81_FR_54294 81 FR 54137 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Rule 24.6

81 FR 54137 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Rule 24.6

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 157 (August 15, 2016)

Page Range54137-54139
FR Document2016-19318

Federal Register, Volume 81 Issue 157 (Monday, August 15, 2016)
[Federal Register Volume 81, Number 157 (Monday, August 15, 2016)]
[Notices]
[Pages 54137-54139]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-19318]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78513; File No. SR-CBOE-2016-058]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to Rule 24.6

August 9, 2016.
    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 August 8, 2016, 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 Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange seeks to amend Rule 24.6. The text of the proposed 
rule change is provided below.

(additions are underlined; deletions are [bracketed])
* * * * *
Chicago Board Options Exchange, Incorporated Rules
* * * * *
Rule 24.6. Days and Hours of Business

    (a)-(b) No change
    . . . Interpretations and Policies:
    .01-.05 No change.
    .06 With respect to options on a foreign index that is comprised of 
component securities trading in a single country, the Exchange may 
determine

[[Page 54138]]

not to open the options for trading when the component securities of 
the foreign index are not trading due to a holiday on the foreign 
exchange(s) at which the component securities trade. At least once a 
year in January, the Exchange will announce via Regulatory Circular the 
days on which options on a particular foreign index will be closed 
pursuant to this interpretation.
* * * * *
    The text of the proposed rule change is also 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's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange seeks to add Interpretation and Policy .06 to Rule 
24.6 in order to specify that the Exchange may determine not to open 
for trading options on a foreign index that is comprised of component 
securities trading in a single country when the component securities of 
the foreign index are not open for trading due to a holiday on the 
foreign exchange or exchanges on which the component securities trade.
    Rule 6.1.04 identifies the days on which the Exchange is not open 
due to a holiday.\3\ Exchanges in foreign countries also have their own 
holiday schedules.\4\ As CBOE lists and trades options that overlie 
various foreign indexes,\5\ the components of which trade on foreign 
exchanges, CBOE proposes to specify in its Rules that the Exchange may 
determine to not open options on foreign indexes when the component 
securities of the foreign index are not open for trading due to a 
holiday on the foreign exchange; however, the Exchange proposes to 
limit the application of this proposal to options on foreign indexes 
that are comprised of component securities trading in a single 
country.\6\
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    \3\ Rule 6.1.04 provides that ``[t]he Board of Directors has 
determined that the Exchange will not be open for business on New 
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good 
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day 
or Christmas Day. The Board has also determined that, when any 
holiday observed by the Exchange falls on a Saturday, the Exchange 
will not be open for business on the preceding Friday, and that when 
any holiday observed by the Exchange falls on a Sunday, the Exchange 
will not be open for business on the following Monday, unless 
unusual business conditions exist at the time.''
    \4\ See e.g., Stock Exchange of Hong Kong Holiday Schedule, 
available at: https://www.hkex.com.hk/eng/market/sec_tradinfo/tradcal/nont10.htm and London Stock Exchange Holiday Schedule, 
available at: http://www.lseg.com/areas-expertise/our-markets/london-stock-exchange/equities-markets/trading-services/business-days.
    \5\ See e.g., Rules 24.2.01, 24.2.02, and 24.2.03.
    \6\ The Exchange notes that when there are multiple exchanges in 
a single country trading the component securities of a foreign index 
the holiday schedule for exchanges within that country are likely to 
be the same or similar.
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    The Exchange may trade options on various foreign indexes 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 seconds, provided that futures on the applicable indexes are 
trading and prices for those contracts may be used as a proxy for the 
current index value.\7\ For example, the component securities of the 
FTSE China 50 Index open with the start of trading on the Stock 
Exchange of Hong Kong (``SEHK'') at approximately 8:30 p.m. (Chicago 
time) (prior day) and close with the end of trading on the SEHK at 
approximately 3:00 a.m. (Chicago time) (next day). Thus, between 8:30 
a.m. and 3:15 p.m. (Chicago time) the FTSE China 50 Index level is a 
static value that market participants can access via data vendors. 
However, the Exchange continues to trade options on the FTSE China 50 
Index (``China 50 options'') from 8:30 a.m. Chicago time to 3:15 a.m. 
Chicago time because prices of the E-Mini FTSE China 50 Index futures 
trading at the CME may be used as a proxy for the current index 
value.\8\ When SEHK is closed because of a holiday, E-Mini FTSE China 
50 Index futures remain open and may still be used as a proxy for the 
current index value. However, the Exchange may determine to keep China 
50 Options (as well as other options on other foreign indexes) closed 
because of a holiday on SEHK (or the applicable foreign exchange on 
which the index constituents trade).
---------------------------------------------------------------------------

