises any of the risks the Securities and Exchange Commission 
(the ``Commission'') has previously raised with respect to ``sub-
increment'' pricing. In its reproposal of the ``Sub-Penny Rule,'' \25\ 
the Commission stated that ``sub-penny quoting impedes transparency by 
reducing market depth at the national best bid or offer (``NBBO'') and 
increasing quote flickering.'' \26\ The Commission stated in its 
overview of the proposed Sub-Penny Rule that the rule ``would address 
the practice of `stepping ahead' of displayed limited orders by trivial 
amounts'' and therefore ``further encourage the display of limit orders 
and improve the depth and liquidity of trading in NMS stocks.'' \27\ 
Specifically, the Commission identified the following problems caused 
by sub-pennies that the Sub-Penny Rule was designed to address when 
approving the Sub-Penny Rule:
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    \25\ The ``Sub-Penny Rule'' in Rule 612 of Regulation NMS states 
that no national securities exchange, national securities 
association, alternative trading system, vendor, or broker or dealer 
may display, rank, or accept from any person a bid or offer, an 
order, or an indication of interest in any NMS stock priced in an 
increment smaller than $0.01 if that bid or offer, order, or 
indication of interest is priced equal to or greater than $1.00 per 
share. The minimum increment for a bid or offer, an order, or an 
indication of interest in any NMS stock priced less than $1.00 per 
share is $0.0001. See 17 CFR 242.612. While Rule 612 applies only to 
NMS stocks and not options, no options exchange permits bids or 
offers on options to be less than $0.01.
    \26\ See Securities Exchange Act Release No. 50870, 69 FR 77423, 
77484 (December 27, 2004) (proposed rules and amendments to joint 
industry plans).
    \27\ Id. at 77429 (emphasis added).
---------------------------------------------------------------------------

     If investors' limit orders lose execution priority for a 
nominal amount, investors may over time decline to use them, thus 
depriving the markets of liquidity.
     When market participants can gain execution priority for a 
nominal amount, important customer protection rules such as exchange 
priority rules and the Manning Rule could be undermined.
     Flickering quotations that can result from widespread sub-
penny pricing

[[Page 78386]]

could make it more difficult for broker-dealers to satisfy their best 
execution obligations and other regulatory responsibilities.
     Widespread sub-penny quoting could decrease market depth 
and lead to higher transaction costs.
     Decreasing depth at the inside could cause institutions to 
rely more on execution alternatives away from the exchanges, 
potentially increasing fragmentation in the securities markets.\28\
---------------------------------------------------------------------------

    \28\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37551--52 (June 29, 2005) (``Sub-Penny 
Approval'').
---------------------------------------------------------------------------

    The Commission, however, ``acknowledge[d] the possibility that the 
balance of costs and benefits could shift in a limited number of cases 
or as the markets continue to evolve.\29\ While the Sub-Penny Rule is 
inapplicable to options trading, the Exchange understands the same 
concerns described above may exist in the options markets with respect 
to subincrement prices.
---------------------------------------------------------------------------

    \29\ Id. at 37553.
---------------------------------------------------------------------------

    In the context of FLEX Option trading, there is no NBBO, as 
execution prices of FLEX Options are not required to consider the 
prices of options on other exchanges (thus there is no NBBO for FLEX 
Options). Additionally, there is no book for FLEX Options on the 
Exchange. As a result, there is no displayed liquidity (or market 
depth) in front of which interest may ``step ahead,'' and the concept 
of quote flickering would not arise in the Exchange's FLEX Options 
market. Additionally, the FLEX market is generally less liquid than the 
non-FLEX market. Trading in FLEX Options may be spread over a larger 
number of series than non-FLEX Options (due to FLEX options not being 
pre-established). As a result, trading interest in a particular series 
of FLEX Options may be limited, making markets in FLEX Options 
potentially less deep and liquid than in non-FLEX Options with the same 
underlying interest.\30\ As a result, the Exchange does not believe the 
risk that sub-increment trading will lead to reduced market depth and 
liquidity in the FLEX market, as those may occur due to the nature of 
the FLEX market in general regardless of the pricing precision 
available. In fact, as discussed, the Exchange believes the proposed 
rule change to permit additional pricing precision for FLEX Options may 
provide market participants with additional flexibility to achieve 
their investment objectives on a listed exchange. These increased 
investment opportunities may ultimately add liquidity to the FLEX 
Options market.
---------------------------------------------------------------------------

