Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 4.5, 48045-48049 [2022-16763]
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Federal Register / Vol. 87, No. 150 / Friday, August 5, 2022 / Notices
renewal alternative on land use;
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After comparing the impacts of the
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Dated: July 29, 2022.
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Christopher M. Regan,
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[FR Doc. 2022–16627 Filed 8–4–22; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–95398; File No. SR–CBOE–
2022–040]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 4.5
lotter on DSK11XQN23PROD with NOTICES1
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
17:20 Aug 04, 2022
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
Rule 4.5. 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/CBOELegalRegulatory
Home.aspx), at the Exchange’s Office of
the Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The proposed rule change amends
Rule 4.5(d). Specifically, the Exchange
1 15
August 1, 2022.
VerDate Sep<11>2014
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 29,
2022, Cboe Exchange, Inc. (‘‘Exchange’’
or ‘‘Cboe Options’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
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48045
proposes to amend Rule 4.5(d)(6) to
account for conflicts between different
provisions within the Short Term
Option Series Rules and make other
clarifying changes.
In 2021, the Exchange amended Rule
4.5 to limit the intervals between strikes
in equity options listed as part of the
Short Term Option Series Program,
excluding Exchange-Traded Fund
Shares and ETNs, that have an
expiration date more than twenty-one
days from the listing date (‘‘Strike
Interval Proposal’’).5 The Strike Interval
Proposal adopted new subparagraph
(d)(6), which included a table that
intended to specify the applicable strike
intervals that would supersede
subparagraph (d)(5) 6 for Short Term
Option Series in equity options,
excluding options on exchange-traded
fund shares and on exchange-traded
notes, which have an expiration more
than 21 days from the listing date. The
Strike Interval Proposal was designed to
reduce the density of strike intervals
that would be listed in later weeks,
within the Short Term Option Series
Program, by utilizing limitations for
intervals between strikes that have an
expiration date more than 21 days from
the listing date.
The Exchange proposes to amend
Rule 4.5(d)(6) to clarify the current rule
text and amend the application of the
table to account for potential conflicts
within the Short Term Option Series
Rules. Currently, Rule 4.5(d)(6) provides
that notwithstanding subparagraph
(d)(5), when Short Term Option Series
in equity options (excluding options on
ETFs and ETNs) have an expiration
more than 21 days from the listing date,
the strike interval for each option class
will be based on the following table:
5 See Securities Exchange Act Release No. 91456
(April 1, 2021), 86 FR 18090 (April 7, 2021) (SR–
CBOE–2021–019).
6 Rule 4.5(d)(5) states the interval between strike
prices on Short Term Option Series may be: (a)
$0.50 or greater where the strike is less than $100
and $1 or greater where the strike price is between
$100 and $150 for all classes that participate in the
Short Term Option Series Program; (b) $0.50 or
greater for classes that trade in one dollar
increments in non-Short Term Options and that
participate in the Short Term Option Series
Program; or (c) $2.50 or greater where the strike
price is above $150. A non-Short Term Option that
is on a class that has been selected to participate
in the Short Term Option Series Program is referred
to as a ‘‘Related non-Short Term Option.’’
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Federal Register / Vol. 87, No. 150 / Friday, August 5, 2022 / Notices
Share price 7
Tier
Average daily volume
Less than $25
1 ........
2 ........
3 ........
Greater than 5,000 ...............................................
Greater than 1,000 to 5,000 .................................
0 to 1,000 .............................................................
First, the Exchange proposes to add
the phrase ‘‘which specifies the
applicable interval for listing’’ to the
end of the first sentence of subparagraph
(d)(6). The table within that
subparagraph provides for the listing of
intervals based on certain parameters
(average daily volume and share price).
The Exchange proposes to add the
phrase ‘‘which specifies the applicable
interval for listing’’ to clarify that the
only permitted intervals are as specified
in the table within subparagraph (d)(6),
as proposed to be amended.
$25 to less
than $75
$0.50
1.00
2.50
$75 to less
than $150
$1.00
1.00
5.00
Second, the Exchange proposes to
amend the table in subparagraph (d)(6)
to address situations in which there is
a conflict between applying the
intervals in subparagraph (d)(5) and the
table in subparagraph (d)(6). Today,
there are instances where a conflict is
presented as between the application of
the table within subparagraph (d)(6) and
the rule text within subparagraph (d)(5)
with respect to the correct interval. To
address these potential conflicts, the
Exchange proposes that to the extent
there is a conflict between applying the
$1.00
1.00
5.00
$150 to less
than $500
$5.00
5.00
5.00
$500 or
greater
$5.00
10.00
10.00
current table within subparagraph (d)(6)
and the rule text within subparagraph
(d)(5), the greater interval would apply.
To reflect this within the Rules, the
Exchange proposes to amend the table
in subparagraph (d)(6) to specify what
the greater interval would be, and thus
the interval the Exchange would apply,
in the event of any possible conflict
between the two rule provisions.
Specifically, the proposed rule change
amends the table as follows:
Share price
Tier
1 ...............
2 ...............
Average daily
volume
Greater than
5,000.