    \7\ See Rules 24.2.01(a)(8), 24.2.02(a)(8), and 24.2.03(a)(8).
    \8\ The trading hours for E-Mini FTSE China 50 Index Futures are 
from 5:00 p.m. (Chicago time) to 4:00 p.m. (Chicago time) the 
following day, Sunday through Friday. See E-Mini FTSE China 50 Index 
Future Contract specifications located at: http://www.cmegroup.com/education/files/e-mini-ftse-china-50-index-futures.pdf. The Exchange 
believes E-Mini FTSE China 50 Index Futures are an appropriate proxy 
for China 50 options.
---------------------------------------------------------------------------

    For example, prior to the launch of China 50 options, SEHK was 
closed from the weekend of February 7-8 through the 2016 Lunar New Year 
from February 8-10. Although E-Mini FTSE China 50 Index futures can be 
used as a proxy, the Exchange may have determined that options 
participants would be better served by keeping China 50 options closed 
because the holiday caused the underlying index value to be unavailable 
for an extended period of time.
    With respect to options on foreign indexes specifically, the 
Exchange has the authority to set the days and hours of business.\9\ 
This proposal simply seeks to add Interpretation and Policy .06 to 
notify market participants that the Exchange may determine not to open 
options on foreign indexes because of a holiday on a foreign exchange. 
Furthermore, as proposed, Interpretation and Policy .06 will also 
require the Exchange to announce via Regulatory Circular in January of 
every year the particular days on which options on particular foreign 
indexes will not be open due to a holiday on a foreign exchange or 
exchanges. However, there may be holidays between the date this 
proposal becomes effective and the following January; thus, the first 
announcement will be made via Regulatory Circular within 30 days of 
this proposal becoming effective.
---------------------------------------------------------------------------

    \9\ See Rule 24.6(a) (providing that with respect to options on 
foreign indexes, the Board's designee shall determine the days and 
hours of business.).
---------------------------------------------------------------------------

    Although keeping options closed because of a foreign exchange's 
holidays will cause users of these particular options to not be able to 
trade when the U.S. market is otherwise open, the closures will only 
occur a few times a year. Furthermore, users will have sufficient 
notice of such closures via the Regulatory Circular that will be 
published every January. Finally, this proposal may potentially allow 
users to receive better executions because for certain holidays, such 
as during the Lunar New Year described above, the closing of the 
component securities may not allow Market-Makers to quote as tightly 
and aggressively as they would otherwise. In effect, limiting users' 
ability to trade particular index options to days on which there is not 
a holiday on a foreign exchange may better serve

[[Page 54139]]

users because they will be trading on days in which Market-Makers may 
potentially provide tighter markets.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\10\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \11\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \12\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ Id.
---------------------------------------------------------------------------

    In particular, the proposal helps 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 
by: (1) Limiting users' ability to trade particular index options to 
days on which there is not a holiday on a foreign exchange because 
doing so allows users of these index options to trade on days in which 
Market-Makers may potentially provide tighter markets and (2) providing 
a mechanism for notifying market participants of the days on which 
options on a particular foreign index will not be open due to a holiday 
on the foreign exchange(s) on which the index constituents trade.