    \30\ See Options Disclosure Document (``ODD'') at pages 77--78.
---------------------------------------------------------------------------

    Additionally, the Commission made clear that the prohibition of 
sub-penny quoting would ``deter the practice of stepping ahead of 
exposed trading interest by an economically insignificant amount.'' 
\31\ No such practice is possible given that trading interest in FLEX 
Auctions is not exposed. FLEX Options submitted for electronic 
execution may only execute pursuant to an electronic auction in which 
the trading interest of competing FLEX Traders is not exposed as set 
forth in Rules 5.72, 5.73, and 5.74. As noted above, responses to the 
Exchange's electronic FLEX Auctions are not visible to other FLEX 
Traders.\32\ Therefore, there will generally be no displayed liquidity 
to which other FLEX Traders may respond by purposefully increasing or 
decreasing their bids and offers, respectively, of other FLEX Traders 
by a trivial amount. Unlike limit orders, auction responses are not 
intended to serve a price-setting function. Therefore, the Exchange 
does not believe that the proposed ``sub-increment'' for electronic 
FLEX Auctions will diminish liquidity in these auctions as the 
Commission believes sub-penny quoting may cause with respect to 
displayed limit orders that do serve a price-setting function in the 
displayed market.\33\ As discussed above, the purpose of FLEX Options 
is to add transparency to the market by encouraging the trading of 
customized options on the Exchange rather than in OTC. As noted above, 
trading in FLEX Options may be spread over a larger number of series 
than non-FLEX Options (due to FLEX options not being pre-established). 
As a result, trading interest in a particular series of FLEX Options 
may be limited, making markets in FLEX Options potentially less deep 
and liquid than in non-FLEX Options with the same underlying 
interest.\34\ The Exchange believes the proposed enhancement to FLEX 
trading in this rule filing may encourage additional Exchange trading 
and liquidity in these options, which benefits all investors.
---------------------------------------------------------------------------

    \31\ See Securities Exchange Act Release No. 50870, 69 FR 77423, 
77457 (December 27, 2004) (proposed rules and amendments to joint 
industry plans) (emphasis added).
    \32\ The Exchange does not disseminate the auction prices for 
any FLEX Auctions (except the FLEX SAM Auction). See Rules 
5.72(c)(2)(A) and 5.73(c)(2); see also 5.74(c)(2).
    \33\ See supra note 24 [sic] at 77457.
    \34\ See Options Disclosure Document (``ODD'') at pages 77--78.
---------------------------------------------------------------------------

    While it is possible that the ultimate result is that a FLEX 
Trader's response in an electronic FLEX Auction may lose execution 
priority if the response of another FLEX Trader is better by a small 
amount, it is just as possible the FLEX Trader may gain execution 
priority by a small amount. Because a FLEX Trader would not know the 
prices of other responses, the FLEX Trader could not submit a response 
with the purpose of increasing the prices of other responses by an 
economically insignificant amount. The purpose of not displaying 
auction responses of other auction participants is to encourage all 
FLEX Traders to submit their best-priced responses.\35\ As demonstrated 
above, even small price changes can create a significant price 
difference. The Exchange does not believe the proposed rule change will 
discourage FLEX Traders from providing liquidity to electronic FLEX 
Auctions, because the prices of their responses are not available to 
other FLEX Traders to use to step ahead by a small amount (and thus 
``piggyback'' off of pricing done by other investors) in order to gain 
execution priority. The Commission itself acknowledged the difference 
between use of a sub-increment in the context of an auction and in the 
context of displayed liquidity in the book. Specifically, in response 
to a commenter arguing that the Commission should prohibit the Boston 
Options Exchange (``BOX'') from using ``sub-increment'' pricing in its 
price improvement period (``PIP'') auction,\36\ the Commission states 
that it did ``not believe that the PIP raise[d] the same problems 
caused by sub-penny quotations of non-option securities . . .'' because 
the use of the sub-increment was in an auction rather than public 
quotations.\37\
---------------------------------------------------------------------------

