Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend Its Rules To Adopt Monthly Options Series, 68833-68837 [2023-21939]
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Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices
to the concerns identified above as well
as any other relevant concerns. Such
comments should be submitted by
October 25, 2023. Rebuttal comments
should be submitted by November 8,
2023. Although there do not appear to
be any issues relevant to approval or
disapproval that would be facilitated by
an oral presentation of views, data, and
arguments, the Commission will
consider, pursuant to Rule 19b–4, any
request for an opportunity to make an
oral presentation.51
The Commission asks that
commenters address the sufficiency and
merit of the Exchange’s statements in
support of the proposal, in addition to
any other comments they may wish to
submit about the proposed rule change.
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–
CboeBZX–2023–067 on the subject line.
Paper Comments
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• 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–CboeBZX–2023–067. 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
51 15
U.S.C. 78s(b)(2). Section 19(b)(2) of the Act
grants the Commission flexibility to determine what
type of proceeding—either oral or notice and
opportunity for written comments—is appropriate
for consideration of a particular proposal by an
SRO. See Securities Acts Amendments of 1975,
Report of the Senate Committee on Banking,
Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
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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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–CboeBZX–2023–067 and should be
submitted on or before October 25,
2023. Rebuttal comments should be
submitted by November 8, 2023.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(3)(C) of the Act,52 that File
No. SR–CboeBZX–2023–067, be and
hereby is, temporarily suspended. In
addition, the Commission is instituting
proceedings to determine whether the
proposed rule change should be
approved or disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.53
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–22009 Filed 10–3–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98593; File No. SR–CBOE–
2023–049]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing of a
Proposed Rule Change To Amend Its
Rules To Adopt Monthly Options
Series
September 28, 2023.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 27, 2023, Cboe Exchange,
Inc. (‘‘Exchange’’ or ‘‘Cboe Options’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
52 15
U.S.C. 78s(b)(3)(C).
CFR 200.30–3(a)(57).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
53 17
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68833
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 Rules to adopt Monthly Options
Series. 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 Exchange proposes to amend its
Rules to accommodate the listing of
option series that would expire at the
close of business on the last business
day of a calendar month (‘‘Monthly
Option Series’’). Pursuant to proposed
Rules 4.5(g)(1) and 4.13(a)(2)(C)(i), the
Exchange may list Monthly Option
Series for up to five currently listed
option classes that are either index
options or options on exchange-traded
funds (‘‘ETFs’’).3 In addition, the
Exchange may also list Monthly Option
Series on any options classes that are
selected by other securities exchanges
3 The Exchange proposes to amend Rule 4.5(a)
and (b) to provide that proposed Rule 4.5(g) will
describe how the Exchange will fix a specific
expiration date and exercise price for Monthly
Option Series and that proposed Rule 4.5(g) will
govern the procedures for opening Monthly Options
Series, respectively. This is consistent with
language in current Rules 4.5(a) and (b) for other
Short Term Option Series, Quarterly Options Series,
and Delayed Start Option Series.
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that employ a similar program under
their respective rules.4 The Exchange
may list 12 expirations for Monthly
Option Series. Monthly Option Series
need not be for consecutive months;
however, the expiration date of a
nonconsecutive expiration may not be
beyond what would be considered the
last expiration date if the maximum
number of expirations were listed
consecutively.5 Other expirations in the
same class are not counted as part of the
maximum numbers of Monthly Option
Series expirations for a class.6 Monthly
Options Series will be P.M.-settled.7
The strike price of each Monthly
Options Series will be fixed at a price
per share, with at least two, but no more
than five, strike prices above and at least
two, but no more than five, strike prices
below the value of the underlying index
or price of the underlying security at
about the time that a Monthly Options
Series is opened for trading on the
Exchange. The Exchange will list strike
prices for Monthly Options Series that
are reasonably related to the current
price of the underlying security or
current index value of the underlying
index to which such series relates at
about the time such series of options is
first opened for trading on the
Exchange. The term ‘‘reasonably related
to the current price of the underlying
security or index value of the
underlying index’’ means that the
exercise price is within 30% of the
current underlying security price or
4 The Exchange is unaware of any other options
exchanges that currently have a similar program but
expect other options exchanges may adopt similar
programs in the future.
5 The Exchange notes this provision considers
consecutive monthly listings. In other words, as
other expirations (such as Quarterly Option Series)
are not counted as part of the maximum, those
expirations would not be considered when
considering when the last expiration date would be
if the maximum number were listed consecutively.
For example, if it is January 2024 and the Exchange
lists Quarterly Options Series in class ABC with
expirations in March, June, September, December,
and the following March, the Exchange could also
list Monthly Options Series in class ABC with
expirations in January, February, April, May, July,
August, October, and November 2024 and January
and February of 2025. This is because, if Quarterly
Option Series, for example, were counted, the
Exchange would otherwise never be able to list the
maximum number of Monthly Option Series. This
is consistent with the listing provisions for
Quarterly Options Series, which permit give
calendar quarter expirations. The need to list series
with the same expiration in the current calendar
year and the following calendar year (whether
Monthly or Quarterly expiration) is to allow market
participants to execute one-year strategies pursuant
to which they may roll their exposures in the
longer-dated options (e.g. January 2025) prior to the
expiration of the nearer-dated option (e.g. January
2024).
6 See proposed Rules 4.5(g)(2) and
4.13(a)(2)(C)(ii).
7 See proposed Rule 4.5(g)(3) and
4.13(a)(2)(C)(iii).