B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposal will not impose a 
burden on intramarket competition because all participants will be 
subject to the same holiday schedule as set forth by the Exchange. 
Furthermore, all participants will have adequate notice of the holiday 
schedule by virtue of the Exchange publishing a Regulatory Circular in 
January of every year that announces such holidays. The proposal will 
not impose a burden on intermarket competition because the options 
effected by this proposal are options on foreign indexes that are 
exclusive to CBOE. Any perceived burden on users of these options is 
outweighed by the fact that users may potentially receive better 
executions by trading on days on which Market-Makers may potentially be 
able to provide tighter markets.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CBOE-2016-058 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2016-058. 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 the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; 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-2016-058 and should be 
submitted on or before September 6, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19318 Filed 8-12-16; 8:45 am]
 BILLING CODE 8011-01-P



                                                                             Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices                                                    54137

                                                proposal that is seeking to further the                 of the Act 20 and paragraph (f) of Rule                 submissions. You should submit only
                                                growth of the Exchange. The Exchange                    19b–4 thereunder.21 At any time within                  information that you wish to make
                                                has structured certain fees and rebates                 60 days of the filing of the proposed rule              available publicly. All submissions
                                                proposed herein to attract certain                      change, the Commission summarily may                    should refer to File Number SR-
                                                additional volume in both Customer and                  temporarily suspend such rule change if                 BatsBZX–2016–44 and should be
                                                certain Non-Customer orders, however,                   it appears to the Commission that such                  submitted on or before September 6,
                                                the Exchange believes that its pricing for              action is necessary or appropriate in the               2016.
                                                all capacities is competitive with that                 public interest, for the protection of                    For the Commission, by the Division of
                                                offered by other options exchanges.                     investors, or otherwise in furtherance of               Trading and Markets, pursuant to delegated
                                                Additionally, Members may opt to                        the purposes of the Act.                                authority.22
                                                disfavor the Exchange’s pricing if they                                                                         Robert W. Errett,
                                                                                                        IV. Solicitation of Comments
                                                believe that alternatives offer them                                                                            Deputy Secretary.
                                                better value. Accordingly, the Exchange                   Interested persons are invited to
                                                                                                        submit written data, views, and                         [FR Doc. 2016–19320 Filed 8–12–16; 8:45 am]
                                                does not believe that the proposed
                                                change will impair the ability of                       arguments concerning the foregoing,                     BILLING CODE 8011–01–P

