80_FR_20103 80 FR 20032 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1, to List and Trade Options on the MSCI EAFE Index and on the MSCI Emerging Markets Index

80 FR 20032 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1, to List and Trade Options on the MSCI EAFE Index and on the MSCI Emerging Markets Index

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 71 (April 14, 2015)

Page Range20032-20035
FR Document2015-08453

Federal Register, Volume 80 Issue 71 (Tuesday, April 14, 2015)
[Federal Register Volume 80, Number 71 (Tuesday, April 14, 2015)]
[Notices]
[Pages 20032-20035]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-08453]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74681; File No. SR-CBOE-2015-023]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Granting Accelerated Approval of Proposed Rule 
Change, as Modified by Amendment No. 1, to List and Trade Options on 
the MSCI EAFE Index and on the MSCI Emerging Markets Index

April 8, 2015.

I. Introduction

    On February 26, 2015, the Chicago Board Options Exchange, 
Incorporated (``Exchange'' or ``CBOE'') filed with the Securities and 
Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to list and trade options on the 
MSCI EAFE Index and the MSCI Emerging Markets (``EM'') Index. The 
proposed rule change was published for comment in the Federal Register 
on March 10, 2015.\3\ On March 24, 2015, the Exchange filed Amendment 
No. 1 to the proposed rule change.\4\ The Commission received no 
comments on the proposed rule change. This order grants approval of the 
proposed rule change, as modified by Amendment No. 1, on an accelerated 
basis.


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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 74430 (March 4, 
2015), 80 FR 12675 (``Notice'').
    \4\ Amendment No. 1 corrects the customer portfolio margin 
description in the Exhibit 3 to conform it to Exchange Rule 12.4. As 
the stated in the Notice, the MSCI EAFE and MSCI EM Index options 
would be subject to the same rules that currently govern other CBOE 
index options, including margin requirements. Amendment No. 1 is not 
subject to notice and comment because it is technical in nature and 
does not materially alter the substance of the proposed rule change 
or raise any novel regulatory issues.
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II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade P.M. cash-settled, 
European-style

[[Page 20033]]

options on the MSCI EAFE Index and the MSCI EM Index.\5\ According to 
the Exchange, the MSCI EAFE Index is a free floated-adjusted market 
capitalization index that is designed to measure the equity market 
performance of developed markets, excluding the U.S. and Canada. The 
MSCI EAFE Index consists of 21 developed market country indexes and has 
over 900 constituents. According to the Exchange, the MSCI EM Index is 
a free float-adjusted market capitalization index that is designed to 
measure the equity market performance of emerging markets. The MSCI EM 
Index consists of 23 emerging market country indexes and has over 800 
constituents.\6\ The Exchange states that the indexes are monitored and 
maintained by MSCI Inc. (``MSCI'').\7\ Adjustments to the indexes are 
made on a daily basis, and MSCI reviews the indexes quarterly.
---------------------------------------------------------------------------

    \5\ The Exchange proposes to list up to twelve near-term 
expiration months for the MSCI EAFE and MSCI EM Index options. The 
Exchange also proposes to list LEAPS on the MSCI EAFE Index and the 
MSCI EM Index. The exchange proposes that options on the MSCI EAFE 
Index and the MSCI EM Index would be eligible for all other 
expirations permitted for other broad-based indexes (e.g., End of 
Week/End of Month Expirations, Short Term Option Series, and 
Quarterly Options Series). In addition, the Exchange proposes to 
designate the MSCI EAFE Index and the MSCI EM Index as eligible for 
trading as FLEX options.
    \6\ The Exchange states that the MSCI EAFE Index and the MSCI EM 
Index each meet the definition of a broad-based index as set forth 
in Exchange Rule 24.1(i)(1).
    \7\ The Exchange proposes to designate MSCI as the reporting 
authority for the MSCI EAFE Index and the MSCI EM Index.
---------------------------------------------------------------------------

    According to the Exchange, both the MSCI EAFE Index and the MSCI EM 
Index are calculated in U.S. dollars on a real-time basis from the open 
of the first market on which the components are traded to the closing 
of the last market on which the components are traded. The 
methodologies used to calculate the MSCI EAFE Index and the MSCI EM 
Index are similar to the methodology used to calculate the value of 
other benchmark market-capitalization weighted indexes.\8\ Real-time 
data is distributed approximately every 15 seconds while the indexes 
are being calculated using MSCI's real-time calculation engine to 
Bloomberg L.P. (``Bloomberg''), FactSet Research Systems, Inc. 
(``FactSet''), and Thomson Reuters (``Reuters''). End of day data is 
distributed daily to clients through MSCI as well as through major 
quotation vendors, including Bloomberg, FactSet, and Reuters.
---------------------------------------------------------------------------

    \8\ Specifically, the indexes are based on the MSCI Global 
Investable Market Indexes Methodology. Further detail regarding this 
methodology can be found in the Notice, supra note 3, at notes 5 and 
9 and accompanying text.
---------------------------------------------------------------------------

    The Exchange proposes that trading hours for MSCI EAFE Index 
options would be from 8:30 a.m. (Chicago Time) to 3:15 p.m. (Chicago 
Time), except that trading in expiring MSCI EAFE Index options would 
end at 10:00 a.m. (Chicago Time) on their expiration date. Trading 
hours for MSCI EM Index options would be from 8:30 a.m. (Chicago Time) 
to 3:15 p.m. (Chicago Time).
    The Exchange proposes that MSCI EAFE and MSCI EM Index options 
would expire on the third Friday of the expiration month.\9\ The 
exercise settlement value would be the official closing values of the 
MSCI EAFE Index and the MSCI EM Index as reported by MSCI on the last 
trading day of the expiring contract. The exercise settlement amount 
would be equal to the difference between the exercise-settlement value 
and the exercise price of the option, multiplied by the contract 
multiplier ($100).\10\ Exercise would result in delivery of cash on the 
business day following expiration.
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    \9\ According to the Exchange, when the last trading day/
expiration date is moved because of an Exchange holiday or closure, 
the last trading day/expiration date for expiring options would be 
the immediately preceding business day.
    \10\ According to the Exchange, if the exercise settlement value 
is not available or the normal settlement procedure cannot be 
utilized due to a trading disruption or other unusual circumstance, 
the settlement value would be determined in accordance with the 
rules and bylaws of the Options Clearing Corporation.
---------------------------------------------------------------------------

