81 FR 88293 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Penny Pilot Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 235 (December 7, 2016)

Page Range		88293-88294
FR Document		2016-29287
Federal Register, Volume 81 Issue 235 (Wednesday, December 7, 2016)
[Federal Register Volume 81, Number 235 (Wednesday, December 7, 2016)]
[Notices]
[Pages 88293-88294]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-29287]



[[Page 88293]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79442; File No. SR-CBOE-2016-083]


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

December 1, 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 November 23, 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 Exchange filed the proposal as a ``non-controversial'' 
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 
\3\ and Rule 19b-4(f)(6) thereunder.\4\ The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the operation of Penny Pilot 
Program through June 30, 2017. The text of the proposed rule change is 
provided below.

(additions are italicized; deletions are [bracketed])
* * * * *

Chicago Board Options Exchange, Incorporated Rules

* * * * *

Rule 6.42. Minimum Increments for Bids and Offers

    The Board of Directors may establish minimum increments for 
options traded on the Exchange. When the Board of Directors 
determines to change the minimum increments, the Exchange will 
designate such change as a stated policy, practice, or 
interpretation with respect to the administration of Rule 6.42 
within the meaning of subparagraph (3)(A) of subsection 19(b) of the 
Exchange Act and will file a rule change for effectiveness upon 
filing with the Commission. Until such time as the Board of 
Directors makes a change to the minimum increments, the following 
minimum increments shall apply to options traded on the Exchange:
    (1) No change.
    (2) No change.
    (3) The decimal increments for bids and offers for all series of 
the option classes participating in the Penny Pilot Program are: 
$0.01 for all option series quoted below $3 (including LEAPS), and 
$0.05 for all option series $3 and above (including LEAPS). For 
QQQQs, IWM, and SPY, the minimum increment is $0.01 for all option 
series. The Exchange may replace any option class participating in 
the Penny Pilot Program that has been delisted with the next most 
actively-traded, multiply-listed option class, based on national 
average daily volume in the preceding six calendar months, that is 
not yet included in the Pilot Program. Any replacement class would 
be added on the second trading day following [July 1, 2016]January 
1, 2017. The Penny Pilot shall expire on [December 31, 2016]June 30, 
2017.
    (4) No change.
    . . . Interpretations and Policies:
    .01-.04 No change.
* * * * *
    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 Penny Pilot Program (the ``Pilot Program'') is scheduled to 
expire on December 31, 2016. CBOE proposes to extend the Pilot Program 
until June 30, 2017. CBOE believes that extending the Pilot Program 
will allow for further analysis of the Pilot Program and a 
determination of how the Pilot Program should be structured in the 
future.
    During this extension of the Pilot Program, CBOE proposes that it 
may replace any option class that is currently included in the Pilot 
Program and that has been delisted with the next most actively traded, 
multiply listed option class that is not yet participating in the Pilot 
Program (``replacement class''). Any replacement class would be 
determined based on national average daily volume in the preceding six 
months,\5\ and would be added on the second trading day following 
January 1, 2017. CBOE will employ the same parameters to prospective 
replacement classes as approved and applicable in determining the 
existing classes in the Pilot Program, including excluding high-priced 
underlying securities.\6\ CBOE will announce to its Trading Permit 
Holders by circular any replacement classes in the Pilot Program.
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    \5\ The month immediately preceding a replacement class's 
addition to the Pilot Program (i.e., December) would not be used for 
purposes of the six-month analysis. Thus, a replacement class to be 
added on the second trading day following January 1, 2017 would be 
identified based on The Option Clearing Corporation's trading volume 
data from June 1, 2016 through November 30, 2016.
    \6\ See Securities Exchange Act Release No. 60864 (October 22, 
2009), 74 FR 55876 (October 29, 2009) (SR-CBOE-2009-76).
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    CBOE is specifically authorized to act jointly with the other 
options exchanges participating in the Pilot Program in identifying any 
replacement class.
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.\7\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \8\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitation 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \9\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. In particular, the proposed rule change allows for 
an extension of the Pilot Program for the benefit of market 
participants.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ Id.

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[[Page 88294]]

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. Specifically, the Exchange 
believes that, by extending the expiration of the Pilot Program, the 
proposed rule change will allow for further analysis of the Pilot 
Program and a determination of how the Program shall be structured in 
the future. In doing so, the proposed rule change will also serve to 
promote regulatory clarity and consistency, thereby reducing burdens on 
the marketplace and facilitating investor protection. In addition, the 
Exchange has been authorized to act jointly in extending the Pilot 
Program and believes the other exchanges will be filing similar 
extensions.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) \11\ thereunder. 
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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     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-2016-083 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-2016-083. 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-2016-083 and should be 
submitted on or before December 28, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-29287 Filed 12-6-16; 8:45 am]
 BILLING CODE 8011-01-P
88294 Federal Register / Vol. 81, No. 235 / Wednesday, December 7, 2016 / Notices

