82_FR_11709 82 FR 11673 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving a Proposed Rule Change Related to a Change to the Trading Symbol for P.M.-Settled Options on the Standard & Poor's 500 Index

82 FR 11673 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving a Proposed Rule Change Related to a Change to the Trading Symbol for P.M.-Settled Options on the Standard & Poor's 500 Index

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 36 (February 24, 2017)

Page Range11673-11674
FR Document2017-03573

Federal Register, Volume 82 Issue 36 (Friday, February 24, 2017) 
[Federal Register Volume 82, Number 36 (Friday, February 24, 2017)]
[Notices]
[Pages 11673-11674]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-03573]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80060; File No. SR-CBOE-2016-091]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving a Proposed Rule Change Related to a 
Change to the Trading Symbol for P.M.-Settled Options on the Standard & 
Poor's 500 Index

February 17, 2017.

I. Introduction

    On December 16, 2016, Chicago Board Options Exchange, Incorporated 
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change amending CBOE's rules related to 
P.M.-settled options on the Standard & Poor's 500 Index (``S&P 500 
Index''). The proposed rule change was published for comment in the 
Federal Register on January 5, 2017.\3\ The Commission received no 
comment letters on the proposed rule change. This order approves the 
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 79712 (December 29, 
2016), 82 FR 1383 (January 5, 2017) (``Notice'').
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II. Description of the Proposed Rule Change

    CBOE proposes to move P.M.-settled S&P 500 Index options expiring 
on the third-Friday of the month (``third-Friday''), currently listed 
in a separate class and trading under the symbol ``SPXPM'', to the 
Hybrid 3.0 S&P 500 Index options class. In connection with the move, 
the Exchange proposes changing the trading symbol for these options 
from ``SPXPM'' to ``SPXW.''
    The Exchange currently lists A.M.-settled \4\ and P.M.-settled \5\ 
S&P 500 Index options that have standard third-Friday expirations. 
Third-Friday A.M.-settled S&P 500 Index options trade under the symbol 
``SPX'' on the Exchange's Hybrid 3.0 platform.\6\ Third-Friday P.M.-
settled S&P 500 Index options trade on the Hybrid Trading System in a 
separate options class under the symbol ``SPXPM''.\7\
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    \4\ See Rule 24.9(a)(4)(i) (A.M.-settled index options).
    \5\ See Rule 24.9.14 (authorizing the Exchange to list P.M.-
settled S&P 500 options for a specified pilot period).
    \6\ See Rule 8.3(c)(iii).
    \7\ See Rule 8.3(c)(i) (identifying P.M.-settled third-Friday 
S&P 500 options as a Tier AA Hybrid Options Class).
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    In addition, the Hybrid 3.0 options class also includes nonstandard 
P.M.-settled S&P 500 Index options trading under the symbol ``SPXW,'' 
which may expire on Mondays, Wednesdays, Fridays (other than the third-
Friday-of-the-month) (i.e., nonstandard weekly expirations pursuant to 
Rule 24.9(e)), and the last trading day of the month.\8\ Although SPXW 
options are included in the Hybrid 3.0 class, they trade on the Hybrid 
Trading System.\9\
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    \8\ See Rule 24.9(e).
    \9\ See Rule 8.14.01.
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    In its filing, the Exchange noted that a gap exists currently in 
Friday expirations for SPXW as a user of SPXW options cannot roll an 
existing SPXW position that expires on a first or second Friday of a 
month into a SPXW position that expires on a third-Friday, because the 
latter is part of the separate SPXPM class.\10\ Moving SPXPM into the 
SPX class under symbol SPXW will remove this gap and allow market 
participants to maintain exposure to SPXW Friday expirations throughout 
the month if they so choose. The Exchange also noted that offering 
access to all P.M.-settled S&P 500 Index options in a single class with 
expirations every Friday of the month will provide market participants 
with greater flexibility in submitting complex orders using S&P 500 
index options.\11\
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    \10\ See Notice, supra note 3, at 1384.
    \11\ See id.
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    In its filing, the Exchange noted its belief that moving SPXPM into 
the SPX options class under the symbol SPXW should not adversely impact 
market participants.\12\ Specifically, the Exchange noted that it 
expects a smooth transition of the SPXPM series to the SPXW symbol 
because SPXPM and SPXW options both trade on the Hybrid Trading System 
\13\ and the Exchange's rules and systems treat SPXPM and SPXW the same 
in many respects.\14\
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    \12\ See id.
    \13\ See Rules 8.3(c)(i) (identifying P.M.-settled third-Friday 
S&P Index options as a Tier AA Hybrid Options Class) and 8.14.01 
(allowing the Exchange to authorize a group of series of a class for 
trading on the Hybrid Trading System).
    \14\ See Notice, supra note 3, at 1384-85 (discussing areas 
where trading parameters for SPXPM and SPXW are the same, such as 
the minimum increment for bids and offers, and where they differ, 
such as the appointment costs).
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Pilot Reports

