Notice2022-24412
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
Primary source
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Published
November 9, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 216 (Wednesday, November 9, 2022)</title>
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[Federal Register Volume 87, Number 216 (Wednesday, November 9, 2022)]
[Notices]
[Pages 67728-67731]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[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.
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\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 (<a href="http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx">http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx</a>), 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 <a href="https://www.cboe.com/aboutcboe/legal-regulatory/national-market-system-plans/non-standard-expiration-data">https://www.cboe.com/aboutcboe/legal-regulatory/national-market-system-plans/non-standard-expiration-data</a>.
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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
<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
[[Page 67731]]
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f381869f96de909c9e9e969d8780b3809690dd949c85"><span class="__cf_email__" data-cfemail="483a3d242d652b2725252d263c3b083b2d2b662f273e">[email protected]</span></a>. Please include
File Number SR-CBOE-2022-055 on the subject line.
Paper Comments
<bullet> 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 (<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 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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