Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Rule Relating to Minimum Market-Maker Quote Size, 54746-54748 [2022-19225]
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54746
Federal Register / Vol. 87, No. 172 / Wednesday, September 7, 2022 / Notices
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Holdings LLC (‘‘Parent’’), as the
controlling owner of the membership
interests in the Exchange, will allocate
sufficient assets to the Exchange to
enable its operation.’’ 165 Given the
applicant’s stated reliance on US
Holdings for sufficient financial support
to enable its operation, the Commission
is considering whether the unaudited
financial statements filed for the
applicant’s parent, US Holdings, show
that the Exchange would be organized
and have the capacity to carry out the
purposes of the Act, including the
ability to enforce compliance by its
members, and persons associated with
its members, with the federal securities
laws and rules thereunder and the rules
of the exchange.
D. Location of Exchange Trading
Platform
24X proposes to locate its primary
trading platform in the Equinix data
center located in New York (‘‘NY4’’).
24X also proposes to locate a
‘‘mirrored’’ primary platform in London
(‘‘LD4’’).166 24X did not describe how
the LD4 platform would operate along
with the platform in NY4. The
Commission is considering whether the
proposal is consistent with the
requirements under Section 6(b)(1) of
the Act, which among other things,
requires the exchange to be so organized
and have the capacity to be able to carry
out the purposes of the Act and to
comply, and to enforce compliance by
its members and persons associated
with its members, with provisions of the
Act. The Commission also is
considering whether the proposal is
consistent with Section 6(b)(5) of the
Act, which requires the rules of the
exchange to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged with
regulating, clearing, settling, processing,
information with respect to and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanisms of a free and open market
and a national market system.
One commenter expressed concern
over this aspect of 24X’s proposal.167
The commenter stated that no other U.S.
exchange operates a mirrored primary
U.S. trading platform outside of the
United States and stated that 24X does
not explain this structure in its
proposal.168 Further, the commenter
stated that the Commission should
165 Id.
166 See
Exhibit E–1 of 24X’s Form 1 at 1.
167 See Nasdaq Letter at 4.
168 Id.
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17:50 Sep 06, 2022
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consider the proposed structure’s
jurisdictional and operational
implications and whether such a
structure ‘‘would open the door to
foreign markets to operate mirrored
markets within the United States.’’ 169
IV. Request for Written Comment
The Commission requests that
interested persons provide written
views and data with respect to 24X’s
Form 1 and the questions included
above or other relevant issues.
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 10–
239 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 10–239. 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/other.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to 24X’s Form 1 filed with
the Commission, and all written
communications relating to the
application 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. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make publicly available. All
submissions should refer to File
Number 10–239 and should be
submitted on or before September 28,
2022.
169 Id.
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By the Commission.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–19264 Filed 9–6–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–95647; File No. SR–CBOE–
2022–043]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Rule
Relating to Minimum Market-Maker
Quote Size
August 31, 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 August
25, 2022, 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 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
its Rule relating to minimum MarketMaker quote size. The text of the
proposed rule change is provided
below.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
Rules of Cboe Exchange, Inc.
*
*
*
*
*
Rule 5.52. Market-Maker Quotes
(a) No change.
(b) Size. A Market-Maker’s bid (offer) for a
series must be accompanied by the minimum
number of contracts determined by the
Exchange on a class-by-class basis, and if the
Exchange determines on a premium basis
and/or expiration basis for series with
expirations (1) no more than one week, (2)
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
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Federal Register / Vol. 87, No. 172 / Wednesday, September 7, 2022 / Notices
between one week and two weeks, (3)
between two weeks and one month, (4)
between one month and two months, (5)
between two months and three months, (6)
between three months and six months, (7)
between six months and nine months, (8)
between nine months and 15 months, and (9)
15 months or more, the minimum of which
will be one contract at the price of the bid
(offer) the Market-Maker is willing to buy
(sell). The System rejects a Market-Maker’s
bid (offer) that does not meet the minimum
initial quote size determined by the Exchange
for that class.
[(1) For SPX, the Exchange may also
determine a minimum initial quote size on a
premium basis and an expiration basis for
series with expirations (1) no more than one
week, (2) between one week and three
months, (3) between three months and six
months, (4) between six months and 15
months, and (5) 15 months or more.
(2)] The obligation of Market-Makers to
make competitive markets under Rule 5.51
does not preclude Trading Permit Holders in
a trading crowd from discussing a request for
a market that is greater than the disseminated
size for that option class, for the purpose of
making a single bid (offer) based upon the
aggregate of individual bids (offers) by
Trading Permit Holders in the trading crowd,
but only when the Trading Permit Holder
representing the order asks for a single bid
(offer). Whenever a single bid (offer) pursuant
to this paragraph is made, such bid (offer) is
a firm quote, and each ICMP participating in
the bid (offer) must fulfill his portion of the
single bid (offer) at the single price.