    \35\ FLEX Traders are permitted to submit multiple responses at 
multiple prices).
    \36\ BOX was permitting penny increments in this price 
improvement auction despite the standard increments for options 
being $0.05 and $0.10. See Securities Exchange Act Release No. 49068 
(January 13, 2004), 69 FR 2775 (January 13, 2004) (SR-BSE-2002-15) 
(order approving PIP auctions that permit orders and responses be 
submitted into the auctions in penny increments).
    \37\ See supra note 24 [sic] at 77459. The Exchange acknowledges 
that it submitted the comment arguing for prohibition of the use of 
sub-increment pricing in BOX's PIP auction. However, the Commission 
approved it as being consistent with the Exchange Act (and the 
Exchange itself has similar price improvement auctions that permit 
penny pricing in options with minimum increments of $0.05 and 
$0.10), and the Commission disagreed with the Exchange's argument.
---------------------------------------------------------------------------

    While equities and options may generally not trade in increments 
smaller than $0.01,\38\ there are exceptions to this restriction for

[[Page 78387]]

specific, limited purposes. As noted above, the minimum increment for a 
bid or offer, an order, or an indication of interest in any NMS stock 
priced less than $1.00 per share is $0.0001.\39\ Sub-penny cabinet 
orders may execute on the Exchange to accommodate closing transactions 
in options.\40\ In both cases, sub-increment pricing permits more 
appropriate prices to apply to lower-valued stocks and options.
---------------------------------------------------------------------------

    \38\ As set forth in Rule 5.4, some options classes may trade in 
increments of $0.01 or $0.05 (several classes may trade in 
increments of $0.01 for all strikes), while other classes may trade 
in increments of $0.05 or $0.10. Complex orders may generally trade 
in increments of $0.01, and FLEX class may trade in increments of 
$0.01 or 0.01%.
    \39\ See 17 CFR 242.612.
    \40\ See Rule 5.85(h).
---------------------------------------------------------------------------

    In addition, various equity exchanges offer retail price 
improvement programs, pursuant to which retail orders may be entered in 
increments of $0.001 if the prices of those retail orders increase the 
NBBO at the time of entry (the prices of the orders would be 
nondisplayed), despite the $0.01 minimum increment for all other 
orders.\41\ While the purpose of these retail price improvement 
programs was to create additional price improvement opportunities for 
retail investors,\42\ the impetus for the programs was similar to the 
purpose of the proposed rule change. Specifically, the Commission 
recognized that most marketable retail order flow executed in OTC 
markets without reaching a public exchange, therefore limiting market 
participants that had the opportunity to interact with that order 
flow.\43\ The Commission indicated it believed creating additional 
price improvement opportunities for retail investors by permitting 
those orders to be submitted at subpenny prices (as was typical in the 
OTC market), the program was ``reasonably designed to attract retail 
order flow to the exchange environment.'' \44\ The Commission also 
noted the benefits to institutional investors that may result from 
opportunities to interact with that order flow that such investors were 
not then able to reach in the OTC market.\45\ Ultimately, the 
Commission found the Program would benefit the marketplace by bringing 
more information about retail orders to the marketplace and would 
enhance competition among market participants and encourage competition 
amongst exchange venues.\46\
---------------------------------------------------------------------------

