Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Adopt a Modified Trading Schedule for Holidays, 68703-68711 [2021-26244]
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Federal Register / Vol. 86, No. 230 / Friday, December 3, 2021 / Notices
Price protection. Additionally, any
Member may elect to enable the
Managed Protection Override feature to
allow the Exchange to cancel their
orders when a risk protection is
triggered.
In addition, the Exchange does not
believe the proposal will impose any
burden on inter-market competition as
the proposal is intended to protect
investors by providing additional price
protection functionality and further
enhancements and transparency to the
Exchange’s risk protections. The
Exchange’s proposal may promote intermarket competition as the Exchange’s
proposal adds additional price
protection features and functionality
that may attract additional order flow to
the Exchange, thereby promoting intermarket competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
All submissions should refer to File
Number SR–MIAX–2021–58. 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–MIAX–2021–58, and
should be submitted on or before
December 27, 2021.
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.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.47
J. Matthew DeLesDernier,
Assistant Secretary.
IV. Solicitation of Comments
[FR Doc. 2021–26241 Filed 12–2–21; 8:45 am]
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:
BILLING CODE 8011–01–P
Electronic Comments
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing of a
Proposed Rule Change To Adopt a
Modified Trading Schedule for
Holidays
• 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–
MIAX–2021–58 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.
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93677; File No. SR–CBOE–
2021–068]
November 29, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
17 CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
47
1 15
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68703
notice is hereby given that on November
15, 2021, 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, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to adopt a
modified trading schedule for holidays.
The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/CBOELegal
RegulatoryHome.aspx), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to adopt a
modified trading schedule for holidays
observed by the Exchange and amend
and conform various rules relating to
the proposed holiday trading sessions,
as described more fully below.
Particularly, the Exchange proposes to
(i) adopt an additional Global Trading
Hours (‘‘GTH’’) 3 trading session that
3 The Exchange’s rules provide that the Exchange
may designate as eligible for trading during GTH
any exclusively listed index option designated for
trading under Chapter 4, Section B. If the Exchange
designates a class of index options as eligible for
trading during GTH, FLEX Options with the same
underlying index are also deemed eligible for
Continued
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would immediately precede domestic
holidays and (ii) start the GTH session
that immediately follows a holiday at
8:15 p.m. on the holiday.4 The proposed
holiday schedule would provide
expanded access to trade SPX and VIX
options, which are designed to help
enable investors to hedge or gain
exposure to the broad U.S. market and
global equity volatility.
By way of background, the Exchange
currently offers two trading sessions.5
Regular Trading Hours (‘‘RTH’’) and
GTH. Rule 5.1 currently sets forth the
trading hours for the Exchange’s RTH
and GTH trading sessions, as well as the
trading schedule for holidays observed
by the Exchange. Particularly, RTH for
transactions in equity options
(including options on individual stocks,
ETFs, ETNs, and other securities) are
the normal business days and hours set
forth in the rules of the primary market
currently trading the securities
underlying the options, except for
options on ETFs, ETNs, Index Portfolio
Shares, Index Portfolio Receipts, and
Trust Issued Receipts the Exchange
designates to remain open for trading
beyond 4:00 p.m.6 but in no case later
than 4:15 p.m.7 RTH for transactions in
index options are from 9:30 a.m. to 4:15
p.m., subject to certain exceptions.8
Currently, the GTH session begins at
3:00 a.m. and ends at 9:15 a.m. on
Monday through Friday.9 Effective
November 21, 2021, the GTH session
will begin at 8:15 p.m. (previous day)
and end at 9:15 a.m. on Monday through
Friday.10 However, effective November
21, 2021, any GTH session that follows
a holiday listed under Rule 5.1(d) will
instead begin at 12:00 a.m. on the
calendar day immediately following the
day the holiday is observed and end at
9:15 a.m., unless the holiday is observed
on a Friday, in which case the
subsequent GTH session will begin at
trading during GTH. Currently, only SPX, VIX and
XSP are approved for trading during GTH. Although
eligible, XSP is not currently listed for trading
during GTH.
4 If the holiday is observed on a Friday, GTH
currently begins (and will continue to begin) at 8:15
p.m. on the following Sunday.
5 The term ‘‘trading session’’ means the hours
during which the Exchange is open for trading for
Regular Trading Hours or Global Trading Hours
(each of which may referred to as a trading session).
Unless otherwise specified in the Rules or the
context otherwise indicates, all Rules apply in the
same manner during each trading session. See Rule
1.1 (Definitions).
6 All times referenced herein are Eastern Standard
Time.
7 See Rule 5.1(b)(1).
8 See Rule 5.1(b)(2).
9 See Rule 5.1(c).
10 See also Securities Exchange Act Release No.
34–93403 (October 22, 2021), 86 FR 59824 (October
28, 2021) (SR–CBOE–2021–061). The Exchange
notes that currently, [sic].
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8:15 p.m. (Sunday) and will end at 9:15
a.m. (Monday).11 Transactions effected
during the GTH session will have the
same trade date as the RTH session that
immediately follows it.12
Additionally, there are several
holidays on which the Exchange is
currently not open for business.13 For
any holiday observed by the Exchange
that falls on a Saturday, the Exchange is
not open for business on the preceding
Friday, and when any holiday observed
by the Exchange falls on a Sunday, the
Exchange is not open for business on
the following Monday, unless unusual
business conditions exist at the time.
Currently, if the Exchange is not open
for RTH on a day, including holidays,
then it will not be open for GTH on that
same day.14
The Exchange notes that it originally
adopted the GTH trading session due to
global demand from investors to trade
SPX and VIX options, as alternatives for
hedging and other investment purposes,
particularly as a complementary
investment tool to VIX futures.15 Given
that SPX and VIX options only traded
during regular trading hours prior to the
adoption of the GTH session, it was
historically difficult for U.S. investors
that traded in non-U.S. markets to use
these products as part of their global
investment strategies. Accordingly, the
Exchange adopted the GTH session to
meet that demand and allow market
participants to engage in trading these
options (SPX and VIX) in conjunction
with trading VIX futures on Cboe
Futures Exchange, LLC (‘‘CFE’’) during
extended hours.16 Currently, VIX
futures are open for trading on CFE
nearly 23 hours a day, 5 days a week.17
The Exchange also recently proposed
to extend the GTH trading session in
order to provide global market
participants with expanded access to
trade the products offered during
11 Id.
12 Transactions effected between 8:15 p.m. to
11:59 p.m. would be considered to have the trade
date of the following business day. For example,
any transactions effected during the GTH session
that begins at 8:15 p.m. on Tuesday, November 23
will be considered to have the trade date of
Wednesday, November 24 regardless of whether the
trades were effected between 8:15 p.m. and 11:59
p.m. on Tuesday, November 23 or between 12:00
a.m. and 9:15 a.m. on Wednesday November 24.
13 See Rule 5.1(d). Currently, the Exchange is not
open for business on: New Year’s Day, Martin
Luther King, Jr. Day, Presidents’ Day, Good Friday,
Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, or Christmas Day.
14 See Cboe Rule 1.1, definition of ‘‘Business Day’’
and ‘‘Trading Day’’.
15 See Securities Exchange Act Release No. 34–
73017 (September 8, 2014), 79 FR 54758 (September
12, 2014) (SR–CBOE–2014–062).
16 Id.
17 See CFE Rule 1202(b).
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GTH.18 In particular, the Exchange
proposed to lengthen the current GTH
session to help meet growing investor
demand for the ability to manage risk
more efficiently, react to global
macroeconomic events as they are
happening and adjust SPX and VIX
options positions nearly around the
clock. Additionally, the proposed
expanded hours overlap with the Asia
Pacific markets, thereby offering a new
segment of global market participants
the opportunity to trade GTH products
in their local time. The Exchange now
proposes to also adopt a modified
holiday trading hours schedule to
provide global market participants the
ability to trade during GTH sessions that
overlap with U.S. domestic holidays.
Particularly, the Exchange believes this
proposal allows market participants to
respond to international market
conditions that may occur during the
time the U.S. markets are closed due to
a domestic holiday notwithstanding that
global markets are still operating. The
proposed change also further maximizes
the overlap in time that SPX and VIX
are open alongside the related futures
contracts, as futures markets, including
CFE, follow a modified holiday trading
hours schedule that aligns with the
Exchange’s proposal.19
Trading Hours
The Exchange first proposes to amend
Rule 5.1(c), which sets forth the trading
hours for the GTH session. Specifically,
the Exchange proposes to update Rule
5.1(c) to add a reference to the holiday
hours set forth in Rule 5.1(d) (as
discussed more fully below), as an
exception to the otherwise codified GTH
hours set forth under Rule 5.1(c). The
Exchange also proposes to eliminate the
language that provides that a GTH
session following a holiday will begin at
12:00 a.m. (unless the holiday is
observed on a Friday, in which case the
GTH session begins at 8:15 p.m. on
Sunday). Particularly, the Exchange
proposes to allow the GTH session that
immediately follows a holiday to start at
the same time as GTH sessions on nonholidays (i.e., start at 8:15 p.m.).
The Exchange next proposes to amend
Rule 5.1(d) to adopt modified trading
schedules for domestic 20 and
18 See Securities Exchange Act Release No. 34–
73017 (September 8, 2014), 79 FR 54758 (September
12, 2014) (SR–CBOE–2014–062).
19 For example, the Exchange notes that CFE
follows a holiday schedule that includes an
extended trading hours session for VIX future that
begin at 6:00 p.m. on the calendar day preceding
a domestic holiday through 11:30 a.m. on the
holiday. See Rule 1202(b).
20 Domestic holidays include Martin Luther King,
Jr. Day, Presidents’ Day, Memorial Day,
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international 21 holidays. First, the
Exchange proposes to adopt Rule
5.1(d)(1), which would outline the
trading hours schedule for domestic
holidays and provide specifically that
for Martin Luther King, Jr. Day,
Presidents’ Day, Memorial Day,
Independence Day, Labor Day, and
Thanksgiving Day (i.e., domestic
holidays), the trading day following the
holiday will consist of the following
three trading sessions: (i) A GTH session
from 8:15 p.m. on the calendar day
preceding the holiday to 11:30 a.m. on
the holiday, (ii) a GTH session from 8:15
p.m. on the holiday, or if the holiday is
on a Friday, on the Sunday following
the holiday, to 9:15 a.m. on the trading
day and (iii) a RTH session on the
trading day. Proposed Rule 5.1(d)(1)
would also make clear that there will
continue to be no RTH session on the
day a domestic holiday is observed.
The Exchange notes the proposed
hours of operation for the GTH session
immediately preceding a RTH session
that is closed due to a domestic holiday
overlaps with the hours of operation of
many international markets, which do
not observe U.S. domestic holidays and
are therefore still open at this time. For
example, markets in Asia begin trading
as early as 8:00 p.m. Eastern Standard
Time and many European markets close
at 11:30 a.m. Eastern Standard Time.
Additionally, the proposed schedule is
similar to the holiday schedule followed
by futures markets (which also closes at
11:30 a.m. on holidays), thereby
maximizing the overlap in time that
SPX and VIX are open alongside related
futures contracts.22 As noted above,
there will also be a GTH trading session
that starts on the holiday at 8:15 p.m.
(instead of 12:00 a.m. next day) and
proceeds as normal until 9:15 a.m. the
following trading day (for non-Friday
domestic holidays). This proposed
change also provides global market
participants an additional opportunity
to trade in their local time and when
their respective market, that does not
observe U.S. domestic holidays, may
still be operating.
As noted above, these two GTH
trading sessions are not considered to
occur on separate trading days and are
considered part of the next trading day
(i.e., both GTH sessions will have the
trade date of the trading day following
the holiday).23 As an example, the
Independence Day, Labor Day and Thanksgiving
Day.
21 International holidays include Good Friday,
Christmas Day and New Year’s Day.
22 See, e.g., CFE Rule 1202.
23 Pursuant to Rule 6.4 (Reporting of Trades to
OCC), all transactions made on the Exchange during
these sessions will continue to be submitted for
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holiday GTH session preceding
Memorial Day will start at 8:15 p.m. on
the Sunday prior to Memorial Day and
end at 11:30 a.m. on Memorial Day. The
market will then be closed at 11:30 a.m.
on Memorial Day (Monday) (i.e., there
will be no RTH session on Memorial
Day). The next GTH trading session will
begin at 8:15 p.m. on Memorial Day and
proceed as normal until 9:15 a.m. on
Tuesday, which will be followed by a
normal RTH session that begins as 9:30
a.m. on Tuesday. All trading from
Sunday night through Tuesday RTH
market close is considered to be part of
the Tuesday trading day. The following
also illustrates how the holiday
schedule applies for U.S. domestic
holidays that are observed on a Friday.