                                                Members or competing venues to                          including whether the proposed rule
                                                maintain their competitive standing in                  change is consistent with the Act.
                                                                                                        Comments may be submitted by any of                     SECURITIES AND EXCHANGE
                                                the financial markets. Additionally,
                                                                                                        the following methods:                                  COMMISSION
                                                Members may opt to disfavor the
                                                Exchange’s pricing if they believe that                 Electronic Comments                                     [Release No. 34–78513; File No. SR–CBOE–
                                                alternatives offer them better value.                                                                           2016–058]
                                                Accordingly, the Exchange does not                        • Use the Commission’s Internet
                                                believe that the proposed changes to the                comment form (http://www.sec.gov/                       Self-Regulatory Organizations;
                                                Exchange’s tiered pricing structure                     rules/sro.shtml); or                                    Chicago Board Options Exchange,
                                                burdens competition, but instead                          • Send an email to rule-comments@                     Incorporated; Notice of Filing and
                                                enhances competition by increasing the                  sec.gov. Please include File Number SR-                 Immediate Effectiveness of a Proposed
                                                competitiveness of the Exchange. The                    BatsBZX–2016–44 on the subject line.                    Rule Change Relating to Rule 24.6
                                                Exchange believes that the price                        Paper Comments                                          August 9, 2016.
                                                changes contribute to, rather than
                                                                                                           • Send paper comments in triplicate                     Pursuant to Section 19(b)(1) of the
                                                burden competition, as such changes are                                                                         Securities Exchange Act of 1934 (the
                                                                                                        to Secretary, Securities and Exchange
                                                broadly intended to incentivize                                                                                 ‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                                                                        Commission, 100 F Street NE.,
                                                participants to increase their                                                                                  notice is hereby given that on August 8,
                                                                                                        Washington, DC 20549–1090.
                                                participation on the Exchange, which                                                                            2016, Chicago Board Options Exchange,
                                                will increase the liquidity and market                  All submissions should refer to File
                                                                                                        Number SR-BatsBZX–2016–44. This file                    Incorporated (the ‘‘Exchange’’ or
                                                quality on the Exchange and further                                                                             ‘‘CBOE’’) filed with the Securities and
                                                enhance the Exchange’s ability to                       number should be included on the
                                                                                                        subject line if email is used. To help the              Exchange Commission (the
                                                compete with other exchanges.                                                                                   ‘‘Commission’’) the proposed rule
                                                   With regard to the proposed logical                  Commission process and review your
                                                                                                        comments more efficiently, please use                   change as described in Items I and II
                                                port fee amendment, the Exchange
                                                                                                        only one method. The Commission will                    below, which Items have been prepared
                                                believes that fees for connectivity are
                                                                                                        post all comments on the Commission’s                   by the Exchange. The Commission is
                                                constrained by the robust competition
                                                                                                        Internet Web site (http://www.sec.gov/                  publishing this notice to solicit
                                                for order flow among exchanges and
                                                                                                        rules/sro.shtml). Copies of the                         comments on the proposed rule change
                                                non-exchange markets. Further,
                                                                                                        submission, all subsequent                              from interested persons.
                                                excessive fees for connectivity,
                                                including logical port fees, would serve                amendments, all written statements                      I. Self-Regulatory Organization’s
                                                to impair an exchange’s ability to                      with respect to the proposed rule                       Statement of the Terms of Substance of
                                                compete for order flow rather than                      change that are filed with the                          the Proposed Rule Change
                                                burdening competition. The Exchange                     Commission, and all written
                                                                                                        communications relating to the                             The Exchange seeks to amend Rule
                                                also does not believe the proposed rule                                                                         24.6. The text of the proposed rule
                                                change would impact intramarket                         proposed rule change between the
                                                                                                        Commission and any person, other than                   change is provided below.
                                                competition as it would apply to all
                                                                                                        those that may be withheld from the                     (additions are underlined; deletions are
                                                Members and non-Members equally.
                                                                                                        public in accordance with the                           [bracketed])
                                                (C) Self-Regulatory Organization’s                      provisions of 5 U.S.C. 552, will be                     *      *     *     *    *
                                                Statement on Comments on the                            available for Web site viewing and                      Chicago Board Options Exchange,
                                                Proposed Rule Change Received From                      printing in the Commission’s Public                     Incorporated Rules
                                                Members, Participants or Others                         Reference Room, 100 F Street, NE.,                      *      *     *     *    *
                                                  The Exchange has not solicited, and                   Washington, DC 20549, on official                       Rule 24.6. Days and Hours of Business
                                                does not intend to solicit, comments on                 business days between the hours of                         (a)–(b) No change
                                                this proposed rule change. The                          10:00 a.m. and 3:00 p.m. Copies of such                    . . . Interpretations and Policies:
                                                Exchange has not received any written                   filing will also be available for                          .01–.05 No change.
sradovich on DSK3GMQ082PROD with NOTICES




                                                comments from members or other                          inspection and copying at the principal                    .06 With respect to options on a
                                                interested parties.                                     office of the Exchange. All comments                    foreign index that is comprised of
                                                                                                        received will be posted without change;                 component securities trading in a single
                                                III. Date of Effectiveness of the
                                                                                                        the Commission does not edit personal                   country, the Exchange may determine
                                                Proposed Rule Change and Timing for
                                                                                                        identifying information from
                                                Commission Action                                                                                                 22 17 CFR 200.30–3(a)(12).
                                                   The foregoing rule change has become                   20 15 U.S.C. 78s(b)(3)(A).                              1 15 U.S.C. 78s(b)(1).
                                                effective pursuant to Section 19(b)(3)(A)                 21 17 CFR 240.19b–4(f).                                 2 17 CFR 240.19b–4.