    The Exchange proposes to create specific initial and maintenance 
listing criteria for options on the MSCI EAFE Index and the MSCI EM 
Index. Specifically, the Exchange proposes to add new Interpretation 
and Policy .01(a) to Rule 24.2 to provide that the Exchange may trade 
MSCI EAFE and MSCI EM Index options if each of the following conditions 
is satisfied: (1) The index is broad-based, as defined in Exchange Rule 
24.1(i)(1); (2) options on the index are designated as P.M.-settled 
index options; (3) the index is capitalization-weighted, price-
weighted, modified capitalization-weighted, or equal dollar-weighted; 
(4) the index consists of 500 or more component securities; (5) all of 
the component securities of the index will have a market capitalization 
of greater than $100 million; (6) no single component security accounts 
for more than fifteen percent (15%) of the weight of the index, and the 
five highest weighted component securities in the index do not, in the 
aggregate, account for more than fifty percent (50%) of the weight of 
the index; (7) non-U.S. component securities (stocks or ADRs) that are 
not subject to comprehensive surveillance agreements do not, in the 
aggregate, represent more than: (i) Twenty percent (20%) of the weight 
of the MSCI EAFE Index, and (ii) twenty-two and a half percent (22.5%) 
of the weight of the MSCI EM Index; (8) during the time options on the 
index are traded on the Exchange, the current index value is widely 
disseminated at least once every fifteen (15) seconds by one or more 
major market data vendors; however, the Exchange may continue to trade 
MSCI EAFE Index options after trading in all component securities has 
closed for the day and the index level is no longer widely disseminated 
at least once every fifteen (15) seconds by one or more major market 
data vendors, provided that EAFE futures contracts are trading and 
prices for those contracts may be used as a proxy for the current index 
value; (9) the Exchange reasonably believes it has adequate system 
capacity to support the trading of options on the index, based on a 
calculation of the Exchange's current Independent System Capacity 
Advisor (ISCA) allocation and the number of new messages per second 
expected to be generated by options on such index; and (10) the 
Exchange has written surveillance procedures in place with respect to 
surveillance of trading of options on the index.
    Additionally, the Exchange proposes to add new Interpretation and 
Policy .01(b) to Rule 24.2 to set forth the following maintenance 
listing standards for options on the MSCI EAFE Index and the MSCI EM 
Index: (1) The conditions set forth in subparagraphs .01(a)(1), (2), 
(3), (4), (7), (8), (9), and (10) must continue to be satisfied, the 
conditions set forth in subparagraphs .01(a)(5) and (6) must be 
satisfied only as of the first day of January and July in each year; 
and (2) the total number of component securities in the index may not 
increase or decrease by more than thirty-five percent (35%) from the 
number of component securities in the index at the time of its initial 
listing. In the event a class of index options listed on the Exchange 
pursuant to Interpretation and Policy .01(a) fails to satisfy these 
maintenance listing standards, the Exchange shall not open for trading 
any additional series of options of that class unless the continued 
listing of that class of index options has been approved by the 
Commission under Section 19(b)(2) of the Act.
    The contract multiplier for the MSCI EAFE and MSCI EM Index options 
would be $100. The Exchange proposes that the minimum tick size for 
series

[[Page 20034]]

trading below $3 would be 0.05 ($5.00), and above $3 would be 0.10 
($10.00). The Exchange also proposes that the strike price interval for 
MSCI EAFE and MSCI EM Index options would be no less than $5, except 
that the strike price interval would be no less than $2.50 if the 
strike price is less than $200.
    The Exchange proposes to apply the default position limits for 
broad-based index options of 25,000 contracts on the same side of the 
market (and 15,000 contracts near-term limit) to MSCI EAFE and MSCI EM 
Index options. All position limit hedge exemptions would apply. The 
exercise limits for MSCI EAFE and MSCI EM Index options would be 
equivalent to the position limits for those options. In addition, the 
Exchange proposes that the position limits for FLEX options on the MSCI 
EAFE Index and the MSCI EM Index would be equal to the position limits 
for non-FLEX options on the MSCI EAFE Index and the MSCI EM Index. The 
exercise limits for FLEX options on the MSCI EAFE Index and the MSCI EM 
Index would be equivalent to the position limits for those options.
    The Exchange states that, except as modified by the proposal, 
Exchange Rules in Chapters I through XIX, XXIV, XXIVA, and XXIVB would 
equally apply to MSCI EAFE and MSCI EM Index options. The Exchange also 
states that MSCI EAFE and MSCI EM Index options would be subject to the 
same rules that currently govern other CBOE index options, including 
sales practice rules, margin requirements,\11\ and trading rules.\12\
---------------------------------------------------------------------------

    \11\ The Exchange states that MSCI EAFE and MSCI EM Index 
options would be margined as broad-based index options.
    \12\ See, e.g., Exchange Rule Chapters IX (Doing Business with 
the Public), XII (Margins), IV (Business Conduct), VI (Doing 
Business on the Trading Floor), VIII (Market-Makers, Trading Crowds 
and Modified Trading Systems), and XXIV (Index Options).
---------------------------------------------------------------------------

    The Exchange represents that it has an adequate surveillance 
program in place for MSCI EAFE and MSCI EM Index options and intends to 
use the same surveillance procedures currently utilized for each of the 
Exchange's other index options to monitor trading in the proposed 
options. The Exchange also states that it is a member of the 
Intermarket Surveillance Group, is an affiliate member of the 
International Organization of Securities Commissions, and has entered 
into various comprehensive surveillance agreements and/or Memoranda of 
Understanding with various stock exchanges. Finally, the Exchange 
represents that it believes it and the Options Price Reporting 
Authority (``OPRA'') have the necessary systems capacity to handle the 
additional traffic associated with the listing of new series that would 
result from the introduction of MSCI EAFE and MSCI EM Index options.

III. Discussion and Commission Findings

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\13\ 
Specifically, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\14\ which requires, among 
other things, that the rules of a national securities exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, 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.
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    \13\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the listing and trading of MSCI EAFE 
Index options will broaden trading and hedging opportunities for 
investors by providing an options instrument based on an index designed 
to measure the equity market performance of developed markets 
(excluding the U.S. and Canada). Similarly, the Commission believes 
that the listing and trading of MSCI EM Index options will broaden 
trading and hedging opportunities for investors by providing an options 
instrument based on an index designed to measure the equity market 
performance of emerging markets. Moreover, the Exchange states that the 
iShares MSCI EAFE exchange traded fund (``EFA'') is an actively-traded 
product and that it lists actively-traded options overlying EFA. The 
Exchange likewise states that the iShares MSCI Emerging Markets 
exchange traded fund (``EEM'') is an actively-traded product and that 
it lists actively-traded options overlying EEM.
    Because the MSCI EAFE Index and the MSCI EM Index are broad-based 
indexes composed of actively-traded, well-capitalized stocks, the 
trading of options on these indexes does not raise unique regulatory 
concerns. The Commission believes that the listing standards, which are 
created specifically and exclusively for these indexes, are consistent 
with the Act, for the reasons discussed below.\15\
---------------------------------------------------------------------------