*
*
*
*
*
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.
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Rule relating to minimum Market-Maker
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54747
quote size. Specifically, the Exchange
proposes to amend Rule 5.52(b) 5 to
permit the Exchange to determine a
minimum initial quote size on a
premium basis and/or an expiration
basis for any option class, not just S&P
500 Index (‘‘SPX’’) options.6 Currently,
Rule 5.52 permits the Exchange to
determine a minimum initial quote size
on a class-by-class basis. Subparagraph
(b)(1) of that rule also permits the
Exchange, for SPX, to determine a
minimum initial quote size on a
premium and an expiration basis for
series with expirations (1) no more than
one week, (2) between one week and
three months, (3) between three months
and six months, (4) between six months
and 15 months, and (5) 15 months or
more.
While different classes may exhibit
different trading characteristics, which
make different minimum quote sizes
appropriate as permitted by the current
Rule, the same may be true of series
with different premiums and
expirations within a class to ensure the
quote size is not burdensome on MarketMakers. For example, series with higher
premiums or farther expirations
generally have wider spreads and lower
trading volumes, and positions in those
series carry additional risk. These
characteristics make lower minimum
quote size requirements more
appropriate and less burdensome on
Market-Makers. This is generally true
for all classes, not just SPX options.
Therefore, the Exchange proposes to
permit the Exchange to determine
minimum initial quote size on a
premium and/or expiration basis for all
classes.7 Additionally, it proposes to
amend the groupings of expirations to
provide the Exchange with sufficient
flexibility to determine minimum quote
sizes appropriate for each class.
Specifically, the proposed rule change
will permit the Exchange to determine
the minimum quote size for any class on
a premium basis and/or expiration basis
for series with expirations (1) no more
than one week, (2) between one week
and two weeks, (3) between two weeks
and one month, (4) between one month
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.
In particular, the Exchange believes
the proposed rule change will promote
just and equitable principles of trade by
permitting the Exchange to impose more
effective and not overly burdensome
minimum size requirements on MarketMakers in all classes, which the
Exchange believes will lead to
continued liquidity on the Exchange,
ultimately benefiting investors. The
5 The proposed rule change moves the language
from Rule 5.52(b)(1), as amended, into the main
part of Rule 5.52(b). As a result, the proposed rule
change deletes the numbering for subparagraph (2),
as that would be the only subparagraph for Rule
5.52(b) and thus will no longer require numbering.
6 The Exchange will announce any minimum
quote size requirements for any class with sufficient
advance notice in accordance with Rule 1.5.
7 The minimum quote size must continue to be at
least one contract at the price of the bid (offer) the
Market-Maker is willing to buy (sell). The System
rejects a Market-Maker’s bid (offer) that does not
meet the minimum initial quote size determined by
the Exchange for that class.
8 As noted above, Rule 5.52(b)(1) already permits
the Exchange to set minimum quote sizes on a
premium and expiration basis for SPX options. The
proposed expiration groupings will permit the
Exchange to determine minimum quote sizes for
SPX options in the same manner as it does today,
as it could determine the same minimum quote size
for multiple expiration groupings to conform to the
current expiration groupings (for example, the same
minimum quote size for proposed expiration groups
two through five is equivalent to having a minimum
quote size equal to current expiration group two).
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
11 Id.
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and two months, (5) between two
months and three months, (6) between
three months and six months, (7)
between six months and nine months,
(8) between nine months and 15
months, and (9) 15 months or more.8 To
the extent the Exchange determines the
minimum quote size for a class will not
be on a premium and/or expiration
basis, the Exchange will determine the
minimum quote size for that class as it
does today, which is determining a
minimum quote size for all series in that
class.
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54748
Federal Register / Vol. 87, No. 172 / Wednesday, September 7, 2022 / Notices
Exchange believes the proposed rule
change maintains an appropriate
balance of obligations and benefits. The
Exchange believes it is appropriate to
have authority to establish minimum
quote sizes in a class on an expiration
or premium basis to reflect the different
trading characteristics of those series
within that class. The Exchange believes
these proposed changes will continue to
incentivize Market-Makers to have
appointments in any class in which the
Exchange may impose minimum quote
size requirements on a premium or
expiration basis, which increases
liquidity and in general protects
investors.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe that the
proposed rule change will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the Act because any
minimum size requirements the
Exchange imposes in a class on a
premium or expiration basis will apply
in the same manner to all MarketMakers with appointments in that class.