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index value.8 Additional Monthly
Options Series of the same class may be
open 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 initial exercise
price or prices. To the extent that any
additional strike prices are listed by the
Exchange, such additional strike prices
will be within 30% above or below the
closing price of the underlying index or
security on the preceding day. The
Exchange may also open additional
strike prices of Monthly Option Series
that are more than 30% above or below
the current price of the underlying
security, provided that demonstrated
customer interest exists for such series,
as expressed by institutional, corporate,
or individual customers or their brokers.
Market-Makers trading for their own
account will not be considered when
determining customer interest under
this provision. The opening of the new
Monthly Options Series will not affect
the series of options of the same class
previously opened.9 The interval
between strike prices on Monthly
Options Series will be the same as the
interval for strike prices for series in
that same options class that expire in
accordance with the normal monthly
expiration cycle.10
By definition, Monthly Option Series
can never expire in the same week as a
standard expiration series (which expire
on the third Friday of a month) in the
same class expires. The same, however,
is not the case with regards to Short
Term Options Series or Quarterly
Options Series. Therefore, to avoid any
confusion in the marketplace, the
Exchange proposes to amend Rules
4.5(d) and 4.13(a)(2)(A) to provide the
Exchange will not list a Short Term
Options Series in a class on a date on
which a Monthly Options Series or
8 See proposed Rule 4.5(g)(4) and 4.13(a)(2)(C)(iv).
The Exchange notes these proposed provisions are
consistent with the initial series provision for the
Quarterly Options Series program in Rule
4.13(a)(2)(B)(iv). While different than the initial
strike listing provision for the Quarterly Options
Series program in current Rule 4.5(e)(4), the
Exchange believes the proposed provision is
appropriate, as it contemplates classes that may
have strike intervals of $5 or greater. For
consistency, the Exchange also proposes to amend
Rule 4.5(e)(4) to incorporate the same provision for
initial series.
9 See proposed Rule 4.5(g)(5) and 4.13(a)(2)(C)(v).
10 See proposed Rule 4.5(g)(6) and
4.13(a)(2)(C)(vi); see also Rule 4.5, Interpretations
and Policies .01 and .04–.07 (permissible strike
prices for ETF classes) and Rules 4.5,
Interpretations and Policies .06, .09, .10, .12, .13,
.15 and 4.13, Interpretations and Policies .01, .04,
.10, and .11 (permissible strike prices for index
options).
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Quarterly Options Series expires.11
Similarly, proposed Rules 4.5(g)(2) and
4.13(a)(2)(C)(ii) provide that no Monthly
Options Series may expire on a date that
coincides with an expiration date of a
Quarterly Options Series in the same
index or ETF class. In other words, the
Exchange will not list a Short Term
Options Series on an index or ETF if a
Monthly Options Series on that index or
ETF were to expire on the same date,
nor will the Exchange list a Monthly
Options Series on an ETF or index if a
Quarterly Options Series on that index
or ETF were to expire on the same date
to prevent the listing of series with
concurrent expirations.12
With respect to Monthly Options
Series added pursuant to proposed
Rules 4.5(g)(1) through (6) and
4.13(a)(2)(C)(i) through (iv), the
Exchange will, on a monthly basis,
review series that are outside a range of
five strikes above and five strikes below
the current price of the underlying
index or security, and delist series with
no open interest in both the put and the
call series having a: (i) strike higher than
the highest strike price with open
interest in the put and/or call series for
a given expiration month; and (ii) strike
lower than the lowest strike price with
open interest in the put and/or call
series for a given expiration month.
Notwithstanding this delisting policy,
customer requests to add strikes and/or
maintain strikes in Monthly Options
Series in series eligible for delisting will
be granted. In connection with this
delisting policy, if the Exchange
identifies series for delisting, the
Exchange will notify other options
exchanges with similar delisting
policies regarding eligible series for
delisting and will work with such other
exchanges to develop a uniform list of
11 The Exchange also proposes to make a
nonsubstantive change to Rules 4.5(d) and
4.13(a)(2)(A) to change current references to
‘‘monthly options series’’ to ‘‘standard expiration
options series’’ (i.e., series that expire on the third
Friday of a month), to eliminate potential
confusion. The current references to ‘‘monthly
options series’’ are intended to refer to those series
that expire on the third Friday of a month, which
are generally referred to in the industry as standard
expirations.
12 The Exchange notes this would not prevent the
Exchange from listing a P.M.-settled Monthly
Options Series on an index with the same
expiration date as an A.M.-settled Short Term
Options Series on the same index, both of which
may expire on a Friday. In other words, the
Exchange may list a P.M-settled Monthly Options
Series on an index concurrent with an A.M.-settled
Short Term Options Series on that index and both
of which expire on a Friday. The Exchange believes
this concurrent listing would provide investors
with yet another hedging mechanism and is
reasonable given these series would not be identical
(unlike if they were both P.M-settled). This could
not occur with respect to ETFs, as all Short Term
Options Series on ETFs are P.M.-settled.
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series to be delisted, so as to ensure
uniform series delisting of multiply
listed Monthly Options Series.13
The Exchange believes that Monthly
Options Series will provide investors
with another flexible and valuable tool
to manage risk exposure, minimize
capital outlays, and be more responsive
to the timing of events affecting the
securities that underlie option contracts.
The Exchange believes limiting Monthly
Options Series to five classes will
ensure the addition of these new series
will have a negligible impact on the
Exchange’s and the Options Price
Reporting Authority’s (‘‘OPRA’s’’)
quoting capacity. The Exchange
represents it has the necessary systems
capacity to support new options series
that will result from the introduction of
Monthly Options Series.