Greater than
1,000 to
5,000.
$25 to less
than $75
Less than $25
$0.50 for strikes less than $100 in Short
Term Option Series Program classes and
classes that trade in $1 increments in
non-Short Term Options.
$1.00 for strikes between $100 and $150 for
classes that do not otherwise trade in
$1.00 increments in non-Short Term Options.
$2.50 for strikes greater than $150 ...............
$1.00 for strikes less than $150 ....................
$2.50 for strikes greater than $150 ...............
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3 ...............
0 to 1,000 ......
$2.50 ..............................................................
$75 to less
than $150
$150 to less
than $500
$500 or
greater
$1.00 for
strikes less
than $150
$1.00 for
strikes less
than $150
$5.00
$5.00
$2.50 for
strikes greater
than $150
$2.50 for
strikes greater
than $150
........................
........................
........................
$1.00 for
strikes less
than $150
$2.50 for
strikes greater
than $150
$5.00
........................
$1.00 for
strikes less
than $150
$2.50 for
strikes greater
than $150
$5.00
........................
$5.00
........................
$10.00
........................
........................
$5.00
$10.00
Below are some examples to
demonstrate the application of the
proposed table:
Example 1: Assume a Tier 1 stock that
closed on the last day of Q1 with a
quarterly share price higher than $75
but less than $150. Therefore, utilizing
the current table within subparagraph
(d)(6), the interval would be $1.00 for
strikes added during Q2 even for strikes
above $150. However, subparagraph
(d)(5) provides that the Exchange may
list a Short Term Option Series at $2.50
intervals where the strike price is above
$150. In other words, there is a potential
conflict between the permitted strike
intervals above $150 during Q2. In this
example, current subparagraph (d)(6)
would specify a $1.00 interval whereas
current subparagraph (d)(5) would
specify a $2.50 interval. Consistent with
selecting the greater interval (from
current subparagraph (d)(5)), the
permissible strike interval in this
scenario would be $2.50 as set forth in
the proposed table. Therefore, during
Q2, the following strikes would be
eligible to list: $152.50 and $157.50. For
strikes less than $150, the following
strikes would be eligible to list during
Q2: $149 and $148 because Short Term
Option Series with expiration dates
more than 21 days from the listing date
as well as Short Term Option Series
with expiration dates less than 21 days
from the listing date would both be
eligible to list $1 intervals pursuant to
both subparagraphs (d)(5) and (d)(6).
Example 2: Assume a Tier 2 stock that
closed on the last day of Q1 with a
quarterly share price less than $25.
Therefore, utilizing the current table
within subparagraph (d)(6), the interval
would be $1.00 for strikes added during
Q2 even for strikes above $25. However,
subparagraph (d)(5) provides that the
Exchange may list a Short Term Option
Series at $0.50 intervals where the strike
is less than $100, at $1.00 intervals
where the strike price is between $100
and $150, and at $2.50 intervals where
7 Share Price is the closing price on the primary
market on the last day of the calendar quarter. In
the event of a corporate action, the Share Price of
the surviving company is utilized. The Average
Daily Volume is the total number of option
contracts traded in a given security for the
applicable calendar quarter divided by the number
of trading days in the applicable calendar quarter.
Beginning on the second trading day in the first
month of each calendar quarter, the Average Daily
Volume is calculated by utilizing data from the
prior calendar quarter based on Customer-cleared
volume at OCC. For options listed on the first
trading day of a given calendar quarter, the Average
Daily Volume is calculated using the quarter prior
to the last trading calendar quarter. See Rule
4.5(d)(6)(A) and (B).
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17:20 Aug 04, 2022
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Federal Register / Vol. 87, No. 150 / Friday, August 5, 2022 / Notices
the strike price is above $150. In other
words, there is a potential conflict
between the permitted strike intervals
below $100 and above $150 during Q2.
In this example, current subparagraph
(d)(6) would specify a $1.00 interval for
strikes below $100 whereas current
subparagraph (d)(5) would specify a
$0.50 interval. Consistent with selecting
the greater interval (from current
subparagraph (d)(6)), the permissible
strike interval in this scenario for strikes
below $100 would be $1.00 as set forth
in the proposed table. For strikes
between $100 and $150, there is no
conflict, as both provisions would
provide $1.00 intervals for those strikes.
For strikes above $150, current
subparagraph (d)(6) would specify a
$1.00 interval for strikes above $150
whereas current subparagraph (d)(5)
would specify a $2.50 interval.
Consistent with selecting the greater
interval (from current subparagraph
(d)(5)), the permissible strike interval in
this scenario for strikes above $150
would be $2.50 as set forth in the
proposed table.
Example 3: Assume a Tier 3 stock that
closed on the last day of Q1 with a
quarterly share price less than $25.
Therefore, utilizing the current table
within subparagraph (d)(6), the interval
would be $2.50 for all strikes added
during Q2. However, subparagraph
(d)(5) provides that the Exchange may
list a Short Term Option Series at $0.50
intervals where the strike price is less
than $100, $1.00 intervals where the
strike price is between $100 and $150,
and $2.50 intervals where the strike
price is above $150. In other words,
there is a potential conflict between the
permitted strike intervals below $150
during Q2 (there is no conflict for
strikes above $150, as both provisions
provide for a $2.50 strike interval).