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                                                54138                        Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices

                                                not to open the options for trading when                countries also have their own holiday                 for the current index value. However,
                                                the component securities of the foreign                 schedules.4 As CBOE lists and trades                  the Exchange may determine to keep
                                                index are not trading due to a holiday                  options that overlie various foreign                  China 50 Options (as well as other
                                                on the foreign exchange(s) at which the                 indexes,5 the components of which                     options on other foreign indexes) closed
                                                component securities trade. At least                    trade on foreign exchanges, CBOE                      because of a holiday on SEHK (or the
                                                once a year in January, the Exchange                    proposes to specify in its Rules that the             applicable foreign exchange on which
                                                will announce via Regulatory Circular                   Exchange may determine to not open                    the index constituents trade).
                                                the days on which options on a                          options on foreign indexes when the                      For example, prior to the launch of
                                                particular foreign index will be closed                 component securities of the foreign                   China 50 options, SEHK was closed
                                                pursuant to this interpretation.                        index are not open for trading due to a               from the weekend of February 7–8
                                                *      *     *    *    *                                holiday on the foreign exchange;                      through the 2016 Lunar New Year from
                                                   The text of the proposed rule change                 however, the Exchange proposes to limit               February 8–10. Although E-Mini FTSE
                                                is also available on the Exchange’s Web                 the application of this proposal to                   China 50 Index futures can be used as
                                                site (http://www.cboe.com/AboutCBOE/                    options on foreign indexes that are                   a proxy, the Exchange may have
                                                CBOELegalRegulatoryHome.aspx), at                       comprised of component securities                     determined that options participants
                                                the Exchange’s Office of the Secretary,                 trading in a single country.6                         would be better served by keeping
                                                and at the Commission’s Public                             The Exchange may trade options on                  China 50 options closed because the
                                                Reference Room.                                         various foreign indexes after trading in              holiday caused the underlying index
                                                                                                        all component securities has closed for               value to be unavailable for an extended
                                                II. Self-Regulatory Organization’s                      the day and the index level is no longer              period of time.
                                                Statement of the Purpose of, and                        widely disseminated at least once every                  With respect to options on foreign
                                                Statutory Basis for, the Proposed Rule                  fifteen seconds, provided that futures on             indexes specifically, the Exchange has
                                                Change                                                  the applicable indexes are trading and                the authority to set the days and hours
                                                   In its filing with the Commission, the               prices for those contracts may be used                of business.9 This proposal simply seeks
                                                Exchange included statements                            as a proxy for the current index value.7              to add Interpretation and Policy .06 to
                                                concerning the purpose of and basis for                 For example, the component securities                 notify market participants that the
                                                the proposed rule change and discussed                  of the FTSE China 50 Index open with                  Exchange may determine not to open
                                                any comments it received on the                         the start of trading on the Stock                     options on foreign indexes because of a
                                                proposed rule change. The text of these                 Exchange of Hong Kong (‘‘SEHK’’) at                   holiday on a foreign exchange.
                                                statements may be examined at the                       approximately 8:30 p.m. (Chicago time)                Furthermore, as proposed,
                                                places specified in Item IV below. The                  (prior day) and close with the end of                 Interpretation and Policy .06 will also
                                                Exchange has prepared summaries, set                    trading on the SEHK at approximately                  require the Exchange to announce via
                                                forth in sections A, B, and C below, of                 3:00 a.m. (Chicago time) (next day).                  Regulatory Circular in January of every
                                                the most significant aspects of such                    Thus, between 8:30 a.m. and 3:15 p.m.                 year the particular days on which
                                                statements.                                             (Chicago time) the FTSE China 50 Index                options on particular foreign indexes
                                                                                                        level is a static value that market                   will not be open due to a holiday on a
                                                A. Self-Regulatory Organization’s                       participants can access via data vendors.
                                                Statement of the Purpose of, and                                                                              foreign exchange or exchanges.
                                                                                                        However, the Exchange continues to                    However, there may be holidays
