Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Renew an Existing Pilot Program Until May 8, 2023, 67728-67731 [2022-24412]

Download as PDF 67728 Federal Register / Vol. 87, No. 216 / Wednesday, November 9, 2022 / Notices khammond on DSKJM1Z7X2PROD with NOTICES now be subject to standard applicable transaction fees for VIX during GTH. 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 purposes of the Act because the proposed rule change applies only to a product exclusively listed on the Exchange. Additionally, the Exchange notes it operates in a highly competitive market. In addition to Cboe Options, TPHs have numerous alternative venues that they may participate on and direct their order flow, including 15 other options exchanges, as well as off-exchange venues, where competitive products are available for trading. Based on publicly available information, no single options exchange has more than 18% of the market share of executed volume of options trades.7 Therefore, no exchange possesses significant pricing power in the execution of option order flow. Moreover, the Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 8 The fact that this market is competitive has also long been recognized by the courts. In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit stated as follows: ‘‘[n]o one disputes that competition for order flow is ‘fierce.’ . . . As the SEC explained, ‘[i]n the U.S. national market system, buyers and sellers of securities, and the brokerdealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution’; [and] ‘no exchange can afford to take its market share percentages for granted’ because ‘no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers’. . . .’’.9 Accordingly, the Exchange does not believe its proposed 7 See Cboe Global Markets, U.S. Options Market Volume Summary by Month (October 26, 2022), available at https://markets.cboe.com/us/options/ market_share/. 8 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 9 NetCoalition v. SEC, 615 F.3d 525, 539 (DC Cir. 2010) (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782–83 (December 9, 2008) (SR–NYSEArca–2006–21)). VerDate Sep<11>2014 17:09 Nov 08, 2022 Jkt 259001 changes to the incentive programs impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 10 and paragraph (f) of Rule 19b–4 11 thereunder. 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 will institute proceedings to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CBOE–2022–056 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–2022–056. 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–2022–056 and should be submitted on or before November 30, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–24415 Filed 11–8–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96223; File No. SR–CBOE– 2022–055] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Renew an Existing Pilot Program Until May 8, 2023 November 3, 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 October 24, 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 and II below, which Items have 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f). PO 00000 Frm 00060 Fmt 4703 1 15 Sfmt 4703 E:\FR\FM\09NON1.SGM 09NON1 Federal Register / Vol. 87, No. 216 / Wednesday, November 9, 2022 / Notices been prepared by the Exchange. The Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) proposes to renew an existing pilot program until May 8, 2023. The text of the proposed rule change is provided below. (additions are italicized; deletions are [bracketed]) * * * * * Rules of Cboe Exchange, Inc. * * * * * Rule 4.13. Series of Index Options (a)–(d) No change. (e) Nonstandard Expirations Pilot Program. (1)–(2) No change. (3) Duration of Nonstandard Expirations Pilot Program. The Nonstandard Expirations Pilot Program shall be through [November 7, 2022]May 8, 2023. * * * * * 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. khammond on DSKJM1Z7X2PROD with NOTICES A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On September 14, 2010, the Securities and Exchange Commission (the ‘‘Commission’’) approved a Cboe Options proposal to establish a pilot 3 15 4 17 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). VerDate Sep<11>2014 17:09 Nov 08, 2022 Jkt 259001 program under which the Exchange is permitted to list P.M.-settled options on broad-based indexes to expire on (a) any Friday of the month, other than the third Friday-of-the-month, and (b) the last trading day of the month.5 On January 14, 2016, the Commission approved a Cboe Options proposal to expand the pilot program to allow P.M.settled options on broad-based indexes to expire on any Wednesday of month, other than those that coincide with an EOM.6 On August 10, 2016, the Commission approved a Cboe Options proposal to expand the pilot program to allow P.M.