The Exchange also proposes to amend
Rules 8.30 through 8.34 to provide that
positions in Monthly Options Series
will be aggregated with positions in
options contracts on the same
underlying security or index.14 This is
consistent with how position (and
exercise) limits are currently imposed
on series with other expirations (Short
Term Options Series, Quarterly Options
Series, and Delayed Start Options
Series). Therefore, positions in options
within class of index or ETF options,
regardless of their expirations, would
continue to be subject to existing
position (and exercise) limits. The
Exchange believes this will address
potential manipulative schemes and
adverse market impacts surrounding the
use of options.
The Exchange also represents its
current surveillance programs will
apply to Monthly Options Series and
will properly monitor trading in the
proposed Monthly Options Series. The
Exchange currently lists Quarterly
Options Series in certain index 15 and
13 See proposed Rules 4.5(g)(7) and
4.13(a)(2)(C)(vii). Pursuant to Rule 8.42, exercise
limits for impacted index and ETF classes would be
equal to the applicable position limits.
14 See proposed Rules 8.30, Interpretation and
Policy .09 (regarding position limits for options on
stocks and ETFs), 8.31(e) (regarding position limits
for broad-based index options), 8.32(f) (regarding
position limits for industry index options), 8.33(c)
(regarding position limits for micro narrow-based
indexes), and 8.34(c) (regarding position limits for
individual stock or ETF based volatility index
options). The Exchange notes the proposed rule
change adds Interpretation and Policy .09 to Rule
8.30 to state that with respect to options on stocks
or ETFs, positions in Short Term Option Series,
Monthly Options Series, and Quarterly Options
Series shall be aggregated with positions in options
contracts on the same underlying security. This is
currently true with respect to Short Term Option
Series and Quarterly Options Series but was
inadvertently omitted from Rule 8.30.
15 The Exchange notes it currently lists quarterly
expirations on index options pursuant to Rule
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ETF classes, which expire at the close
of business at the end of four calendar
months (i.e., the end of each calendar
quarter), and has not experienced any
market disruptions nor issues with
capacity. The Exchange’s surveillance
programs currently in place to support
and properly monitor trading in these
Quarterly Options Series, as well as
Short Term Option Series and standard
expiration series, will apply to the
proposed Monthly Options Series. The
Exchange believes its surveillances
continue to be designed to deter and
detect violations of its Rules, including
position and exercise limits and
possible manipulative behavior, and
these surveillances will apply to
Monthly Options Series that the
Exchange determines to list for trading.
Ultimately, the Exchange does not
believe the proposed rule change raises
any unique regulatory concerns because
existing safeguards—such as position
and exercise limits (and the aggregation
of options overlying the same index or
ETF) and reporting requirements—
would continue to apply.
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.16 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 17 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) 18 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 introduction of Monthly Options
Series will remove impediments to and
perfect the mechanism of a free and
4.13(c) (regarding quarterly index expirations or
‘‘QIXs’’).
16 15 U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(5).
18 Id.
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68835
open market and a national market
system by expanding hedging tools
available to market participants. The
Exchange believes the proposed
monthly expirations will allow market
participants to transact in the index and
ETF options listed pursuant to the
proposed rule change based on their
timing as needed and allow them to
tailor their investment and hedging
needs more effectively. Further, the
Exchange believes the availability of
Monthly Options Series would protect
investors and the public interest by
providing investors with more
flexibility to closely tailor their
investment and hedging decisions in
these options, thus allowing them to
better manage their risk exposure.
The Exchange believes the Quarterly
Options Series Program has been
successful to date and the proposed
Monthly Options Series program simply
expands the ability of investors to hedge
risk against market movements
stemming from economic releases or
market events that occur at months’
ends in the same way the Quarterly
Options Series Program has expanded
the landscape of hedging for quarter-end
news. Monthly Options Series will also
complement Short Term Options Series,
which allow investors to hedge risk
against events that occur throughout a
month. The Exchange believes the
availability of additional expirations
should create greater trading and
hedging opportunities for investors, as
well as provide investors with eh ability
to tailor their investment objectives
more effectively.
The Exchange notes the proposed
terms of Monthly Options Series,
including the limitation to five index
and ETF option classes, are
substantively the same as the current
terms of Quarterly Options Series.19
Quarterly Options Series expire on the
last business day of a calendar quarter,
which is the last business day of every
third month. The proposed Monthly
Options Series would fill the gaps
between Quarterly Options Series
expirations by permitting series to
expire on the last business day of every
month, rather than every third month.
The proposed Monthly Options Series
may be listed in accordance with the
same terms as Quarterly Options Series,
including permissible strikes.20 As is
19 Compare proposed Rules 4.5(g) and
4.13(a)(2)(C) to Rules 4.5(e) and 4.13(a)(2)(B),
respectively.
20 The Exchange notes the proposed maximum
number of expirations is consistent with the
maximum number of expirations permitted for endof-month series in index classes. See Rule 4.13(e)(2)
(which references Rule 4.13(a)(2), which permits up
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the case with Quarterly Options Series,
no Short Term Options Series may
expire on the same day as a Monthly
Options Series. Similarly, as proposed,
no Monthly Options Series may expire
on the same day as a Quarterly Options
Series. The Exchange believes
preventing listing series with concurrent
expirations in a class will eliminate
potential investors confusion and thus
protect investors and the public interest.
Given that Quarterly Options Series the
Exchange currently lists are essentially
Monthly Options Series that can expire
at the end of only certain calendar
months, the Exchange believes it is
reasonable to list Monthly Options
Series in accordance with the same
terms, as it will promote just and
equitable principles of trade. The
Exchange believes limiting Monthly
Options Series to five classes will
ensure the addition of these new series
will have a negligible impact on the
Exchange’s and OPRA’s quoting
capacity. The Exchange represents it has
the necessary systems capacity to
support new options series that will
result from the introduction of Monthly
Options Series.