    \15\ The Commission notes that it previously approved the 
listing and trading of options on the MSCI EAFE Index and the MSCI 
EM Index on NASDAQ OMX PHLX LLC (``Phlx''). See Securities Exchange 
Act Release Nos. 66420 (February 17, 2012), 77 FR 11177 (February 
24, 2012) (SR-Phlx-2011-179) (order approving the listing of MSCI EM 
Index options on Phlx) and 66861 (April 26, 2012), 77 FR 26056 (May 
2, 2012) (SR-Phlx-2012-28) (order approving the listing of MSCI EAFE 
Index options on Phlx). See also Securities Exchange Act Release No. 
67071 (May 29, 2012), 77 FR 33013 (June 4, 2012) (SR-Phlx-2012-67) 
(notice of filing and immediate effectiveness of proposed rule 
change to amend the trading hours for MSCI EAFE Index options). The 
Exchange states that its proposal is substantially similar to the 
Phlx proposals that were approved by the Commission.
---------------------------------------------------------------------------

    The Commission notes that proposed Interpretation and Policy .01 to 
Exchange Rule 24.2 would require that the MSCI EAFE Index and the MSCI 
EM Index each consist of 500 or more component securities. Further, for 
options on the MSCI EAFE Index and the MSCI EM Index to trade, each of 
the minimum of 500 component securities would need to have a market 
capitalization of greater than $100 million. The Commission notes that, 
according to the Exchange, the MSCI EAFE Index has more than 900 
components and the MSCI EM Index has more than 800 components, all of 
which must meet the market capitalization requirement to permit options 
on these indexes to begin trading.
    The Commission notes that the proposed listing standards for 
options on the MSCI EAFE Index and the MSCI EM Index would not permit 
any single component security to account for more than 15% of the 
weight of the index, and would not permit the five highest weighted 
component securities to account for more than 50% of the weight of the 
index in the aggregate. The Commission believes that, in view of the 
requirement on the number of securities in each index, the number of 
countries represented in each index, and the market capitalization, 
this concentration standard is consistent with the Act. Further, the 
Exchange states that no single component accounts for more than 5% of 
either index. As noted above, the Exchange represents that it has an 
adequate surveillance program in place for MSCI EAFE and MSCI EM Index 
options and intends to use the same surveillance procedures currently 
utilized for each of the Exchange's other index options to monitor 
trading in the proposed options.
    The Commission notes that, consistent with the Exchange's generic 
listing standards for broad-based index options, non-U.S. component 
securities

[[Page 20035]]

of the MSCI EAFE Index that are not subject to comprehensive 
surveillance agreements will not, in the aggregate, represent more than 
20% of the weight of the index. With respect to the MSCI EM Index, non-
U.S. component securities that are not subject to comprehensive 
surveillance agreements must not, in the aggregate, represent more than 
22.5% of the weight of the index.
    The proposed listing standards require that, during the time 
options on the MSCI EAFE Index and the MSCI EM Index are traded on the 
Exchange, the current index value is widely disseminated at least once 
every 15 seconds by one or more major market data vendors. However, the 
Exchange may continue to trade MSCI EAFE Index options after trading in 
all component securities has closed for the day and the index level is 
no longer widely disseminated at least once every 15 seconds by one or 
more major market data vendors, provided that EAFE futures contracts 
are trading and prices for those contracts may be used as a proxy for 
the current index value.\16\
---------------------------------------------------------------------------

    \16\ The Exchange notes that, because trading in the components 
of the MSCI EAFE Index ends at approximately 11:30 a.m. (Chicago 
Time), there will not be a current MSCI EAFE Index level calculated 
and disseminated during a portion of the time when MSCI EAFE Index 
options would be traded (from approximately 11:30 a.m. (Chicago 
Time) to 3:15 p.m. (Chicago Time)). However, the Exchange states 
that EAFE futures contracts will be trading during this time period 
and that the futures prices would be a proxy for the current MSCI 
EAFE Index level during this time period. The Exchange states that 
MSCI EAFE Mini Index futures contracts are listed for trading on the 
Intercontinental Exchange, Inc. (``ICE'') and other derivatives 
contracts on the MSCI EAFE Index are listed for trading in Europe. 
Similarly, the Exchange states that MSCI Emerging Markets Mini Index 
futures contracts are listed for trading on ICE and other 
derivatives contracts on the MSCI EM Index are listed for trading in 
Europe.
---------------------------------------------------------------------------

    In addition, the proposed listing standards require the Exchange to 
reasonably believe that it has adequate system capacity to support the 
trading of options on the MSCI EAFE Index and the MSCI EM Index. As 
noted above, the Exchange represents that it believes it and the OPRA 
have the necessary systems capacity to handle the additional traffic 
associated with the listing of new series that would result from the 
introduction of MSCI EAFE and MSCI EM Index options.
    As a national securities exchange, the Exchange is required, under 
Section 6(b)(1) of the Act,\17\ to enforce compliance by its members, 
and persons associated with its members, with the provisions of the 
Act, Commission rules and regulations thereunder, and its own rules. As 
noted above, the Exchange states that, except as modified by the 
proposal, Exchange Rules in Chapters I through XIX, XXIV, XXIVA, and 
XXIVB would equally apply to MSCI EAFE and MSCI EM Index options. The 
Exchange also states that MSCI EAFE and MSCI EM Index options would be 
subject to the same rules that currently govern other CBOE index 
options, including sales practice rules, margin requirements, and 
trading rules.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    The Commission further believes that the Exchange's proposed 
position and exercise limits, trading hours, margin, strike price 
intervals, minimum tick size, series openings, and other aspects of the 
proposed rule change are appropriate and consistent with the Act.

IV. Accelerated Approval of Proposed Rule Change, as Modified by 
Amendment No. 1

    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\18\ for approving the proposed rule change, as modified by 
Amendment No. 1, prior to the 30th day after the date of publication of 
notice in the Federal Register. As noted above, the Commission 
previously approved the listing and trading of options on the MSCI EAFE 
Index and the MSCI EM Index on another exchange,\19\ and the current 
proposal is substantially similar to the rules that were approved by 
the Commission. The prior proposals and the current proposal were each 
subject to a full 21-day comment period and no comments were received 
on any of the proposals.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(2).
    \19\ See supra note 15.
---------------------------------------------------------------------------

    The Exchange requested that the Commission accelerate approval of 
the proposal. The Exchange believes that accelerated approval by the 
Commission would enable these options to be brought to market sooner, 
which would broaden trading and hedging opportunities for investors by 
creating new options on indexes that are demonstrably popular.
    The Commission finds that good cause exists to approve the 
proposal, as modified by Amendment No. 1, on an accelerated basis.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\20\ that the proposed rule change (SR-CBOE-2015-023), as modified 
by Amendment No. 1, be, and hereby is, approved on an accelerated 
basis.
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    \20\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-08453 Filed 4-13-15; 8:45 am]
BILLING CODE 8011-01-P