                                                Statutory Basis for, the Proposed Rule                  trade options on the FTSE China 50
                                                Change                                                                                                        between the date this proposal becomes
                                                                                                        Index (‘‘China 50 options’’) from 8:30                effective and the following January;
                                                1. Purpose                                              a.m. Chicago time to 3:15 a.m. Chicago                thus, the first announcement will be
                                                   The Exchange seeks to add                            time because prices of the E-Mini FTSE                made via Regulatory Circular within 30
                                                Interpretation and Policy .06 to Rule                   China 50 Index futures trading at the                 days of this proposal becoming
                                                24.6 in order to specify that the                       CME may be used as a proxy for the                    effective.
                                                Exchange may determine not to open for                  current index value.8 When SEHK is                       Although keeping options closed
                                                trading options on a foreign index that                 closed because of a holiday, E-Mini                   because of a foreign exchange’s holidays
                                                                                                        FTSE China 50 Index futures remain                    will cause users of these particular
                                                is comprised of component securities
                                                                                                        open and may still be used as a proxy                 options to not be able to trade when the
                                                trading in a single country when the
                                                component securities of the foreign                                                                           U.S. market is otherwise open, the
                                                                                                           4 See e.g., Stock Exchange of Hong Kong Holiday
                                                index are not open for trading due to a                                                                       closures will only occur a few times a
                                                                                                        Schedule, available at: https://www.hkex.com.hk/
                                                holiday on the foreign exchange or                      eng/market/sec_tradinfo/tradcal/nont10.htm and        year. Furthermore, users will have
                                                exchanges on which the component                        London Stock Exchange Holiday Schedule,               sufficient notice of such closures via the
                                                securities trade.                                       available at: http://www.lseg.com/areas-expertise/    Regulatory Circular that will be
                                                                                                        our-markets/london-stock-exchange/equities-           published every January. Finally, this
                                                   Rule 6.1.04 identifies the days on                   markets/trading-services/business-days.
                                                which the Exchange is not open due to                      5 See e.g., Rules 24.2.01, 24.2.02, and 24.2.03.
                                                                                                                                                              proposal may potentially allow users to
                                                a holiday.3 Exchanges in foreign                           6 The Exchange notes that when there are           receive better executions because for
                                                                                                        multiple exchanges in a single country trading the    certain holidays, such as during the
                                                  3 Rule 6.1.04 provides that ‘‘[t]he Board of          component securities of a foreign index the holiday   Lunar New Year described above, the
                                                Directors has determined that the Exchange will not     schedule for exchanges within that country are        closing of the component securities may
                                                be open for business on New Year’s Day, Martin          likely to be the same or similar.
                                                                                                           7 See Rules 24.2.01(a)(8), 24.2.02(a)(8), and
                                                                                                                                                              not allow Market-Makers to quote as
                                                Luther King, Jr. Day, Presidents’ Day, Good Friday,
                                                Memorial Day, Independence Day, Labor Day,              24.2.03(a)(8).                                        tightly and aggressively as they would
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                                                Thanksgiving Day or Christmas Day. The Board has           8 The trading hours for E-Mini FTSE China 50       otherwise. In effect, limiting users’
                                                also determined that, when any holiday observed         Index Futures are from 5:00 p.m. (Chicago time) to    ability to trade particular index options
                                                by the Exchange falls on a Saturday, the Exchange       4:00 p.m. (Chicago time) the following day, Sunday    to days on which there is not a holiday
                                                will not be open for business on the preceding          through Friday. See E-Mini FTSE China 50 Index
                                                Friday, and that when any holiday observed by the       Future Contract specifications located at: http://    on a foreign exchange may better serve
                                                Exchange falls on a Sunday, the Exchange will not       www.cmegroup.com/education/files/e-mini-ftse-
                                                be open for business on the following Monday,           china-50-index-futures.pdf. The Exchange believes       9 See Rule 24.6(a) (providing that with respect to

                                                unless unusual business conditions exist at the         E-Mini FTSE China 50 Index Futures are an             options on foreign indexes, the Board’s designee
                                                time.’’                                                 appropriate proxy for China 50 options.               shall determine the days and hours of business.).



