80 FR 37692 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 5.3.06
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 126 (July 1, 2015)
Federal Register Volume 80, Issue 126 (July 1, 2015)
| Page Range | 37692-37695 | |
| FR Document | 2015-16085 |
[Federal Register Volume 80, Number 126 (Wednesday, July 1, 2015)] [Notices] [Pages 37692-37695] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-16085] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75296; File No. SR-CBOE-2015-052] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 5.3.06 June 25, 2015. 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 June 15, 2015, Chicago Board Options Exchange, Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ``non-controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 15 U.S.C. 78s(b)(3)(A). \4\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change CBOE proposes to amend Rule 5.3.06 to allow the listing of options overlying Exchange-Traded Fund Shares (``ETFs'') that are listed pursuant to generic listing standards on equities exchanges for series of portfolio depositary receipts and index fund shares based on international or global indexes under which a comprehensive surveillance agreement is not required. The text of the proposed rule change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the Secretary, and at the Commission. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 5.3.06 to allow the listing of options overlying ETFs (referred to as ``Units'' in Rule 5.3.06) that are listed pursuant to generic listing standards on equities exchanges for series of portfolio depositary receipts and index fund shares based on international or global indexes under which a comprehensive surveillance sharing agreement (``comprehensive surveillance agreement'' or ``CSSA'') is not required.\5\ This proposal will enable the Exchange to list and trade options on ETFs without a CSSA provided that the ETF is listed on an equities exchange pursuant to the generic listings standards that do not require a CSSA pursuant to Rule 19b-4(e) \6\ of the Exchange Act. Rule 19b-4(e) provides that the listing and trading of a new [[Page 37693]] derivative securities product by a self-regulatory organization (``SRO'') shall not be deemed a proposed rule change, pursuant to paragraph (c)(1) of Rule 19b-4, if the Commission has approved, pursuant to Section 19(b) of the Exchange Act, the SRO's trading rules, procedures and listing standards for the product class that would include the new derivatives securities product, and the SRO has a surveillance program for the product class.\7\ In other words, the proposal will amend the listing standards to allow the Exchange to list and trade options on ETFs based on international or global indexes to a similar degree that they are allowed to be listed on several equities exchanges.\8\ --------------------------------------------------------------------------- \5\ See e.g., NYSE MKT Rule 1000 Commentary .03(a)(B); NYSE Arca Equities Rule 5.2(j)(3) Commentary .01(a)(B); NASDAQ Rule 5705(a)(3)(A)(ii); and BATS Rule 14.11(b)(3)(A)(ii). \6\ 17 CFR 240.19b-4(e). \7\ When relying on Rule 19b-4(e), the SRO must submit Form 19b- 4(e) to the Commission within five business days after the SRO begins trading the new derivative securities products. See Securities Exchange Act Release No. 40761 (December 8, 1998), 63 FR 70952 (December 22, 1998). \8\ See NYSE MKT Rule 1000 Commentary .03(a)(B); NYSE Arca Equities Rule 5.2(j)(3) Commentary .01(a)(B); NASDAQ Rule 5705(a)(3)(A)(ii); and BATS Rule 14.11(b)(3)(A)(ii). See also Securities Exchange Act Release Nos. 54739 (November 9, 2006), 71 FR 66993 (SR-Amex-2006-78); 55269 (February 9, 2007), 72 FR 7490 (February 15, 2007) (SR-NASDAQ-2006-050); 55621 (April 12, 2007), 72 FR 19571 (April 18, 2007) (SR-NYSEArca-2006-86). --------------------------------------------------------------------------- Exchange Traded Funds The Exchange allows for the listing and trading of options on ETFs (referred to as ``Units'' in Rule 5.3.06). Rule 5.3.06(v)(A)-(C) provide the listings standards for options on ETFs with non-U.S. component securities, such as ETFs based on international or global indexes. Rule 5.3.06(v)(A) requires that any non-U.S. component securities of an index or portfolio of securities on which the Units are based that are not subject to comprehensive surveillance agreements do not in the aggregate represent more than 50% of the weight of the index or portfolio. Rule 5.3.06(v)(B) requires that component securities of an index or portfolio of securities on which the Units are based for which the primary market is in any one country that is not subject to a comprehensive surveillance agreement do not represent 20% or more of the weight of the index. Rule 5.3.06(v)(C) requires that component securities of an index or portfolio of securities on which the Units are based for which the primary market is in any two countries that are not subject to comprehensive surveillance agreements do not represent 33% or more of the weight of the index. Generic Listing Standards for Exchange-Traded Funds The Exchange notes that the Commission has previously approved generic listing standards pursuant to Rule 19b-4(e) \9\ of the Exchange Act for ETFs based on indexes that consist of stocks listed on U.S. exchanges.