                                                    20032                          Federal Register / Vol. 80, No. 71 / Tuesday, April 14, 2015 / Notices

                                                    document. The amendment documents                       which is being issued concurrently with                  Dated at Rockville, Maryland, this 7th day
                                                    for COLs NPF–93 and NPF–94 are                          this exemption.                                       of April 2015.
                                                    available in ADAMS under Accession                        3. As explained in Section 5.0 of the                  For the Nuclear Regulatory Commission.
                                                    Nos. ML14351A419 and ML14351A424,                       NRC staff’s Safety Evaluation (ADAMS                  Chandu P. Patel,
                                                    respectively. A summary of the                          Accession Number ML14345B029), this                   Acting Chief, Licensing Branch 4, Division
                                                    amendment documents is provided in                      exemption meets the eligibility criteria              of New Reactor Licensing, Office of New
                                                    Section III of this document.                           for categorical exclusion set forth in 10             Reactors.
                                                                                                            CFR 51.22(c)(9). Therefore, pursuant to               [FR Doc. 2015–08563 Filed 4–13–15; 8:45 am]
                                                    II. Exemption                                           10 CFR 51.22(b), no environmental                     BILLING CODE 7590–01–P
                                                       Reproduced below is the exemption                    impact statement or environmental
                                                    document issued to VCSNS, Units 2 and                   assessment needs to be prepared in
                                                    3. It makes reference to the combined                   connection with the issuance of the                   SECURITIES AND EXCHANGE
                                                    safety evaluation that provides the                     exemption.                                            COMMISSION
                                                    reasoning for the findings made by the                    4. This exemption is effective as of the
                                                                                                            date of its issuance.                                 [Release No. 34–74681; File No. SR–CBOE–
                                                    NRC (and listed under Item 1) in order
                                                                                                                                                                  2015–023]
                                                    to grant the exemption:                                 III. License Amendment Request
                                                       1. In a letter dated May 20, 2014, and                                                                     Self-Regulatory Organizations;
                                                    supplemented by the letters dated June                     The request for the amendment and
                                                                                                                                                                  Chicago Board Options Exchange,
                                                    3, November 6, and November 14, 2014,                   exemption was submitted by the letter
                                                                                                                                                                  Incorporated; Order Granting
                                                    South Carolina Electric & Gas Company                   dated May 20, 2014. The licensee
                                                                                                                                                                  Accelerated Approval of Proposed
                                                    (licensee) requested from the Nuclear                   supplemented this request by letter
                                                                                                                                                                  Rule Change, as Modified by
                                                    Regulatory Commission (Commission)                      dated June 3, 2014. The proposed
                                                                                                                                                                  Amendment No. 1, to List and Trade
                                                    an exemption to allow departures from                   amendment is described in Section I,
                                                                                                                                                                  Options on the MSCI EAFE Index and
                                                    Tier 1 information in the certified                     above.
                                                                                                               The Commission has determined for                  on the MSCI Emerging Markets Index
                                                    Design Control Document (DCD)
                                                    incorporated by reference in 10 CFR                     these amendments that the application                 April 8, 2015.
                                                    part 52, appendix D, ‘‘Design                           complies with the standards and
                                                                                                            requirements of the Atomic Energy Act                 I. Introduction
                                                    Certification Rule for the AP1000
                                                    Design,’’ as part of license amendment                  of 1954, as amended (the Act), and the                   On February 26, 2015, the Chicago
                                                    request (LAR) 13–42, ‘‘Tier 1 Editorial                 Commission’s rules and regulations.                   Board Options Exchange, Incorporated
                                                    and Consistency Changes.’’                              The Commission has made appropriate                   (‘‘Exchange’’ or ‘‘CBOE’’) filed with the
                                                       For the reasons set forth in Section 3.1             findings as required by the Act and the               Securities and Exchange Commission
                                                    of the NRC staff’s Safety Evaluation,                   Commission’s rules and regulations in                 (‘‘Commission’’), pursuant to Section
                                                    which can be found in ADAMS under                       10 CFR Chapter I, which are set forth in              19(b)(1) of the Securities Exchange Act
                                                    Accession No. ML14345B029, the                          the license amendment.                                of 1934 (‘‘Act’’) 1 and Rule 19b–4
                                                                                                               A notice of consideration of issuance              thereunder,2 a proposed rule change to
                                                    Commission finds that:
                                                                                                            of amendment to facility operating                    list and trade options on the MSCI EAFE
                                                       A. The exemption is authorized by
                                                                                                            license or combined license, as                       Index and the MSCI Emerging Markets
                                                    law;
                                                                                                            applicable, proposed no significant                   (‘‘EM’’) Index. The proposed rule
                                                       B. the exemption presents no undue                   hazards consideration determination,                  change was published for comment in
                                                    risk to public health and safety;                       and opportunity for a hearing in                      the Federal Register on March 10,
                                                       C. the exemption is consistent with                  connection with these actions, was                    2015.3 On March 24, 2015, the Exchange
                                                    the common defense and security;                        published in the Federal Register on                  filed Amendment No. 1 to the proposed
                                                       D. special circumstances are present                 September 2, 2014 (79 FR 52059). The                  rule change.4 The Commission received
                                                    in that the application of the rule in this             June 3, 2014 supplement had no effect                 no comments on the proposed rule
                                                    circumstance is not necessary to serve                  on the no significant hazards                         change. This order grants approval of
                                                    the underlying purpose of the rule;                     consideration determination, and no                   the proposed rule change, as modified
                                                       E. the special circumstances outweigh                comments were received during the 60-                 by Amendment No. 1, on an accelerated
                                                    any decrease in safety that may result                  day comment period.                                   basis.
                                                    from the reduction in standardization                      The Commission has determined that
                                                    caused by the exemption; and                            these amendments satisfy the criteria for
                                                       F. the exemption will not result in a                categorical exclusion in accordance                   II. Description of the Proposed Rule
                                                    significant decrease in the level of safety             with 10 CFR 51.22(c)(9). Therefore,                   Change
                                                    otherwise provided by the design.                       pursuant to 10 CFR 51.22(b), no
                                                       2. Accordingly, the licensee is granted                                                                       The Exchange proposes to list and
                                                                                                            environmental impact statement or                     trade P.M. cash-settled, European-style
                                                    an exemption from the certified DCD                     environmental assessment need be
                                                    Tier 1 Figures 2.2.4–1, 3.3–1 through 10,               prepared for these amendments.                          1 15  U.S.C. 78s(b)(1).
                                                    3.3–11A, 3.3–11B, and 3.3–12 through                                                                            2 17  CFR 240.19b–4.
                                                    14; Tables 2.2.2–3, 2.2.3–4, 2.2.3–6,                   IV. Conclusion                                           3 See Securities Exchange Act Release No. 74430
                                                    2.2.4–1, 2.2.4–4, 2.2.5–5, 2.3.2–2, 2.3.6–                 Using the reasons set forth in the                 (March 4, 2015), 80 FR 12675 (‘‘Notice’’).
                                                    1, 2.3.6–4, 2.3.10–1, 2.3.10–4, 2.3.14–2,               combined safety evaluation, the staff
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                                                                                                                                                                     4 Amendment No. 1 corrects the customer