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                                                                              Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices                                                      54139

                                                users because they will be trading on                    Furthermore, all participants will have                   Electronic Comments
                                                days in which Market-Makers may                          adequate notice of the holiday schedule
                                                potentially provide tighter markets.                     by virtue of the Exchange publishing a                      • Use the Commission’s Internet
                                                                                                         Regulatory Circular in January of every                   comment form (http://www.sec.gov/
                                                2. Statutory Basis                                                                                                 rules/sro.shtml); or
                                                                                                         year that announces such holidays. The
                                                   The Exchange believes the proposed                    proposal will not impose a burden on                        • Send an email to rule-comments@
                                                rule change is consistent with the                       intermarket competition because the                       sec.gov. Please include File Number SR–
                                                Securities Exchange Act of 1934 (the                     options effected by this proposal are                     CBOE–2016–058 on the subject line.
                                                ‘‘Act’’) and the rules and regulations                   options on foreign indexes that are
                                                thereunder applicable to the Exchange                    exclusive to CBOE. Any perceived                          Paper Comments
                                                and, in particular, the requirements of                  burden on users of these options is
                                                Section 6(b) of the Act.10 Specifically,                 outweighed by the fact that users may                       • Send paper comments in triplicate
                                                the Exchange believes the proposed rule                  potentially receive better executions by                  to Secretary, Securities and Exchange
                                                change is consistent with the Section                    trading on days on which Market-                          Commission, 100 F Street NE.,
                                                6(b)(5) 11 requirements that the rules of                Makers may potentially be able to                         Washington, DC 20549–1090.
                                                an exchange be designed to prevent                       provide tighter markets.
                                                fraudulent and manipulative acts and                                                                               All submissions should refer to File
                                                practices, to promote just and equitable                 C. Self-Regulatory Organization’s                         Number SR–CBOE–2016–058. This file
                                                principles of trade, to foster cooperation               Statement on Comments on the                              number should be included on the
                                                and coordination with persons engaged                    Proposed Rule Change Received From                        subject line if email is used. To help the
                                                in regulating, clearing, settling,                       Members, Participants, or Others                          Commission process and review your
                                                processing information with respect to,                                                                            comments more efficiently, please use
                                                and facilitating transactions in                           The Exchange neither solicited nor                      only one method. The Commission will
                                                securities, to remove impediments to                     received comments on the proposed                         post all comments on the Commission’s
                                                and perfect the mechanism of a free and                  rule change.                                              Internet Web site (http://www.sec.gov/
                                                open market and a national market                        III. Date of Effectiveness of the                         rules/sro.shtml). Copies of the
                                                system, and, in general, to protect                      Proposed Rule Change and Timing for                       submission, all subsequent
                                                investors and the public interest.                       Commission Action                                         amendments, all written statements
                                                Additionally, the Exchange believes the                                                                            with respect to the proposed rule
                                                proposed rule change is consistent with                    Because the foregoing proposed rule                     change that are filed with the
                                                the Section 6(b)(5) 12 requirement that                  change does not: (i) Significantly affect                 Commission, and all written
                                                the rules of an exchange not be designed                 the protection of investors or the public                 communications relating to the
                                                to permit unfair discrimination between                  interest; (ii) impose any significant
                                                                                                                                                                   proposed rule change between the
                                                customers, issuers, brokers, or dealers.                 burden on competition; and (iii) become
                                                                                                                                                                   Commission and any person, other than
                                                   In particular, the proposal helps to                  operative for 30 days from the date on
                                                                                                                                                                   those that may be withheld from the
                                                remove impediments to and perfect the                    which it was filed, or such shorter time
                                                                                                         as the Commission may designate, it has                   public in accordance with the