\10\ In general, the criteria for the underlying component securities in the international and global indexes are similar to those for the domestic indexes, but with modifications as appropriate for the issues and risks associated with non-U.S. securities. --------------------------------------------------------------------------- \9\ 17 CFR 240.19b-4(e). \10\ See Commentary .03 to Amex Rule 1000 and Commentary .02 to Amex Rule 1000A. See also Securities Exchange Act Release No. 42787 (May 15, 2000), 65 FR 33598 (May24, 2000). --------------------------------------------------------------------------- In addition, the Commission has previously approved the listing and trading of ETFs based on international indexes--those based on non-U.S. component stocks--as well as global indexes--those based on non-U.S. and U.S. component stocks.\11\ --------------------------------------------------------------------------- \11\ See e.g., Securities Exchange Act Release Nos. 50189 (August 12, 2004), 69 FR 51723 (August 20, 2004) (approving the listing and trading of certain Vanguard International Equity Index Funds); 44700 (August 14, 2001), 66 FR 43927 (August 21, 2001) (approving the listing and trading of series of the iShares Trust based on certain S&P global indexes). --------------------------------------------------------------------------- In approving ETFs for equities exchange trading, the Commission thoroughly considered the structure of the ETFs, their usefulness to investors and to the markets, and SRO rules that govern their trading. The Exchange believes that allowing the listing of options overlying ETFs that are listed pursuant to the generic listing standards on equities exchanges for ETFs based on international and global indexes and applying Rule 19b-4(e) \12\ should fulfill the intended objective of that Rule by allowing options on those ETFs that have satisfied the generic listing standards to commence trading, without the need for the public comment period and Commission approval. The proposed rule has the potential to reduce the time frame for bringing options on ETFs to market, thereby reducing the burdens on issuers and other market participants. The failure of a particular ETF to comply with the generic listing standards under Rule 19b-4(e) \13\ would not, however, preclude the Exchange from submitting a separate filing pursuant to Section 19(b)(2),\14\ requesting Commission approval to list and trade options on a particular ETF. --------------------------------------------------------------------------- \12\ 17 CFR 240.19b-4(e). \13\ 17 CFR 240.19b-4(e). \14\ 15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- Requirements for Listing and Trading Options Overlying ETFs Based on International and Global Indexes Options on ETFs listed pursuant to these generic standards for international and global indexes would be traded, in all other respects, under the Exchange's existing trading rules and procedures that apply to options on ETFs and would be covered under the Exchange's surveillance program for options on ETFs. Pursuant to the proposed rule, the Exchange may list and trade options on an ETF without a CSSA provided that the ETF is listed pursuant to generic listing standards for series of portfolio depositary receipts and index fund shares based on international or global indexes under which a comprehensive surveillance agreement is not required. The Exchange believes that these generic listing standards are intended to ensure that stocks with substantial market capitalization and trading volume account for a substantial portion of the weight of an index or portfolio. The Exchange believes that this proposed listing standard for options on ETFs is reasonable for international and global indexes, and, when applied in conjunction with the other listing requirements,\15\ will result in options overlying ETFs that are sufficiently broad-based in scope and not readily susceptible to manipulation. The Exchange also believes that allowing the Exchange to list options overlying ETFs that are listed on equities exchanges pursuant to generic standards for series of portfolio depositary receipts and index fund shares based on international or global indexes under which a CSSA is not required, will result in options overlying ETFs that are adequately diversified in weighting for any single security or small group of securities to significantly reduce concerns that trading in options overlying ETFs based on international or global indexes could become a surrogate for trading in unregistered securities. --------------------------------------------------------------------------- \15\ All of the other listing criteria under the Exchange's rules will continue to apply to any options listed pursuant to the proposed rule change. --------------------------------------------------------------------------- The Exchange believes that ETFs based on international and global indexes that have been listed pursuant to the generic standards are sufficiently broad-based enough as to make options overlying such