The Exchange further believes the
proposed rule change regarding the
treatment of Monthly Options Series
with respect to determining compliance
with position and exercise limits is
designed to prevent fraudulent and
manipulative acts and practices and
promote just and equitable principles of
trade. Monthly Options Series will be
aggregated with options overlying the
same ETF or index for purposes of
compliance with position (and exercise)
limits, which is consistent with how
position (and exercise) limits are
currently imposed on series with other
expirations (Short Term Options Series,
Quarterly Options Series, and Delayed
Start Options Series). Therefore, options
positions within ETF or index option
classes for which Monthly Options
Series are listed, regardless of their
expirations, would continue to be
subject to existing position (and
exercise) limits. The Exchange believes
this will address potential manipulative
schemes and adverse market impacts
surrounding the use of options. The
Exchange also represents its current
surveillance programs will apply to
Monthly Options Series and will
properly monitor trading in the
proposed Monthly Options Series. The
Exchange currently trades Quarterly
Options Series in certain index and ETF
classes, which expire at the close of
business at the end of four calendar
months (i.e., the end of each calendar
quarter), and has not experienced any
market disruptions nor issues with
capacity. The Exchange’s surveillance
programs currently in place to support
and properly monitor trading in these
Quarterly Options Series, as well as
Short Term Option Series and standard
expiration series, will apply to the
proposed Monthly Options Series. The
Exchange believes its surveillances
continue to be designed to deter and
detect violations of its Rules, including
position and exercise limits and
possible manipulative behavior, and
these surveillances will apply to
Monthly Options Series that the
Exchange determines to list for trading.
Ultimately, the Exchange does not
believe the proposed rule change raises
any unique regulatory concerns because
existing safeguards—such as position
and exercise limits (and the aggregation
of options overlying the same ETF or
index) and reporting requirements—
would continue to apply.
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 the proposed
rule change to list Monthly Option
Series will impose any burden on
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as any
Monthly Options Series the Exchange
lists for trading will be available in the
same manner for all market participants
who wish to trade such options. The
Exchange notes the proposed terms of
Monthly Options Series, including the
limitation to five index and ETF option
classes, are substantively the same as
the current terms of Quarterly Options
Series.21 Quarterly Options Series
expire on the last business day of a
calendar quarter, which is the last
business day of every third month,
making the concept of Monthly Options
Series in a limited number of index and
ETF options not novel. The proposed
Monthly Options Series will fill the
gaps between Quarterly Options Series
expirations by permitting series to
expire on the last business day of every
month, rather than every third month.
The proposed Monthly Options Series
may be listed in accordance with the
same terms as Quarterly Options Series,
including permissible strikes.22
21 See
to 12 standard monthly expirations on the majority
of index options currently listed on the Exchange).
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Rules 4.5(e) and 4.13(a)(2)(B).
Exchange notes the proposed maximum
number of expirations is consistent with the
22 The
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Monthly Options Series will trade on
the Exchange in the same manner as
other options in the same class.
The Exchange does not believe the
proposed rule change to list Monthly
Option Series will impose any burden
on intermarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as nothing
prevents other options exchanges from
proposing similar rules. As discussed
above, the proposed rule change would
permit listing of Monthly Options Series
in five index or ETF options, as well as
any other classes that other exchanges
may list under similar programs. To the
extent that the availability of Monthly
Options Series makes the Exchange a
more attractive marketplace to market
participants at other exchanges, market
participants are free to elect to become
market participants on the Exchange.
The Exchange believes that the
proposed rule change may relieve any
burden on, or otherwise promote,
competition. Similar to Short Term
Options Series and Quarterly Options
Series, the Exchange believes the
introduction of Monthly Options Series
will not impose an undue burden on
competition. The Exchange believes that
it will, among other things, expand
hedging tools available to market
participants. The Exchange believes
Monthly Options Series will allow
market participants to purchase options
based on their timing as needed and
allow them to tailor their investment
and hedging needs more effectively.
The Exchange does not believe the
proposed rule change to provide that
positions in Monthly Options Series
will be aggregated with positions in
options contracts on the same
underlying index or security for
purposes of determining compliance
with position (and exercise) limits will
impose any burden on intramarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act, as it will apply in
the same manner to all market
participants. The Exchange proposes to
apply position (and exercise) limits to
Monthly Options Series in the same
manner it applies position limits to
series with other expirations (Short
Term Options Series, Quarterly Options
Series, and Delayed Start Options
Series). Therefore, positions in options
in a class of ETF or index options,
regardless of their expirations, would
continue to be subject to existing
position (and exercise) limits.
maximum number of expirations permitted for endof-month series in index classes. See Rule 4.13(e)(2)
(which references Rule 4.13(a)(2), which permits up
to 12 standard monthly expirations on the majority
of index options currently listed on the Exchange).