                                                mechanism of a free and open market
                                                and a national market system, and, in                    become effective pursuant to Section                      provisions of 5 U.S.C. 552, will be
                                                general, to protect investors and the                    19(b)(3)(A) of the Act 13 and Rule 19b–                   available for Web site viewing and
                                                public interest by: (1) Limiting users’                  4(f)(6) thereunder.14                                     printing in the Commission’s Public
                                                ability to trade particular index options                                                                          Reference Room, 100 F Street NE.,
                                                                                                            At any time within 60 days of the                      Washington, DC 20549 on official
                                                to days on which there is not a holiday                  filing of the proposed rule change, the
                                                on a foreign exchange because doing so                                                                             business days between the hours of
                                                                                                         Commission summarily may
                                                allows users of these index options to                                                                             10:00 a.m. and 3:00 p.m. Copies of the
                                                                                                         temporarily suspend such rule change if
                                                trade on days in which Market-Makers                                                                               filing also will be available for
                                                                                                         it appears to the Commission that such
                                                may potentially provide tighter markets                                                                            inspection and copying at the principal
                                                                                                         action is necessary or appropriate in the
                                                and (2) providing a mechanism for                                                                                  office of the Exchange. All comments
                                                                                                         public interest, for the protection of
                                                notifying market participants of the days                                                                          received will be posted without change;
                                                                                                         investors, or otherwise in furtherance of
                                                on which options on a particular foreign                                                                           the Commission does not edit personal
                                                                                                         the purposes of the Act.
                                                index will not be open due to a holiday                                                                            identifying information from
                                                on the foreign exchange(s) on which the                  IV. Solicitation of Comments                              submissions. You should submit only
                                                index constituents trade.                                                                                          information that you wish to make
                                                                                                           Interested persons are invited to
                                                B. Self-Regulatory Organization’s                        submit written data, views, and                           available publicly. All submissions
                                                Statement on Burden on Competition                       arguments concerning the foregoing,                       should refer to File Number SR–CBOE–
                                                                                                         including whether the proposed rule                       2016–058 and should be submitted on
                                                  CBOE does not believe that the
                                                proposed rule change will impose any                     change is consistent with the Act.                        or before September 6, 2016.
                                                burden on competition that is not                        Comments may be submitted by any of                         For the Commission, by the Division of
                                                necessary or appropriate in furtherance                  the following methods:                                    Trading and Markets, pursuant to delegated
                                                of the purposes of the Act. The proposal                                                                           authority.15
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                                                will not impose a burden on intramarket                    13 15  U.S.C. 78s(b)(3)(A).                             Robert W. Errett,
                                                competition because all participants                       14 17  CFR 240.19b–4(f)(6). In addition, Rule 19b–
                                                                                                                                                                   Deputy Secretary.
                                                will be subject to the same holiday                      4(f)(6) requires a self-regulatory organization to give
                                                                                                         the Commission written notice of its intent to file       [FR Doc. 2016–19318 Filed 8–12–16; 8:45 am]
                                                schedule as set forth by the Exchange.                   the proposed rule change at least five business days      BILLING CODE 8011–01–P
                                                                                                         prior to the date of filing of the proposed rule
                                                  10 15  U.S.C. 78f(b).                                  change, or such shorter time as designated by the
                                                  11 15 U.S.C. 78f(b)(5).
                                                                                                         Commission. The Exchange has satisfied this                 15 17   CFR 200.30–3(a)(12).
                                                  12 Id.                                                 requirement.



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Document Created: 2016-08-13 02:22:24
Document Modified: 2016-08-13 02:22:24
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 Citation81 FR 54137 

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