ETFs not susceptible instruments for manipulation. The Exchange believes that the threat of manipulation is sufficiently mitigated for underlying ETFs that have been listed on equities exchanges pursuant to generic listing standards for series of portfolio depositary receipts and index fund shares based on international or global indexes under which a comprehensive surveillance agreement is not required and for the overlying options, that the Exchange does not see [[Page 37694]] the need for CSSA to be in place before listing and trading options on such ETFs. The Exchange notes that its proposal does not replace the need for a CSSA as provided in the current rule. The provisions of the current rule, including the need for a CSSA, remain materially unchanged in the proposed rule and will continue to apply to options on ETFs that are not listed on an equities exchange pursuant to generic listing standards for series of portfolio depositary receipts and index fund shares based on international or global indexes under which a comprehensive surveillance agreement is not required. Instead, the proposed rule adds an additional listing mechanism for certain qualifying options on ETFs to be listed on the Exchange. Proposed Non-Substantive Reorganizational Changes The Exchange proposes to take this opportunity to reorganize the provisions set forth in Rule 5.3.06. As background, the Exchange states that there are three general areas addressed in Rule 5.3.06. First, current subparagraphs (i) to (v) identify general and specific types of ETFs eligible for options listing. The Exchange is proposing to maintain this organization. Second, subparagraph (v)(E) sets forth the two ways in which an ETF may meet the Exchange's initial listing criteria. Third, subparagraphs (A)-(D) and (F) set forth additional initial listing criteria for ETFs based on the particular type of ETF. The Exchange believes that reorganizing the presentation of these paragraphs would make Rule 5.3.06 clearer and more user-friendly. As a result, CBOE proposes to move the contents of current subparagraph (v)(E) to be set forth as new paragraphs (B)(i) and (ii), after the general and specific types of ETFs eligible for options listing are identified. The Exchange believes that this placement would make it clearer that this provision applies to all ETFs. Finally, the Exchange proposes to add new subparagraph lettering to existing rule text and to re-letter existing rule text. These these [sic] are technical organizational changes and are not substantive changes. CBOE also proposes to amend Rule 5.4.08 by updating internal cross- references to Rule 5.3.06 to reflect renumbering changing being proposed in this current filing to Rule 5.3.06. These proposed changes to Rule 5.4.08 are technical and non-substantive. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,\16\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\17\ in particular, in that it is 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 facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78f(b). \17\ 15 U.S.C. 78f(b). --------------------------------------------------------------------------- In particular, the proposed rules have the potential to reduce the time frame for bringing options on ETFs to market, thereby reducing the burdens on issuers and other market participants. The Exchange also believes enabling the listing and trading of options on ETFs pursuant to this new listing standard will benefit investors by providing them with valuable risk management tools. The Exchange notes that its proposal does not replace the need for a CSSA as provided in the current rule. The provisions of the current rule, including the need for a comprehensive surveillance sharing agreement, remain materially unchanged in the proposed rule and will continue to apply to options on ETFs that are not listed on an equities exchange pursuant to generic listing standards for series of portfolio depositary receipts and index fund shares based on international or global indexes under which a comprehensive surveillance agreement is not required. Instead, the proposed rule adds an additional listing mechanism for certain qualifying options on ETFs to be listed on the Exchange in a manner that is 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 facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. The Exchange believes that the proposed non-substantive reorganizational changes to Rule 5.3.06 would be beneficial to market participants and users of CBOE's Rulebook because these proposed changes would generally result in a clearer and more user-friendly presentment of the provisions set forth in CBOE's Rulebook. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. To the contrary, the proposed rule change is a competitive change that is substantially similar to recent rule changes filed by the MIAX Options Exchange (``MIAX''), NASDAQ OMX PHLX, LLC (``Phlx'') and International Securities Exchange, LLC (``ISE'').