    \41\ See, e.g., Cboe BYX Exchange, Inc. (``BYX'') Rule 11.24. 
The Exchange notes that multiple retail orders will be ranked for 
priority purposes based on their prices (including any subpenny 
prices).
    \42\ It is common for markets to generally distinguish between 
retail investors and other traders; however, it is also common for 
markets to generally distinguish between FLEX trading and non-FLEX 
trading. For example, as otherwise discussed in this filing, the 
manner in which FLEX Options trades (via auction only) differs from 
the manner in which non-FLEX options trade (a combination of a book 
into which orders may be submitted as well as auctions). 
Additionally, as noted above, all FLEX Options may trade in pennies, 
while only certain non-FLEX Options (with certain strikes) may trade 
in pennies.
    \43\ See Securities Exchange Act Release No. 68303 (November 27, 
2012), 77 FR 71652, 71655 (December 3, 2012) (SR-BYX-2012-019) 
(``BYX Approval Order''). The BYX retail price improvement program 
was initially approved as a pilot program; however, the Commission 
later approved it to become a permanent program. See Securities 
Exchange Act Release No. 87154 (September 30, 2019), 84 FR 53183 
(October 4, 2019) (SR-CboeBYX-2019-014).
    \44\ Id. at 71656.
    \45\ Id.
    \46\ Id. at 71657.
---------------------------------------------------------------------------

    Like the BYX retail price improvement program (and other similar 
programs), the proposed rule change is intended to attract order flow 
that currently executes in the OTC market to an exchange by permitting 
competition on the exchange for that order flow to occur with the same 
terms available in the OTC market. FLEX Traders on the Exchange are not 
currently able to interact with order flow for many options that could 
otherwise trade as FLEX Options because it is routinely executed in the 
OTC market where sub-increment executions are available so they can 
obtain the benefits of pricing precision as described above. The 
Exchange believes the proposed rule change is reasonably designed, 
limited to FLEX Options (which represents a small percentage of 
Exchange volume), to attract FLEX Option order flow to the Exchange, 
which would add transparency to the market for these options, as well 
as provide those options with the benefits of trading on an exchange 
(which benefits are described above).
    Like the retail price improvement programs, the Exchange believes 
the proposed rule change is a case in which the benefits of 
subincrement pricing due to evolving markets outweigh any potential 
costs. The benefits of attracting FLEX Option order flow to an exchange 
are outlined above. Exchanges are unable to currently compete to equal 
footing with the OTC market for a variety of factors, including due to 
the current lack of availability of subincrement pricing. The proposed 
rule change is a limited exception to the current minimum of penny 
increment pricing on the Exchange, which is reasonably designed to 
minimize the concerns the Commission has previously raised with respect 
to subincrement pricing. Because there is no book, and thus no quotes 
or resting limit orders, in the FLEX Options market, the Exchange 
believes there is de minimis, if any, risk of reducing incentives for 
investors to display limit orders or for quote-flickering and reduced 
market depth. In fact, by attracting more FLEX Option order flow to the 
Exchange, the Exchange believes the proposed rule change could result 
in greater order interaction and liquidity in the FLEX Options market. 
As noted above, because all FLEX Options may only execute in auctions 
in which responses are not disseminated, the Exchange believes the 
proposed rule change does not encourage market participants to step 
ahead of competing responses to gain an insignificant price improvement 
because those prices are not displayed. The proposed rule change is 
designed to attract order flow away from the alternative of OTC 
execution, and, therefore, the Exchange does not believe the proposed 
rule change will cause increased fragmentation (and in fact it may 
reduce this fragmentation). Because the proposed rule change is limited 
to FLEX Options and given the structure of the FLEX market on the 
Exchange, the Exchange believes the benefits of increasing the 
potential to compete with OTC markets for FLEX orders in order to bring 
additional transparency to executions occurring off-exchange today and 
to provide those orders with the benefits of trading on an exchange far 
outweigh any risks related to subincrement pricing that may exist in 
the FLEX Options market (which, as described above, the Exchange 
believes are minimal). As a result, the Exchange believes the proposed 
rule change will benefit investors and remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, as well as promote just and equitable principles of trade and 
promote competition by permitting the Exchange to compete on similar 
terms with the OTC market.
    The Exchange believes the proposed rule change to describe how bids 
and offers in FLEX Auctions for FLEX Option series are ranked and 
allocated will remove impediments to and perfect the mechanism of a 
free and open market and a national market system and protect investors 
and the public interest by increasing the transparency in the Rules 
regarding the allocation of FLEX Orders at the conclusion of FLEX 
Auctions. The proposed rule change codifies that the term ``price'' in 
the rules regarding allocations following FLEX Auctions refers to the 
dollar and decimal amount of bids and offers submitted as a fixed 
amount (as is the case for all non-FLEX Options and which as proposed 
may be as small as $0.001 for FLEX Options), and the percentage value 
(which as proposed may be as small as 0.0001%) of bids and