-settled options on broadbased indexes to expire on any Monday of month, other than those that coincide with an EOM.7 On April 12, 2022, the Commission approved a Cboe Options proposal to expand the pilot program to allow P.M.-settled SPX options to also expire on Tuesday or Thursday.8 On September 15, 2022, the Commission approved a Cboe Options proposal to expand the pilot program to allow P.M.settled XSP options to similarly expire on Tuesday or Thursday.9 Under the terms of the Nonstandard Expirations Pilot Program (‘‘Program’’), Weekly Expirations and EOMs are permitted on any broad-based index that is eligible for regular options trading. Weekly Expirations and EOMs are cash-settled and have European-style exercise. The proposal became effective on a pilot basis for a period of fourteen months that commenced on the next full month after approval was received to establish the Program 10 and was subsequently extended.11 Pursuant to Rule 4.13(e)(3), 5 See Securities Exchange Act Release 62911 (September 14, 2010), 75 FR 57539 (September 21, 2010) (order approving SR–CBOE–2009–075). 6 See Securities Exchange Act Release 76909 (January 14, 2016), 81 FR 3512 (January 21, 2016) (order approving SR–CBOE–2015–106). 7 See Securities Exchange Act Release 78531 (August 10, 2016), 81 FR 54643 (August 16, 2016) (order approving SR–CBOE–2016–046). 8 See Securities Exchange Act Release 94682 (April 12, 2022) (order approving SR–CBOE–2022– 005). 9 See Securities Exchange Act Release 95795 (September 21, 2022) (order approving SR–CBOE– 2022–039). 10 See supra note 7. 11 See Securities Exchange Act Release 65741 (November 14, 2011), 76 FR 72016 (November 21, 2011) (immediately effective rule change extending the Program through February 14, 2013). See also Securities Exchange Act Release 68933 (February 14, 2013), 78 FR 12374 (February 22, 2013) (immediately effective rule change extending the Program through April 14, 2014); 71836 (April 1, 2014), 79 FR 19139 (April 7, 2014) (immediately effective rule change extending the Program through November 3, 2014); 73422 (October 24, 2014), 79 FR 64640 (October 30, 2014) (immediately effective rule change extending the Program through May 3, 2016); 76909 (January 14, 2016), 81 FR 3512 (January 21, 2016) (extending the Program through May 3, 2017); 80387 (April 6, 2017), 82 FR PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 67729 the Program is scheduled to expire on November 7, 2022. The Exchange believes that the Program has been successful and well received by its Trading Permit Holders and the investing public during that the time that it has been in operation. The Exchange hereby proposes to extend the Program until May 8, 2023. This proposal does not request any other changes to the Program. Pursuant to the order approving the establishment of the Program, two months prior to the conclusion of the pilot period, Cboe Options is required to submit an annual report to the Commission, which addresses the following areas: Analysis of Volume & Open Interest; Monthly Analysis of Weekly Expirations & EOM Trading Patterns; Provisional Analysis of Index Price Volatility; and, for SPX and XSP options specifically, certain market quality data.12 The Exchange has submitted, under separate cover, the annual report in connection with the present proposed rule change. Additionally, the Exchange will provide the Commission with any additional data or analyses the Commission requests because it deems such data or analyses necessary to determine whether the Program is consistent with the Exchange Act. The Exchange is in the process of making public on its website all data and analyses previously submitted to the Commission under the Program,13 and will make public any data and analyses it makes to the 17706 (April 12, 2017) (extending the Program through May 3, 2018); 83165 (May 3, 2018), 83 FR 21316 (May 9, 2018) (SR–CBOE–2018–038) (extending the Program through November 5, 2018); 84534 (November 5, 2019), 83 FR 56119 (November 9, 2018) (SR–CBOE–2018–070) (extending the Program through May 6, 2019); 85650 (April 15, 2019), 84 FR 16552 (April 19, 2019) (SR–CBOE– 2019–022) (extending the Program through November 4, 2019); 87462 (November 5, 2019), 84 FR 61108 (November 12, 2019) (SR–CBOE–2019– 104) (extending the Program through May 4, 2020); 88673 (April 16, 2020), 85 FR 22507 (April 22, 2020) (SR–CBOE–2020–035) (extending the Program through November 2, 2020); 90262 (October 23, 2020) 85 FR 68616 (October 29, 2020) (SR–CBOE–2020–101); 91697 (April 28, 2021), 86 FR 23775 (May 4, 2021) (SR–CBOE–2021–026) (extending the Program through November 1, 2021); 93459 (October 28, 2021), 86 FR 60663 (November 3, 2021) (SR–CBOE–2021–063) (extending the Program through May 2, 2022); and 94800 (April 27, 2022) 87 FR 26248 (May 3, 2022) (SR–CBOE– 2022–021 (extending the Program through November 7, 2022). 