B. Self-Regulatory Organization’s change should be approved or For the Commission, by the Division of
Statement on Burden on Competition disapproved. Trading and Markets, pursuant to delegated
authority.12
CBOE does not believe that the IV. Solicitation of Comments Brent J. Fields,
proposed rule change will impose any
Secretary.
burden on competition that is not Interested persons are invited to
[FR Doc. 2016–29287 Filed 12–6–16; 8:45 am]
necessary or appropriate in furtherance submit written data, views, and
of the purposes of the Act. Specifically, BILLING CODE 8011–01–P
arguments concerning the foregoing,
the Exchange believes that, by extending including whether the proposed rule
the expiration of the Pilot Program, the change is consistent with the Act. SECURITIES AND EXCHANGE
proposed rule change will allow for Comments may be submitted by any of COMMISSION
further analysis of the Pilot Program and the following methods:
a determination of how the Program [Release No. IA–4578; File No. 803–00236]
shall be structured in the future. In Electronic Comments
doing so, the proposed rule change will Merrill Lynch, Pierce, Fenner & Smith
• Use the Commission’s Internet Incorporated; Notice of Application
also serve to promote regulatory clarity
comment form (http://www.sec.gov/
and consistency, thereby reducing December 1, 2016.
burdens on the marketplace and rules/sro.shtml); or
AGENCY: Securities and Exchange
facilitating investor protection. In • Send an email to rule-comments@
Commission (‘‘Commission’’).
addition, the Exchange has been sec.gov. Please include File Number SR–
ACTION: Notice of application for an
authorized to act jointly in extending CBOE–2016–083 on the subject line.
exemptive order under section 206A of
the Pilot Program and believes the other
Paper Comments the Investment Advisers Act of 1940
exchanges will be filing similar
(‘‘Advisers Act’’) providing an
extensions. • Send paper comments in triplicate exemption from the written disclosure
C. Self-Regulatory Organization’s to Secretary, Securities and Exchange and consent requirements of section
Statement on Comments on the Commission, 100 F Street NE., 206(3).
Proposed Rule Change Received From Washington, DC 20549–1090.
Members, Participants, or Others Applicant: Merrill Lynch, Pierce,
All submissions should refer to File Fenner & Smith Incorporated
The Exchange neither solicited nor Number SR–CBOE–2016–083. This file (‘‘Applicant’’).
received comments on the proposed number should be included on the Relevant Advisers Act Sections:
rule change. subject line if email is used. To help the Exemption requested under section
III. Date of Effectiveness of the Commission process and review your 206A from the written disclosure and
Proposed Rule Change and Timing for comments more efficiently, please use consent requirements of section 206(3).
Commission Action only one method. The Commission will Summary of Application: Applicant
post all comments on the Commission’s requests that the Commission issue an
The Exchange has filed the proposed Internet Web site (http://www.sec.gov/ order under section 206A exempting it
rule change pursuant to Section and Future Advisers (as defined below)
rules/sro.shtml). Copies of the
19(b)(3)(A) of the Act 10 and Rule 19b– from the written disclosure and consent
submission, all subsequent
4(f)(6) 11 thereunder. Because the requirements of section 206(3) with
amendments, all written statements
proposed rule change does not: (i) respect to principal transactions with
Significantly affect the protection of with respect to the proposed rule
change that are filed with the nondiscretionary advisory client
investors or the public interest; (ii) accounts.
impose any significant burden on Commission, and all written Filing Dates: The application was
competition; and (iii) become operative communications relating to the filed on November 23, 2016.
prior to 30 days from the date on which proposed rule change between the Hearing or Notification of Hearing: An
it was filed, or such shorter time as the Commission and any person, other than order granting the requested relief will
Commission may designate, if those that may be withheld from the be issued unless the Commission orders
consistent with the protection of public in accordance with the a hearing. Interested persons may
investors and the public interest, the provisions of 5 U.S.C. 552, will be request a hearing by writing to the
proposed rule change has become available for Web site viewing and Commission’s Secretary and serving
effective pursuant to Section 19(b)(3)(A) printing in the Commission’s Public Applicant with a copy of the request,
of the Act and Rule 19b–4(f)(6)(iii) Reference Room, 100 F Street NE., personally or by mail. Hearing requests
thereunder. Washington, DC 20549 on official should be received by the Commission
At any time within 60 days of the business days between the hours of by 5:30 p.m. on December 27, 2016, and
filing of the proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of the should be accompanied by proof of
Commission summarily may filing also will be available for service on Applicant, in the form of an
temporarily suspend such rule change if inspection and copying at the principal affidavit or, for lawyers, a certificate of
it appears to the Commission that such office of the Exchange. All comments service. Pursuant to rule 0–5 under the
action is necessary or appropriate in the received will be posted without change; Advisers Act, hearing requests should
public interest, for the protection of state the nature of the writer’s interest,
asabaliauskas on DSK3SPTVN1PROD with NOTICES

the Commission does not edit personal
investors, or otherwise in furtherance of identifying information from any facts bearing upon the desirability
the purposes of the Act. If the submissions. You should submit only of a hearing on the matter, the reason for
Commission takes such action, the the request, and the issues contested.
information that you wish to make
Commission will institute proceedings Persons who wish to be notified of a
available publicly. All submissions
to determine whether the proposed rule hearing may request notification by
should refer to File Number SR–CBOE–
writing to the Commission’s Secretary.
10 15
2016–083 and should be submitted on
U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(6).
or before December 28, 2016. 12 17 CFR 200.30–3(a)(12).

VerDate Sep<11>2014 17:54 Dec 06, 2016 Jkt 241001 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 E:\FR\FM\07DEN1.SGM 07DEN1
Document Created: 2016-12-07 05:31:54
Document Modified: 2016-12-07 05:31:54
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		81 FR 88293