The Exchange does not believe that the
proposed rule change will impose any
burden on intermarket competition that
is not necessary or appropriate in
furtherance of the Act because it relates
solely to quoting obligations the
Exchange imposes on Market-Makers on
the Exchange. The Exchange believes
the proposed rule change will maintain
an appropriate balance of Market-Maker
obligations and benefits and will permit
the Exchange to impose more effective
minimum size requirements in a class
without being overly burdensome on
Market-Makers given the differing trade
characteristics applicable to series with
different expirations and premiums.
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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
VerDate Sep<11>2014
19:38 Sep 06, 2022
Jkt 256001
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 12 and
subparagraph (f)(6) of Rule 19b–4
thereunder.13
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
under Section 19(b)(2)(B) 14 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
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–2022–043 and
should be submitted on or before
September 28, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
J. Matthew DeLesDernier,
Deputy Secretary.
• 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–2022–043 on the subject line.
[FR Doc. 2022–19225 Filed 9–6–22; 8:45 am]
Paper Comments
Railroad Revenue Adequacy—2021
Determination
• Send paper comments in triplicate
to the Secretary, Securities and
Exchange Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CBOE–2022–043. 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
12 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
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.
14 15 U.S.C. 78s(b)(2)(B).
13 17
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BILLING CODE 8011–01–P
SURFACE TRANSPORTATION BOARD
[Docket No. EP 552 (Sub-No. 26)]
Surface Transportation Board.
Notice of decision.
AGENCY:
ACTION:
On September 6, 2022, the
Board served a decision announcing the
2021 revenue adequacy determinations
for the nation’s Class I railroads. Five
Class I railroads (BNSF Railroad
Company, CSX Transportation, Inc.,
Norfolk Southern Combined Railroad
Subsidiaries, Soo Line Corporation, and
Union Pacific Railroad Company) were
found to be revenue adequate.
DATES: This decision is effective on
September 6, 2022.
FOR FURTHER INFORMATION CONTACT:
Pedro Ramirez, (202) 245–0333.
Assistance for the hearing impaired is
available through the Federal Relay
Service at (800) 877–8339.
SUPPLEMENTARY INFORMATION: Under 49
U.S.C. 10704(a)(3), the Board is required
to make an annual determination of
railroad revenue adequacy. A railroad is
SUMMARY:
15 17
E:\FR\FM\07SEN1.SGM
CFR 200.30–3(a)(12).
07SEN1
Agencies
[Federal Register Volume 87, Number 172 (Wednesday, September 7, 2022)]
[Notices]
[Pages 54746-54748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19225]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95647; File No. SR-CBOE-2022-043]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Rule Relating to Minimum Market-Maker Quote Size
August 31, 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 August 25, 2022, 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
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 its Rule relating to minimum Market-Maker quote size. The text
of the proposed rule change is provided below.
(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 5.52. Market-Maker Quotes
(a) No change.
(b) Size. A Market-Maker's bid (offer) for a series must be
accompanied by the minimum number of contracts determined by the
Exchange on a class-by-class basis, and if the Exchange determines
on a premium basis and/or expiration basis for series with
expirations (1) no more than one week, (2)
[[Page 54747]]
between one week and two weeks, (3) between two weeks and one month,
(4) between one month and two months, (5) between two months and
three months, (6) between three months and six months, (7) between
six months and nine months, (8) between nine months and 15 months,
and (9) 15 months or more, the minimum of which will be one contract
at the price of the bid (offer) the Market-Maker is willing to buy
(sell). The System rejects a Market-Maker's bid (offer) that does
not meet the minimum initial quote size determined by the Exchange
for that class.
[(1) For SPX, the Exchange may also determine a minimum initial
quote size on a premium basis and an expiration basis for series
with expirations (1) no more than one week, (2) between one week and
three months, (3) between three months and six months, (4) between
six months and 15 months, and (5) 15 months or more.
(2)] The obligation of Market-Makers to make competitive markets
under Rule 5.51 does not preclude Trading Permit Holders in a
trading crowd from discussing a request for a market that is greater
than the disseminated size for that option class, for the purpose of
making a single bid (offer) based upon the aggregate of individual
bids (offers) by Trading Permit Holders in the trading crowd, but
only when the Trading Permit Holder representing the order asks for
a single bid (offer). Whenever a single bid (offer) pursuant to this
paragraph is made, such bid (offer) is a firm quote, and each ICMP
participating in the bid (offer) must fulfill his portion of the
single bid (offer) at the single price.