For example, if Independence Day is
observed on a Friday, the trading day
following the Friday holiday (Monday
Trading Day) will consist of three
trading sessions: (1) A GTH session
open from 8:15 p.m. on the Thursday
preceding Independence Day to 11:30
a.m. on Independence Day, (2) a GTH
session from 8:15 p.m. on the Sunday
following Independence Day to 9:15
a.m. on the following Monday and (3) a
RTH session from 9:30 a.m. to 4:15 p.m.
on Monday. All trading from Thursday
night through Friday, and from Sunday
night through Monday RTH market
close is considered to be part of the
Monday trading day.
The Exchange next proposes to adopt
Rule 5.1(d)(2) which would outline the
trading hours schedule for international
holidays and provide specifically that
for Good Friday, Christmas Day and
New Year’s Day (i.e., international
holidays), the trading day following the
holiday will consist of the following two
trading sessions: (i) A GTH session from
8:15 p.m. on the holiday, or if the
holiday is observed on a Friday, on the
Sunday following the holiday, to 9:15
a.m. on the trading day and (ii) a RTH
session on the trading day. Proposed
Rule 5.1(d)(2) would also make clear
that there will continue to be no RTH
session on the day an international
holiday is observed nor a GTH session
that immediately precedes the day an
international holiday is observed. The
Exchange does not propose to adopt a
GTH trading session that immediately
precedes an international holiday, as
these holidays, unlike domestic
holidays, are observed not just by U.S.
residents, but by many global market
participants. Therefore, many
international markets are also closed in
clearance to the Options Clearing Corporation
(‘‘OCC’’) in the same manner they are today.
However, as noted, such trades will have the trade
date of the trading day following the holiday.
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68705
observance of these international
holidays. Futures markets similarly do
not provide an extended trading hours
session that precede certain
international holidays.24 Just like
regular GTH trading sessions, a GTH
trading session that starts on an
international holiday at 8:15 p.m., will
be considered part of the next trading
day. The following illustrates the
international holiday schedule using
Good Friday as an example.
Particularly, there will be no GTH
session immediately preceding Good
Friday (i.e., no GTH session that starts
on Thursday). Rather, the market will be
closed from RTH market close on the
Thursday preceding Good Friday until
the GTH session that starts at 8:15 p.m.
on the Sunday following Good Friday.
All trading from Sunday night through
RTH market close on the following
Monday is for a trading day of
Monday.25
Definitions
In connection with the proposed
modified holiday trading schedule, the
Exchange proposes to amend the
definition of ‘‘business day’’ and
‘‘trading day’’ under Rule 1.1
(Definitions). Effective November 21,
2021, ‘‘business day’’ and ‘‘trading day’’
will be defined as a day on which the
Exchange is open for trading during
RTH and includes the RTH session and
the GTH session that immediately
precedes it. Effective November 21,
2021, the definition will also provide
that if the Exchange is not open for RTH
on a day, then it will not be open for
GTH immediately preceding what
would have otherwise been the RTH
session on that day. In light of the
proposed modified holiday schedule for
GTH discussed above, the Exchange
proposes to update the definition of
‘‘business day’’ and ‘‘trading day’’.
Specifically, the Exchange proposes to
eliminate the following language ‘‘[i]f
the Exchange is not open for Regular
Trading Hours on a day, then it will not
be open for Global Trading Hours on
24 See e.g., CFE Rule 1202, which provides,
among other things, that there will be no extended
trading hours session preceding New Year’s Day
and Christmas Day.
25 As a further example, if Christmas Day
(December 25) is on a Tuesday, there will be no
GTH session that begins the preceding Monday at
8:15 p.m. The Trading Day following Christmas Day
would be Wednesday, December 26 and would
consist of two trading sessions: (1) A GTH session
from 8:15 p.m. on Christmas Day to 9:15 a.m. on
Wednesday and (2) a regular RTH session from 9:30
a.m. to 4:15 p.m. on the Wednesday following
Christmas Day. All trading from Tuesday at 8:15
p.m. through RTH market close on Wednesday is
considered to be part of the Wednesday trading day
(i.e., all transactions executed during these two
sessions will have a trade date of December 26).
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that day’’ and in its place add language
that clarifies that a business day or
trading day that immediately follows a
domestic holiday pursuant to Rule
5.1(d) includes the RTH session and the
two GTH sessions that immediately
precede it. The Exchange believes the
proposed amendments to the definition
add clarity and alleviate potential
confusion in connection with the
proposed changes to the trading hours
on holidays.
Entry of Orders, Quotes and
Cancellations
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The Exchange lastly proposes to
update Rule 5.7(e), which provides that
after RTH market close, Users may
cancel orders and quotes with Time-inForce of Good-til-Cancelled (‘‘GTC’’) 26
or Good-til-Date (‘‘GTD’’) 27 that remain
in the Book until 4:45 p.m. In light of
the proposed holiday schedule for GTH
sessions on domestic holidays (i.e., GTH
session will end at 11:30 a.m. on a
domestic holiday (observed)), the
Exchange proposes to update Rule 5.7(e)
to provide that on such domestic
holidays, users may cancel orders and
quotes with Time-in-Force of GTC or
GTD until 11:45 a.m. The Exchange
notes that the proposed rule change
would allow Users to cancel any GTC
and GTD orders until 11:45 a.m. on
domestic holidays, not just orders in All
Sessions classes (i.e., SPX and VIX). The
Exchange believes the proposed rule
change provides Users with additional
flexibility to manage their orders in all
classes that remain in the Book
following the market close on holidays.
In particularly, the Exchange notes that
cancelling a RTH Only GTC or GTD
order at 11:30 a.m. on a domestic
holiday has the same effect as cancelling
that order at 7:30 a.m. the following
day—ultimately it accommodates the
User’s goal of cancelling an order prior
to it potentially executing during the
RTH Opening Process the following
morning.
26 See Rule 5.6(c). The terms ‘‘Good-tilCancelled’’ and ‘‘GTC’’ mean, for an order so
designated, if after entry into the System, the order
is not fully executed, the order (or unexecuted
portion) remains available for potential display or
execution (with the same timestamp) unless
cancelled by the entering User, or until the option
expires, whichever comes first. Users may not
designate bulk messages as GTC.
27 See Rule 5.6(c). The terms ‘‘Good-til-Date’’ and
‘‘GTD’’ mean, for an order so designated, if after
entry into the System, the order is not fully
executed, the order (or unexecuted portion) remains
available for potential display or execution (with
the same timestamp) until a date and time specified
by the entering User unless cancelled by the
entering User. Users may not designate bulk
messages as GTD. A User may not designate a GTD
order as Direct to PAR.
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Market-Maker Rules
Current Rule 5.50(a) (Market-Maker
Appointments) provides that a MarketMaker’s selected class appointment
applies to classes during all trading
sessions. In other words, if a MarketMaker selects an appointment in SPX
options, for example, that appointment
would apply during both GTH and RTH
(and thus, the Market-Maker would
have an appointment to make markets
in SPX during GTH and RTH). As a
result, the Market-Maker continuous
quoting obligations set forth in Rule
5.52(d) applies to the class for an entire
trading day (including both trading
sessions). Pursuant to Rule 5.52(d), a
Market-Maker must enter continuous
bids and offers in 60% of the series of
the Market-Maker’s appointed classes,
excluding any adjusted series, any intraday add-on series on the day during
which such series are added for trading,
any Quarterly Option series, and any
series with an expiration of greater than
270 days.28 The Exchange calculates
this requirement by taking the total
number of seconds the Market-Maker
disseminates quotes in each appointed
class (excluding the series noted above)
and dividing that time by the eligible
total number of seconds each appointed
class is open for trading that day. The
Exchange also notes however, that
pursuant to Rule 5.52(d)(2)(E), the
obligations apply only when the MarketMaker is quoting in a particular class
during a given trading day and the
obligations are not applicable to an
appointed class if a Market-Maker is not
quoting in that appointed class.
Accordingly, if a Market-Maker does not
wish to quote during the proposed new
GTH sessions (i.e., 8:15 p.m. (day prior
to holiday) to 11:30 a.m. (holiday) or
8:15 p.m. (holiday) to 11:59 p.m.
holiday), then so long as the MarketMaker doesn’t log in and quote during
those hours, the time between 8:15 p.m.
(day prior to holiday) and 11:30 a.m.
(holiday) and between 8:15 p.m. and
11:59 p.m. (holiday) won’t be
considered when determining a MarketMaker’s compliance with the quoting
obligations. Accordingly, the adoption
of a modified trading schedule on
holidays will have a de minimis, if any,
impact on a Market-Maker’s continuous
quoting obligations, as they may
continue to choose when to actively
quote and have their obligations to their
appointed classes apply. Moreover,
selecting an appointment in SPX or VIX
options will be optional and within the
discretion of a Market-Maker.
Additionally, Market-Makers have the
28 See
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opportunity to quote during the holiday
GTH trading hours (and receive the
benefits of acting as a Market-Maker
with respect to transactions it effects
during that time) without obtaining an
additional Trading Permit or creating
additional connections to the Exchange.
Given this ease of access to the GTH
holiday trading sessions, the Exchange
believes Market-Makers may be
encouraged to quote during the trading
session, even as amended. The
Exchange believes Market-Makers will
continue to have an incentive to quote
during the holiday GTH sessions given
the significance of the SPX and VIX
within the financial markets, the
expected demand, and given that the
related futures also trading during those
hours (which may permit execution of
certain hedging strategies). The
Exchange believes continuing to extend
a Market-Maker’s appointment to GTH
notwithstanding the proposed holiday
trading hours will enhance liquidity
during that trading session, which
benefits all investors during those
hours. Therefore, the Exchange believes
the proposed rule change provides
customer trading interest with a net
benefit and continues to maintain a
balance of Market-Maker benefits and
obligations.
The Exchange also does not anticipate
any changes with respect to the current
Lead-Market-Makers (‘‘LMMs’’)
structure used today during GTH. More
specifically, Rule 3.55 (LMMS)
currently provides that the Exchange
may approve one or more MarketMakers to act as LMMs in each class
during GTH. Further, subparagraph (b)
of Rule 5.55 (LMMs) provides that if a
LMM is approved to act as an LMM
during GTH, then the LMM must
comply with the continuous quoting
obligation and other obligations of
Market-Makers set forth in Rule
5.52(d)(2) but does not have to comply
with the obligations under Rule 5.55(a).
Additionally, subparagraph (a)(2)(B)(iv)
of Rule 5.32 (Order and Quote Book
Processing, Display, Priority and
Execution) provides that the DPM/
LMM/PMM participation entitlement
does not apply during GTH. LMMs
appointed in the GTH holiday sessions
will therefore continue to not be
obligated to satisfy heightened
continuous quoting and opening
quoting standards during GTH, nor will
they receive a benefit in exchange for
satisfying an obligation (i.e., LMMs do
and will not receive a participation
entitlement during GTH, including
during holiday trading hours). The
Exchange intends to adopt via a separate
rule filing an incentive program that
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provides appointed LMMs a rebate if
they meet certain heightened
continuous quoting standards during
the GTH session, which includes GTH
holiday sessions. The Exchange believes
the such program will encourage LMMs
to provide significant liquidity during
GTH, including during the proposed
holiday trading hours.
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Discussion
The Exchange notes that the proposed
rule change to adopt a modified holiday
trading schedule makes no changes to
the trading rules applicable to GTH. The
GTH trading session, including GTH
holiday sessions, will continue to be
separate trading sessions from RTH and
the rules that currently apply (or don’t
apply) to the current GTH session will
continue to apply (or not apply) to the
GTH holiday session.29 The Exchange
will continue to use the same servers
and hardware during the GTH holiday
sessions as it uses for RTH and GTH
today. Further, TPHs may continue to
use the same ports and connections to
the Exchange for all trading sessions.
The Book used during the GTH holiday
sessions will also be the same Book
used currently during RTH and GTH.