12 The SPX and XSP options market quality data includes time-weighted relative quoted spreads, relative effective spreads and time-weighted bid and offer sizes, over sample periods determined by the Exchange and the Commission. 13 Available at https://www.cboe.com/aboutcboe/ legal-regulatory/national-market-system-plans/nonstandard-expiration-data. E:\FR\FM\09NON1.SGM 09NON1 67730 Federal Register / Vol. 87, No. 216 / Wednesday, November 9, 2022 / Notices Commission under the Program in the future. If, in the future, the Exchange proposes an additional extension of the Program, or should the Exchange propose to make the Program permanent (which the Exchange currently intends to do), the Exchange will submit an annual report (addressing the same areas referenced above and consistent with the order approving the establishment of the Program) to the Commission at least two months prior to the next bi-annual expiration date of the Program.14 The Exchange will also make this report public. Any positions established under the Program will not be impacted by the expiration of the Program. The Exchange believes there is sufficient investor interest and demand in the Program to warrant its extension. The Exchange believes that the Program has provided investors with additional means of managing their risk exposures and carrying out their investment objectives. Furthermore, the Exchange has not experienced any adverse market effects with respect to the Program. The Exchange believes that the proposed extension of the Program will not have an adverse impact on capacity. 2. Statutory Basis khammond on DSKJM1Z7X2PROD with NOTICES 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.15 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 16 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 facilitation 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 14 The Exchange notes that from the Program’s implementation in 2010 through 2014, the Program ran on a 14-month basis, and, in 2014, the Program was extended to run on a bi-annual pilot basis. See Securities Exchange Act Release No. 71836 (April 1, 2014), 79 FR 19139 (April 7, 2014) (SR–CBOE– 2014–027). The Program continues to run on a biannual basis today. 15 15 U.S.C. 78f(b). 16 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 17:09 Nov 08, 2022 Jkt 259001 the Section 6(b)(5) 17 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 that the Program has been successful to date and states that it has not encountered any problems with the Program. The proposed rule change allows for an extension of the Program for the benefit of market participants. Additionally, the Exchange believes that there is demand for the expirations offered under the Program and believes that that Weekly Expirations and EOMs will continue to provide the investing public and other market participants increased opportunities to better manage their risk exposure. B. Self-Regulatory Organization’s Statement on Burden on Competition Cboe Options 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. Specifically, the Exchange believes that, by extending the expiration of the Program, the proposed rule change will allow for further analysis of the Program and a determination of how the Program shall be structured in the future. In doing so, the proposed rule change will also serve to promote regulatory clarity and consistency, thereby reducing burdens on the marketplace and facilitating investor protection. 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) of the Act 18 and Rule 19b– 4(f)(6) thereunder.19 17 Id. 18 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 19 17 PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 A proposed rule change filed under Rule 19b–4(f)(6) 20 normally does not become operative prior to 30 days after the date of the filing. However, Rule 19b–4(f)(6)(iii) 21 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange states that waiver of the 30-day operative delay will allow it to extend the Program prior to its expiration on November 7, 2022, and maintain the status quo, thereby reducing market disruption. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest as it will allow the Pilot Program to continue uninterrupted, thereby avoiding investor confusion that could result from a temporary interruption in the Program. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposed rule change as operative upon filing.22 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 20 17 CFR 240.19b–4(f)(6). 21 17 CFR 240.19b–4(f)(6)(iii). 22 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). E:\FR\FM\09NON1.SGM 09NON1 Federal Register / Vol. 87, No. 216 / Wednesday, November 9, 2022 / Notices • Send an email to rule-comments@ sec.gov. Please include File Number SR– CBOE–2022–055 on the subject line. SECURITIES AND EXCHANGE COMMISSION Paper Comments [Release No. 34–96225; File No. SR–BOX– 2022–27] • 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–2022–055. 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–2022–055 and should be submitted on or before November 30, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 J. Matthew DeLesDernier, Deputy Secretary. khammond on DSKJM1Z7X2PROD with NOTICES [FR Doc. 2022–24412 Filed 11–8–22; 8:45 am] BILLING CODE 8011–01–P Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Allow Electronic MultiLeg Orders on BOX November 3, 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 October 26, 2022, BOX Exchange LLC (the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the 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 The Exchange proposes to amend BOX Rule 7240 (Complex Orders) to permit electronic Multi-Leg Orders on BOX. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission’s Public Reference Room and also on the Exchange’s internet website at https:// rules.boxexchange.com/rulefilings. 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 self-regulatory organization 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 self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. 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 23 17 CFR 200.30–3(a)(12), (59). VerDate Sep<11>2014 17:09 Nov 08, 2022 Jkt 259001 PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 67731 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Currently, only Multi-Leg Orders defined as ‘‘Complex Orders’’ trade electronically on BOX.5 The Exchange now proposes to allow Multi-Leg Orders that are not Complex Orders to trade electronically on BOX. As such, the Exchange proposes BOX Rule 7240(a)(10) which states that the term ‘‘Multi-Leg Order’’ means any order involving the simultaneous purchase and/or sale of two or more different options series in the same underlying security, for the same account, and for the purpose of executing a particular investment strategy, in a ratio that is less than one-to-three (.333) or greater than three-to-one (3.00). The Exchange notes that similar functionality is currently available at another options exchange and on the BOX Trading Floor.6 Multi-Leg Orders involve the simultaneous purchase and/or sale of two or more different options series in the same underlying security, for the same account, and for the purpose of executing a particular investment strategy.7 In particular, Multi-Leg Orders are distinguished from Complex Orders by the ratio between each leg of the orders. Complex Orders have a ratio between the legs of equal to or greater than one-to-three and less than or equal to three-to-one. Multi-Leg Orders consist of strategies with ratios greater than three-to-one or less than one-to-three. Participants may determine that using Multi-Leg Orders is appropriate for their investment and hedging purposes. The Exchange again notes that multi-leg Qualified Open Outcry (‘‘QOO’’) Orders may currently be executed on the BOX Trading Floor.8 5 Multi-Leg Orders and Complex Orders are distinguished by the ratio between each leg of the orders. Complex Orders have a ratio between the legs of equal to or greater than one to three and less than or equal to three to one. Multi-Leg Orders for these purposes consist of all other ratios between the legs. 6 See Chicago Board of Options Exchange, Inc. (‘‘CBOE’’) Rule 1.1 (stating in the definition of Complex Order that ‘‘the exchange determines on a class-by-class basis whether complex orders with ratios less than one-to-three (.333) or greater than three-to-one (3.00) (except for Index Combo orders) are eligible for electronic processing’’). The Exchange notes that multi-leg Qualified Open Outcry (‘‘QOO’’) orders are currently traded on the BOX Trading Floor. See BOX Rule 7600(c). 7 See BOX Rule 7600(c). 8 Each component series of a multi-leg QOO order must be executed at a price that is equal to or better than the NBBO for that series subject to the exceptions of Rule 15010(b). Each component series of a multi-leg QOO order (1) may not trade through Continued E:\FR\FM\09NON1.SGM 09NON1