* * * * *
The text of the proposed rule change is also available on the
Exchange's website (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Rule relating to minimum Market-
Maker quote size. Specifically, the Exchange proposes to amend Rule
5.52(b) \5\ to permit the Exchange to determine a minimum initial quote
size on a premium basis and/or an expiration basis for any option
class, not just S&P 500 Index (``SPX'') options.\6\ Currently, Rule
5.52 permits the Exchange to determine a minimum initial quote size on
a class-by-class basis. Subparagraph (b)(1) of that rule also permits
the Exchange, for SPX, to determine a minimum initial quote size on a
premium and an expiration basis for series with expirations (1) no more
than one week, (2) between one week and three months, (3) between three
months and six months, (4) between six months and 15 months, and (5) 15
months or more.
---------------------------------------------------------------------------
\5\ The proposed rule change moves the language from Rule
5.52(b)(1), as amended, into the main part of Rule 5.52(b). As a
result, the proposed rule change deletes the numbering for
subparagraph (2), as that would be the only subparagraph for Rule
5.52(b) and thus will no longer require numbering.
\6\ The Exchange will announce any minimum quote size
requirements for any class with sufficient advance notice in
accordance with Rule 1.5.
---------------------------------------------------------------------------
While different classes may exhibit different trading
characteristics, which make different minimum quote sizes appropriate
as permitted by the current Rule, the same may be true of series with
different premiums and expirations within a class to ensure the quote
size is not burdensome on Market-Makers. For example, series with
higher premiums or farther expirations generally have wider spreads and
lower trading volumes, and positions in those series carry additional
risk. These characteristics make lower minimum quote size requirements
more appropriate and less burdensome on Market-Makers. This is
generally true for all classes, not just SPX options.
Therefore, the Exchange proposes to permit the Exchange to
determine minimum initial quote size on a premium and/or expiration
basis for all classes.\7\ Additionally, it proposes to amend the
groupings of expirations to provide the Exchange with sufficient
flexibility to determine minimum quote sizes appropriate for each
class. Specifically, the proposed rule change will permit the Exchange
to determine the minimum quote size for any class on a premium basis
and/or expiration basis for series with expirations (1) no more than
one week, (2) between one week and two weeks, (3) between two weeks and
one month, (4) between one month and two months, (5) between two months
and three months, (6) between three months and six months, (7) between
six months and nine months, (8) between nine months and 15 months, and
(9) 15 months or more.\8\ To the extent the Exchange determines the
minimum quote size for a class will not be on a premium and/or
expiration basis, the Exchange will determine the minimum quote size
for that class as it does today, which is determining a minimum quote
size for all series in that class.
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\7\ The minimum quote size must continue to be at least one
contract at the price of the bid (offer) the Market-Maker is willing
to buy (sell). The System rejects a Market-Maker's bid (offer) that
does not meet the minimum initial quote size determined by the
Exchange for that class.
\8\ As noted above, Rule 5.52(b)(1) already permits the Exchange
to set minimum quote sizes on a premium and expiration basis for SPX
options. The proposed expiration groupings will permit the Exchange
to determine minimum quote sizes for SPX options in the same manner
as it does today, as it could determine the same minimum quote size
for multiple expiration groupings to conform to the current
expiration groupings (for example, the same minimum quote size for
proposed expiration groups two through five is equivalent to having
a minimum quote size equal to current expiration group two).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\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.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ Id.
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In particular, the Exchange believes the proposed rule change will
promote just and equitable principles of trade by permitting the
Exchange to impose more effective and not overly burdensome minimum
size requirements on Market-Makers in all classes, which the Exchange
believes will lead to continued liquidity on the Exchange, ultimately
benefiting investors. The
[[Page 54748]]
Exchange believes the proposed rule change maintains an appropriate
balance of obligations and benefits. The Exchange believes it is
appropriate to have authority to establish minimum quote sizes in a
class on an expiration or premium basis to reflect the different
trading characteristics of those series within that class. The Exchange
believes these proposed changes will continue to incentivize Market-
Makers to have appointments in any class in which the Exchange may
impose minimum quote size requirements on a premium or expiration
basis, which increases liquidity and in general protects investors.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the Act because any minimum size requirements the
Exchange imposes in a class on a premium or expiration basis will apply
in the same manner to all Market-Makers with appointments in that
class. The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the Act because it relates solely to
quoting obligations the Exchange imposes on Market-Makers on the
Exchange. The Exchange believes the proposed rule change will maintain
an appropriate balance of Market-Maker obligations and benefits and
will permit the Exchange to impose more effective minimum size
requirements in a class without being overly burdensome on Market-
Makers given the differing trade characteristics applicable to series
with different expirations and premiums.
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 from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \12\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \14\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\14\ 15 U.S.C. 78s(b)(2)(B).
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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-2022-043 on the subject line.
Paper Comments
Send paper comments in triplicate to the Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number SR-CBOE-2022-043. 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-2022-043 and should be submitted on
or before September 28, 2022.
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\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19225 Filed 9-6-22; 8:45 am]
BILLING CODE 8011-01-P