E:\FR\FM\04OCN1.SGM
04OCN1
Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices
Additionally, the Exchange does not
believe this 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 it will
address potential manipulative schemes
and adverse market impacts
surrounding the use of options.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the Exchange consents, the Commission
will:
A. by order approve or disapprove
such proposed rule change, or
B. institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
lotter on DSK11XQN23PROD with NOTICES1
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CBOE–2023–049 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–2023–049. 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
VerDate Sep<11>2014
20:21 Oct 03, 2023
Jkt 262001
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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–CBOE–2023–049 and should be
submitted on or before October 25,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–21939 Filed 10–3–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98620; File No. SR–
NYSEARCA–2023–66]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Rule 0
September 28, 2023.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on
September 27, 2023, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or 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 self-regulatory
organization. The Commission is
publishing this notice to solicit
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00279
Fmt 4703
Sfmt 4703
68837
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
Rule 0 (Regulation of the Exchange, OTP
Holders, OTP Firms and ETP Holders)
to adopt new rule text based on based
on [sic] Rule 0 (Regulation of the
Exchange and its Member
Organizations) of its affiliate New York
Stock Exchange LLC. The proposed rule
change is available on the Exchange’s
website at www.nyse.com, at the
principal office of the Exchange, 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
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 those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Rule 0 (Rule 0 [sic] (Regulation of the
Exchange, OTP Holders, OTP Firms and
ETP Holders) to adopt new rule text
based on Rule 0 (Regulation of the
Exchange and its Member
Organizations) of its affiliate New York
Stock Exchange LLC (‘‘NYSE’’).
Specifically, the Exchange proposes a
new subsection (b) in conformity with
NYSE Rule 0(b). NYSE Rule 0(b) is in
turn based on FINRA Rule 0140(a)
(Applicability), Nasdaq Stock Market
LLC (‘‘Nasdaq’’) General 2 (Organization
and Administration), Section 6(a), and
Nasdaq BX, Inc. (‘‘Nasdaq BX’’) General
2 (Organization and Administration),
Section 6(a).4
NYSE Rule 0(b) provides that the
NYSE’s rules apply to all member
organizations and persons associated
4 For purposes of this filing, Nasdaq and Nasdaq
BX are referred to collectively as the ‘‘Nasdaq
Exchanges.’’ Nasdaq General 2, Section 6(a) and
Nasdaq BX General 2, Section 6(a) are referred to
collectively as the ‘‘Nasdaq Exchanges’ Rules.’’
E:\FR\FM\04OCN1.SGM
04OCN1
]]>Agencies
[Federal Register Volume 88, Number 191 (Wednesday, October 4, 2023)]
[Notices]
[Pages 68833-68837]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21939]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98593; File No. SR-CBOE-2023-049]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To Amend Its Rules To Adopt Monthly
Options Series
September 28, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 27, 2023, Cboe Exchange, Inc. (``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend its Rules to adopt Monthly Options Series. 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 Exchange proposes to amend its Rules to accommodate the listing
of option series that would expire at the close of business on the last
business day of a calendar month (``Monthly Option Series''). Pursuant
to proposed Rules 4.5(g)(1) and 4.13(a)(2)(C)(i), the Exchange may list
Monthly Option Series for up to five currently listed option classes
that are either index options or options on exchange-traded funds
(``ETFs'').\3\ In addition, the Exchange may also list Monthly Option
Series on any options classes that are selected by other securities
exchanges
[[Page 68834]]
that employ a similar program under their respective rules.\4\ The
Exchange may list 12 expirations for Monthly Option Series. Monthly
Option Series need not be for consecutive months; however, the
expiration date of a nonconsecutive expiration may not be beyond what
would be considered the last expiration date if the maximum number of
expirations were listed consecutively.\5\ Other expirations in the same
class are not counted as part of the maximum numbers of Monthly Option
Series expirations for a class.\6\ Monthly Options Series will be P.M.-
settled.\7\
---------------------------------------------------------------------------
\3\ The Exchange proposes to amend Rule 4.5(a) and (b) to
provide that proposed Rule 4.5(g) will describe how the Exchange
will fix a specific expiration date and exercise price for Monthly
Option Series and that proposed Rule 4.5(g) will govern the
procedures for opening Monthly Options Series, respectively. This is
consistent with language in current Rules 4.5(a) and (b) for other
Short Term Option Series, Quarterly Options Series, and Delayed
Start Option Series.
\4\ The Exchange is unaware of any other options exchanges that
currently have a similar program but expect other options exchanges
may adopt similar programs in the future.
\5\ The Exchange notes this provision considers consecutive
monthly listings. In other words, as other expirations (such as
Quarterly Option Series) are not counted as part of the maximum,
those expirations would not be considered when considering when the
last expiration date would be if the maximum number were listed
consecutively. For example, if it is January 2024 and the Exchange
lists Quarterly Options Series in class ABC with expirations in
March, June, September, December, and the following March, the
Exchange could also list Monthly Options Series in class ABC with
expirations in January, February, April, May, July, August, October,
and November 2024 and January and February of 2025. This is because,
if Quarterly Option Series, for example, were counted, the Exchange
would otherwise never be able to list the maximum number of Monthly
Option Series. This is consistent with the listing provisions for
Quarterly Options Series, which permit give calendar quarter
expirations. The need to list series with the same expiration in the
current calendar year and the following calendar year (whether
Monthly or Quarterly expiration) is to allow market participants to
execute one-year strategies pursuant to which they may roll their
exposures in the longer-dated options (e.g. January 2025) prior to
the expiration of the nearer-dated option (e.g. January 2024).
\6\ See proposed Rules 4.5(g)(2) and 4.13(a)(2)(C)(ii).
\7\ See proposed Rule 4.5(g)(3) and 4.13(a)(2)(C)(iii).
---------------------------------------------------------------------------
The strike price of each Monthly Options Series will be fixed at a
price per share, with at least two, but no more than five, strike
prices above and at least two, but no more than five, strike prices
below the value of the underlying index or price of the underlying
security at about the time that a Monthly Options Series is opened for
trading on the Exchange. The Exchange will list strike prices for
Monthly Options Series that are reasonably related to the current price
of the underlying security or current index value of the underlying
index to which such series relates at about the time such series of
options is first opened for trading on the Exchange. The term
``reasonably related to the current price of the underlying security or
index value of the underlying index'' means that the exercise price is
within 30% of the current underlying security price or index value.\8\
Additional Monthly Options Series of the same class may be open 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 initial
exercise price or prices. To the extent that any additional strike
prices are listed by the Exchange, such additional strike prices will
be within 30% above or below the closing price of the underlying index
or security on the preceding day. The Exchange may also open additional
strike prices of Monthly Option Series that are more than 30% above or
below the current price of the underlying security, provided that
demonstrated customer interest exists for such series, as expressed by
institutional, corporate, or individual customers or their brokers.
