Notice2022-07948
Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by The Options Clearing Corporation Concerning Weekly Options and Short Term Options
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
April 14, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 72 (Thursday, April 14, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 72 (Thursday, April 14, 2022)]
[Notices]
[Pages 22238-22240]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-07948]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94646; File No. SR-OCC-2022-006]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change by
The Options Clearing Corporation Concerning Weekly Options and Short
Term Options
April 8, 2022.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on March 25, 2022, The Options Clearing
Corporation (``OCC'') 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 OCC. 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. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
This proposed rule change would amend the definitions of ``weekly
option'' and ``short term option'' in Article I of OCC's By-Laws. The
proposed rule change would amend these definitions to align with the
rules of participant options exchanges by clarifying that weekly
options and short term options may expire and/or be opened in
accordance with the rules of the exchange on which they are traded. The
proposed changes to OCC's By-Laws are included in Exhibit 5 of File No.
SR-OCC-2022-006. Material proposed to be added to OCC's By-Laws as
currently in effect is underlined and material proposed to be deleted
is marked in strikethrough text. All capitalized terms not defined
herein have the same meaning as set forth in the OCC By-Laws and
Rules.\3\
---------------------------------------------------------------------------
\3\ OCC's By-Laws and Rules can be found on OCC's public
website: <a href="https://www.theocc.com/Company-Information/Documents-and-Archives/By-Laws-and-Rules">https://www.theocc.com/Company-Information/Documents-and-Archives/By-Laws-and-Rules</a>.
---------------------------------------------------------------------------
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
(1) Purpose
The purpose of this proposed rule change is to more clearly align
certain existing definitions in OCC's By-Laws for options products with
Exchange Rules related to those products. OCC currently facilitates the
clearance and settlement of weekly options and short term options on
behalf of participant options exchanges. The term ``weekly option'' is
currently defined in Article I of OCC's By-Laws as ``an option of a
series of stock options or index options that expires on any Friday of
a calendar month other than the third Friday of such calendar month.''
\4\ The definition was first introduced in 2010.\5\ The term ``short
term option'' is currently defined as ``an option of a series of
options that expires one week after it is opened for trading'' and
further specifies that short term options ``may be opened on a Friday
that is a business day and shall expire, at the expiration time, on the
next Friday that is a business day; provided, however, that if a Friday
is not a business day, the series shall be opened (or shall expire) on
the first business day immediately prior to that Friday.'' \6\ The
definition was first introduced in 2005 in connection with a pilot
program for short term options that was eventually made permanent in
2009.\7\
---------------------------------------------------------------------------
\4\ The definition of ``weekly option'' also states that ``[t]he
term `weekly index option' means a weekly option on an index.'' OCC
is not proposing changes to this part of the weekly option
definition.
\5\ See Exchange Act Release No. 63293, 75 FR 70055 (November
16, 2010) (approval order establishing weekly options and monthly
options).
\6\ The definition of ``short term option'' also specifies that
a short term option series may be opened in any option class. OCC is
not proposing changes to this part of the short term option
definition.
\7\ See Exchange Act Release No. 52010, 70 FR 41469 (July 19,
2005) (SR-OCC-2005-06) (approval order to support the short term
options pilot program). See also e.g., Exchange Act Release Nos.
52011 (July 12, 2005), 70 FR 41451 (July 19, 2005) (SR-CBOE-2004-63)
(approval order establishing Weeklys Pilot Program) and 59824 (April
27, 2009), 74 FR 20518 (May 4, 2009) (SR-CBOE-2009-018) (approval
order permanently establishing Weeklys Program). CBOE refers to its
short term option program as the ``Weeklys Program.''
---------------------------------------------------------------------------
Currently, participant options exchanges list and trade weekly
options that expire on other days of the week, such as Monday or
Wednesday,\8\ and a participant options exchange has recently filed a
proposed rule change to list and trade weekly options that expire on
Tuesday and Thursday.\9\ These exchanges also list short term options
that may be opened on days other than a Friday and expire on days other
than Friday.\10\ Because pursuant to Exchange
[[Page 22239]]
Rules weekly options may expire on days other than Friday and short
term options may be opened and expire on days other than Friday, OCC
proposes making clarifying changes to these definitions to more closely
align them with options Exchange Rules and with how these options trade
today.
---------------------------------------------------------------------------
\8\ See e.g., Cboe Rule 4.13(e)(1) (``The Exchange may open for
trading Weekly Expirations on any broad-based index eligible for
standard options trading to expire on any Monday, Wednesday, or
Friday (other than the third Friday-of-the-month or days that
coincide with an EOM [end of month] expiration.'')(emphasis added).
\9\ See Exchange Act Release No. 94292, 87 FR 11102 (February
28, 2022) (SR-CBOE-2022-005) (notice of filing of proposed rule
change to permit P.M.-settled S&P 500 index options that expire on
Tuesday or Thursday).