Consistent with selecting the greater
interval (from current subparagraph
(d)(6)), the permissible strike interval in
this scenario for strikes below $150
would be $2.50 as set forth in the
proposed table.8
Third, the Exchange proposes to
delete the last sentence of the
introductory paragraph of subparagraph
(d)(6), which states ‘‘[t]he below table
indicates the applicable strike intervals
and supersedes subparagraph (d)(4)
above, which permits additional series
to be opened for trading on the
Exchange when the Exchange deems it
necessary to maintain an orderly
8 The Exchange made similar corresponding
changes to the table for tier 1 and tier 2 stocks with
prices $25 to less than $75 and $75 to less than
$150, with all potential conflicts between current
subparagraphs (d)(5) and (d)(6) resolved to apply
the greater interval.
VerDate Sep<11>2014
17:20 Aug 04, 2022
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market, to meet customer demand or
when the market price of the underlying
security moves substantially from the
exercise price or prices of the series
already opened.’’ The table within
subparagraph (d)(6) supersedes other
rules pertaining to strike intervals, but
the table does not supersede rules
governing the addition of options series.
Therefore, the table within
subparagraph (d)(6) and the rule text of
subparagraph (d)(4) do not conflict with
each other. Deleting the reference to
subparagraph (d)(4) will avoid potential
confusion.
Fourth, the Exchange proposes to
delete subparagraph (d)(6)(D), which
states ‘‘[n]otwithstanding the limitations
imposed by this subparagraph (d)(6),
this subparagraph (d)(6) does not amend
the range of strikes for Short Term
Option Series may be listed pursuant to
subparagraph (d)(5) above.’’ While the
range limitations continue to be
applicable within subparagraph (d)(6),
the strike ranges do not conflict with the
strike intervals and therefore the
sentence is not necessary. Removing
this provision will avoid potential
confusion.
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.9 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 10 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) 11 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange believes the Strike
Proposal continues to limit the intervals
between strikes listed in the Short Term
Option Series Program that have an
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
11 Id.
Frm 00091
Fmt 4703
expiration date more than twenty-one
days.
In particular, the Exchange’s proposed
addition to the first sentence of Rule
4.5(d)(6) is consistent with the Act
because it clarifies that the only
permitted intervals are as specified in
the table within that subparagraph, as
amended. The Exchange believes this
proposed rule change will bring greater
transparency to the rule. The proposed
rule change to amend the table within
Rule 4.5(d)(6) to address potential
conflicts between that subparagraph and
subparagraph (d)(5) with respect to the
correct strike interval is consistent with
the Act because it protects investors and
the public interest by adding
transparency to the manner in which
the Exchange implements its listing
rules and removes potential uncertainty.
The proposed rule text specifies the
applicable intervals when there is a
conflict between the rule text within
subparagraphs (d)(5) and (d)(6), thereby
providing certainty as to the outcome.
The table within subparagraph (d)(6)
impacts strike intervals and supersedes
other strike interval rules but does not
supersede the addition of option series.
Therefore, subparagraph (d)(4) regarding
the addition of option series does not
conflict with the table in subparagraph
(d)(6). Deleting the last sentence of the
introductory paragraph of Rule 4.5(d)(6)
that includes the reference to
subparagraph (d)(4) is therefore
consistent with the Act. Similarly,
deleting Rule 4.5(d)(6)(D) is consistent
with the Act because while the range
limitations continue to be applicable,
the strike ranges do not conflict with
strike intervals, rendering the sentence
unnecessary. Deletion of this provision
will avoid potential confusion.
The Strike Interval Proposal was
designed to reduce the density of strike
intervals that would be listed in later
weeks, within the Short Term Option
Series Program, by utilizing limitations
for intervals between strikes which have
an expiration date more than twentyone days from the listing date. The
Exchange’s proposal intends to continue
to remove certain strike intervals where
there exist clusters of strikes whose
characteristics closely resemble one
another and, therefore, do not serve
different trading needs,12 rendering
these strikes less useful. Also, the Strike
Interval Proposal continues to reduce
the number of strikes listed on the
Exchange, allowing Market-Makers to
expend their capital in the options
market in a more efficient manner,
12 For example, two strikes that are densely
clustered may have the same risk properties and
may also be the same percentage out-of-the-money.
10 15
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Federal Register / Vol. 87, No. 150 / Friday, August 5, 2022 / Notices
thereby improving overall market
quality on the Exchange.
Additionally, by applying the greater
interval would control as between the
rule text within current Rule 4.5(d)(5)
and (d)(6), the Exchange is reducing the
number of strikes listed in a manner
consistent with the intent of the Strike
Interval Proposal, which was to reduce
strikes which were farther out in time.