The Exchange also notes the following:
• All TPHs will continue to be
allowed to, but will not be required to,
participate during GTH holiday trading
hours.30 As noted above, while a
Market-Maker’s appointment to an All
Sessions class will apply to that class
whether it quotes in series in that class
or not during holiday trading hours, the
Exchange believes any additional
burden related to the application of a
Market-Maker’s quoting obligation to
the additional time added to those hours
will be de minimis. The Exchange
believes even if a Market-Maker elects to
not quote during GTH holiday trading
hours, its ability to satisfy its
continuous quoting obligation will not
be substantially impacted given the few
classes that will be listed for trading
during GTH.
• The Exchange will continue to use
the same connection lines, message
formats, and feeds during RTH and
29 For example, business conduct rules in Chapter
8 and rules related to doing business with the
public in Chapter 9 will continue to apply during
the GTH holiday session. Additionally, a brokerdealer’s due diligence and best execution
obligations apply during the GTH holiday session.
As there will still be no open outcry trading on the
floor during GTH, Chapter 5, Section G will
continue not to apply as such rules pertain to
manual order handling and open-outcry trading.
30 In order to participate in GTH, even as
amended, a Trading Permit Holder (‘‘TPH’’) must
have a letter of guarantee from a Clearing TPH that
is properly authorized by the Options Clearing
Corporation (‘‘OCC’’) to operate during the GTH
session. See Cboe Options Rule 3.61.
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GTH, including GTH holiday sessions.31
TPHs may use the same ports and
EFIDs 32 for each trading session.33
Accordingly, the Exchange expects
TPHs that want to trade during the
holiday trading hours to have minimal
preparation.
• The same opening process will
continue to be used to open GTH.
• Order processing will operate in the
same manner as it does during RTH and
the current GTH session. There will be
no changes to the ranking, display, or
allocation algorithms rules.
• There will be no changes to the
processes for clearing, settlement,
exercise, and expiration.34
• The Exchange will report Exchange
quotation and last sale information to
the Options Price Reporting Authority
(‘‘OPRA’’) pursuant to the Plan for
Reporting of Consolidated Options Last
Sale Reports and Quotation Information
(the ‘‘OPRA Plan’’) during the proposed
additional holiday hours in the same
manner it currently reports this
information to OPRA during RTH and
GTH today.35 The Exchange will also
continue to disseminate an opening
quote and trade price through OPRA
during the proposed additional holiday
trading hours (as it does for RTH and
GTH today). Therefore, all TPHs that
elect to trade during the proposed
31 The same telecommunications lines used by
TPHs during RTH and/or GTH today may be used
during GTH, even as extended, and these lines will
be connected to the same application server at the
Exchange during both trading sessions.
32 The term ‘‘EFID’’ means an Executing Firm ID.
The Exchange assigns an EFID to a TPH, which the
System uses to identify the TPH and the clearing
number for the execution of orders and quotes
submitted to the System with that EFID.
33 A TPH may elect to have separate ports or
EFIDs for each trading session, but the Exchange
will not require that.
34 The Exchange has held discussions with the
Options Clearing Corporation, which is responsible
for clearance and settlement of all listed options
transactions and has informed the Exchange that it
will be able to clear and settle all transactions that
occur on the Exchange during the proposed holiday
trading hours subject to its existing requirements for
transactions executed during extended and
overnight trading sessions. See Exchange Act
Release No. 74268 (February 12, 2015), 80 FR 8917
(February 19, 2015) (SR–OCC–2014–024) (approval
of proposed rule change concerning extended and
overnight trading sessions), which applies to both
index options and index future products.
35 The OPRA Plan provides for the collection and
dissemination of last sale and quotation information
on options that are trading on the participant
exchanges. The OPRA Plan is a national market
system plan approved by the Commission pursuant
to Section 11A of the Act and Rule 608 thereunder.
See Securities Exchange Act Release No. 17638
(March 18, 1981). The full text of the OPRA Plan
is available at https://www.opraplan.com. All
operating U.S. options exchanges participate in the
OPRA Plan. The Exchange will report its best bid
and offer and executed trades to OPRA during the
proposed additional holiday trading hours in the
same manner that they are reported during RTH and
GTH today.
PO 00000
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68707
holiday trading hours will have access
to quote and last sale information
during that trading session. Exchange
proprietary data feeds will also continue
to be disseminated during holiday
trading hours using the same formats
and delivery mechanisms with which
the Exchange disseminates them during
RTH and GTH today. Use of these
proprietary data feeds during holiday
trading hours will be optional (as they
are today during RTH and GTH).36
• The same TPHs that are required to
maintain connectivity to a backup
trading facility during RTH and GTH
today will be required to do so during
the proposed holiday trading hours.37
Because the same connections and
servers will be used for all trading
sessions, including any holiday trading
hours, a TPH will not be required to
take any additional action to comply
with this requirement, regardless of
whether the TPH chooses to trade
during holiday trading hours.
• The Exchange will process all
clearly erroneous trade breaks during
holiday trading hours in the same
manner it does during RTH and GTH
today and will have Exchange officials
available to do so.
• The Exchange will perform all
necessary surveillance coverage during
holiday trading hours.
• The Exchange may halt trading
during GTH holiday sessions in the
interests of a fair and orderly market in
the same manner it may during RTH
and GTH today pursuant to Rule 5.20.
Among the factors that may be
considered in making the foregoing
determinations are whether there has
been an activation of price limits on
futures exchanges or the halt of trading
in related futures with respect to index
options.38
• Rule 5.22 (Market-wide Trading
Halts due to Extraordinary Market
Volatility) will continue to not apply
during GTH, including the proposed
GTH holiday sessions. Under Rule 5.22,
the Exchange will halt trading in all
classes whenever a market-wide trading
halt (commonly known as a circuit
breaker) is initiated in response to
36 Any fees related to receipt of the OPRA data
feed during GTH would be included on the OPRA
fee schedule. Any fees related to receipt of the
Exchange’s proprietary data feeds during GTH will
be included on the Exchange’s fee schedule (and
will be included in a separate rule filing) or the
Exchange’s market data website, as applicable.
37 See Rule 5.24.
38 See Rule 5.20(a)(6). As discussed above, futures
markets already follow a modified holiday trading
schedule similar to what the Exchange is proposing.
As such, should a halt of trading in related futures
occur during the time a GTH holiday session is
open, then the Exchange may consider whether to
halt during that session, just as it may do during
regular GTH (and RTH) sessions.
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extraordinary market conditions. Rule
5.22(b)(1) states that the Exchange will
halt trading for 15 minutes if a Level 1
or Level 2 Market Decline occurs after
9:30 a.m. and up to and including 3:25
p.m. (or 12:25 p.m. for an early
scheduled close). Additionally, the
Exchange will not halt trading if a Level
1 or Level 2 Market Decline occurs after
3:25 p.m. (or 12:25 p.m., if applicable).
Rule 5.22(b)(2) states that the Exchange
will halt trading until the next trading
day if a Level 3 Market Decline occurs.
The Exchange notes that Rule 5.22(b)(1)
will continue not to apply during the
proposed GTH holiday sessions, just as
it does not apply during GTH today, as
the beginning of the GTH holiday
session will occur past the 15-minute
halt window for a Level 1 or Level 2
Market Decline. Rule 5.22(b)(2) will also
not apply to the GTH holiday session,
as the GTH holiday sessions are still
considered a different (i.e., the next)
trading day than the preceding RTH
session (even though a GTH holiday
session may begin on the same calendar
day as such a halt). As such, if a Level
3 Market Decline occurs at any time
during the RTH session immediately
preceding a holiday, the Exchange will
halt trading in SPX and VIX only until
the start of the GTH holiday session.
The Exchange believes that it is
appropriate to continue to not apply
Rule 5.22(b) because, even if stock
trading was halted at the close of the
previous trading day, the condition that
led to the halt is likely to have been
resolved by the time the GTH holiday
session starts given the length of time
between the close of the previous
trading day and the proposed start time
of GTH holiday session (approximately
4 hours). Moreover, current Rule 5.20(a)
continues to allow the Exchange to
consider unusual conditions or
circumstances when determining
whether to halt trading during GTH. To
the extent a circuit breaker caused a
stock market to be closed at the end of
the prior trading day, the Exchange
could consider, for example, whether it
received notice from stock exchanges
that trading was expected to resume (or
not) the next trading day (after the
holiday) in determining whether to halt
trading during a GTH holiday session.
Because the stock markets would not
begin trading until after GTH opens, the
Exchange believes it should be able to
open a GTH holiday session rather than
waiting up to a few days to see whether
stock markets open to allow investors to
participate in GTH if the Exchange
believe such trading can occur in a fair
and orderly manner based on thenexisting circumstances, not
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circumstances that existed many hours
earlier.
The Exchange understands that
systems and other issues may arise and
is committed to resolving those issues as
quickly as possible, including during
the new GTH holiday trading hours.
Thus, the Exchange will have
appropriate staff on-site and otherwise
available as necessary during the
proposed GTH holiday sessions to
handle any technical and support issues
that may arise during those hours.
Additionally, the Exchange will have
personnel available to address any
trading issues that may arise during the
additional GTH trading hours. The
Exchange is also committed to fulfilling
its obligations as a self-regulatory
organization at all times, including
during GTH, and will have
appropriately trained, qualified
regulatory staff in place during GTH
holiday sessions to the extent it deems
necessary to satisfy those obligations.
The Exchange believes its surveillance
procedures are adequate to properly
monitor trading during the proposed
GTH holiday sessions but notes if
additional changes are needed in the
future, it will revise such procedures to
the extent necessary.
Implementation Date
The Exchange will announce the
implementation date of the proposed
rule change in accordance with Rule
1.5. The Exchange also notes that it first
announced its proposal to adopt a
modified GTH holiday schedule to
market-participants via a Trade Desk
notice earlier this year.39 Since then, the
Exchange has issued numerous updated
notices, FAQs and detailed technical
specifications.
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.40 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 41 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,
39 See Exchange Notice C2021032501 ‘‘Cboe
Options Exchange Releases Technical
Specifications in Support of Extended Global
Trading Hours’’.
40 15 U.S.C. 78f(b).
41 15 U.S.C. 78f(b)(5).
PO 00000
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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.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 42 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
the proposed rule change to adopt a
modified holiday schedule will remove
impediments to and perfect the
mechanism of a free and open market
and a national market system and will
not significantly affect the protection of
investors or the public interest.
Particularly, the proposed rule change
provides an enhanced investment
opportunity within the options trading
industry that is consistent with the
continued globalization of the securities
markets and closer aligns the
Exchange’s trading hours with extended
trading hours of futures exchanges and
also market hours of other geographic
regions. The adoption of a modified
holiday trading schedule is a
competitive initiative designed to
improve the Exchange’s marketplace for
the benefit of investors and allow the
Exchange to provide a competitive
marketplace for market participants to
trade certain products for an additional
period of time outside of RTH. More
specifically, the adoption of GTH
holiday sessions are designed to
increase the overlap in time that SPX
and VIX options are open alongside the
related futures contracts and further
aims to provide global market
participants with expanded access to
trade the products offered during GTH.
As discussed above, the proposed
modified holiday trading schedule is
designed to better help meet growing
investor demand for the ability to
manage risk more efficiently, react to
global macroeconomic events as they
are happening and adjust SPX and VIX
options positions nearly around the
clock. Indeed, the proposal allows
market participants operating in
geographic locations that do not observe
U.S. domestic holidays to respond to
international market conditions that
may occur during such holidays. The
proposed rule change also provides a
mechanism for the Exchange to more
effectively compete with exchanges
located outside of the United States.
Global markets have become
increasingly interdependent and linked,
42 Id.
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both psychologically and through
improved communications technology.
This has been accompanied by an
increased desire among investors to
have access to U.S.-listed exchange
products outside of regular trading
hours, and the Exchange believes this
desire extends to its exclusively listed
products. Indeed, market participants in
the Asia Pacific region and Europe have
expressed their interest in having the
ability to participate in the GTH session
during their market hours, which
coincide with the proposed holiday
trading schedule. As described above,
markets in Asia begin trading as early as
8:00 p.m. Eastern Standard Time and
many European markets close at 11:30
a.m. Eastern Standard Time.