                                                    2.6.3–3, 2.6.3–4, 3.3–1, 3.3–6, 2.1.3–4,                granted the exemption and issued the                  portfolio margin description in the Exhibit 3 to
                                                                                                                                                                  conform it to Exchange Rule 12.4. As the stated in
                                                    2.5.1–2 and 3.7–2; and Sections 2.6.3                   amendment that the licensee requested                 the Notice, the MSCI EAFE and MSCI EM Index
                                                    and 3.3, as described in the licensee’s                 on May 20, 2014, and supplemented by                  options would be subject to the same rules that
                                                    request dated May 20, 2014, and                         letter dated June 3, 2014. The exemption              currently govern other CBOE index options,
                                                    supplemented on June 3, November 6,                     and amendment were issued on March                    including margin requirements. Amendment No. 1
                                                                                                                                                                  is not subject to notice and comment because it is
                                                    and November 14, 2014. This exemption                   10, 2015, as part of a combined package               technical in nature and does not materially alter the
                                                    is related to, and necessary for the                    to the licensee (ADAMS Accession No.                  substance of the proposed rule change or raise any
                                                    granting of License Amendment No. 23,                   ML14345B023).                                         novel regulatory issues.



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                                                                                   Federal Register / Vol. 80, No. 71 / Tuesday, April 14, 2015 / Notices                                             20033

                                                    options on the MSCI EAFE Index and                      quotation vendors, including                          securities (stocks or ADRs) that are not
                                                    the MSCI EM Index.5 According to the                    Bloomberg, FactSet, and Reuters.                      subject to comprehensive surveillance
                                                    Exchange, the MSCI EAFE Index is a                         The Exchange proposes that trading                 agreements do not, in the aggregate,
                                                    free floated-adjusted market                            hours for MSCI EAFE Index options                     represent more than: (i) Twenty percent
                                                    capitalization index that is designed to                would be from 8:30 a.m. (Chicago Time)                (20%) of the weight of the MSCI EAFE
                                                    measure the equity market performance                   to 3:15 p.m. (Chicago Time), except that              Index, and (ii) twenty-two and a half
                                                    of developed markets, excluding the                     trading in expiring MSCI EAFE Index                   percent (22.5%) of the weight of the
                                                    U.S. and Canada. The MSCI EAFE Index                    options would end at 10:00 a.m.                       MSCI EM Index; (8) during the time
                                                    consists of 21 developed market country                 (Chicago Time) on their expiration date.              options on the index are traded on the
                                                    indexes and has over 900 constituents.                  Trading hours for MSCI EM Index                       Exchange, the current index value is
                                                                                                            options would be from 8:30 a.m.                       widely disseminated at least once every
                                                    According to the Exchange, the MSCI
                                                                                                            (Chicago Time) to 3:15 p.m. (Chicago                  fifteen (15) seconds by one or more
                                                    EM Index is a free float-adjusted market
                                                                                                            Time).                                                major market data vendors; however,
                                                    capitalization index that is designed to                   The Exchange proposes that MSCI                    the Exchange may continue to trade
                                                    measure the equity market performance                   EAFE and MSCI EM Index options                        MSCI EAFE Index options after trading
                                                    of emerging markets. The MSCI EM                        would expire on the third Friday of the               in all component securities has closed
                                                    Index consists of 23 emerging market                    expiration month.9 The exercise                       for the day and the index level is no
                                                    country indexes and has over 800                        settlement value would be the official                longer widely disseminated at least once
                                                    constituents.6 The Exchange states that                 closing values of the MSCI EAFE Index                 every fifteen (15) seconds by one or
                                                    the indexes are monitored and                           and the MSCI EM Index as reported by                  more major market data vendors,
                                                    maintained by MSCI Inc. (‘‘MSCI’’).7                    MSCI on the last trading day of the                   provided that EAFE futures contracts
                                                    Adjustments to the indexes are made on                  expiring contract. The exercise                       are trading and prices for those
                                                    a daily basis, and MSCI reviews the                     settlement amount would be equal to                   contracts may be used as a proxy for the
                                                    indexes quarterly.                                      the difference between the exercise-                  current index value; (9) the Exchange
                                                       According to the Exchange, both the                  settlement value and the exercise price               reasonably believes it has adequate
                                                    MSCI EAFE Index and the MSCI EM                         of the option, multiplied by the contract             system capacity to support the trading
                                                    Index are calculated in U.S. dollars on                 multiplier ($100).10 Exercise would                   of options on the index, based on a
                                                                                                            result in delivery of cash on the                     calculation of the Exchange’s current
                                                    a real-time basis from the open of the
                                                                                                            business day following expiration.                    Independent System Capacity Advisor
                                                    first market on which the components                       The Exchange proposes to create
                                                    are traded to the closing of the last                                                                         (ISCA) allocation and the number of