The result of this clarification is to
select wider strike intervals for Short
Term Option Series in equity options
which have an expiration date more
than twenty-one days from the listing
date. This rule change would harmonize
strike intervals as between inner
weeklies (those having less than twentyone days from the listing date) and outer
weeklies (those having more than
twenty-one days from the listing date)
so that strike intervals are not widening
as the listing date approaches.
lotter on DSK11XQN23PROD with NOTICES1
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 Strike
Interval Proposal continues to limit the
number of Short Term Option Series
Program strike intervals available for
quoting and trading on the Exchange for
all Trading Permit Holders.
The Exchange believes adding
clarifying language to the first sentence
of Rule 4.5(d)(6) regarding which
parameter the table within that
provision amends within the Short
Term Option Series Program will bring
greater transparency to the rules.
Amending the table within
subparagraph (d)(6) to address potential
conflicts as between the rule text of Rule
4.5(d)(5) and (d)(6) will bring greater
transparency to and reduce potential
confusion regarding the manner in
which the Exchange implements its
listing rules. Deleting the last sentence
of the first paragraph of the introductory
paragraph of Rule 4.5(d)(6) that
references subparagraph (d)(4) does not
impose an undue burden on
competition and will avoid potential
confusion because the table within Rule
4.5(d)(6) impacts strike intervals and
supersedes other rules pertaining to
strike intervals, but the table does not
supersede rules governing the addition
of options series, such as Rule 4.5(d)(4).
Deleting Rule 4.5(d)(6)(D) will also
avoid any potential confusion because,
while the range limitations continue to
be applicable, the strike ranges do not
conflict with strike intervals and are not
necessary.
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17:20 Aug 04, 2022
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While this proposal continues to limit
the intervals of strikes listed on the
Exchange, the Exchange continues to
balance the needs of market participants
by continuing to offer a number of
strikes to meet a market participant’s
investment objective. The Exchange’s
Strike Interval Proposal does not impose
an undue burden on intermarket
competition as this Strike Interval
Proposal does not impact the listings
available at another self-regulatory
organization.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days after the date of
the filing, or such shorter time as the
Commission may designate, it has
become effective pursuant to 19(b)(3)(A)
of the Act 13 and Rule 19b–4(f)(6) 14
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 15 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),16 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative delay so that the Exchange
may implement the proposed rule
change on August 1, 2022—the same
time other exchanges are implementing
the same change.17 The Exchange states
13 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
15 17 CFR 240.19b–4(f)(6).
16 17 CFR 240.19b–4(f)(6)(iii).
17 The Commission recently approved a
substantially similar proposal. See Securities
Exchange Act Release No. 95085 (June 10, 2022), 87
FR 36353 (June 16, 2022) (SR–ISE–2022–10) (Order
Approving a Proposed Rule Change, as Modified by
Amendment No. 1, to Amend ISE Options 4,
Section 5, Series of Options Contracts Open for
Trading).
14 17
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that implementing the proposal
simultaneously with other option
exchanges will promote the protection
of investors by harmonizing the strike
listing methodology across exchanges.
For these reasons, the Commission
believes that waiver of the 30-day
operative delay is consistent with the
protection of investors and the public
interest. Accordingly, the Commission
hereby waives the operative delay.18
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2022–040 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–2022–040. 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
18 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
E:\FR\FM\05AUN1.SGM
05AUN1
Federal Register / Vol. 87, No. 150 / Friday, August 5, 2022 / Notices
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–2022–040, and
should be submitted on or before
August 26, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–16763 Filed 8–4–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–217, OMB Control No.
3235–0241]
lotter on DSK11XQN23PROD with NOTICES1
Submission for OMB Review;
Comment Request: Extension: Rule
206(4)–2
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for extension and
revision of the previously approved
collection of information discussed
below.
The title for the collection of
information is ‘‘Rule 206(4)–2 under the
Investment Advisers Act of 1940—
Custody of Funds or Securities of
Clients by Investment Advisers.’’ Rule
206(4)–2 (17 CFR 275.206(4)–2) under
the Investment Advisers Act of 1940 (15
U.S.C. 80b–1 et seq.) governs the
custody of funds or securities of clients
19 17
CFR 200.30–3(a)(12), (59).
VerDate Sep<11>2014
17:20 Aug 04, 2022
Jkt 256001
by Commission-registered investment
advisers. Rule 206(4)–2 requires each
registered investment adviser that has
custody of client funds or securities to
maintain those client funds or securities
with a broker-dealer, bank or other
‘‘qualified custodian.’’ 1 The rule
requires the adviser to promptly notify
clients as to the place and manner of
custody, after opening an account for
the client and following any changes.2
If an adviser sends account statements
to its clients, it must insert a legend in
the notice and in subsequent account
statements sent to those clients urging
them to compare the account statements
from the custodian with those from the
adviser.3 The adviser also must have a
reasonable basis, after due inquiry, for
believing that the qualified custodian
maintaining client funds and securities
sends account statements directly to the
advisory clients at least quarterly,
identifying the amount of funds and of
each security in the account at the end
of the period and setting forth all
transactions in the account during that
period.4 The client funds and securities
of which an adviser has custody must
undergo an annual surprise examination
by an independent public accountant to
verify client assets pursuant to a written
agreement with the accountant that
specifies certain duties.5 Unless client
assets are maintained by an
independent custodian (i.e., a custodian
that is not the adviser itself or a related
person), the adviser also is required to
obtain or receive a written report of the
internal controls relating to the custody
of those assets from an independent
public accountant that is registered with
and subject to regular inspection by the
Public Company Accounting Oversight
Board (‘‘PCAOB’’).6
The rule exempts advisers from the
rule with respect to clients that are
registered investment companies.