Accordingly, the proposed GTH holiday
session provides market participants an
additional opportunity to trade in their
local time when their respective market
(that does not observe U.S. domestic
holidays) is still operating. The
Exchange therefore believes that the
proposed rule change is reasonably
designed to provide an appropriate
mechanism for additional trading hours
available outside of its current RTH and
GTH sessions, while providing for
appropriate Exchange oversight
pursuant to the Act, trade reporting, and
surveillance.
The Exchange also notes that it, along
with some of its affiliated options
exchanges, already allow for trading
outside of the hours of RTH (i.e., during
the current GTH trading session).43
Furthermore, the Commission has
authorized U.S. stock exchanges to be
open for trading outside of regular
trading hours.44 Additionally, as noted
above, futures exchanges also operate
during the hours proposed to be
adopted, including the Exchange’s
affiliate, CFE, which is open during the
holiday hours the Exchange proposes to
adopt.45
As described in detail above, the
Exchange’s trading rules that apply to
43 See Cboe Options Rule 5.1, C2 Rule 5.1 and
Cboe EDGX Rule 21.2.
44 See e.g., Cboe BZX Exchange, Inc. Rule 1.5,
which provides for an After Hours Trading Session
which is a trading session from 4:00 p.m.–8:00 p.m.
and follows the Regular Trading Hours session
which takes place between 9:30 a.m. and 4:00 p.m.
See also Exchange Act Release No. 59963 (May 21,
2009), 74 FR 25787 (May 29, 2009) (SR–BATS–
2009–012) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change to Amend
BATS Rules to Offer an After Hours Trading
Session).
45 See, e.g., CFE Rule 1202, which outlines the
trading schedule for futures on the Cboe Volatility
Index and includes holiday trading sessions that
begin at 6:00 p.m. the day prior to a holiday and
ends at 11:30 a.m. on the holiday and another
extending trading hours session that begins at 6:00
p.m. on the holiday.
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GTH today will continue to apply
during the proposed GTH holiday
trading hours, which rules have all been
previously filed with the Commission as
being consistent with the goals of the
Act. Rules that will continue to apply
during the proposed holiday trading
hours include rules that protect public
customers, impose best execution
requirements on TPHs, and prohibit acts
and practices that are inconsistent with
just and equitable principles of trade as
well as fraudulent and manipulative
practices. The Exchange’s rules will also
continue to provide opportunities for
price improvement during the proposed
holiday trading hours and applies the
same allocation and priority rules that
are available to the Exchange during
RTH and GTH today. The Exchange
believes, therefore, that the rules that
will apply during the proposed holiday
trading hours will continue to promote
just and equitable principles of trade
and prevent fraudulent and
manipulative acts.
The proposed rule change clearly
identifies the ways in which trading
during the proposed holiday hours will
be different from trading during current
GTH (such as clarifying the trading
sessions that will be considered part of
the trading day following a holiday).
This ensures that investors are aware of
any differences relating to the proposed
additional trading hours. Additionally,
the Exchange notes that it will continue
to require that disclosures be made to
customers describing potential risks,
which will continue to further protect
investors from any additional risks
related to trading during GTH.46 The
Exchange believes that, with these
disclosures, GTH remains appropriate
and beneficial. The All Sessions order 47
and RTH Only order 48 will continue to
protect investors by permitting investors
who wish only to trade during RTH
from having orders or quotes execute
outside of the RTH session, including
during the proposed holiday GTH
trading hours. Consistent with the goal
of investor protection, the Exchange will
not allow market orders during the
proposed holiday GTH trading hours
due to the expected increased volatility
and decreased liquidity during these
hours, just as it does not currently allow
such orders during GTH today for the
same reasons.
46 See
Cboe Options Rule 9.20.
All Sessions order is an order a User
designates as eligible to trade during both GTH and
RTH. See Cboe Options Rule 5.6(c).
48 An RTH Only order is an order a User
designates as eligible to trade only during RTH or
not designated as All Sessions. See Cboe Options
Rule 5.6(c).
47 An
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68709
Additionally, the Exchange believes
that the proposed rule change will foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, as the Exchange will
ensure that adequate staffing is available
during the proposed additional GTH
holiday hours (as it does during current
GTH hours) to provide appropriate
trading support during those hours, as
well as Exchange officials to make any
necessary determinations under the
rules during GTH (such as trading halts
and trade nullification for obvious
errors). The Exchange is also committed
to continuing to fulfill its obligations as
a self-regulatory organization at all
times, including during the proposed
holiday hours. The Exchange believes
its surveillance procedures are adequate
to properly monitor trading during the
proposed holiday trading hours.
Clearing and settlement processes will
be the same for transactions executed
during the proposed holiday GTH
trading hours as they are for
transactions executing during RTH or
GTH trading session today.
The proposed rule change further
removes impediments to a free and open
market and does not unfairly
discriminate among market participants,
as all TPHs with access to the Exchange
may trade during the proposed holiday
trading hours using the same connection
lines, message formats data feeds, and
EFIDs they use during RTH and GTH
today, minimizing any preparation
efforts necessary to participate during
the proposed hours. TPHs will continue
not be required to trade during GTH.
Additionally, as discussed above,
while the proposed rule change
increases the total time during which a
Market-Maker with an appointment has
the ability to quote in a selected class,
the Exchange believes this increase has
a de minimis, if any, impact on MarketMakers given that a Market-Maker’s
compliance with its continuous quoting
obligation is based on all classes in
which it has an appointment in the
aggregate and based only when a
Market-Maker is quoting it its appointed
classes. Indeed, as noted above, if a
Market-Maker who quotes during the
GTH session today does not wish to
quote during the proposed holiday GTH
trading hours, then so long as such
Market-Maker does not log into the
system and quote during those hours (or
whatever other time it wishes to begin
quoting), there will be no impact with
respect to the Market-Maker’s ability to
satisfy its continuous quoting
obligations. Selecting an appointment in
SPX and/or VIX options will continue to
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be optional and within the discretion of
a Market-Maker. Additionally, MarketMakers continue to have the
opportunity to quote during GTH and
the proposed holiday GTH trading hours
(and receive the benefits of acting as a
Market-Maker with respect to
transactions it effects during that time)
without obtaining an additional Trading
Permit or creating additional
connections to the Exchange. The
Exchange believes Market-Makers will
have an incentive to quote in SPX and
VIX during the holiday GTH trading
hours given the significance of these
products within the financial markets,
the expected demand, and given that the
related futures are also trading during
those hours on holidays (which may
permit execution of certain hedging
strategies). The Exchange believes
continuing to extend a Market-Maker’s
appointment to the GTH holiday trading
hours will enhance liquidity during that
time, which benefits all investors during
those hours. The Exchange believes that
any slight additional burden of
extending the continuous quoting
obligation to the additional hours being
added in the eligible classes would be
outweighed by the Exchange’s efforts to
add liquidity during the proposed
holiday GTH trading session in All
Sessions classes, the minimal
preparation a Market-Maker may require
to participate in the holiday GTH
trading session, and the benefits to
investors that may result from that
liquidity. Therefore, the Exchange
believes the proposed rule change
provides customer trading interest with
a net benefit and continues to maintain
a balance of Market-Maker benefits and
obligations.
The proposed rule change is also
consistent with Section 11A of the Act
and Regulation NMS thereunder,
because it continues to provide for the
dissemination of transaction and
quotation information during GTH,
including holiday GTH trading hours,
through OPRA, pursuant to the OPRA
Plan, which the Commission approved
and indicated to be consistent with the
Act. While Section 11A and Regulation
NMS contemplate an integrated system
for trading securities, they also envision
competition between markets, and
innovation that provides marketplace
benefits to attract order flow to an
exchange does not result in unfair
competition if other markets are free to
compete in the same manner.49 As
49 See Exchange Act Release Nos. 73704
(November 28, 2014), 79 FR 72044 (December 4,
2014) (SR–CBOE–2014–062) (approval of proposed
rule change for Cboe Options to extend its trading
hours outside of Regular Trading Hours); and 29237
(May 24, 1991), 46 FR 24853 (May 31, 1991) (SR–
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discussed, the Exchange, as well as
other options exchanges, already offer
trading sessions outside of regular
trading hours.50
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 adopt a
modified holiday trading schedule will
impose any burden on intramarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act, because all TPHs
will be able, but not be required, to
participate during the additional trading
hours, and will be able to do so using
the same connectivity as they use
during RTH and GTH today. As
discussed, participation in GTH,
including the proposed modified
holiday trading schedule, will be
voluntary and within the discretion of
TPHs. While the proposed rule change
increases the total time during which a
Market-Maker with either a SPX and/or
VIX appointment may be able quote, the
Exchange believes the proposal will
have a de minimis, if any, impact on a
Market-Maker’s continuous quoting
obligations, as they may continue to
choose when to actively quote and have
their obligations to their appointed
classes apply. Furthermore, selecting an
appointment in these options classes
will be optional and within the
discretion of a Market-Maker.
Additionally, Market-Makers continue
to have the opportunity to quote during
GTH and any holiday trading hours (and
receive the benefits of acting as a
Market-Maker with respect to
transactions it effects during that time)
without obtaining an additional Trading
Permit or creating additional
connections to the Exchange. The
Exchange believes that extending the
continuous quoting obligation to the
additional trading hours being added is
also outweighed by the Exchange’s
efforts to add liquidity during the entire
NYSE–1990–052 and SR–NYSE–1990–053)
(approval of proposed rule change for NYSE to
extend its trading hours outside of Regular Trading
Hours). The Exchange also notes that no other U.S.
options exchange provides for trading SPX or VIX
options outside of RTH, so there is currently no
need for intermarket linkage during GTH, including
GTH holiday trading hours. If another Cboe
Affiliated Exchange lists any options authorized to
trade during GTH outside of RTH, trading of such
options on the Exchange would comply with
linkage rules.
50 See, e.g., Cboe Options Rule 5.1, C2 Rule 5.1
and Cboe EDGX. Rule 21.2.
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
GTH trading session in All Sessions
classes, the minimal preparation a
Market-Maker may require to participate
in the GTH trading session, and the
benefits to investors that may result
from that liquidity. Therefore, the
Exchange believes the proposed rule
change provides customer trading
interest with a net benefit and continues
to maintain a balance of Market-Maker
benefits and obligations.
The Exchange does not believe that
the proposed rule change to adopt a
modified holiday schedule will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act,
because the proposed rule change is a
competitive initiative that will benefit
the marketplace and investors.
Additionally, all options exchanges are
free to compete in the same manner.
The Exchange further believes that the
same level of competition among
options exchanges will continue during
RTH. Because the Exchange will
continue to make only exclusively listed
products available for trading during
GTH, including GTH holiday trading
hours, and because any All Sessions
orders that do not trade during GTH will
be eligible to trade during the RTH
trading sessions in the same manner as
all other orders submitted during RTH,
the proposed rule change will have no
effect on the national best prices or
trading during RTH. The Exchange also
believes the proposed rule change could
further increase its competitive position
outside of the United States by
providing investors with an additional
investment vehicle with respect to their
global trading strategies during times
that better correspond with parts of
regular trading hours outside of the
United States.
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
E:\FR\FM\03DEN1.SGM
03DEN1
Federal Register / Vol. 86, No. 230 / Friday, December 3, 2021 / Notices
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 is consistent with the Act.
Comments may be submitted by any of
the following methods:
jspears on DSK121TN23PROD with NOTICES1
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–2021–068 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–2021–068. 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–2021–068 and
should be submitted on or before
December 27, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.51
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–26244 Filed 12–2–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93674; File No. SR–Phlx–
2021–69]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Establish Juneteenth
National Independence Day as an
Exchange Holiday and Give the
Exchange the Authority To Halt or
Suspend Trading or Close Exchange
Facilities for Certain Unanticipated
Closures
November 29, 2021.
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 17, 2021, Nasdaq PHLX LLC
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt a
new Rule 1030, within General 3, titled
‘‘Member Access to the Exchange,’’ to
make Juneteenth National Independence
Day a holiday of the Exchange
memorialize all current Exchange
holidays within General 3, Rule 1030,
and to add a provision to permit the
Exchange the authority to halt or
suspend trading or close Exchange
facilities for certain unanticipated
closures.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/phlx/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
1 15
51 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
18:06 Dec 02, 2021
2 17
Jkt 256001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00087
Fmt 4703
Sfmt 4703
68711
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 adopt a
new Rule 1030, within General 3, titled
‘‘Member Access to the Exchange,’’ to
make Juneteenth National Independence
Day a holiday. The Exchange also
proposes to memorialize all current
holidays within General 3, Rule 1030, as
well as add a provision to permit the
Exchange authority to halt or suspend
trading or close Exchange facilities for
certain unanticipated closures.