                                                                                                            specific initial and maintenance listing              new messages per second expected to be
                                                    market on which the components are                      criteria for options on the MSCI EAFE                 generated by options on such index; and
                                                    traded. The methodologies used to                       Index and the MSCI EM Index.                          (10) the Exchange has written
                                                    calculate the MSCI EAFE Index and the                   Specifically, the Exchange proposes to                surveillance procedures in place with
                                                    MSCI EM Index are similar to the                        add new Interpretation and Policy .01(a)              respect to surveillance of trading of
                                                    methodology used to calculate the value                 to Rule 24.2 to provide that the                      options on the index.
                                                    of other benchmark market-                              Exchange may trade MSCI EAFE and                         Additionally, the Exchange proposes
                                                    capitalization weighted indexes.8 Real-                 MSCI EM Index options if each of the                  to add new Interpretation and Policy
                                                    time data is distributed approximately                  following conditions is satisfied: (1) The            .01(b) to Rule 24.2 to set forth the
                                                    every 15 seconds while the indexes are                  index is broad-based, as defined in                   following maintenance listing standards
                                                    being calculated using MSCI’s real-time                 Exchange Rule 24.1(i)(1); (2) options on              for options on the MSCI EAFE Index
                                                    calculation engine to Bloomberg L.P.                    the index are designated as P.M.-settled              and the MSCI EM Index: (1) The
                                                    (‘‘Bloomberg’’), FactSet Research                       index options; (3) the index is                       conditions set forth in subparagraphs
                                                    Systems, Inc. (‘‘FactSet’’), and Thomson                capitalization-weighted, price-weighted,              .01(a)(1), (2), (3), (4), (7), (8), (9), and
                                                    Reuters (‘‘Reuters’’). End of day data is               modified capitalization-weighted, or                  (10) must continue to be satisfied, the
                                                    distributed daily to clients through                    equal dollar-weighted; (4) the index                  conditions set forth in subparagraphs
                                                    MSCI as well as through major                           consists of 500 or more component                     .01(a)(5) and (6) must be satisfied only
                                                                                                            securities; (5) all of the component                  as of the first day of January and July in
                                                       5 The Exchange proposes to list up to twelve near-   securities of the index will have a                   each year; and (2) the total number of
                                                    term expiration months for the MSCI EAFE and            market capitalization of greater than                 component securities in the index may
                                                    MSCI EM Index options. The Exchange also                $100 million; (6) no single component                 not increase or decrease by more than
                                                    proposes to list LEAPS on the MSCI EAFE Index           security accounts for more than fifteen               thirty-five percent (35%) from the
                                                    and the MSCI EM Index. The exchange proposes
                                                    that options on the MSCI EAFE Index and the MSCI        percent (15%) of the weight of the                    number of component securities in the
                                                    EM Index would be eligible for all other expirations    index, and the five highest weighted                  index at the time of its initial listing. In
                                                    permitted for other broad-based indexes (e.g., End      component securities in the index do                  the event a class of index options listed
                                                    of Week/End of Month Expirations, Short Term            not, in the aggregate, account for more               on the Exchange pursuant to
                                                    Option Series, and Quarterly Options Series). In
                                                    addition, the Exchange proposes to designate the        than fifty percent (50%) of the weight of             Interpretation and Policy .01(a) fails to
                                                    MSCI EAFE Index and the MSCI EM Index as                the index; (7) non-U.S. component                     satisfy these maintenance listing
                                                    eligible for trading as FLEX options.                                                                         standards, the Exchange shall not open
                                                       6 The Exchange states that the MSCI EAFE Index          9 According to the Exchange, when the last
                                                                                                                                                                  for trading any additional series of
                                                    and the MSCI EM Index each meet the definition          trading day/expiration date is moved because of an
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                                                                                                                                                                  options of that class unless the
                                                    of a broad-based index as set forth in Exchange Rule    Exchange holiday or closure, the last trading day/
                                                    24.1(i)(1).                                             expiration date for expiring options would be the
                                                                                                                                                                  continued listing of that class of index
                                                       7 The Exchange proposes to designate MSCI as the     immediately preceding business day.                   options has been approved by the
                                                    reporting authority for the MSCI EAFE Index and            10 According to the Exchange, if the exercise      Commission under Section 19(b)(2) of
                                                    the MSCI EM Index.                                      settlement value is not available or the normal       the Act.
                                                       8 Specifically, the indexes are based on the MSCI    settlement procedure cannot be utilized due to a         The contract multiplier for the MSCI
                                                    Global Investable Market Indexes Methodology.           trading disruption or other unusual circumstance,
                                                    Further detail regarding this methodology can be        the settlement value would be determined in
                                                                                                                                                                  EAFE and MSCI EM Index options
                                                    found in the Notice, supra note 3, at notes 5 and       accordance with the rules and bylaws of the           would be $100. The Exchange proposes
                                                    9 and accompanying text.                                Options Clearing Corporation.                         that the minimum tick size for series