Market-Makers trading for their own account will not be considered when
determining customer interest under this provision. The opening of the
new Monthly Options Series will not affect the series of options of the
same class previously opened.\9\ The interval between strike prices on
Monthly Options Series will be the same as the interval for strike
prices for series in that same options class that expire in accordance
with the normal monthly expiration cycle.\10\
---------------------------------------------------------------------------
\8\ See proposed Rule 4.5(g)(4) and 4.13(a)(2)(C)(iv). The
Exchange notes these proposed provisions are consistent with the
initial series provision for the Quarterly Options Series program in
Rule 4.13(a)(2)(B)(iv). While different than the initial strike
listing provision for the Quarterly Options Series program in
current Rule 4.5(e)(4), the Exchange believes the proposed provision
is appropriate, as it contemplates classes that may have strike
intervals of $5 or greater. For consistency, the Exchange also
proposes to amend Rule 4.5(e)(4) to incorporate the same provision
for initial series.
\9\ See proposed Rule 4.5(g)(5) and 4.13(a)(2)(C)(v).
\10\ See proposed Rule 4.5(g)(6) and 4.13(a)(2)(C)(vi); see also
Rule 4.5, Interpretations and Policies .01 and .04-.07 (permissible
strike prices for ETF classes) and Rules 4.5, Interpretations and
Policies .06, .09, .10, .12, .13, .15 and 4.13, Interpretations and
Policies .01, .04, .10, and .11 (permissible strike prices for index
options).
---------------------------------------------------------------------------
By definition, Monthly Option Series can never expire in the same
week as a standard expiration series (which expire on the third Friday
of a month) in the same class expires. The same, however, is not the
case with regards to Short Term Options Series or Quarterly Options
Series. Therefore, to avoid any confusion in the marketplace, the
Exchange proposes to amend Rules 4.5(d) and 4.13(a)(2)(A) to provide
the Exchange will not list a Short Term Options Series in a class on a
date on which a Monthly Options Series or Quarterly Options Series
expires.\11\ Similarly, proposed Rules 4.5(g)(2) and 4.13(a)(2)(C)(ii)
provide that no Monthly Options Series may expire on a date that
coincides with an expiration date of a Quarterly Options Series in the
same index or ETF class. In other words, the Exchange will not list a
Short Term Options Series on an index or ETF if a Monthly Options
Series on that index or ETF were to expire on the same date, nor will
the Exchange list a Monthly Options Series on an ETF or index if a
Quarterly Options Series on that index or ETF were to expire on the
same date to prevent the listing of series with concurrent
expirations.\12\
---------------------------------------------------------------------------
\11\ The Exchange also proposes to make a nonsubstantive change
to Rules 4.5(d) and 4.13(a)(2)(A) to change current references to
``monthly options series'' to ``standard expiration options series''
(i.e., series that expire on the third Friday of a month), to
eliminate potential confusion. The current references to ``monthly
options series'' are intended to refer to those series that expire
on the third Friday of a month, which are generally referred to in
the industry as standard expirations.
\12\ The Exchange notes this would not prevent the Exchange from
listing a P.M.-settled Monthly Options Series on an index with the
same expiration date as an A.M.-settled Short Term Options Series on
the same index, both of which may expire on a Friday. In other
words, the Exchange may list a P.M-settled Monthly Options Series on
an index concurrent with an A.M.-settled Short Term Options Series
on that index and both of which expire on a Friday. The Exchange
believes this concurrent listing would provide investors with yet
another hedging mechanism and is reasonable given these series would
not be identical (unlike if they were both P.M-settled). This could
not occur with respect to ETFs, as all Short Term Options Series on
ETFs are P.M.-settled.
---------------------------------------------------------------------------
With respect to Monthly Options Series added pursuant to proposed
Rules 4.5(g)(1) through (6) and 4.13(a)(2)(C)(i) through (iv), the
Exchange will, on a monthly basis, review series that are outside a
range of five strikes above and five strikes below the current price of
the underlying index or security, and delist series with no open
interest in both the put and the call series having a: (i) strike
higher than the highest strike price with open interest in the put and/
or call series for a given expiration month; and (ii) strike lower than
the lowest strike price with open interest in the put and/or call
series for a given expiration month. Notwithstanding this delisting
policy, customer requests to add strikes and/or maintain strikes in
Monthly Options Series in series eligible for delisting will be
granted. In connection with this delisting policy, if the Exchange
identifies series for delisting, the Exchange will notify other options
exchanges with similar delisting policies regarding eligible series for
delisting and will work with such other exchanges to develop a uniform
list of
[[Page 68835]]
series to be delisted, so as to ensure uniform series delisting of
multiply listed Monthly Options Series.\13\
---------------------------------------------------------------------------
\13\ See proposed Rules 4.5(g)(7) and 4.13(a)(2)(C)(vii).
Pursuant to Rule 8.42, exercise limits for impacted index and ETF
classes would be equal to the applicable position limits.