Advisers to limited partnerships,
limited liability companies and other
pooled investment vehicles are excepted
from the account statement delivery and
deemed to comply with the annual
surprise examination requirement if the
limited partnerships, limited liability
companies or pooled investment
vehicles are subject to annual audit by
an independent public accountant
registered with, and subject to regular
inspection by the PCAOB, and the
audited financial statements are
1 Rule
206(4)–2(a)(1).
206(4)–2(a)(2).
3 Rule 206(4)–2(a)(2).
4 Rule 206(4)–2(a)(3).
5 Rule 206(4)–2(a)(4).
6 Rule 206(4)–2(a)(6).
2 Rule
PO 00000
Frm 00093
Fmt 4703
distributed to investors in the pools.7
The rule also provides an exception to
the surprise examination requirement
for advisers that have custody solely
because they have authority to deduct
advisory fees from client accounts,8 and
advisers that have custody solely
because a related person holds the
adviser’s client assets (or has any
authority to obtain possession of them)
and the related person is operationally
independent of the adviser.9
Advisory clients use this information
to confirm proper handling of their
accounts. The Commission’s staff uses
the information obtained through these
collections in its enforcement,
regulatory and examination programs.
Without the information collected under
the rule, the Commission would be less
efficient and effective in its programs
and clients would not have information
valuable for monitoring an adviser’s
handling of their accounts.
The respondents to this information
collection are investment advisers
registered with the Commission and
have custody of clients’ funds or
securities. We estimate that 8,057
advisers would be subject to the
information collection burden under
rule 206(4)–2. The number of responses
under rule 206(4)–2 will vary
considerably depending on the number
of clients for which an adviser has
custody of funds or securities, and the
number of investors in pooled
investment vehicles that the adviser
manages. It is estimated that the average
number of responses annually for each
respondent would be 6,830, and an
average time of 0.00524 hour per
response. The annual aggregate burden
for all respondents to the requirements
of rule 206(4)–2 is estimated to be
288,202 hours.
This collection of information is
found at 17 CFR 275.206(4)–2 and is
mandatory. Responses to the collection
of information are not kept confidential.
Commission-registered investment
advisers are required to maintain and
preserve certain information required
under rule 206(4)–2 for five years. The
long-term retention of these records is
necessary for the Commission’s
examination program to ascertain
compliance with the Investment
Advisers Act.
The estimated average burden hours
are made solely for the purposes of
Paperwork Reduction Act and are not
derived from a comprehensive or even
representative survey or study of the
cost of Commission rules and forms. An
7 Rule
206(4)–2(b)(4).
206(4)–2(b)(3).
9 Rule 206(4)–2(b)(6).
8 Rule
Sfmt 4703
48049
E:\FR\FM\05AUN1.SGM
05AUN1
]]>Agencies
[Federal Register Volume 87, Number 150 (Friday, August 5, 2022)]
[Notices]
[Pages 48045-48049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-16763]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95398; File No. SR-CBOE-2022-040]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 4.5
August 1, 2022.
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 July 29, 2022, Cboe Exchange, Inc. (``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend Rule 4.5. 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The proposed rule change amends Rule 4.5(d). Specifically, the
Exchange proposes to amend Rule 4.5(d)(6) to account for conflicts
between different provisions within the Short Term Option Series Rules
and make other clarifying changes.
In 2021, the Exchange amended Rule 4.5 to limit the intervals
between strikes in equity options listed as part of the Short Term
Option Series Program, excluding Exchange-Traded Fund Shares and ETNs,
that have an expiration date more than twenty-one days from the listing
date (``Strike Interval Proposal'').\5\ The Strike Interval Proposal
adopted new subparagraph (d)(6), which included a table that intended
to specify the applicable strike intervals that would supersede
subparagraph (d)(5) \6\ for Short Term Option Series in equity options,
excluding options on exchange-traded fund shares and on exchange-traded
notes, which have an expiration more than 21 days from the listing
date. The Strike Interval Proposal was designed to reduce the density
of strike intervals that would be listed in later weeks, within the
Short Term Option Series Program, by utilizing limitations for
intervals between strikes that have an expiration date more than 21
days from the listing date.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 91456 (April 1,
2021), 86 FR 18090 (April 7, 2021) (SR-CBOE-2021-019).
\6\ Rule 4.5(d)(5) states the interval between strike prices on
Short Term Option Series may be: (a) $0.50 or greater where the
strike is less than $100 and $1 or greater where the strike price is
between $100 and $150 for all classes that participate in the Short
Term Option Series Program; (b) $0.50 or greater for classes that
trade in one dollar increments in non-Short Term Options and that
participate in the Short Term Option Series Program; or (c) $2.50 or
greater where the strike price is above $150. A non-Short Term
Option that is on a class that has been selected to participate in
the Short Term Option Series Program is referred to as a ``Related
non-Short Term Option.''