\18\ Furthermore, the Exchange believes this proposed rule change will benefit investors by providing additional methods to trade options on ETFs, and by providing them with valuable risk management tools. Specifically, the Exchange believes that market participants on the Exchange would benefit from the introduction and availability of options on ETFs in a manner that is similar to equities exchanges and will provide investors with a venue on which to trade options on these products. For all the reasons stated above, the Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act, and believes the proposed change will enhance competition. --------------------------------------------------------------------------- \18\ See Securities Exchange Act Release Nos. 74509 (March 13, 2015), 80 FR 14425 (March 19, 2015) (SR-MIAX-2015-04); 74553 (March 20, 2015), 80 FR 16072 (March 26, 2015) (SR-Phlx-2015-27) and 74832 (April 29, 2015), 80 FR 25738 (May 5, 2015) (SR-ISE-2015-16). --------------------------------------------------------------------------- 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 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 \19\ and Rule 19b-4(f)(6) thereunder.\20\ --------------------------------------------------------------------------- \19\ 15 U.S.C. 78s(b)(3)(A). \20\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b- 4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the 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. --------------------------------------------------------------------------- [[Page 37695]] A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act \21\ normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii) \22\ 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 stated that waiver of the operative delay will permit the Exchange to list and trade certain ETF options on the same basis as other options markets.\23\ Moreover, the Exchange has represented that the reorganizational changes are non-substantive and would assist market participants by providing a clearer rule. The Commission believes the waiver of the operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the operative delay and designates the proposal operative upon filing.\24\ --------------------------------------------------------------------------- \21\ 17 CFR 240.19b-4(f)(6). \22\ 17 CFR 240.19b-4(f)(6)(iii). \23\ See supra note 18. \24\ 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). --------------------------------------------------------------------------- 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-CBOE-2015-052 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2015-052. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2015-052, and should be submitted on or before July 22, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\25\ --------------------------------------------------------------------------- \25\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-16085 Filed 6-30-15; 8:45 am] BILLING CODE 8011-01-P
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additional time to analyze the impact of available for Web site viewing and I. Self-Regulatory Organization’s
the Pilot Program. Accordingly, the printing in the Commission’s Public Statement of the Terms of the Substance
Commission designates the proposed Reference Room, 100 F Street NE., of the Proposed Rule Change
rule change as operative upon filing Washington, DC 20549–1090 on official CBOE proposes to amend Rule 5.3.06
with the Commission.10 business days between the hours of to allow the listing of options overlying
At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of the Exchange-Traded Fund Shares (‘‘ETFs’’)
filing of such proposed rule change, the filing will also be available for that are listed pursuant to generic listing
Commission summarily may inspection and copying at the principal standards on equities exchanges for
temporarily suspend such rule change if series of portfolio depositary receipts
office of the Exchange. All comments
it appears to the Commission that such and index fund shares based on
received will be posted without change;
action is necessary or appropriate in the international or global indexes under
public interest, for the protection of the Commission does not edit personal
identifying information from which a comprehensive surveillance
investors, or otherwise in furtherance of agreement is not required. The text of
the purposes of the Act. If the submissions. You should submit only
information that you wish to make the proposed rule change is available on
Commission takes such action, the the Exchange’s Web site (http://
Commission shall institute proceedings available publicly. All submissions
should refer to File Number SR–BOX– www.cboe.com/AboutCBOE/
under Section 19(b)(2)(B) of the Act to CBOELegalRegulatoryHome.aspx), at
determine whether the proposed rule 2015–23 and should be submitted on or
the Exchange’s Office of the Secretary,
change should be approved or before July 22, 2015.
and at the Commission.
disapproved. For the Commission, by the Division of
Trading and Markets, pursuant to delegated
II. Self-Regulatory Organization’s
IV. Solicitation of Comments Statement of the Purpose of, and
authority.11
Interested persons are invited to Statutory Basis for, the Proposed Rule
Robert W. Errett,
submit written data, views, and Change
arguments concerning the foregoing, Deputy Secretary.