---------------------------------------------------------------------------
The Exchange believes that Monthly Options Series will provide
investors with another flexible and valuable tool to manage risk
exposure, minimize capital outlays, and be more responsive to the
timing of events affecting the securities that underlie option
contracts. The Exchange believes limiting Monthly Options Series to
five classes will ensure the addition of these new series will have a
negligible impact on the Exchange's and the Options Price Reporting
Authority's (``OPRA's'') quoting capacity. The Exchange represents it
has the necessary systems capacity to support new options series that
will result from the introduction of Monthly Options Series.
The Exchange also proposes to amend Rules 8.30 through 8.34 to
provide that positions in Monthly Options Series will be aggregated
with positions in options contracts on the same underlying security or
index.\14\ This is consistent with how position (and exercise) limits
are currently imposed on series with other expirations (Short Term
Options Series, Quarterly Options Series, and Delayed Start Options
Series). Therefore, positions in options within class of index or ETF
options, regardless of their expirations, would continue to be subject
to existing position (and exercise) limits. The Exchange believes this
will address potential manipulative schemes and adverse market impacts
surrounding the use of options.
---------------------------------------------------------------------------
\14\ See proposed Rules 8.30, Interpretation and Policy .09
(regarding position limits for options on stocks and ETFs), 8.31(e)
(regarding position limits for broad-based index options), 8.32(f)
(regarding position limits for industry index options), 8.33(c)
(regarding position limits for micro narrow-based indexes), and
8.34(c) (regarding position limits for individual stock or ETF based
volatility index options). The Exchange notes the proposed rule
change adds Interpretation and Policy .09 to Rule 8.30 to state that
with respect to options on stocks or ETFs, positions in Short Term
Option Series, Monthly Options Series, and Quarterly Options Series
shall be aggregated with positions in options contracts on the same
underlying security. This is currently true with respect to Short
Term Option Series and Quarterly Options Series but was
inadvertently omitted from Rule 8.30.
---------------------------------------------------------------------------
The Exchange also represents its current surveillance programs will
apply to Monthly Options Series and will properly monitor trading in
the proposed Monthly Options Series. The Exchange currently lists
Quarterly Options Series in certain index \15\ and ETF classes, which
expire at the close of business at the end of four calendar months
(i.e., the end of each calendar quarter), and has not experienced any
market disruptions nor issues with capacity. The Exchange's
surveillance programs currently in place to support and properly
monitor trading in these Quarterly Options Series, as well as Short
Term Option Series and standard expiration series, will apply to the
proposed Monthly Options Series. The Exchange believes its
surveillances continue to be designed to deter and detect violations of
its Rules, including position and exercise limits and possible
manipulative behavior, and these surveillances will apply to Monthly
Options Series that the Exchange determines to list for trading.
Ultimately, the Exchange does not believe the proposed rule change
raises any unique regulatory concerns because existing safeguards--such
as position and exercise limits (and the aggregation of options
overlying the same index or ETF) and reporting requirements--would
continue to apply.
---------------------------------------------------------------------------
\15\ The Exchange notes it currently lists quarterly expirations
on index options pursuant to Rule 4.13(c) (regarding quarterly index
expirations or ``QIXs'').
---------------------------------------------------------------------------
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.\16\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \17\ 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) \18\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
\18\ Id.
---------------------------------------------------------------------------
In particular, the Exchange believes the introduction of Monthly
Options Series will remove impediments to and perfect the mechanism of
a free and open market and a national market system by expanding
hedging tools available to market participants. The Exchange believes
the proposed monthly expirations will allow market participants to
transact in the index and ETF options listed pursuant to the proposed
rule change based on their timing as needed and allow them to tailor
their investment and hedging needs more effectively. Further, the
Exchange believes the availability of Monthly Options Series would
protect investors and the public interest by providing investors with
more flexibility to closely tailor their investment and hedging
decisions in these options, thus allowing them to better manage their
risk exposure.
The Exchange believes the Quarterly Options Series Program has been
successful to date and the proposed Monthly Options Series program
simply expands the ability of investors to hedge risk against market
movements stemming from economic releases or market events that occur
at months' ends in the same way the Quarterly Options Series Program
has expanded the landscape of hedging for quarter-end news. Monthly
Options Series will also complement Short Term Options Series, which
allow investors to hedge risk against events that occur throughout a
month. The Exchange believes the availability of additional expirations
should create greater trading and hedging opportunities for investors,
as well as provide investors with eh ability to tailor their investment
objectives more effectively.
The Exchange notes the proposed terms of Monthly Options Series,
including the limitation to five index and ETF option classes, are
substantively the same as the current terms of Quarterly Options
Series.\19\ Quarterly Options Series expire on the last business day of
a calendar quarter, which is the last business day of every third
month. The proposed Monthly Options Series would fill the gaps between
Quarterly Options Series expirations by permitting series to expire on
the last business day of every month, rather than every third month.
The proposed Monthly Options Series may be listed in accordance with
the same terms as Quarterly Options Series, including permissible
strikes.\20\ As is
[[Page 68836]]
the case with Quarterly Options Series, no Short Term Options Series
may expire on the same day as a Monthly Options Series. Similarly, as
proposed, no Monthly Options Series may expire on the same day as a
Quarterly Options Series. The Exchange believes preventing listing
series with concurrent expirations in a class will eliminate potential
investors confusion and thus protect investors and the public interest.
Given that Quarterly Options Series the Exchange currently lists are
essentially Monthly Options Series that can expire at the end of only
certain calendar months, the Exchange believes it is reasonable to list
Monthly Options Series in accordance with the same terms, as it will
promote just and equitable principles of trade. The Exchange believes
limiting Monthly Options Series to five classes will ensure the
addition of these new series will have a negligible impact on the
Exchange's and OPRA's quoting capacity. The Exchange represents it has
the necessary systems capacity to support new options series that will
result from the introduction of Monthly Options Series.