---------------------------------------------------------------------------
The Exchange proposes to amend Rule 4.5(d)(6) to clarify the
current rule text and amend the application of the table to account for
potential conflicts within the Short Term Option Series Rules.
Currently, Rule 4.5(d)(6) provides that notwithstanding subparagraph
(d)(5), when Short Term Option Series in equity options (excluding
options on ETFs and ETNs) have an expiration more than 21 days from the
listing date, the strike interval for each option class will be based
on the following table:
[[Page 48046]]
----------------------------------------------------------------------------------------------------------------
Share price \7\
-------------------------------------------------------------------------------
Tier Average daily volume $25 to less $75 to less $150 to less $500 or
Less than $25 than $75 than $150 than $500 greater
----------------------------------------------------------------------------------------------------------------
1........ Greater than 5,000... $0.50 $1.00 $1.00 $5.00 $5.00
2........ Greater than 1,000 to 1.00 1.00 1.00 5.00 10.00
5,000.
3........ 0 to 1,000........... 2.50 5.00 5.00 5.00 10.00
----------------------------------------------------------------------------------------------------------------
First, the Exchange proposes to add the phrase ``which specifies
the applicable interval for listing'' to the end of the first sentence
of subparagraph (d)(6). The table within that subparagraph provides for
the listing of intervals based on certain parameters (average daily
volume and share price). The Exchange proposes to add the phrase
``which specifies the applicable interval for listing'' to clarify that
the only permitted intervals are as specified in the table within
subparagraph (d)(6), as proposed to be amended.
---------------------------------------------------------------------------
\7\ Share Price is the closing price on the primary market on
the last day of the calendar quarter. In the event of a corporate
action, the Share Price of the surviving company is utilized. The
Average Daily Volume is the total number of option contracts traded
in a given security for the applicable calendar quarter divided by
the number of trading days in the applicable calendar quarter.
Beginning on the second trading day in the first month of each
calendar quarter, the Average Daily Volume is calculated by
utilizing data from the prior calendar quarter based on Customer-
cleared volume at OCC. For options listed on the first trading day
of a given calendar quarter, the Average Daily Volume is calculated
using the quarter prior to the last trading calendar quarter. See
Rule 4.5(d)(6)(A) and (B).
---------------------------------------------------------------------------
Second, the Exchange proposes to amend the table in subparagraph
(d)(6) to address situations in which there is a conflict between
applying the intervals in subparagraph (d)(5) and the table in
subparagraph (d)(6). Today, there are instances where a conflict is
presented as between the application of the table within subparagraph
(d)(6) and the rule text within subparagraph (d)(5) with respect to the
correct interval. To address these potential conflicts, the Exchange
proposes that to the extent there is a conflict between applying the
current table within subparagraph (d)(6) and the rule text within
subparagraph (d)(5), the greater interval would apply. To reflect this
within the Rules, the Exchange proposes to amend the table in
subparagraph (d)(6) to specify what the greater interval would be, and
thus the interval the Exchange would apply, in the event of any
possible conflict between the two rule provisions. Specifically, the
proposed rule change amends the table as follows:
----------------------------------------------------------------------------------------------------------------
Share price
Average daily --------------------------------------------------------------------------------
Tier volume $25 to less $75 to less $150 to less $500 or
Less than $25 than $75 than $150 than $500 greater
----------------------------------------------------------------------------------------------------------------
1............. Greater than $0.50 for $1.00 for $1.00 for $5.00 $5.00
5,000. strikes less strikes less strikes less
than $100 in than $150 than $150
Short Term
Option Series
Program
classes and
classes that
trade in $1
increments in
non-Short Term
Options.
$1.00 for $2.50 for $2.50 for .............. ..............
strikes strikes strikes
between $100 greater than greater than
and $150 for $150 $150
classes that
do not
otherwise
trade in $1.00
increments in
non-Short Term
Options.
$2.50 for .............. .............. .............. ..............
strikes
greater than
$150.
2............. Greater than $1.00 for $1.00 for $1.00 for $5.00 $10.00
1,000 to 5,000. strikes less strikes less strikes less
than $150. than $150 than $150
$2.50 for $2.50 for $2.50 for .............. ..............
strikes strikes strikes
greater than greater than greater than
$150. $150 $150
3............. 0 to 1,000..... $2.50.......... $5.00 $5.00 $5.00 $10.00
----------------------------------------------------------------------------------------------------------------
Below are some examples to demonstrate the application of the
proposed table:
Example 1: Assume a Tier 1 stock that closed on the last day of Q1
with a quarterly share price higher than $75 but less than $150.
Therefore, utilizing the current table within subparagraph (d)(6), the
interval would be $1.00 for strikes added during Q2 even for strikes
above $150. However, subparagraph (d)(5) provides that the Exchange may
list a Short Term Option Series at $2.50 intervals where the strike
price is above $150. In other words, there is a potential conflict
between the permitted strike intervals above $150 during Q2. In this
example, current subparagraph (d)(6) would specify a $1.00 interval
whereas current subparagraph (d)(5) would specify a $2.50 interval.