In its filing with the Commission, the
including whether the proposed rule [FR Doc. 2015–16084 Filed 6–30–15; 8:45 am]
Exchange included statements
change is consistent with the Act. BILLING CODE 8011–01–P concerning the purpose of and basis for
Comments may be submitted by any of the proposed rule change and discussed
the following methods: any comments it received on the
SECURITIES AND EXCHANGE proposed rule change. The text of these
Electronic Comments
COMMISSION statements may be examined at the
• Use the Commission’s Internet places specified in Item IV below. The
comment form (http://www.sec.gov/ [Release No. 34–75296; File No. SR–CBOE– Exchange has prepared summaries, set
rules/sro.shtml); or 2015–052] forth in sections A, B, and C below, of
• Send an email to rule-comments@
the most significant aspects of such
sec.gov. Please include File Number SR– Self-Regulatory Organizations; statements.
BOX–2015–23 on the subject line. Chicago Board Options Exchange,
A. Self-Regulatory Organization’s
Paper Comments Incorporated; Notice of Filing and
Statement of the Purpose of, and
• Send paper comments in triplicate Immediate Effectiveness of a Proposed Statutory Basis for, the Proposed Rule
to Secretary, Securities and Exchange Rule Change To Amend Rule 5.3.06 Change
Commission, 100 F Street NE., June 25, 2015.
Washington, DC 20549–1090. 1. Purpose
All submissions should refer to File Pursuant to Section 19(b)(1) of the The Exchange proposes to amend
Number SR–BOX–2015–23. This file Securities Exchange Act of 1934 (the Rule 5.3.06 to allow the listing of
number should be included on the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 options overlying ETFs (referred to as
subject line if email is used. To help the notice is hereby given that on June 15, ‘‘Units’’ in Rule 5.3.06) that are listed
Commission process and review your 2015, Chicago Board Options Exchange, pursuant to generic listing standards on
comments more efficiently, please use Incorporated (the ‘‘Exchange’’ or equities exchanges for series of portfolio
only one method. The Commission will ‘‘CBOE’’) filed with the Securities and depositary receipts and index fund
post all comments on the Commission’s Exchange Commission (the shares based on international or global
Internet Web site (http://www.sec.gov/ ‘‘Commission’’) the proposed rule indexes under which a comprehensive
rules/sro.shtml). Copies of the change as described in Items I and II surveillance sharing agreement
submission, all subsequent below, which Items have been prepared (‘‘comprehensive surveillance
amendments, all written statements agreement’’ or ‘‘CSSA’’) is not required.5
by the Exchange. The Exchange filed the
with respect to the proposed rule This proposal will enable the Exchange
proposal as a ‘‘non-controversial’’
change that are filed with the to list and trade options on ETFs
proposed rule change pursuant to
Commission, and all written without a CSSA provided that the ETF
Section 19(b)(3)(A) of the Act 3 and Rule is listed on an equities exchange
communications relating to the
19b–4(f)(6) thereunder.4 The pursuant to the generic listings
proposed rule change between the
Commission and any person, other than Commission is publishing this notice to standards that do not require a CSSA
those that may be withheld from the solicit comments on the proposed rule pursuant to Rule 19b–4(e) 6 of the
change from interested persons. Exchange Act. Rule 19b–4(e) provides
tkelley on DSK3SPTVN1PROD with NOTICES
public in accordance with the
provisions of 5 U.S.C. 552, will be that the listing and trading of a new
11 17 CFR 200.30–3(a)(12).
10 For 5 See e.g., NYSE MKT Rule 1000 Commentary
purposes only of waiving the operative 1 15 U.S.C. 78s(b)(1).
delay for this proposal, the Commission has .03(a)(B); NYSE Arca Equities Rule 5.2(j)(3)
2 17 CFR 240.19b–4.
considered the proposed rule’s impact on Commentary .01(a)(B); NASDAQ Rule
3 15 U.S.C. 78s(b)(3)(A).
efficiency, competition, and capital formation. See 5705(a)(3)(A)(ii); and BATS Rule 14.11(b)(3)(A)(ii).