Today, the Exchange observes the
following holidays: New Year’s Day,
Martin Luther King, Jr. Day, Presidents’
Day, Good Friday, Memorial Day,
Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.3
Equity 2, Section 8 (Normal Business
Hours) provides, ‘‘The System operates
from 8:00 a.m. to 5:00 p.m. Eastern.
Time on each business day, unless
modified by the Exchange.’’ 4
At this time, the Exchange also
proposes to observe Juneteenth National
Independence Day, which was
designated a legal public holiday on
June 17, 2021.5 Consistent with broad
industry sentiment 6 and the approach
recommended by the Securities Industry
and Financial Markets Association
(‘‘SIFMA’’),7 the Exchange proposes to
3 See https://www.nasdaq.com/market-activity/
stock-market-holiday-calendar.
4 Additionally, Phlx Options 3, Section 1 (Hours
of Business) provides, ‘‘The Board of Directors shall
determine by resolution the hours during which
business may be transacted on the Exchange.’’
5 Public Law 117–17.
6 See, e.g. https://www.wsj.com/articles/wallstreet-moves-to-close-markets-for-juneteenth-in2022-11626376243#:∼:text=Stock%20and%20bond
%20markets%20are,on%20a%20Sunday%20
next%20year.
7 SIFMA recommends a full market close in
observance of Juneteenth National Independence
Day. See https://www.sifma.org/resources/general/
holiday-schedule/#US.
E:\FR\FM\03DEN1.SGM
03DEN1
]]>Agencies
[Federal Register Volume 86, Number 230 (Friday, December 3, 2021)]
[Notices]
[Pages 68703-68711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26244]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93677; File No. SR-CBOE-2021-068]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To Adopt a Modified Trading Schedule
for Holidays
November 29, 2021.
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 November 15, 2021, 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,
II, and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to adopt a modified trading schedule for holidays. The text of the
proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to adopt a modified trading schedule for
holidays observed by the Exchange and amend and conform various rules
relating to the proposed holiday trading sessions, as described more
fully below. Particularly, the Exchange proposes to (i) adopt an
additional Global Trading Hours (``GTH'') \3\ trading session that
[[Page 68704]]
would immediately precede domestic holidays and (ii) start the GTH
session that immediately follows a holiday at 8:15 p.m. on the
holiday.\4\ The proposed holiday schedule would provide expanded access
to trade SPX and VIX options, which are designed to help enable
investors to hedge or gain exposure to the broad U.S. market and global
equity volatility.
---------------------------------------------------------------------------
\3\ The Exchange's rules provide that the Exchange may designate
as eligible for trading during GTH any exclusively listed index
option designated for trading under Chapter 4, Section B. If the
Exchange designates a class of index options as eligible for trading
during GTH, FLEX Options with the same underlying index are also
deemed eligible for trading during GTH. Currently, only SPX, VIX and
XSP are approved for trading during GTH. Although eligible, XSP is
not currently listed for trading during GTH.
\4\ If the holiday is observed on a Friday, GTH currently begins
(and will continue to begin) at 8:15 p.m. on the following Sunday.
---------------------------------------------------------------------------
By way of background, the Exchange currently offers two trading
sessions.\5\ Regular Trading Hours (``RTH'') and GTH. Rule 5.1
currently sets forth the trading hours for the Exchange's RTH and GTH
trading sessions, as well as the trading schedule for holidays observed
by the Exchange. Particularly, RTH for transactions in equity options
(including options on individual stocks, ETFs, ETNs, and other
securities) are the normal business days and hours set forth in the
rules of the primary market currently trading the securities underlying
the options, except for options on ETFs, ETNs, Index Portfolio Shares,
Index Portfolio Receipts, and Trust Issued Receipts the Exchange
designates to remain open for trading beyond 4:00 p.m.\6\ but in no
case later than 4:15 p.m.\7\ RTH for transactions in index options are
from 9:30 a.m. to 4:15 p.m., subject to certain exceptions.\8\
---------------------------------------------------------------------------
\5\ The term ``trading session'' means the hours during which
the Exchange is open for trading for Regular Trading Hours or Global
Trading Hours (each of which may referred to as a trading session).
Unless otherwise specified in the Rules or the context otherwise
indicates, all Rules apply in the same manner during each trading
session. See Rule 1.1 (Definitions).
\6\ All times referenced herein are Eastern Standard Time.
\7\ See Rule 5.1(b)(1).
\8\ See Rule 5.1(b)(2).
---------------------------------------------------------------------------
Currently, the GTH session begins at 3:00 a.m. and ends at 9:15
a.m. on Monday through Friday.\9\ Effective November 21, 2021, the GTH
session will begin at 8:15 p.m. (previous day) and end at 9:15 a.m. on
Monday through Friday.\10\ However, effective November 21, 2021, any
GTH session that follows a holiday listed under Rule 5.1(d) will
instead begin at 12:00 a.m. on the calendar day immediately following
the day the holiday is observed and end at 9:15 a.m., unless the
holiday is observed on a Friday, in which case the subsequent GTH
session will begin at 8:15 p.m. (Sunday) and will end at 9:15 a.m.
(Monday).\11\ Transactions effected during the GTH session will have
the same trade date as the RTH session that immediately follows it.\12\
---------------------------------------------------------------------------
\9\ See Rule 5.1(c).
\10\ See also Securities Exchange Act Release No. 34-93403
(October 22, 2021), 86 FR 59824 (October 28, 2021) (SR-CBOE-2021-
061). The Exchange notes that currently, [sic].
\11\ Id.
\12\ Transactions effected between 8:15 p.m. to 11:59 p.m. would
be considered to have the trade date of the following business day.
For example, any transactions effected during the GTH session that
begins at 8:15 p.m. on Tuesday, November 23 will be considered to
have the trade date of Wednesday, November 24 regardless of whether
the trades were effected between 8:15 p.m. and 11:59 p.m. on
Tuesday, November 23 or between 12:00 a.m. and 9:15 a.m. on
Wednesday November 24.
---------------------------------------------------------------------------
Additionally, there are several holidays on which the Exchange is
currently not open for business.\13\ For any holiday observed by the
Exchange that falls on a Saturday, the Exchange is not open for
business on the preceding Friday, and when any holiday observed by the
Exchange falls on a Sunday, the Exchange is not open for business on
the following Monday, unless unusual business conditions exist at the
time. Currently, if the Exchange is not open for RTH on a day,
including holidays, then it will not be open for GTH on that same
day.\14\
---------------------------------------------------------------------------
\13\ See Rule 5.1(d). Currently, the Exchange is not open for
business on: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, or Christmas Day.
\14\ See Cboe Rule 1.1, definition of ``Business Day'' and
``Trading Day''.
---------------------------------------------------------------------------
The Exchange notes that it originally adopted the GTH trading
session due to global demand from investors to trade SPX and VIX
options, as alternatives for hedging and other investment purposes,
particularly as a complementary investment tool to VIX futures.\15\
Given that SPX and VIX options only traded during regular trading hours
prior to the adoption of the GTH session, it was historically difficult
for U.S. investors that traded in non-U.S. markets to use these
products as part of their global investment strategies. Accordingly,
the Exchange adopted the GTH session to meet that demand and allow
market participants to engage in trading these options (SPX and VIX) in
conjunction with trading VIX futures on Cboe Futures Exchange, LLC
(``CFE'') during extended hours.\16\ Currently, VIX futures are open
for trading on CFE nearly 23 hours a day, 5 days a week.\17\
---------------------------------------------------------------------------
\15\ See Securities Exchange Act Release No. 34-73017 (September
8, 2014), 79 FR 54758 (September 12, 2014) (SR-CBOE-2014-062).
\16\ Id.
\17\ See CFE Rule 1202(b).
---------------------------------------------------------------------------
The Exchange also recently proposed to extend the GTH trading
session in order to provide global market participants with expanded
access to trade the products offered during GTH.\18\ In particular, the
Exchange proposed to lengthen the current GTH session to help meet
growing investor demand for the ability to manage risk more
efficiently, react to global macroeconomic events as they are happening
and adjust SPX and VIX options positions nearly around the clock.
Additionally, the proposed expanded hours overlap with the Asia Pacific
markets, thereby offering a new segment of global market participants
the opportunity to trade GTH products in their local time. The Exchange
now proposes to also adopt a modified holiday trading hours schedule to
provide global market participants the ability to trade during GTH
sessions that overlap with U.S. domestic holidays. Particularly, the
Exchange believes this proposal allows market participants to respond
to international market conditions that may occur during the time the
U.S. markets are closed due to a domestic holiday notwithstanding that
global markets are still operating. The proposed change also further
maximizes the overlap in time that SPX and VIX are open alongside the
related futures contracts, as futures markets, including CFE, follow a
modified holiday trading hours schedule that aligns with the Exchange's
proposal.\19\
---------------------------------------------------------------------------
\18\ See Securities Exchange Act Release No. 34-73017 (September
8, 2014), 79 FR 54758 (September 12, 2014) (SR-CBOE-2014-062).
\19\ For example, the Exchange notes that CFE follows a holiday
schedule that includes an extended trading hours session for VIX
future that begin at 6:00 p.m. on the calendar day preceding a
domestic holiday through 11:30 a.m. on the holiday. See Rule
1202(b).
---------------------------------------------------------------------------
Trading Hours
The Exchange first proposes to amend Rule 5.1(c), which sets forth
the trading hours for the GTH session. Specifically, the Exchange
proposes to update Rule 5.1(c) to add a reference to the holiday hours
set forth in Rule 5.1(d) (as discussed more fully below), as an
exception to the otherwise codified GTH hours set forth under Rule
5.1(c). The Exchange also proposes to eliminate the language that
provides that a GTH session following a holiday will begin at 12:00
a.m. (unless the holiday is observed on a Friday, in which case the GTH
session begins at 8:15 p.m. on Sunday). Particularly, the Exchange
proposes to allow the GTH session that immediately follows a holiday to
start at the same time as GTH sessions on non-holidays (i.e., start at
8:15 p.m.).
The Exchange next proposes to amend Rule 5.1(d) to adopt modified
trading schedules for domestic \20\ and
[[Page 68705]]
international \21\ holidays. First, the Exchange proposes to adopt Rule
5.1(d)(1), which would outline the trading hours schedule for domestic
holidays and provide specifically that for Martin Luther King, Jr. Day,
Presidents' Day, Memorial Day, Independence Day, Labor Day, and
Thanksgiving Day (i.e., domestic holidays), the trading day following
the holiday will consist of the following three trading sessions: (i) A
GTH session from 8:15 p.m. on the calendar day preceding the holiday to
11:30 a.m. on the holiday, (ii) a GTH session from 8:15 p.m. on the
holiday, or if the holiday is on a Friday, on the Sunday following the
holiday, to 9:15 a.m. on the trading day and (iii) a RTH session on the
trading day. Proposed Rule 5.1(d)(1) would also make clear that there
will continue to be no RTH session on the day a domestic holiday is
observed.
---------------------------------------------------------------------------
\20\ Domestic holidays include Martin Luther King, Jr. Day,
Presidents' Day, Memorial Day, Independence Day, Labor Day and
Thanksgiving Day.
\21\ International holidays include Good Friday, Christmas Day
and New Year's Day.
---------------------------------------------------------------------------
The Exchange notes the proposed hours of operation for the GTH
session immediately preceding a RTH session that is closed due to a
domestic holiday overlaps with the hours of operation of many
international markets, which do not observe U.S. domestic holidays and
are therefore still open at this time. For example, markets in Asia
begin trading as early as 8:00 p.m. Eastern Standard Time and many
European markets close at 11:30 a.m. Eastern Standard Time.
Additionally, the proposed schedule is similar to the holiday schedule
followed by futures markets (which also closes at 11:30 a.m. on
holidays), thereby maximizing the overlap in time that SPX and VIX are
open alongside related futures contracts.\22\ As noted above, there
will also be a GTH trading session that starts on the holiday at 8:15
p.m. (instead of 12:00 a.m. next day) and proceeds as normal until 9:15
a.m. the following trading day (for non-Friday domestic holidays). This
proposed change also provides global market participants an additional
opportunity to trade in their local time and when their respective
market, that does not observe U.S. domestic holidays, may still be
operating.