Consistent with selecting the greater interval (from current
subparagraph (d)(5)), the permissible strike interval in this scenario
would be $2.50 as set forth in the proposed table. Therefore, during
Q2, the following strikes would be eligible to list: $152.50 and
$157.50. For strikes less than $150, the following strikes would be
eligible to list during Q2: $149 and $148 because Short Term Option
Series with expiration dates more than 21 days from the listing date as
well as Short Term Option Series with expiration dates less than 21
days from the listing date would both be eligible to list $1 intervals
pursuant to both subparagraphs (d)(5) and (d)(6).
Example 2: Assume a Tier 2 stock that closed on the last day of Q1
with a quarterly share price less than $25. Therefore, utilizing the
current table within subparagraph (d)(6), the interval would be $1.00
for strikes added during Q2 even for strikes above $25. However,
subparagraph (d)(5) provides that the Exchange may list a Short Term
Option Series at $0.50 intervals where the strike is less than $100, at
$1.00 intervals where the strike price is between $100 and $150, and at
$2.50 intervals where
[[Page 48047]]
the strike price is above $150. In other words, there is a potential
conflict between the permitted strike intervals below $100 and above
$150 during Q2. In this example, current subparagraph (d)(6) would
specify a $1.00 interval for strikes below $100 whereas current
subparagraph (d)(5) would specify a $0.50 interval. Consistent with
selecting the greater interval (from current subparagraph (d)(6)), the
permissible strike interval in this scenario for strikes below $100
would be $1.00 as set forth in the proposed table. For strikes between
$100 and $150, there is no conflict, as both provisions would provide
$1.00 intervals for those strikes. For strikes above $150, current
subparagraph (d)(6) would specify a $1.00 interval for strikes above
$150 whereas current subparagraph (d)(5) would specify a $2.50
interval. Consistent with selecting the greater interval (from current
subparagraph (d)(5)), the permissible strike interval in this scenario
for strikes above $150 would be $2.50 as set forth in the proposed
table.
Example 3: Assume a Tier 3 stock that closed on the last day of Q1
with a quarterly share price less than $25. Therefore, utilizing the
current table within subparagraph (d)(6), the interval would be $2.50
for all strikes added during Q2. However, subparagraph (d)(5) provides
that the Exchange may list a Short Term Option Series at $0.50
intervals where the strike price is less than $100, $1.00 intervals
where the strike price is between $100 and $150, and $2.50 intervals
where the strike price is above $150. In other words, there is a
potential conflict between the permitted strike intervals below $150
during Q2 (there is no conflict for strikes above $150, as both
provisions provide for a $2.50 strike interval). Consistent with
selecting the greater interval (from current subparagraph (d)(6)), the
permissible strike interval in this scenario for strikes below $150
would be $2.50 as set forth in the proposed table.\8\
---------------------------------------------------------------------------
\8\ The Exchange made similar corresponding changes to the table
for tier 1 and tier 2 stocks with prices $25 to less than $75 and
$75 to less than $150, with all potential conflicts between current
subparagraphs (d)(5) and (d)(6) resolved to apply the greater
interval.
---------------------------------------------------------------------------
Third, the Exchange proposes to delete the last sentence of the
introductory paragraph of subparagraph (d)(6), which states ``[t]he
below table indicates the applicable strike intervals and supersedes
subparagraph (d)(4) above, which permits additional series to be opened
for trading on the Exchange when the Exchange deems it necessary to
maintain an orderly market, to meet customer demand or when the market
price of the underlying security moves substantially from the exercise
price or prices of the series already opened.'' The table within
subparagraph (d)(6) supersedes other rules pertaining to strike
intervals, but the table does not supersede rules governing the
addition of options series. Therefore, the table within subparagraph
(d)(6) and the rule text of subparagraph (d)(4) do not conflict with
each other. Deleting the reference to subparagraph (d)(4) will avoid
potential confusion.
Fourth, the Exchange proposes to delete subparagraph (d)(6)(D),
which states ``[n]otwithstanding the limitations imposed by this
subparagraph (d)(6), this subparagraph (d)(6) does not amend the range
of strikes for Short Term Option Series may be listed pursuant to
subparagraph (d)(5) above.'' While the range limitations continue to be
applicable within subparagraph (d)(6), the strike ranges do not
conflict with the strike intervals and therefore the sentence is not
necessary. Removing this provision will avoid potential confusion.
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.\9\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \10\ 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) \11\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The Exchange believes the Strike Proposal
continues to limit the intervals between strikes listed in the Short
Term Option Series Program that have an expiration date more than
twenty-one days.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ Id.