Agencies

[Federal Register Volume 87, Number 216 (Wednesday, November 9, 2022)]
[Notices]
[Pages 67728-67731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24412]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96223; File No. SR-CBOE-2022-055]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Renew 
an Existing Pilot Program Until May 8, 2023

November 3, 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 October 24, 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 
and II below, which Items have

[[Page 67729]]

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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to renew an existing pilot program until May 8, 2023. The text of the 
proposed rule change is provided below. (additions are italicized; 
deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *

Rule 4.13. Series of Index Options

    (a)-(d) No change.
    (e) Nonstandard Expirations Pilot Program.
    (1)-(2) No change.
    (3) Duration of Nonstandard Expirations Pilot Program. The 
Nonstandard Expirations Pilot Program shall be through [November 7, 
2022]May 8, 2023.
* * * * *
    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
    On September 14, 2010, the Securities and Exchange Commission (the 
``Commission'') approved a Cboe Options proposal to establish a pilot 
program under which the Exchange is permitted to list P.M.-settled 
options on broad-based indexes to expire on (a) any Friday of the 
month, other than the third Friday-of-the-month, and (b) the last 
trading day of the month.\5\ On January 14, 2016, the Commission 
approved a Cboe Options proposal to expand the pilot program to allow 
P.M.-settled options on broad-based indexes to expire on any Wednesday 
of month, other than those that coincide with an EOM.\6\ On August 10, 
2016, the Commission approved a Cboe Options proposal to expand the 
pilot program to allow P.M.-settled options on broad-based indexes to 
expire on any Monday of month, other than those that coincide with an 
EOM.\7\ On April 12, 2022, the Commission approved a Cboe Options 
proposal to expand the pilot program to allow P.M.-settled SPX options 
to also expire on Tuesday or Thursday.\8\ On September 15, 2022, the 
Commission approved a Cboe Options proposal to expand the pilot program 
to allow P.M.-settled XSP options to similarly expire on Tuesday or 
Thursday.\9\ Under the terms of the Nonstandard Expirations Pilot 
Program (``Program''), Weekly Expirations and EOMs are permitted on any 
broad-based index that is eligible for regular options trading. Weekly 
Expirations and EOMs are cash-settled and have European-style exercise. 
The proposal became effective on a pilot basis for a period of fourteen 
months that commenced on the next full month after approval was 
received to establish the Program \10\ and was subsequently 
extended.\11\ Pursuant to Rule 4.13(e)(3), the Program is scheduled to 
expire on November 7, 2022. The Exchange believes that the Program has 
been successful and well received by its Trading Permit Holders and the 
investing public during that the time that it has been in operation. 
The Exchange hereby proposes to extend the Program until May 8, 2023. 
This proposal does not request any other changes to the Program.
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    \5\ See Securities Exchange Act Release 62911 (September 14, 
2010), 75 FR 57539 (September 21, 2010) (order approving SR-CBOE-
2009-075).
    \6\ See Securities Exchange Act Release 76909 (January 14, 
2016), 81 FR 3512 (January 21, 2016) (order approving SR-CBOE-2015-
106).
    \7\ See Securities Exchange Act Release 78531 (August 10, 2016), 
81 FR 54643 (August 16, 2016) (order approving SR-CBOE-2016-046).
    \8\ See Securities Exchange Act Release 94682 (April 12, 2022) 
(order approving SR-CBOE-2022-005).
    \9\ See Securities Exchange Act Release 95795 (September 21, 
2022) (order approving SR-CBOE-2022-039).
    \10\ See supra note 7.
    \11\ See Securities Exchange Act Release 65741 (November 14, 
2011), 76 FR 72016 (November 21, 2011) (immediately effective rule 
change extending the Program through February 14, 2013). See also 
Securities Exchange Act Release 68933 (February 14, 2013), 78 FR 
12374 (February 22, 2013) (immediately effective rule change 
extending the Program through April 14, 2014); 71836 (April 1, 
2014), 79 FR 19139 (April 7, 2014) (immediately effective rule 
change extending the Program through November 3, 2014); 73422 
(October 24, 2014), 79 FR 64640 (October 30, 2014) (immediately 
effective rule change extending the Program through May 3, 2016); 
76909 (January 14, 2016), 81 FR 3512 (January 21, 2016) (extending 
the Program through May 3, 2017); 80387 (April 6, 2017), 82 FR 17706 
(April 12, 2017) (extending the Program through May 3, 2018); 83165 
(May 3, 2018), 83 FR 21316 (May 9, 2018) (SR-CBOE-2018-038) 
(extending the Program through November 5, 2018); 84534 (November 5, 
2019), 83 FR 56119 (November 9, 2018) (SR-CBOE-2018-070) (extending 
the Program through May 6, 2019); 85650 (April 15, 2019), 84 FR 
16552 (April 19, 2019) (SR-CBOE-2019-022) (extending the Program 
through November 4, 2019); 87462 (November 5, 2019), 84 FR 61108 
(November 12, 2019) (SR-CBOE-2019-104) (extending the Program 
through May 4, 2020); 88673 (April 16, 2020), 85 FR 22507 (April 22, 
2020) (SR-CBOE-2020-035) (extending the Program through November 2, 
2020); 90262 (October 23, 2020) 85 FR 68616 (October 29, 2020) (SR-
CBOE-2020-101); 91697 (April 28, 2021), 86 FR 23775 (May 4, 2021) 
(SR-CBOE-2021-026) (extending the Program through November 1, 2021); 
93459 (October 28, 2021), 86 FR 60663 (November 3, 2021) (SR-CBOE-
2021-063) (extending the Program through May 2, 2022); and 94800 
(April 27, 2022) 87 FR 26248 (May 3, 2022) (SR-CBOE-2022-021 
(extending the Program through November 7, 2022).
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    Pursuant to the order approving the establishment of the Program, 
two months prior to the conclusion of the pilot period, Cboe Options is 
required to submit an annual report to the Commission, which addresses 
the following areas: Analysis of Volume & Open Interest; Monthly 
Analysis of Weekly Expirations & EOM Trading Patterns; Provisional 
Analysis of Index Price Volatility; and, for SPX and XSP options 
specifically, certain market quality data.\12\ The Exchange has 
submitted, under separate cover, the annual report in connection with 
the present proposed rule change. Additionally, the Exchange will 
provide the Commission with any additional data or analyses the 
Commission requests because it deems such data or analyses necessary to 
determine whether the Program is consistent with the Exchange Act. The 
Exchange is in the process of making public on its website all data and 
analyses previously submitted to the Commission under the Program,\13\ 
and will make public any data and analyses it makes to the