---------------------------------------------------------------------------
\19\ Compare proposed Rules 4.5(g) and 4.13(a)(2)(C) to Rules
4.5(e) and 4.13(a)(2)(B), respectively.
\20\ The Exchange notes the proposed maximum number of
expirations is consistent with the maximum number of expirations
permitted for end-of-month series in index classes. See Rule
4.13(e)(2) (which references Rule 4.13(a)(2), which permits up to 12
standard monthly expirations on the majority of index options
currently listed on the Exchange).
---------------------------------------------------------------------------
The Exchange further believes the proposed rule change regarding
the treatment of Monthly Options Series with respect to determining
compliance with position and exercise limits is designed to prevent
fraudulent and manipulative acts and practices and promote just and
equitable principles of trade. Monthly Options Series will be
aggregated with options overlying the same ETF or index for purposes of
compliance with position (and exercise) limits, which is consistent
with how position (and exercise) limits are currently imposed on series
with other expirations (Short Term Options Series, Quarterly Options
Series, and Delayed Start Options Series). Therefore, options positions
within ETF or index option classes for which Monthly Options Series are
listed, regardless of their expirations, would continue to be subject
to existing position (and exercise) limits. The Exchange believes this
will address potential manipulative schemes and adverse market impacts
surrounding the use of options. The Exchange also represents its
current surveillance programs will apply to Monthly Options Series and
will properly monitor trading in the proposed Monthly Options Series.
The Exchange currently trades Quarterly Options Series in certain index
and ETF classes, which expire at the close of business at the end of
four calendar months (i.e., the end of each calendar quarter), and has
not experienced any market disruptions nor issues with capacity. The
Exchange's surveillance programs currently in place to support and
properly monitor trading in these Quarterly Options Series, as well as
Short Term Option Series and standard expiration series, will apply to
the proposed Monthly Options Series. The Exchange believes its
surveillances continue to be designed to deter and detect violations of
its Rules, including position and exercise limits and possible
manipulative behavior, and these surveillances will apply to Monthly
Options Series that the Exchange determines to list for trading.
Ultimately, the Exchange does not believe the proposed rule change
raises any unique regulatory concerns because existing safeguards--such
as position and exercise limits (and the aggregation of options
overlying the same ETF or index) and reporting requirements--would
continue to apply.
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 the proposed rule change to list Monthly Option Series will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as any Monthly
Options Series the Exchange lists for trading will be available in the
same manner for all market participants who wish to trade such options.
The Exchange notes the proposed terms of Monthly Options Series,
including the limitation to five index and ETF option classes, are
substantively the same as the current terms of Quarterly Options
Series.\21\ Quarterly Options Series expire on the last business day of
a calendar quarter, which is the last business day of every third
month, making the concept of Monthly Options Series in a limited number
of index and ETF options not novel. The proposed Monthly Options Series
will fill the gaps between Quarterly Options Series expirations by
permitting series to expire on the last business day of every month,
rather than every third month. The proposed Monthly Options Series may
be listed in accordance with the same terms as Quarterly Options
Series, including permissible strikes.\22\ Monthly Options Series will
trade on the Exchange in the same manner as other options in the same
class.
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\21\ See Rules 4.5(e) and 4.13(a)(2)(B).
\22\ The Exchange notes the proposed maximum number of
expirations is consistent with the maximum number of expirations
permitted for end-of-month series in index classes. See Rule
4.13(e)(2) (which references Rule 4.13(a)(2), which permits up to 12
standard monthly expirations on the majority of index options
currently listed on the Exchange).
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The Exchange does not believe the proposed rule change to list
Monthly Option Series will impose any burden on intermarket competition
that is not necessary or appropriate in furtherance of the purposes of
the Act, as nothing prevents other options exchanges from proposing
similar rules. As discussed above, the proposed rule change would
permit listing of Monthly Options Series in five index or ETF options,
as well as any other classes that other exchanges may list under
similar programs. To the extent that the availability of Monthly
Options Series makes the Exchange a more attractive marketplace to
market participants at other exchanges, market participants are free to
elect to become market participants on the Exchange.
The Exchange believes that the proposed rule change may relieve any
burden on, or otherwise promote, competition. Similar to Short Term
Options Series and Quarterly Options Series, the Exchange believes the
introduction of Monthly Options Series will not impose an undue burden
on competition. The Exchange believes that it will, among other things,
expand hedging tools available to market participants. The Exchange
believes Monthly Options Series will allow market participants to
purchase options based on their timing as needed and allow them to
tailor their investment and hedging needs more effectively.
The Exchange does not believe the proposed rule change to provide
that positions in Monthly Options Series will be aggregated with
positions in options contracts on the same underlying index or security
for purposes of determining compliance with position (and exercise)
limits will impose any burden on intramarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act, as
it will apply in the same manner to all market participants. The
Exchange proposes to apply position (and exercise) limits to Monthly
Options Series in the same manner it applies position limits to series
with other expirations (Short Term Options Series, Quarterly Options
Series, and Delayed Start Options Series). Therefore, positions in
options in a class of ETF or index options, regardless of their
expirations, would continue to be subject to existing position (and
exercise) limits.
[[Page 68837]]
Additionally, the Exchange does not believe this 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 it
will address potential manipulative schemes and adverse market impacts
surrounding the use of options.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
A. by order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change 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-2023-049 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-2023-049. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-CBOE-2023-049 and should be
submitted on or before October 25, 2023.
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).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21939 Filed 10-3-23; 8:45 am]
BILLING CODE 8011-01-P