---------------------------------------------------------------------------
\22\ See, e.g., CFE Rule 1202.
---------------------------------------------------------------------------
As noted above, these two GTH trading sessions are not considered
to occur on separate trading days and are considered part of the next
trading day (i.e., both GTH sessions will have the trade date of the
trading day following the holiday).\23\ As an example, the holiday GTH
session preceding Memorial Day will start at 8:15 p.m. on the Sunday
prior to Memorial Day and end at 11:30 a.m. on Memorial Day. The market
will then be closed at 11:30 a.m. on Memorial Day (Monday) (i.e., there
will be no RTH session on Memorial Day). The next GTH trading session
will begin at 8:15 p.m. on Memorial Day and proceed as normal until
9:15 a.m. on Tuesday, which will be followed by a normal RTH session
that begins as 9:30 a.m. on Tuesday. All trading from Sunday night
through Tuesday RTH market close is considered to be part of the
Tuesday trading day. The following also illustrates how the holiday
schedule applies for U.S. domestic holidays that are observed on a
Friday. For example, if Independence Day is observed on a Friday, the
trading day following the Friday holiday (Monday Trading Day) will
consist of three trading sessions: (1) A GTH session open from 8:15
p.m. on the Thursday preceding Independence Day to 11:30 a.m. on
Independence Day, (2) a GTH session from 8:15 p.m. on the Sunday
following Independence Day to 9:15 a.m. on the following Monday and (3)
a RTH session from 9:30 a.m. to 4:15 p.m. on Monday. All trading from
Thursday night through Friday, and from Sunday night through Monday RTH
market close is considered to be part of the Monday trading day.
---------------------------------------------------------------------------
\23\ Pursuant to Rule 6.4 (Reporting of Trades to OCC), all
transactions made on the Exchange during these sessions will
continue to be submitted for clearance to the Options Clearing
Corporation (``OCC'') in the same manner they are today. However, as
noted, such trades will have the trade date of the trading day
following the holiday.
---------------------------------------------------------------------------
The Exchange next proposes to adopt Rule 5.1(d)(2) which would
outline the trading hours schedule for international holidays and
provide specifically that for Good Friday, Christmas Day and New Year's
Day (i.e., international holidays), the trading day following the
holiday will consist of the following two trading sessions: (i) A GTH
session from 8:15 p.m. on the holiday, or if the holiday is observed on
a Friday, on the Sunday following the holiday, to 9:15 a.m. on the
trading day and (ii) a RTH session on the trading day. Proposed Rule
5.1(d)(2) would also make clear that there will continue to be no RTH
session on the day an international holiday is observed nor a GTH
session that immediately precedes the day an international holiday is
observed. The Exchange does not propose to adopt a GTH trading session
that immediately precedes an international holiday, as these holidays,
unlike domestic holidays, are observed not just by U.S. residents, but
by many global market participants. Therefore, many international
markets are also closed in observance of these international holidays.
Futures markets similarly do not provide an extended trading hours
session that precede certain international holidays.\24\ Just like
regular GTH trading sessions, a GTH trading session that starts on an
international holiday at 8:15 p.m., will be considered part of the next
trading day. The following illustrates the international holiday
schedule using Good Friday as an example. Particularly, there will be
no GTH session immediately preceding Good Friday (i.e., no GTH session
that starts on Thursday). Rather, the market will be closed from RTH
market close on the Thursday preceding Good Friday until the GTH
session that starts at 8:15 p.m. on the Sunday following Good Friday.
All trading from Sunday night through RTH market close on the following
Monday is for a trading day of Monday.\25\
---------------------------------------------------------------------------
\24\ See e.g., CFE Rule 1202, which provides, among other
things, that there will be no extended trading hours session
preceding New Year's Day and Christmas Day.
\25\ As a further example, if Christmas Day (December 25) is on
a Tuesday, there will be no GTH session that begins the preceding
Monday at 8:15 p.m. The Trading Day following Christmas Day would be
Wednesday, December 26 and would consist of two trading sessions:
(1) A GTH session from 8:15 p.m. on Christmas Day to 9:15 a.m. on
Wednesday and (2) a regular RTH session from 9:30 a.m. to 4:15 p.m.
on the Wednesday following Christmas Day. All trading from Tuesday
at 8:15 p.m. through RTH market close on Wednesday is considered to
be part of the Wednesday trading day (i.e., all transactions
executed during these two sessions will have a trade date of
December 26).
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Definitions
In connection with the proposed modified holiday trading schedule,
the Exchange proposes to amend the definition of ``business day'' and
``trading day'' under Rule 1.1 (Definitions). Effective November 21,
2021, ``business day'' and ``trading day'' will be defined as a day on
which the Exchange is open for trading during RTH and includes the RTH
session and the GTH session that immediately precedes it. Effective
November 21, 2021, the definition will also provide that if the
Exchange is not open for RTH on a day, then it will not be open for GTH
immediately preceding what would have otherwise been the RTH session on
that day. In light of the proposed modified holiday schedule for GTH
discussed above, the Exchange proposes to update the definition of
``business day'' and ``trading day''. Specifically, the Exchange
proposes to eliminate the following language ``[i]f the Exchange is not
open for Regular Trading Hours on a day, then it will not be open for
Global Trading Hours on
[[Page 68706]]
that day'' and in its place add language that clarifies that a business
day or trading day that immediately follows a domestic holiday pursuant
to Rule 5.1(d) includes the RTH session and the two GTH sessions that
immediately precede it. The Exchange believes the proposed amendments
to the definition add clarity and alleviate potential confusion in
connection with the proposed changes to the trading hours on holidays.
Entry of Orders, Quotes and Cancellations
The Exchange lastly proposes to update Rule 5.7(e), which provides
that after RTH market close, Users may cancel orders and quotes with
Time-in-Force of Good-til-Cancelled (``GTC'') \26\ or Good-til-Date
(``GTD'') \27\ that remain in the Book until 4:45 p.m. In light of the
proposed holiday schedule for GTH sessions on domestic holidays (i.e.,
GTH session will end at 11:30 a.m. on a domestic holiday (observed)),
the Exchange proposes to update Rule 5.7(e) to provide that on such
domestic holidays, users may cancel orders and quotes with Time-in-
Force of GTC or GTD until 11:45 a.m. The Exchange notes that the
proposed rule change would allow Users to cancel any GTC and GTD orders
until 11:45 a.m. on domestic holidays, not just orders in All Sessions
classes (i.e., SPX and VIX). The Exchange believes the proposed rule
change provides Users with additional flexibility to manage their
orders in all classes that remain in the Book following the market
close on holidays. In particularly, the Exchange notes that cancelling
a RTH Only GTC or GTD order at 11:30 a.m. on a domestic holiday has the
same effect as cancelling that order at 7:30 a.m. the following day--
ultimately it accommodates the User's goal of cancelling an order prior
to it potentially executing during the RTH Opening Process the
following morning.
---------------------------------------------------------------------------
\26\ See Rule 5.6(c). The terms ``Good-til-Cancelled'' and
``GTC'' mean, for an order so designated, if after entry into the
System, the order is not fully executed, the order (or unexecuted
portion) remains available for potential display or execution (with
the same timestamp) unless cancelled by the entering User, or until
the option expires, whichever comes first. Users may not designate
bulk messages as GTC.
\27\ See Rule 5.6(c). The terms ``Good-til-Date'' and ``GTD''
mean, for an order so designated, if after entry into the System,
the order is not fully executed, the order (or unexecuted portion)
remains available for potential display or execution (with the same
timestamp) until a date and time specified by the entering User
unless cancelled by the entering User. Users may not designate bulk
messages as GTD. A User may not designate a GTD order as Direct to
PAR.
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Market-Maker Rules
Current Rule 5.50(a) (Market-Maker Appointments) provides that a
Market-Maker's selected class appointment applies to classes during all
trading sessions. In other words, if a Market-Maker selects an
appointment in SPX options, for example, that appointment would apply
during both GTH and RTH (and thus, the Market-Maker would have an
appointment to make markets in SPX during GTH and RTH). As a result,
the Market-Maker continuous quoting obligations set forth in Rule
5.52(d) applies to the class for an entire trading day (including both
trading sessions). Pursuant to Rule 5.52(d), a Market-Maker must enter
continuous bids and offers in 60% of the series of the Market-Maker's
appointed classes, excluding any adjusted series, any intra-day add-on
series on the day during which such series are added for trading, any
Quarterly Option series, and any series with an expiration of greater
than 270 days.\28\ The Exchange calculates this requirement by taking
the total number of seconds the Market-Maker disseminates quotes in
each appointed class (excluding the series noted above) and dividing
that time by the eligible total number of seconds each appointed class
is open for trading that day. The Exchange also notes however, that
pursuant to Rule 5.52(d)(2)(E), the obligations apply only when the
Market-Maker is quoting in a particular class during a given trading
day and the obligations are not applicable to an appointed class if a
Market-Maker is not quoting in that appointed class. Accordingly, if a
Market-Maker does not wish to quote during the proposed new GTH
sessions (i.e., 8:15 p.m. (day prior to holiday) to 11:30 a.m.
(holiday) or 8:15 p.m. (holiday) to 11:59 p.m. holiday), then so long
as the Market-Maker doesn't log in and quote during those hours, the
time between 8:15 p.m. (day prior to holiday) and 11:30 a.m. (holiday)
and between 8:15 p.m. and 11:59 p.m. (holiday) won't be considered when
determining a Market-Maker's compliance with the quoting obligations.
Accordingly, the adoption of a modified trading schedule on holidays
will have a de minimis, if any, impact on a Market-Maker's continuous
quoting obligations, as they may continue to choose when to actively
quote and have their obligations to their appointed classes apply.
Moreover, selecting an appointment in SPX or VIX options will be
optional and within the discretion of a Market-Maker. Additionally,
Market-Makers have the opportunity to quote during the holiday GTH
trading hours (and receive the benefits of acting as a Market-Maker
with respect to transactions it effects during that time) without
obtaining an additional Trading Permit or creating additional
connections to the Exchange. Given this ease of access to the GTH
holiday trading sessions, the Exchange believes Market-Makers may be
encouraged to quote during the trading session, even as amended. The
Exchange believes Market-Makers will continue to have an incentive to
quote during the holiday GTH sessions given the significance of the SPX
and VIX within the financial markets, the expected demand, and given
that the related futures also trading during those hours (which may
permit execution of certain hedging strategies). The Exchange believes
continuing to extend a Market-Maker's appointment to GTH
notwithstanding the proposed holiday trading hours will enhance
liquidity during that trading session, which benefits all investors
during those hours. Therefore, the Exchange believes the proposed rule
change provides customer trading interest with a net benefit and
continues to maintain a balance of Market-Maker benefits and
obligations.
---------------------------------------------------------------------------
\28\ See Rule 5.52(d)(2).
---------------------------------------------------------------------------
The Exchange also does not anticipate any changes with respect to
the current Lead-Market-Makers (``LMMs'') structure used today during
GTH. More specifically, Rule 3.55 (LMMS) currently provides that the
Exchange may approve one or more Market-Makers to act as LMMs in each
class during GTH. Further, subparagraph (b) of Rule 5.55 (LMMs)
provides that if a LMM is approved to act as an LMM during GTH, then
the LMM must comply with the continuous quoting obligation and other
obligations of Market-Makers set forth in Rule 5.52(d)(2) but does not
have to comply with the obligations under Rule 5.55(a). Additionally,
subparagraph (a)(2)(B)(iv) of Rule 5.32 (Order and Quote Book
Processing, Display, Priority and Execution) provides that the DPM/LMM/
PMM participation entitlement does not apply during GTH. LMMs appointed
in the GTH holiday sessions will therefore continue to not be obligated
to satisfy heightened continuous quoting and opening quoting standards
during GTH, nor will they receive a benefit in exchange for satisfying
an obligation (i.e., LMMs do and will not receive a participation
entitlement during GTH, including during holiday trading hours). The
Exchange intends to adopt via a separate rule filing an incentive
program that
[[Page 68707]]
provides appointed LMMs a rebate if they meet certain heightened
continuous quoting standards during the GTH session, which includes GTH
holiday sessions. The Exchange believes the such program will encourage
LMMs to provide significant liquidity during GTH, including during the
proposed holiday trading hours.