[[Page 78388]]

offers submitted as percentages. As percentages ultimately reflect a 
price in dollars and cents, and thus allocation of a FLEX Order to the 
highest percentage bids and lowest percentage offers still results in 
allocation of that order to the best prices in the same manner as bids 
and offers in dollars and cents. For example, a bid of 1.05% will be 
for a higher dollar value than a bid of 1.04%, because a higher 
percentage of a number will have a higher value than a lower percentage 
of that same number. This is a reasonable allocation that ensures 
highest priced bids and offers receive first priority (and is the same 
as how dollar-priced bids and offers are ranked), which protects 
investors.
    The Exchange believes the proposed nonsubstantive changes, 
codification of a longstanding interpretation, and correction of terms 
described above enhance the readability of and provide clarity to the 
applicable provisions, which increases the transparency of the Rules 
and ultimately benefits investors.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange does not 
believe that the proposed rule change to increase precision for bids 
and offers and exercise prices for electronic FLEX Auctions will impose 
any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, because the same 
bid and offer and exercise price increments will be available to all 
FLEX Traders. While the same precision will not be available in open 
outcry FLEX Auctions, all FLEX Traders have the ability to submit FLEX 
Orders for electronic execution if they desire to trade with additional 
precision.\47\ The Exchange does not believe that the proposed rule 
change to increase the precision for bids and offers and exercise 
prices for FLEX Options submitted for electronic execution will impose 
any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, because while 
additional decimals may be available for bids and offers and exercise 
prices for electronic auctions, FLEX options will continue to trade in 
the same manner as they do today. While FLEX markets may be less liquid 
than non-FLEX markets for options with the same underlying, the 
Exchange believes the proposed rule change may increase liquidity in 
the FLEX markets. To the extent the proposed rule change makes the 
Exchange a more attractive trading venue for market participants on 
other exchanges, those market participants may elect to become Exchange 
market participants.
---------------------------------------------------------------------------

    \47\ Options generally have different minimum increments in the 
same class. See Rule 5.4.
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change may relieve any 
burden on, or otherwise promote, competition. The Exchange believes 
this is an enhancement to a comparable alternative to the OTC market in 
customized options. By enhancing our FLEX trading platform to provide 
additional pricing terms that are available in the OTC market but not 
currently available in the listed options market, the Exchange believes 
it may be a more attractive alternative to the OTC market. The Exchange 
believes market participants benefit from being able to trade 
customized options in an exchange environment in several ways, 
including but not limited to the following: (1) Enhanced efficiency in 
initiating and closing out position; (2) increased market transparency; 
and (3) heightened contra-party creditworthiness due to the role of OCC 
as issuer and guarantor of FLEX Options. The Exchange believes these 
benefits in addition to the benefits of precision pricing described 
above far outweigh the minimal (if any) risks of sub-increment pricing 
in the FLEX market.
    The nonsubstantive proposed rule changes, as well as the 
codification of an interpretation and term correction, are not intended 
for competitive purposes, but rather to increase transparency in the 
Rules by codifying current System functionality and practice with 
respect to FLEX Option bids and offers. These changes do not modify how 
FLEX Options trade on the Exchange and merely provide enhanced clarity 
and readability to the Rules.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. By order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be 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, as modified by Amendment No. 1, 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-2020-106 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-2020-106. 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

[[Page 78389]]

submissions should refer to File Number SR-CBOE-2020-106, and should be 
submitted on or before December 28, 2020.\48\
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    \48\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-26678 Filed 12-3-20; 8:45 am]
BILLING CODE 8011-01-P