[[Page 67730]]

Commission under the Program in the future.
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    \12\ The SPX and XSP options market quality data includes time-
weighted relative quoted spreads, relative effective spreads and 
time-weighted bid and offer sizes, over sample periods determined by 
the Exchange and the Commission.
    \13\ Available at https://www.cboe.com/aboutcboe/legal-regulatory/national-market-system-plans/non-standard-expiration-data.
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    If, in the future, the Exchange proposes an additional extension of 
the Program, or should the Exchange propose to make the Program 
permanent (which the Exchange currently intends to do), the Exchange 
will submit an annual report (addressing the same areas referenced 
above and consistent with the order approving the establishment of the 
Program) to the Commission at least two months prior to the next bi-
annual expiration date of the Program.\14\ The Exchange will also make 
this report public. Any positions established under the Program will 
not be impacted by the expiration of the Program.
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    \14\ The Exchange notes that from the Program's implementation 
in 2010 through 2014, the Program ran on a 14-month basis, and, in 
2014, the Program was extended to run on a bi-annual pilot basis. 
See Securities Exchange Act Release No. 71836 (April 1, 2014), 79 FR 
19139 (April 7, 2014) (SR-CBOE-2014-027). The Program continues to 
run on a bi-annual basis today.
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    The Exchange believes there is sufficient investor interest and 
demand in the Program to warrant its extension. The Exchange believes 
that the Program has provided investors with additional means of 
managing their risk exposures and carrying out their investment 
objectives. Furthermore, the Exchange has not experienced any adverse 
market effects with respect to the Program.
    The Exchange believes that the proposed extension of the Program 
will not have an adverse impact on capacity.
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.\15\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \16\ 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 facilitation 
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) \17\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
    \17\ Id.
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    In particular, the Exchange believes that the Program has been 
successful to date and states that it has not encountered any problems 
with the Program. The proposed rule change allows for an extension of 
the Program for the benefit of market participants. Additionally, the 
Exchange believes that there is demand for the expirations offered 
under the Program and believes that that Weekly Expirations and EOMs 
will continue to provide the investing public and other market 
participants increased opportunities to better manage their risk 
exposure.

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

    Cboe Options 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. Specifically, the Exchange 
believes that, by extending the expiration of the Program, the proposed 
rule change will allow for further analysis of the Program and a 
determination of how the Program shall be structured in the future. In 
doing so, the proposed rule change will also serve to promote 
regulatory clarity and consistency, thereby reducing burdens on the 
marketplace and facilitating investor protection.

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) of the Act \18\ and Rule 19b-
4(f)(6) thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \21\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange states that 
waiver of the 30-day operative delay will allow it to extend the 
Program prior to its expiration on November 7, 2022, and maintain the 
status quo, thereby reducing market disruption. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest as it will allow the 
Pilot Program to continue uninterrupted, thereby avoiding investor 
confusion that could result from a temporary interruption in the 
Program. Accordingly, the Commission hereby waives the 30-day operative 
delay and designates the proposed rule change as operative upon 
filing.\22\
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    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
    \22\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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 change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or

[[Page 67731]]

     Send an email to [email protected]. Please include 
File Number SR-CBOE-2022-055 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-2022-055. 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-2022-055 and should be submitted on 
or before November 30, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12), (59).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-24412 Filed 11-8-22; 8:45 am]
BILLING CODE 8011-01-P
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