Discussion
The Exchange notes that the proposed rule change to adopt a
modified holiday trading schedule makes no changes to the trading rules
applicable to GTH. The GTH trading session, including GTH holiday
sessions, will continue to be separate trading sessions from RTH and
the rules that currently apply (or don't apply) to the current GTH
session will continue to apply (or not apply) to the GTH holiday
session.\29\ The Exchange will continue to use the same servers and
hardware during the GTH holiday sessions as it uses for RTH and GTH
today. Further, TPHs may continue to use the same ports and connections
to the Exchange for all trading sessions. The Book used during the GTH
holiday sessions will also be the same Book used currently during RTH
and GTH. The Exchange also notes the following:
---------------------------------------------------------------------------
\29\ For example, business conduct rules in Chapter 8 and rules
related to doing business with the public in Chapter 9 will continue
to apply during the GTH holiday session. Additionally, a broker-
dealer's due diligence and best execution obligations apply during
the GTH holiday session. As there will still be no open outcry
trading on the floor during GTH, Chapter 5, Section G will continue
not to apply as such rules pertain to manual order handling and
open-outcry trading.
---------------------------------------------------------------------------
All TPHs will continue to be allowed to, but will not be
required to, participate during GTH holiday trading hours.\30\ As noted
above, while a Market-Maker's appointment to an All Sessions class will
apply to that class whether it quotes in series in that class or not
during holiday trading hours, the Exchange believes any additional
burden related to the application of a Market-Maker's quoting
obligation to the additional time added to those hours will be de
minimis. The Exchange believes even if a Market-Maker elects to not
quote during GTH holiday trading hours, its ability to satisfy its
continuous quoting obligation will not be substantially impacted given
the few classes that will be listed for trading during GTH.
---------------------------------------------------------------------------
\30\ In order to participate in GTH, even as amended, a Trading
Permit Holder (``TPH'') must have a letter of guarantee from a
Clearing TPH that is properly authorized by the Options Clearing
Corporation (``OCC'') to operate during the GTH session. See Cboe
Options Rule 3.61.
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The Exchange will continue to use the same connection
lines, message formats, and feeds during RTH and GTH, including GTH
holiday sessions.\31\ TPHs may use the same ports and EFIDs \32\ for
each trading session.\33\ Accordingly, the Exchange expects TPHs that
want to trade during the holiday trading hours to have minimal
preparation.
---------------------------------------------------------------------------
\31\ The same telecommunications lines used by TPHs during RTH
and/or GTH today may be used during GTH, even as extended, and these
lines will be connected to the same application server at the
Exchange during both trading sessions.
\32\ The term ``EFID'' means an Executing Firm ID. The Exchange
assigns an EFID to a TPH, which the System uses to identify the TPH
and the clearing number for the execution of orders and quotes
submitted to the System with that EFID.
\33\ A TPH may elect to have separate ports or EFIDs for each
trading session, but the Exchange will not require that.
---------------------------------------------------------------------------
The same opening process will continue to be used to open
GTH.
Order processing will operate in the same manner as it
does during RTH and the current GTH session. There will be no changes
to the ranking, display, or allocation algorithms rules.
There will be no changes to the processes for clearing,
settlement, exercise, and expiration.\34\
---------------------------------------------------------------------------
\34\ The Exchange has held discussions with the Options Clearing
Corporation, which is responsible for clearance and settlement of
all listed options transactions and has informed the Exchange that
it will be able to clear and settle all transactions that occur on
the Exchange during the proposed holiday trading hours subject to
its existing requirements for transactions executed during extended
and overnight trading sessions. See Exchange Act Release No. 74268
(February 12, 2015), 80 FR 8917 (February 19, 2015) (SR-OCC-2014-
024) (approval of proposed rule change concerning extended and
overnight trading sessions), which applies to both index options and
index future products.
---------------------------------------------------------------------------
The Exchange will report Exchange quotation and last sale
information to the Options Price Reporting Authority (``OPRA'')
pursuant to the Plan for Reporting of Consolidated Options Last Sale
Reports and Quotation Information (the ``OPRA Plan'') during the
proposed additional holiday hours in the same manner it currently
reports this information to OPRA during RTH and GTH today.\35\ The
Exchange will also continue to disseminate an opening quote and trade
price through OPRA during the proposed additional holiday trading hours
(as it does for RTH and GTH today). Therefore, all TPHs that elect to
trade during the proposed holiday trading hours will have access to
quote and last sale information during that trading session. Exchange
proprietary data feeds will also continue to be disseminated during
holiday trading hours using the same formats and delivery mechanisms
with which the Exchange disseminates them during RTH and GTH today. Use
of these proprietary data feeds during holiday trading hours will be
optional (as they are today during RTH and GTH).\36\
---------------------------------------------------------------------------
\35\ The OPRA Plan provides for the collection and dissemination
of last sale and quotation information on options that are trading
on the participant exchanges. The OPRA Plan is a national market
system plan approved by the Commission pursuant to Section 11A of
the Act and Rule 608 thereunder. See Securities Exchange Act Release
No. 17638 (March 18, 1981). The full text of the OPRA Plan is
available at https://www.opraplan.com. All operating U.S. options
exchanges participate in the OPRA Plan. The Exchange will report its
best bid and offer and executed trades to OPRA during the proposed
additional holiday trading hours in the same manner that they are
reported during RTH and GTH today.
\36\ Any fees related to receipt of the OPRA data feed during
GTH would be included on the OPRA fee schedule. Any fees related to
receipt of the Exchange's proprietary data feeds during GTH will be
included on the Exchange's fee schedule (and will be included in a
separate rule filing) or the Exchange's market data website, as
applicable.
---------------------------------------------------------------------------
The same TPHs that are required to maintain connectivity
to a backup trading facility during RTH and GTH today will be required
to do so during the proposed holiday trading hours.\37\ Because the
same connections and servers will be used for all trading sessions,
including any holiday trading hours, a TPH will not be required to take
any additional action to comply with this requirement, regardless of
whether the TPH chooses to trade during holiday trading hours.
---------------------------------------------------------------------------
\37\ See Rule 5.24.
---------------------------------------------------------------------------
The Exchange will process all clearly erroneous trade
breaks during holiday trading hours in the same manner it does during
RTH and GTH today and will have Exchange officials available to do so.
The Exchange will perform all necessary surveillance
coverage during holiday trading hours.
The Exchange may halt trading during GTH holiday sessions
in the interests of a fair and orderly market in the same manner it may
during RTH and GTH today pursuant to Rule 5.20. Among the factors that
may be considered in making the foregoing determinations are whether
there has been an activation of price limits on futures exchanges or
the halt of trading in related futures with respect to index
options.\38\
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\38\ See Rule 5.20(a)(6). As discussed above, futures markets
already follow a modified holiday trading schedule similar to what
the Exchange is proposing. As such, should a halt of trading in
related futures occur during the time a GTH holiday session is open,
then the Exchange may consider whether to halt during that session,
just as it may do during regular GTH (and RTH) sessions.
---------------------------------------------------------------------------
Rule 5.22 (Market-wide Trading Halts due to Extraordinary
Market Volatility) will continue to not apply during GTH, including the
proposed GTH holiday sessions. Under Rule 5.22, the Exchange will halt
trading in all classes whenever a market-wide trading halt (commonly
known as a circuit breaker) is initiated in response to
[[Page 68708]]
extraordinary market conditions. Rule 5.22(b)(1) states that the
Exchange will halt trading for 15 minutes if a Level 1 or Level 2
Market Decline occurs after 9:30 a.m. and up to and including 3:25 p.m.
(or 12:25 p.m. for an early scheduled close). Additionally, the
Exchange will not halt trading if a Level 1 or Level 2 Market Decline
occurs after 3:25 p.m. (or 12:25 p.m., if applicable). Rule 5.22(b)(2)
states that the Exchange will halt trading until the next trading day
if a Level 3 Market Decline occurs. The Exchange notes that Rule
5.22(b)(1) will continue not to apply during the proposed GTH holiday
sessions, just as it does not apply during GTH today, as the beginning
of the GTH holiday session will occur past the 15-minute halt window
for a Level 1 or Level 2 Market Decline. Rule 5.22(b)(2) will also not
apply to the GTH holiday session, as the GTH holiday sessions are still
considered a different (i.e., the next) trading day than the preceding
RTH session (even though a GTH holiday session may begin on the same
calendar day as such a halt). As such, if a Level 3 Market Decline
occurs at any time during the RTH session immediately preceding a
holiday, the Exchange will halt trading in SPX and VIX only until the
start of the GTH holiday session. The Exchange believes that it is
appropriate to continue to not apply Rule 5.22(b) because, even if
stock trading was halted at the close of the previous trading day, the
condition that led to the halt is likely to have been resolved by the
time the GTH holiday session starts given the length of time between
the close of the previous trading day and the proposed start time of
GTH holiday session (approximately 4 hours). Moreover, current Rule
5.20(a) continues to allow the Exchange to consider unusual conditions
or circumstances when determining whether to halt trading during GTH.
To the extent a circuit breaker caused a stock market to be closed at
the end of the prior trading day, the Exchange could consider, for
example, whether it received notice from stock exchanges that trading
was expected to resume (or not) the next trading day (after the
holiday) in determining whether to halt trading during a GTH holiday
session. Because the stock markets would not begin trading until after
GTH opens, the Exchange believes it should be able to open a GTH
holiday session rather than waiting up to a few days to see whether
stock markets open to allow investors to participate in GTH if the
Exchange believe such trading can occur in a fair and orderly manner
based on then-existing circumstances, not circumstances that existed
many hours earlier.
The Exchange understands that systems and other issues may arise
and is committed to resolving those issues as quickly as possible,
including during the new GTH holiday trading hours. Thus, the Exchange
will have appropriate staff on-site and otherwise available as
necessary during the proposed GTH holiday sessions to handle any
technical and support issues that may arise during those hours.
Additionally, the Exchange will have personnel available to address any
trading issues that may arise during the additional GTH trading hours.
The Exchange is also committed to fulfilling its obligations as a self-
regulatory organization at all times, including during GTH, and will
have appropriately trained, qualified regulatory staff in place during
GTH holiday sessions to the extent it deems necessary to satisfy those
obligations. The Exchange believes its surveillance procedures are
adequate to properly monitor trading during the proposed GTH holiday
sessions but notes if additional changes are needed in the future, it
will revise such procedures to the extent necessary.
Implementation Date
The Exchange will announce the implementation date of the proposed
rule change in accordance with Rule 1.5. The Exchange also notes that
it first announced its proposal to adopt a modified GTH holiday
schedule to market-participants via a Trade Desk notice earlier this
year.\39\ Since then, the Exchange has issued numerous updated notices,
FAQs and detailed technical specifications.
---------------------------------------------------------------------------
\39\ See Exchange Notice C2021032501 ``Cboe Options Exchange
Releases Technical Specifications in Support of Extended Global
Trading Hours''.
---------------------------------------------------------------------------
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.\40\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \41\ 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) \42\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\40\ 15 U.S.C. 78f(b).
\41\ 15 U.S.C. 78f(b)(5).
\42\ Id.
---------------------------------------------------------------------------
In particular, the Exchange believes the proposed rule change to
adopt a modified holiday schedule will remove impediments to and
perfect the mechanism of a free and open market and a national market
system and will not significantly affect the protection of investors or
the public interest. Particularly, the proposed rule change provides an
enhanced investment opportunity within the options trading industry
that is consistent with the continued globalization of the securities
markets and closer aligns the Exchange's trading hours with extended
trading hours of futures exchanges and also market hours of other
geographic regions. The adoption of a modified holiday trading schedule
is a competitive initiative designed to improve the Exchange's
marketplace for the benefit of investors and allow the Exchange to
provide a competitive marketplace for market participants to trade
certain products for an additional period of time outside of RTH. More
specifically, the adoption of GTH holiday sessions are designed to
increase the overlap in time that SPX and VIX options are open
alongside the related futures contracts and further aims to provide
global market participants with expanded access to trade the products
offered during GTH. As discussed above, the proposed modified holiday
trading schedule is designed to better help meet growing investor
demand for the ability to manage risk more efficiently, react to global
macroeconomic events as they are happening and adjust SPX and VIX
options positions nearly around the clock. Indeed, the proposal allows
market participants operating in geographic locations that do not
observe U.S. domestic holidays to respond to international market
conditions that may occur during such holidays. The proposed rule
change also provides a mechanism for the Exchange to more effectively
compete with exchanges located outside of the United States. Global
markets have become increasingly interdependent and linked,
[[Page 68709]]
both psychologically and through improved communications technology.