15 U.S.C. 78c(f). 4 17 CFR 240.19b–4(f)(6). 6 17 CFR 240.19b–4(e).
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the need for CSSA to be in place before Section 6(b) of the Act,16 in general, and B. Self-Regulatory Organization’s
listing and trading options on such furthers the objectives of Section 6(b)(5) Statement on Burden on Competition
ETFs. The Exchange notes that its of the Act,17 in particular, in that it is The Exchange does not believe that
proposal does not replace the need for designed to prevent fraudulent and the proposed rule change will impose
a CSSA as provided in the current rule. manipulative acts and practices, to any burden on competition that is not
The provisions of the current rule, promote just and equitable principles of necessary or appropriate in furtherance
including the need for a CSSA, remain trade, to foster cooperation and of the purposes of the Act. To the
materially unchanged in the proposed coordination with persons engaged in contrary, the proposed rule change is a
rule and will continue to apply to facilitating transactions in securities, to competitive change that is substantially
options on ETFs that are not listed on remove impediments to and perfect the similar to recent rule changes filed by
an equities exchange pursuant to mechanisms of a free and open market the MIAX Options Exchange (‘‘MIAX’’),
generic listing standards for series of and a national market system and, in NASDAQ OMX PHLX, LLC (‘‘Phlx’’)
portfolio depositary receipts and index general, to protect investors and the and International Securities Exchange,
fund shares based on international or public interest. LLC (‘‘ISE’’).18 Furthermore, the
global indexes under which a In particular, the proposed rules have Exchange believes this proposed rule
comprehensive surveillance agreement the potential to reduce the time frame change will benefit investors by
is not required. Instead, the proposed for bringing options on ETFs to market, providing additional methods to trade
rule adds an additional listing thereby reducing the burdens on issuers options on ETFs, and by providing them
mechanism for certain qualifying and other market participants. The with valuable risk management tools.
options on ETFs to be listed on the Exchange also believes enabling the Specifically, the Exchange believes that
Exchange. listing and trading of options on ETFs market participants on the Exchange
Proposed Non-Substantive pursuant to this new listing standard would benefit from the introduction and
Reorganizational Changes will benefit investors by providing them availability of options on ETFs in a
with valuable risk management tools. manner that is similar to equities
The Exchange proposes to take this
The Exchange notes that its proposal exchanges and will provide investors
opportunity to reorganize the provisions
does not replace the need for a CSSA as with a venue on which to trade options
set forth in Rule 5.3.06. As background,
provided in the current rule. The on these products. For all the reasons
the Exchange states that there are three
provisions of the current rule, including stated above, the Exchange does not
general areas addressed in Rule 5.3.06.
the need for a comprehensive believe that the proposed rule change
First, current subparagraphs (i) to (v)
surveillance sharing agreement, remain will impose any burden on competition
identify general and specific types of
materially unchanged in the proposed not necessary or appropriate in
ETFs eligible for options listing. The
rule and will continue to apply to furtherance of the purposes of the Act,
Exchange is proposing to maintain this
options on ETFs that are not listed on and believes the proposed change will
organization. Second, subparagraph
an equities exchange pursuant to enhance competition.
(v)(E) sets forth the two ways in which
an ETF may meet the Exchange’s initial generic listing standards for series of C. Self-Regulatory Organization’s
listing criteria. Third, subparagraphs portfolio depositary receipts and index Statement on Comments on the
(A)–(D) and (F) set forth additional fund shares based on international or Proposed Rule Change Received From
initial listing criteria for ETFs based on global indexes under which a Members, Participants, or Others
the particular type of ETF. The comprehensive surveillance agreement
is not required. Instead, the proposed The Exchange neither solicited nor
Exchange believes that reorganizing the received comments on the proposed
presentation of these paragraphs would rule adds an additional listing
mechanism for certain qualifying rule change.