---------------------------------------------------------------------------
In particular, the Exchange's proposed addition to the first
sentence of Rule 4.5(d)(6) is consistent with the Act because it
clarifies that the only permitted intervals are as specified in the
table within that subparagraph, as amended. The Exchange believes this
proposed rule change will bring greater transparency to the rule. The
proposed rule change to amend the table within Rule 4.5(d)(6) to
address potential conflicts between that subparagraph and subparagraph
(d)(5) with respect to the correct strike interval is consistent with
the Act because it protects investors and the public interest by adding
transparency to the manner in which the Exchange implements its listing
rules and removes potential uncertainty. The proposed rule text
specifies the applicable intervals when there is a conflict between the
rule text within subparagraphs (d)(5) and (d)(6), thereby providing
certainty as to the outcome. The table within subparagraph (d)(6)
impacts strike intervals and supersedes other strike interval rules but
does not supersede the addition of option series. Therefore,
subparagraph (d)(4) regarding the addition of option series does not
conflict with the table in subparagraph (d)(6). Deleting the last
sentence of the introductory paragraph of Rule 4.5(d)(6) that includes
the reference to subparagraph (d)(4) is therefore consistent with the
Act. Similarly, deleting Rule 4.5(d)(6)(D) is consistent with the Act
because while the range limitations continue to be applicable, the
strike ranges do not conflict with strike intervals, rendering the
sentence unnecessary. Deletion of this provision will avoid potential
confusion.
The Strike Interval Proposal was designed to reduce the density of
strike intervals that would be listed in later weeks, within the Short
Term Option Series Program, by utilizing limitations for intervals
between strikes which have an expiration date more than twenty-one days
from the listing date. The Exchange's proposal intends to continue to
remove certain strike intervals where there exist clusters of strikes
whose characteristics closely resemble one another and, therefore, do
not serve different trading needs,\12\ rendering these strikes less
useful. Also, the Strike Interval Proposal continues to reduce the
number of strikes listed on the Exchange, allowing Market-Makers to
expend their capital in the options market in a more efficient manner,
[[Page 48048]]
thereby improving overall market quality on the Exchange.
---------------------------------------------------------------------------
\12\ For example, two strikes that are densely clustered may
have the same risk properties and may also be the same percentage
out-of-the-money.
---------------------------------------------------------------------------
Additionally, by applying the greater interval would control as
between the rule text within current Rule 4.5(d)(5) and (d)(6), the
Exchange is reducing the number of strikes listed in a manner
consistent with the intent of the Strike Interval Proposal, which was
to reduce strikes which were farther out in time. The result of this
clarification is to select wider strike intervals for Short Term Option
Series in equity options which have an expiration date more than
twenty-one days from the listing date. This rule change would harmonize
strike intervals as between inner weeklies (those having less than
twenty-one days from the listing date) and outer weeklies (those having
more than twenty-one days from the listing date) so that strike
intervals are not widening as the listing date approaches.
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 Strike Interval Proposal
continues to limit the number of Short Term Option Series Program
strike intervals available for quoting and trading on the Exchange for
all Trading Permit Holders.
The Exchange believes adding clarifying language to the first
sentence of Rule 4.5(d)(6) regarding which parameter the table within
that provision amends within the Short Term Option Series Program will
bring greater transparency to the rules. Amending the table within
subparagraph (d)(6) to address potential conflicts as between the rule
text of Rule 4.5(d)(5) and (d)(6) will bring greater transparency to
and reduce potential confusion regarding the manner in which the
Exchange implements its listing rules. Deleting the last sentence of
the first paragraph of the introductory paragraph of Rule 4.5(d)(6)
that references subparagraph (d)(4) does not impose an undue burden on
competition and will avoid potential confusion because the table within
Rule 4.5(d)(6) impacts strike intervals and supersedes other rules
pertaining to strike intervals, but the table does not supersede rules
governing the addition of options series, such as Rule 4.5(d)(4).
Deleting Rule 4.5(d)(6)(D) will also avoid any potential confusion
because, while the range limitations continue to be applicable, the
strike ranges do not conflict with strike intervals and are not
necessary.
While this proposal continues to limit the intervals of strikes
listed on the Exchange, the Exchange continues to balance the needs of
market participants by continuing to offer a number of strikes to meet
a market participant's investment objective. The Exchange's Strike
Interval Proposal does not impose an undue burden on intermarket
competition as this Strike Interval Proposal does not impact the
listings available at another self-regulatory organization.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) \14\
thereunder.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the Exchange may implement the proposed rule change on August 1, 2022--
the same time other exchanges are implementing the same change.\17\ The
Exchange states that implementing the proposal simultaneously with
other option exchanges will promote the protection of investors by
harmonizing the strike listing methodology across exchanges. For these
reasons, the Commission believes that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest. Accordingly, the Commission hereby waives the operative
delay.\18\
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ The Commission recently approved a substantially similar
proposal. See Securities Exchange Act Release No. 95085 (June 10,
2022), 87 FR 36353 (June 16, 2022) (SR-ISE-2022-10) (Order Approving
a Proposed Rule Change, as Modified by Amendment No. 1, to Amend ISE
Options 4, Section 5, Series of Options Contracts Open for Trading).
\18\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CBOE-2022-040 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-2022-040. 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
[[Page 48049]]
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-2022-040, and should be submitted on or before August 26, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12), (59).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-16763 Filed 8-4-22; 8:45 am]
BILLING CODE 8011-01-P