This has been accompanied by an increased desire among investors to
have access to U.S.-listed exchange products outside of regular trading
hours, and the Exchange believes this desire extends to its exclusively
listed products. Indeed, market participants in the Asia Pacific region
and Europe have expressed their interest in having the ability to
participate in the GTH session during their market hours, which
coincide with the proposed holiday trading schedule. As described
above, markets in Asia begin trading as early as 8:00 p.m. Eastern
Standard Time and many European markets close at 11:30 a.m. Eastern
Standard Time. Accordingly, the proposed GTH holiday session provides
market participants an additional opportunity to trade in their local
time when their respective market (that does not observe U.S. domestic
holidays) is still operating. The Exchange therefore believes that the
proposed rule change is reasonably designed to provide an appropriate
mechanism for additional trading hours available outside of its current
RTH and GTH sessions, while providing for appropriate Exchange
oversight pursuant to the Act, trade reporting, and surveillance.
The Exchange also notes that it, along with some of its affiliated
options exchanges, already allow for trading outside of the hours of
RTH (i.e., during the current GTH trading session).\43\ Furthermore,
the Commission has authorized U.S. stock exchanges to be open for
trading outside of regular trading hours.\44\ Additionally, as noted
above, futures exchanges also operate during the hours proposed to be
adopted, including the Exchange's affiliate, CFE, which is open during
the holiday hours the Exchange proposes to adopt.\45\
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\43\ See Cboe Options Rule 5.1, C2 Rule 5.1 and Cboe EDGX Rule
21.2.
\44\ See e.g., Cboe BZX Exchange, Inc. Rule 1.5, which provides
for an After Hours Trading Session which is a trading session from
4:00 p.m.-8:00 p.m. and follows the Regular Trading Hours session
which takes place between 9:30 a.m. and 4:00 p.m. See also Exchange
Act Release No. 59963 (May 21, 2009), 74 FR 25787 (May 29, 2009)
(SR-BATS-2009-012) (Notice of Filing and Immediate Effectiveness of
Proposed Rule Change to Amend BATS Rules to Offer an After Hours
Trading Session).
\45\ See, e.g., CFE Rule 1202, which outlines the trading
schedule for futures on the Cboe Volatility Index and includes
holiday trading sessions that begin at 6:00 p.m. the day prior to a
holiday and ends at 11:30 a.m. on the holiday and another extending
trading hours session that begins at 6:00 p.m. on the holiday.
---------------------------------------------------------------------------
As described in detail above, the Exchange's trading rules that
apply to GTH today will continue to apply during the proposed GTH
holiday trading hours, which rules have all been previously filed with
the Commission as being consistent with the goals of the Act. Rules
that will continue to apply during the proposed holiday trading hours
include rules that protect public customers, impose best execution
requirements on TPHs, and prohibit acts and practices that are
inconsistent with just and equitable principles of trade as well as
fraudulent and manipulative practices. The Exchange's rules will also
continue to provide opportunities for price improvement during the
proposed holiday trading hours and applies the same allocation and
priority rules that are available to the Exchange during RTH and GTH
today. The Exchange believes, therefore, that the rules that will apply
during the proposed holiday trading hours will continue to promote just
and equitable principles of trade and prevent fraudulent and
manipulative acts.
The proposed rule change clearly identifies the ways in which
trading during the proposed holiday hours will be different from
trading during current GTH (such as clarifying the trading sessions
that will be considered part of the trading day following a holiday).
This ensures that investors are aware of any differences relating to
the proposed additional trading hours. Additionally, the Exchange notes
that it will continue to require that disclosures be made to customers
describing potential risks, which will continue to further protect
investors from any additional risks related to trading during GTH.\46\
The Exchange believes that, with these disclosures, GTH remains
appropriate and beneficial. The All Sessions order \47\ and RTH Only
order \48\ will continue to protect investors by permitting investors
who wish only to trade during RTH from having orders or quotes execute
outside of the RTH session, including during the proposed holiday GTH
trading hours. Consistent with the goal of investor protection, the
Exchange will not allow market orders during the proposed holiday GTH
trading hours due to the expected increased volatility and decreased
liquidity during these hours, just as it does not currently allow such
orders during GTH today for the same reasons.
---------------------------------------------------------------------------
\46\ See Cboe Options Rule 9.20.
\47\ An All Sessions order is an order a User designates as
eligible to trade during both GTH and RTH. See Cboe Options Rule
5.6(c).
\48\ An RTH Only order is an order a User designates as eligible
to trade only during RTH or not designated as All Sessions. See Cboe
Options Rule 5.6(c).
---------------------------------------------------------------------------
Additionally, the Exchange believes that the proposed rule change
will foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in securities, as the Exchange will
ensure that adequate staffing is available during the proposed
additional GTH holiday hours (as it does during current GTH hours) to
provide appropriate trading support during those hours, as well as
Exchange officials to make any necessary determinations under the rules
during GTH (such as trading halts and trade nullification for obvious
errors). The Exchange is also committed to continuing to fulfill its
obligations as a self-regulatory organization at all times, including
during the proposed holiday hours. The Exchange believes its
surveillance procedures are adequate to properly monitor trading during
the proposed holiday trading hours. Clearing and settlement processes
will be the same for transactions executed during the proposed holiday
GTH trading hours as they are for transactions executing during RTH or
GTH trading session today.
The proposed rule change further removes impediments to a free and
open market and does not unfairly discriminate among market
participants, as all TPHs with access to the Exchange may trade during
the proposed holiday trading hours using the same connection lines,
message formats data feeds, and EFIDs they use during RTH and GTH
today, minimizing any preparation efforts necessary to participate
during the proposed hours. TPHs will continue not be required to trade
during GTH.
Additionally, as discussed above, while the proposed rule change
increases the total time during which a Market-Maker with an
appointment has the ability to quote in a selected class, the Exchange
believes this increase has a de minimis, if any, impact on Market-
Makers given that a Market-Maker's compliance with its continuous
quoting obligation is based on all classes in which it has an
appointment in the aggregate and based only when a Market-Maker is
quoting it its appointed classes. Indeed, as noted above, if a Market-
Maker who quotes during the GTH session today does not wish to quote
during the proposed holiday GTH trading hours, then so long as such
Market-Maker does not log into the system and quote during those hours
(or whatever other time it wishes to begin quoting), there will be no
impact with respect to the Market-Maker's ability to satisfy its
continuous quoting obligations. Selecting an appointment in SPX and/or
VIX options will continue to
[[Page 68710]]
be optional and within the discretion of a Market-Maker. Additionally,
Market-Makers continue to have the opportunity to quote during GTH and
the proposed holiday GTH trading hours (and receive the benefits of
acting as a Market-Maker with respect to transactions it effects during
that time) without obtaining an additional Trading Permit or creating
additional connections to the Exchange. The Exchange believes Market-
Makers will have an incentive to quote in SPX and VIX during the
holiday GTH trading hours given the significance of these products
within the financial markets, the expected demand, and given that the
related futures are also trading during those hours on holidays (which
may permit execution of certain hedging strategies). The Exchange
believes continuing to extend a Market-Maker's appointment to the GTH
holiday trading hours will enhance liquidity during that time, which
benefits all investors during those hours. The Exchange believes that
any slight additional burden of extending the continuous quoting
obligation to the additional hours being added in the eligible classes
would be outweighed by the Exchange's efforts to add liquidity during
the proposed holiday GTH trading session in All Sessions classes, the
minimal preparation a Market-Maker may require to participate in the
holiday GTH trading session, and the benefits to investors that may
result from that liquidity. Therefore, the Exchange believes the
proposed rule change provides customer trading interest with a net
benefit and continues to maintain a balance of Market-Maker benefits
and obligations.
The proposed rule change is also consistent with Section 11A of the
Act and Regulation NMS thereunder, because it continues to provide for
the dissemination of transaction and quotation information during GTH,
including holiday GTH trading hours, through OPRA, pursuant to the OPRA
Plan, which the Commission approved and indicated to be consistent with
the Act. While Section 11A and Regulation NMS contemplate an integrated
system for trading securities, they also envision competition between
markets, and innovation that provides marketplace benefits to attract
order flow to an exchange does not result in unfair competition if
other markets are free to compete in the same manner.\49\ As discussed,
the Exchange, as well as other options exchanges, already offer trading
sessions outside of regular trading hours.\50\
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\49\ See Exchange Act Release Nos. 73704 (November 28, 2014), 79
FR 72044 (December 4, 2014) (SR-CBOE-2014-062) (approval of proposed
rule change for Cboe Options to extend its trading hours outside of
Regular Trading Hours); and 29237 (May 24, 1991), 46 FR 24853 (May
31, 1991) (SR-NYSE-1990-052 and SR-NYSE-1990-053) (approval of
proposed rule change for NYSE to extend its trading hours outside of
Regular Trading Hours). The Exchange also notes that no other U.S.
options exchange provides for trading SPX or VIX options outside of
RTH, so there is currently no need for intermarket linkage during
GTH, including GTH holiday trading hours. If another Cboe Affiliated
Exchange lists any options authorized to trade during GTH outside of
RTH, trading of such options on the Exchange would comply with
linkage rules.
\50\ See, e.g., Cboe Options Rule 5.1, C2 Rule 5.1 and Cboe
EDGX. Rule 21.2.
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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 adopt a modified holiday
trading schedule will impose any burden on intramarket competition that
is not necessary or appropriate in furtherance of the purposes of the
Act, because all TPHs will be able, but not be required, to participate
during the additional trading hours, and will be able to do so using
the same connectivity as they use during RTH and GTH today. As
discussed, participation in GTH, including the proposed modified
holiday trading schedule, will be voluntary and within the discretion
of TPHs. While the proposed rule change increases the total time during
which a Market-Maker with either a SPX and/or VIX appointment may be
able quote, the Exchange believes the proposal will have a de minimis,
if any, impact on a Market-Maker's continuous quoting obligations, as
they may continue to choose when to actively quote and have their
obligations to their appointed classes apply. Furthermore, selecting an
appointment in these options classes will be optional and within the
discretion of a Market-Maker. Additionally, Market-Makers continue to
have the opportunity to quote during GTH and any holiday trading hours
(and receive the benefits of acting as a Market-Maker with respect to
transactions it effects during that time) without obtaining an
additional Trading Permit or creating additional connections to the
Exchange. The Exchange believes that extending the continuous quoting
obligation to the additional trading hours being added is also
outweighed by the Exchange's efforts to add liquidity during the entire
GTH trading session in All Sessions classes, the minimal preparation a
Market-Maker may require to participate in the GTH trading session, and
the benefits to investors that may result from that liquidity.
Therefore, the Exchange believes the proposed rule change provides
customer trading interest with a net benefit and continues to maintain
a balance of Market-Maker benefits and obligations.
The Exchange does not believe that the proposed rule change to
adopt a modified holiday schedule will impose any burden on intermarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act, because the proposed rule change is a competitive
initiative that will benefit the marketplace and investors.
Additionally, all options exchanges are free to compete in the same
manner. The Exchange further believes that the same level of
competition among options exchanges will continue during RTH. Because
the Exchange will continue to make only exclusively listed products
available for trading during GTH, including GTH holiday trading hours,
and because any All Sessions orders that do not trade during GTH will
be eligible to trade during the RTH trading sessions in the same manner
as all other orders submitted during RTH, the proposed rule change will
have no effect on the national best prices or trading during RTH. The
Exchange also believes the proposed rule change could further increase
its competitive position outside of the United States by providing
investors with an additional investment vehicle with respect to their
global trading strategies during times that better correspond with
parts of regular trading hours outside of the United States.
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
[[Page 68711]]
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 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-2021-068 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-2021-068. 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-2021-068 and should be submitted on
or before December 27, 2021.
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\51\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\51\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-26244 Filed 12-2-21; 8:45 am]
BILLING CODE 8011-01-P