make Rule 5.3.06 clearer and more user-
friendly. As a result, CBOE proposes to options on ETFs to be listed on the III. Date of Effectiveness of the
move the contents of current Exchange in a manner that is designed Proposed Rule Change and Timing for
subparagraph (v)(E) to be set forth as to prevent fraudulent and manipulative Commission Action
new paragraphs (B)(i) and (ii), after the acts and practices, to promote just and Because the proposed rule change
general and specific types of ETFs equitable principles of trade, to foster does not (i) significantly affect the
eligible for options listing are identified. cooperation and coordination with protection of investors or the public
The Exchange believes that this persons engaged in facilitating interest; (ii) impose any significant
placement would make it clearer that transactions in securities, to remove burden on competition; and (iii) become
this provision applies to all ETFs. impediments to and perfect the operative for 30 days from the date on
Finally, the Exchange proposes to add mechanisms of a free and open market which it was filed, or such shorter time
new subparagraph lettering to existing and a national market system and, in as the Commission may designate, it has
rule text and to re-letter existing rule general, to protect investors and the become effective pursuant to Section
text. These these [sic] are technical public interest. 19(b)(3)(A) of the Act 19 and Rule 19b–
organizational changes and are not The Exchange believes that the 4(f)(6) thereunder.20
substantive changes. proposed non-substantive
CBOE also proposes to amend Rule reorganizational changes to Rule 5.3.06 18 See Securities Exchange Act Release Nos.
5.4.08 by updating internal cross- would be beneficial to market 74509 (March 13, 2015), 80 FR 14425 (March 19,
participants and users of CBOE’s 2015) (SR–MIAX–2015–04); 74553 (March 20,
references to Rule 5.3.06 to reflect 2015), 80 FR 16072 (March 26, 2015) (SR–Phlx–
renumbering changing being proposed Rulebook because these proposed 2015–27) and 74832 (April 29, 2015), 80 FR 25738
tkelley on DSK3SPTVN1PROD with NOTICES
in this current filing to Rule 5.3.06. changes would generally result in a (May 5, 2015) (SR–ISE–2015–16).
These proposed changes to Rule 5.4.08 clearer and more user-friendly 19 15 U.S.C. 78s(b)(3)(A).
are technical and non-substantive. presentment of the provisions set forth 20 17 CFR 240.19b–4(f)(6). As required under Rule
in CBOE’s Rulebook. 19b–4(f)(6)(iii), the Exchange provided the
2. Statutory Basis Commission with written notice of its intent to file
the proposed rule change, along with a brief
The Exchange believes that the 16 15 U.S.C. 78f(b). description and the text of the proposed rule
proposed rule change is consistent with 17 15 U.S.C. 78f(b). change, at least five business days prior to the date
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![Federal Register / Vol. 80, No. 126 / Wednesday, July 1, 2015 / Notices 37695
A proposed rule change filed Paper Comments SECURITIES AND EXCHANGE
pursuant to Rule 19b–4(f)(6) under the COMMISSION
Act 21 normally does not become • Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities [Release No. 34–75301; File No. SR–
operative for 30 days after the date of its NYSEMKT–2015–44]
filing. However, Rule 19b–4(f)(6)(iii) 22 and Exchange Commission, 100 F Street
permits the Commission to designate a NE., Washington, DC 20549–1090. Self-Regulatory Organizations; NYSE
shorter time if such action is consistent All submissions should refer to File MKT LLC; Notice of Filing and
with the protection of investors and the Number SR–CBOE–2015–052. This file Immediate Effectiveness of Proposed
public interest. The Exchange has asked number should be included on the Rule Change Amending the Members’
the Commission to waive the 30-day Schedule as Defined in the Amended
subject line if email is used. To help the
operative delay so that the proposal may and Restated Limited Liability
Commission process and review your
become operative immediately upon Company Agreement of NYSE Amex
filing. The Exchange stated that waiver comments more efficiently, please use
Options LLC Dated as of May 14, 2014
of the operative delay will permit the only one method. The Commission will
in Order to Reflect Changes to the
Exchange to list and trade certain ETF post all comments on the Commission’s
Capital Structure of the Company
options on the same basis as other Internet Web site (http://www.sec.gov/
options markets.23 Moreover, the rules/sro.shtml). Copies of the June 25, 2015.