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                                                    20034                          Federal Register / Vol. 80, No. 71 / Tuesday, April 14, 2015 / Notices

                                                    trading below $3 would be 0.05 ($5.00),                 systems capacity to handle the                        indexes, are consistent with the Act, for
                                                    and above $3 would be 0.10 ($10.00).                    additional traffic associated with the                the reasons discussed below.15
                                                    The Exchange also proposes that the                     listing of new series that would result                  The Commission notes that proposed
                                                    strike price interval for MSCI EAFE and                 from the introduction of MSCI EAFE                    Interpretation and Policy .01 to
                                                    MSCI EM Index options would be no                       and MSCI EM Index options.                            Exchange Rule 24.2 would require that
                                                    less than $5, except that the strike price                                                                    the MSCI EAFE Index and the MSCI EM
                                                                                                            III. Discussion and Commission                        Index each consist of 500 or more
                                                    interval would be no less than $2.50 if
                                                                                                            Findings                                              component securities. Further, for
                                                    the strike price is less than $200.
                                                       The Exchange proposes to apply the                      The Commission finds that the                      options on the MSCI EAFE Index and
                                                    default position limits for broad-based                 proposed rule change is consistent with               the MSCI EM Index to trade, each of the
                                                    index options of 25,000 contracts on the                the requirements of the Act and the                   minimum of 500 component securities
                                                    same side of the market (and 15,000                     rules and regulations thereunder                      would need to have a market
                                                    contracts near-term limit) to MSCI EAFE                 applicable to a national securities                   capitalization of greater than $100
                                                    and MSCI EM Index options. All                          exchange.13 Specifically, the                         million. The Commission notes that,
                                                    position limit hedge exemptions would                   Commission finds that the proposed                    according to the Exchange, the MSCI
                                                    apply. The exercise limits for MSCI                     rule change is consistent with Section                EAFE Index has more than 900
                                                    EAFE and MSCI EM Index options                          6(b)(5) of the Act,14 which requires,                 components and the MSCI EM Index
                                                    would be equivalent to the position                     among other things, that the rules of a               has more than 800 components, all of
                                                    limits for those options. In addition, the              national securities exchange be                       which must meet the market
                                                    Exchange proposes that the position                     designed to prevent fraudulent and                    capitalization requirement to permit
                                                    limits for FLEX options on the MSCI                     manipulative acts and practices, to                   options on these indexes to begin
                                                    EAFE Index and the MSCI EM Index                        promote just and equitable principles of              trading.
                                                    would be equal to the position limits for                                                                        The Commission notes that the
                                                                                                            trade, to remove impediments to and
                                                    non-FLEX options on the MSCI EAFE                                                                             proposed listing standards for options
                                                                                                            perfect the mechanism of a free and
                                                    Index and the MSCI EM Index. The                                                                              on the MSCI EAFE Index and the MSCI
                                                                                                            open market and a national market
                                                    exercise limits for FLEX options on the                                                                       EM Index would not permit any single
                                                                                                            system and, in general, to protect
                                                    MSCI EAFE Index and the MSCI EM                                                                               component security to account for more
                                                                                                            investors and the public interest.
                                                    Index would be equivalent to the                                                                              than 15% of the weight of the index,
                                                    position limits for those options.                         The Commission believes that the                   and would not permit the five highest
                                                       The Exchange states that, except as                  listing and trading of MSCI EAFE Index                weighted component securities to
                                                    modified by the proposal, Exchange                      options will broaden trading and                      account for more than 50% of the
                                                    Rules in Chapters I through XIX, XXIV,                  hedging opportunities for investors by                weight of the index in the aggregate. The
                                                    XXIVA, and XXIVB would equally                          providing an options instrument based                 Commission believes that, in view of the
                                                    apply to MSCI EAFE and MSCI EM                          on an index designed to measure the                   requirement on the number of securities
                                                    Index options. The Exchange also states                 equity market performance of developed                in each index, the number of countries
                                                    that MSCI EAFE and MSCI EM Index                        markets (excluding the U.S. and                       represented in each index, and the
                                                    options would be subject to the same                    Canada). Similarly, the Commission                    market capitalization, this concentration
                                                    rules that currently govern other CBOE                  believes that the listing and trading of              standard is consistent with the Act.
                                                    index options, including sales practice                 MSCI EM Index options will broaden                    Further, the Exchange states that no
                                                    rules, margin requirements,11 and                       trading and hedging opportunities for                 single component accounts for more
                                                    trading rules.12                                        investors by providing an options                     than 5% of either index. As noted
                                                       The Exchange represents that it has an               instrument based on an index designed                 above, the Exchange represents that it
                                                    adequate surveillance program in place                  to measure the equity market                          has an adequate surveillance program in
                                                    for MSCI EAFE and MSCI EM Index                         performance of emerging markets.                      place for MSCI EAFE and MSCI EM
                                                    options and intends to use the same                     Moreover, the Exchange states that the                Index options and intends to use the
                                                    surveillance procedures currently                       iShares MSCI EAFE exchange traded                     same surveillance procedures currently
                                                    utilized for each of the Exchange’s other               fund (‘‘EFA’’) is an actively-traded                  utilized for each of the Exchange’s other
                                                    index options to monitor trading in the                 product and that it lists actively-traded             index options to monitor trading in the
                                                    proposed options. The Exchange also                     options overlying EFA. The Exchange                   proposed options.
                                                    states that it is a member of the                       likewise states that the iShares MSCI                    The Commission notes that,
                                                    Intermarket Surveillance Group, is an                   Emerging Markets exchange traded fund                 consistent with the Exchange’s generic
                                                    affiliate member of the International                   (‘‘EEM’’) is an actively-traded product               listing standards for broad-based index
                                                    Organization of Securities Commissions,                 and that it lists actively-traded options             options, non-U.S. component securities
                                                    and has entered into various                            overlying EEM.
                                                                                                                                                                     15 The Commission notes that it previously
                                                    comprehensive surveillance agreements                      Because the MSCI EAFE Index and
                                                                                                                                                                  approved the listing and trading of options on the
                                                    and/or Memoranda of Understanding                       the MSCI EM Index are broad-based                     MSCI EAFE Index and the MSCI EM Index on
                                                    with various stock exchanges. Finally,                  indexes composed of actively-traded,                  NASDAQ OMX PHLX LLC (‘‘Phlx’’). See Securities
                                                    the Exchange represents that it believes                well-capitalized stocks, the trading of               Exchange Act Release Nos. 66420 (February 17,
                                                    it and the Options Price Reporting                      options on these indexes does not raise               2012), 77 FR 11177 (February 24, 2012) (SR–Phlx–
                                                                                                                                                                  2011–179) (order approving the listing of MSCI EM
                                                    Authority (‘‘OPRA’’) have the necessary                 unique regulatory concerns. The
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                                                                                                                                                                  Index options on Phlx) and 66861 (April 26, 2012),
                                                                                                            Commission believes that the listing                  77 FR 26056 (May 2, 2012) (SR–Phlx–2012–28)
                                                       11 The Exchange states that MSCI EAFE and MSCI
                                                                                                            standards, which are created                          (order approving the listing of MSCI EAFE Index
                                                    EM Index options would be margined as broad-            specifically and exclusively for these                options on Phlx). See also Securities Exchange Act
                                                    based index options.                                                                                          Release No. 67071 (May 29, 2012), 77 FR 33013
                                                       12 See, e.g., Exchange Rule Chapters IX (Doing                                                             (June 4, 2012) (SR–Phlx–2012–67) (notice of filing
                                                                                                              13 In approving this proposed rule change, the
                                                    Business with the Public), XII (Margins), IV                                                                  and immediate effectiveness of proposed rule
                                                    (Business Conduct), VI (Doing Business on the           Commission has considered the proposed rule’s         change to amend the trading hours for MSCI EAFE
                                                    Trading Floor), VIII (Market-Makers, Trading            impact on efficiency, competition, and capital        Index options). The Exchange states that its
                                                    Crowds and Modified Trading Systems), and XXIV          formation. See 15 U.S.C. 78c(f).                      proposal is substantially similar to the Phlx
                                                    (Index Options).                                          14 15 U.S.C. 78f(b)(5).                             proposals that were approved by the Commission.



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                                                                                   Federal Register / Vol. 80, No. 71 / Tuesday, April 14, 2015 / Notices                                                 20035