\10\ See e.g., Cboe Rule 4.5(d) (``Short Term Option Series
Program. After an option class has been approved for listing and
trading on the Exchange, the Exchange may open for trading on any
Thursday or Friday that is a business day . . . Monday and Wednesday
SPY, IWM and QQQ Expirations. The Exchange may open for trading on
any Friday or Monday that is a business day series of options on the
SPDR S&P 500 ETF Trust (``SPY'') . . . that expire at the close of
business each of the next five Mondays that are business days . . .
The Exchange may also open for trading on any Tuesday or Wednesday
that is a business day series of SPY options . . . that expire at
the close of business on each of the next five Wednesdays . . .
.'').
---------------------------------------------------------------------------
Accordingly, OCC proposes to amend the definition of a weekly
option to provide that a weekly option means ``an option of a series of
stock options or index options that has a weekly tenor and that expires
on any day as provided in Exchange Rules. The term `weekly index
option' means a weekly option on an index.'' Similarly, OCC proposes to
amend the definition of a short term option to provide that a short
term option means ``an option of a series of options that pursuant to
Exchange Rules expires one week after it is opened for trading. Short
term option series may be opened in any option class.'' In both cases,
OCC proposes to remove language specifying particular days of the week
on which weekly options or short term options may expire and/or be
opened and to instead reference the relevant options Exchange Rules for
information on expirations and any opening conditions. OCC believes
that the proposed amendments would promote clarity in OCC's By-Laws
regarding when weekly options and short term options may be opened and/
or expire and, as noted, promote greater consistency with options
Exchange Rules.
(2) Statutory Basis
Section 17A(b)(3)(F) \11\ of the Exchange Act requires, among other
things, that the rules of a clearing agency be designed, in general, to
protect investors and the public interest. OCC believes that the
proposed rule change is consistent with Section 17A(b)(3)(F) of the
Act.\12\ As noted above, the proposed rule change would promote clarity
in OCC's By-Laws regarding when weekly options and short term options
may be opened and/or expire and consistency with options Exchange
Rules. OCC believes that the proposed amendments to the ``weekly
option'' and ``short term option'' definitions would protect investors
and the public interest by setting forth clear definitions that are
consistent with options Exchange Rules and in turn facilitate a clear
understanding of the regulatory framework for weekly options and short
term options. Additionally, OCC believes that making clarifying changes
to its definitions of a weekly option and short term option to better
align with options Exchange Rules helps foster cooperation and
coordination with persons engaged in the clearance and settlement of
securities transactions between and among OCC and the options exchanges
that rely on OCC to clear and settle trades, consistent with Section
17A(b)(3)(F) of the Act.\13\ Additionally, the proposed rule change is
not inconsistent with the existing rules of OCC, including any other
rules proposed to be amended.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78q-1(b)(3)(F).
\12\ Id.
\13\ Id.
---------------------------------------------------------------------------
(B) Clearing Agency's Statement on Burden on Competition
Section 17A(b)(3)(I) of the Act \14\ requires that the rules of a
clearing agency not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act. OCC does not
believe that the proposed amendments to the definitions of ``weekly
option'' and ``short term option'' would impose any burden on
competition because they would merely modify the definitions to promote
consistency with options Exchange Rules and to reflect how these
options trade today pursuant to those Exchange Rules. The proposed
changes would not inhibit access to OCC's services in any way, would
apply to all Clearing Members uniformly and does not disadvantage or
favor any particular user in relationship to another user. Accordingly,
OCC does not believe that the proposed rule change would have any
impact or impose a burden on competition.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants or Others
Written comments on the proposed rule change were not and are not
intended to be solicited with respect to the proposed rule change and
none have been received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A)(ii) \15\ of the Act, and Rule 19b-
4(f)(1) and (4) thereunder,\16\ the proposed rule change is filed for
immediate effectiveness. 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. The proposal shall not take effect until all regulatory
actions required with respect to the proposal are completed.\17\
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-4(f)(1), (4).
\17\ Notwithstanding its immediate effectiveness, implementation
of this rule change will be delayed until this change is deemed
certified under CFTC Regulation 40.6.
---------------------------------------------------------------------------
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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#1163647d743c727e7c7c747f6562516274723f767e67"><span class="__cf_email__" data-cfemail="6210170e074f010d0f0f070c1611221107014c050d14">[email protected]</span></a>. Please include
File Number SR-OCC-2022-006 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Vanessa Countryman,
Secretary, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-OCC-2022-006. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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
[[Page 22240]]
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
such filing also will be available for inspection and copying at the
principal office of OCC and on OCC's website at <a href="https://www.theocc.com/Company-Information/Documents-and-Archives/By-Laws-and-Rules">https://www.theocc.com/Company-Information/Documents-and-Archives/By-Laws-and-Rules</a>.
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-OCC-2022-006 and
should be submitted on or before May 5, 2022.
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-07948 Filed 4-13-22; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on April 14, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.