Exchange has represented that the submission, all subsequent Pursuant to Section 19(b)(1) 1 of the
reorganizational changes are non- amendments, all written statements Securities Exchange Act of 1934 (the
substantive and would assist market with respect to the proposed rule ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
participants by providing a clearer rule. change that are filed with the notice is hereby given that on June 17,
The Commission believes the waiver of Commission, and all written 2015, NYSE MKT LLC (the ‘‘Exchange’’
the operative delay is consistent with communications relating to the or ‘‘NYSE MKT’’) filed with the
the protection of investors and the proposed rule change between the Securities and Exchange Commission
public interest. Therefore, the Commission and any person, other than (the ‘‘Commission’’) the proposed rule
Commission hereby waives the those that may be withheld from the change as described in Items I and II
operative delay and designates the below, which Items have been prepared
public in accordance with the
proposal operative upon filing.24 by the self-regulatory organization. The
provisions of 5 U.S.C. 552, will be
At any time within 60 days of the Commission is publishing this notice to
available for Web site viewing and solicit comments on the proposed rule
filing of the proposed rule change, the printing in the Commission’s Public
Commission summarily may change from interested persons.
Reference Room, 100 F Street NE.,
temporarily suspend such rule change if Washington, DC 20549 on official I. Self-Regulatory Organization’s
it appears to the Commission that such business days between the hours of Statement of the Terms of Substance of
action is necessary or appropriate in the the Proposed Rule Change
10:00 a.m. and 3:00 p.m. Copies of such
public interest, for the protection of
filing also will be available for The Exchange proposes to amend the
investors, or otherwise in furtherance of
inspection and copying at the principal Members’ Schedule (as defined in the
the purposes of the Act. If the
office of the Exchange. All comments Amended and Restated Limited
Commission takes such action, the
received will be posted without change; Liability Company Agreement of NYSE
Commission shall institute proceedings
the Commission does not edit personal Amex Options LLC (the ‘‘Company’’)
to determine whether the proposed rule
identifying information from dated as of May 14, 2014 (the ‘‘LLC
change should be approved or
submissions. You should submit only Agreement’’)) in order to reflect changes
disapproved.
information that you wish to make to the capital structure of the Company
IV. Solicitation of Comments available publicly. All submissions based on two transactions (such
Interested persons are invited to should refer to File Number SR–CBOE– amendment, the ‘‘Proposed Rule
submit written data, views, and 2015–052, and should be submitted on Change’’). The first transaction involved
arguments concerning the foregoing, or before July 22, 2015. the issuance of Annual Incentive Shares
including whether the proposed rule (as defined in the Members Agreement
For the Commission, by the Division of (as defined below)) to the Founding
change is consistent with the Act. Trading and Markets, pursuant to delegated
Comments may be submitted by any of Firms (as defined below) consistent
authority.25 with the formula set forth in Section 2.1
the following methods:
Robert W. Errett, of that certain Amended and Restated
Electronic Comments Deputy Secretary. Members Agreement, dated as of May
• Use the Commission’s Internet [FR Doc. 2015–16085 Filed 6–30–15; 8:45 am] 14, 2014, by and among the Company,
comment form (http://www.sec.gov/ BILLING CODE 8011–01–P
NYSE MKT, NYSE Holdings LLC
rules/sro.shtml); or (formerly known as NYSE Euronext)
• Send an email to rule-comments@ (‘‘NYSE Holdings’’), NYSE Market (DE),
sec.gov. Please include File Number SR– Inc. (formerly known as NYSE Market,
CBOE–2015–052 on the subject line. Inc.) (‘‘NYSE Market (DE)’’), Banc of
America Strategic Investments
of filing of the proposed rule change, or such Corporation (‘‘BAML’’), Barclays
shorter time as designated by the Commission. Electronic Commerce Holdings Inc.
tkelley on DSK3SPTVN1PROD with NOTICES
21 17 CFR 240.19b–4(f)(6).
(‘‘Barclays’’), Citadel Securities LLC
22 17 CFR 240.19b–4(f)(6)(iii).
(‘‘Citadel’’), Citigroup Financial
23 See supra note 18.
24 For purposes only of waiving the 30-day
Strategies, Inc. (‘‘Citigroup’’), Goldman,
operative delay, the Commission has also
1 15 U.S.C.78s(b)(1).
considered the proposed rule’s impact on
2 15 U.S.C. 78a.
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f). 25 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4.
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Document Created: 2015-12-15 13:19:49
Document Modified: 2015-12-15 13:19:49
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 37692 |
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