                                                    of the MSCI EAFE Index that are not                     proposal, Exchange Rules in Chapters I                  For the Commission, by the Division of
                                                    subject to comprehensive surveillance                   through XIX, XXIV, XXIVA, and XXIVB                   Trading and Markets, pursuant to delegated
                                                    agreements will not, in the aggregate,                  would equally apply to MSCI EAFE and                  authority.21
                                                    represent more than 20% of the weight                   MSCI EM Index options. The Exchange                   Brent J. Fields,
                                                    of the index. With respect to the MSCI                  also states that MSCI EAFE and MSCI                   Secretary.
                                                    EM Index, non-U.S. component                            EM Index options would be subject to                  [FR Doc. 2015–08453 Filed 4–13–15; 8:45 am]
                                                    securities that are not subject to                      the same rules that currently govern                  BILLING CODE 8011–01–P
                                                    comprehensive surveillance agreements                   other CBOE index options, including
                                                    must not, in the aggregate, represent                   sales practice rules, margin
                                                    more than 22.5% of the weight of the                                                                          SECURITIES AND EXCHANGE
                                                                                                            requirements, and trading rules.
                                                    index.                                                                                                        COMMISSION
                                                       The proposed listing standards                          The Commission further believes that
                                                                                                            the Exchange’s proposed position and                  [Release No. 34–74680; File No. SR–
                                                    require that, during the time options on
                                                                                                                                                                  NASDAQ–2015–029]
                                                    the MSCI EAFE Index and the MSCI EM                     exercise limits, trading hours, margin,
                                                    Index are traded on the Exchange, the                   strike price intervals, minimum tick                  Self-Regulatory Organizations; The
                                                    current index value is widely                           size, series openings, and other aspects              NASDAQ Stock Market LLC; Notice of
                                                    disseminated at least once every 15                     of the proposed rule change are                       Filing and Immediate Effectiveness of
                                                    seconds by one or more major market                     appropriate and consistent with the Act.              Proposed Rule Change To Modify
                                                    data vendors. However, the Exchange                                                                           NASDAQ Rule 7051 Fees Relating to
                                                    may continue to trade MSCI EAFE Index                   IV. Accelerated Approval of Proposed
                                                                                                                                                                  Pricing for Direct Circuit Connections
                                                    options after trading in all component                  Rule Change, as Modified by
                                                    securities has closed for the day and the               Amendment No. 1                                       April 8, 2015.
                                                    index level is no longer widely                                                                                  Pursuant to Section 19(b)(1) of the
                                                    disseminated at least once every 15                        The Commission finds good cause,                   Securities Exchange Act of 1934
                                                    seconds by one or more major market                     pursuant to Section 19(b)(2) of the                   (‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                    data vendors, provided that EAFE                        Act,18 for approving the proposed rule                notice is hereby given that on March 26,
                                                    futures contracts are trading and prices                change, as modified by Amendment No.                  2015, The NASDAQ Stock Market LLC
                                                    for those contracts may be used as a                    1, prior to the 30th day after the date of            (‘‘NASDAQ’’ or ‘‘Exchange’’) filed with
                                                    proxy for the current index value.16                    publication of notice in the Federal                  the Securities and Exchange
                                                       In addition, the proposed listing                    Register. As noted above, the                         Commission (‘‘SEC’’ or ‘‘Commission’’)
                                                    standards require the Exchange to                       Commission previously approved the                    the proposed rule change as described
                                                    reasonably believe that it has adequate                 listing and trading of options on the                 in Items I and II below, which Items
                                                    system capacity to support the trading                  MSCI EAFE Index and the MSCI EM                       have been prepared by the Exchange.
                                                    of options on the MSCI EAFE Index and                   Index on another exchange,19 and the                  The Commission is publishing this
                                                    the MSCI EM Index. As noted above, the                  current proposal is substantially similar             notice to solicit comments on the
                                                    Exchange represents that it believes it                 to the rules that were approved by the                proposed rule change from interested
                                                    and the OPRA have the necessary                         Commission. The prior proposals and                   persons.
                                                    systems capacity to handle the                          the current proposal were each subject
                                                    additional traffic associated with the                                                                        I. Self-Regulatory Organization’s
                                                                                                            to a full 21-day comment period and no
                                                    listing of new series that would result                                                                       Statement of the Terms of Substance of
                                                                                                            comments were received on any of the                  the Proposed Rule Change
                                                    from the introduction of MSCI EAFE                      proposals.
                                                    and MSCI EM Index options.                                                                                       NASDAQ is proposing to amend Rule
                                                       As a national securities exchange, the                  The Exchange requested that the                    7051 to increase installation and
                                                    Exchange is required, under Section                     Commission accelerate approval of the                 monthly fees assessed for Direct Circuit
                                                    6(b)(1) of the Act,17 to enforce                        proposal. The Exchange believes that                  Connection to NASDAQ, and to waive
                                                    compliance by its members, and persons                  accelerated approval by the Commission                certain installation fees thereunder for a
                                                    associated with its members, with the                   would enable these options to be                      limited time. The exchange will
                                                    provisions of the Act, Commission rules                 brought to market sooner, which would                 implement the proposed changes on
                                                    and regulations thereunder, and its own                 broaden trading and hedging                           April 1, 2015.
                                                    rules. As noted above, the Exchange                     opportunities for investors by creating                  The text of the proposed rule change
                                                    states that, except as modified by the                  new options on indexes that are                       is available at http://
                                                                                                            demonstrably popular.                                 nasdaq.cchwallstreet.com at NASDAQ’s
                                                       16 The Exchange notes that, because trading in the

                                                    components of the MSCI EAFE Index ends at                  The Commission finds that good                     principal office, and at the
                                                    approximately 11:30 a.m. (Chicago Time), there will     cause exists to approve the proposal, as              Commission’s Public Reference Room.
                                                    not be a current MSCI EAFE Index level calculated       modified by Amendment No. 1, on an
                                                    and disseminated during a portion of the time when                                                            II. Self-Regulatory Organization’s
                                                    MSCI EAFE Index options would be traded (from           accelerated basis.                                    Statement of the Purpose of, and
                                                    approximately 11:30 a.m. (Chicago Time) to 3:15
                                                                                                            V. Conclusion                                         Statutory Basis for, the Proposed Rule
                                                    p.m. (Chicago Time)). However, the Exchange states                                                            Change
                                                    that EAFE futures contracts will be trading during
                                                    this time period and that the futures prices would        It is therefore ordered, pursuant to                  In its filing with the Commission,
                                                    be a proxy for the current MSCI EAFE Index level        Section 19(b)(2) of the Act,20 that the
asabaliauskas on DSK5VPTVN1PROD with NOTICES




                                                                                                                                                                  NASDAQ included statements
                                                    during this time period. The Exchange states that       proposed rule change (SR–CBOE–2015–
                                                    MSCI EAFE Mini Index futures contracts are listed                                                             concerning the purpose of, and basis for,
                                                    for trading on the Intercontinental Exchange, Inc.      023), as modified by Amendment No. 1,                 the proposed rule change and discussed
                                                    (‘‘ICE’’) and other derivatives contracts on the MSCI   be, and hereby is, approved on an                     any comments it received on the
                                                    EAFE Index are listed for trading in Europe.            accelerated basis.
                                                    Similarly, the Exchange states that MSCI Emerging
                                                                                                                                                                  proposed rule change. The text of those
                                                    Markets Mini Index futures contracts are listed for
                                                                                                              18 15 U.S.C. 78s(b)(2).                               21 17 CFR 200.30–3(a)(12).
                                                    trading on ICE and other derivatives contracts on
                                                    the MSCI EM Index are listed for trading in Europe.       19 See supra note 15.                                 1 15 U.S.C. 78s(b)(1).
                                                       17 15 U.S.C. 78f(b)(1).                                20 15 U.S.C. 78s(b)(2).                               2 17 CFR 240.19b–4.




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Document Created: 2015-12-18 11:09:30
Document Modified: 2015-12-18 11:09:30
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 20032 

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