    SPXPM options currently are approved for listing and trading on a 
pilot basis.\15\ The Exchange represents that the pilot will continue 
under the same terms that established the pilot.\16\
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    \15\ See Rule 24.9.14 and Securities Exchange Act Release No. 
68457 (December 18, 2012), 77 FR 76135 (December 26, 2012) (SR-CBOE-
2012-120).
    \16\ See Notice, supra note 3, at 1385. As part of the pilot, 
the Exchange submits quarterly reports and annual reports that 
analyze the market impact and trading patterns of third-Friday P.M.-
settled S&P 500 options. The Exchange will modify the reports to 
provide the same data and analysis for third-Friday P.M.-settled S&P 
500 Index options trading under symbol SPXW that it currently 
submits for third-Friday P.M.-settled S&P 500 Index options trading 
under symbol SPXPM. See id.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act \17\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.\18\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act, \19\ which 
requires, among other things, that the rules of a national securities 
exchange be designed to remove impediments to and perfect the mechanism 
of a free and open market and a national market system, and, in 
general, to protect investors and the public interest.
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    \17\ 15 U.S.C. 78f.
    \18\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \19\ 15 U.S.C. 78f(b)(5).
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    The Exchange represents that trading P.M.-settled third-Friday 
expirations as part of the S&P 500 Index options class under the SPXW 
symbol, rather than as a separate class under the SPXPM symbol, will 
help remove impediments to and perfect the mechanism of a free and open 
market by providing market participants with access to a single class

[[Page 11674]]

of P.M.-settled S&P 500 Index options with expirations every Friday of 
the month.\20\ The Commission believes that the proposal can thus 
benefit investors by providing them with additional trading flexibility 
for both simple and complex orders.
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    \20\ See Notice, supra note 3, at 1386.
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    Further, the Exchange represents that there are minimal differences 
in the trading parameters of the two options classes.\21\ Although the 
appointment costs for SPXPM and SPX are different, the Exchange 
represents that market makers should not be adversely impacted by this 
proposal because all market-makers currently appointed in SPXPM also 
are appointed in SPX, which confers the right to trade SPXW 
options.\22\ The Commission believes that, to the extent the trading 
parameters of the two classes are substantively similar, the Exchange's 
proposal to move SPXPM options into the SPX options class does not 
raise novel issues.
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    \21\ See id. at 1384-85.
    \22\ See id. at 1385.
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    Finally, SPXPM options currently are listed on a pilot basis. As 
part of the pilot, the Exchange has been required to submit to the 
Commission quarterly reports and annual reports that analyze the market 
impact and trading patterns of third-Friday P.M.-settled S&P 500 
options. The Exchange represents that it will continue to provide this 
data in exactly the same scope and format.\23\ The Commission believes 
that the continued pilot and reports will allow the Exchange and the 
Commission to monitor for and assess any potential adverse market 
impact caused by these P.M.-settled options.
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    \23\ See id.
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    Based on the Exchange's representations discussed above, and for 
the reasons noted above, the Commission believes that the proposal to 
move SPXPM options into the SPX options class is consistent with the 
Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\24\, that the proposed rule change (SR-CBOE-2016-091) be, and hereby 
is, approved.
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    \24\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03573 Filed 2-23-17; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 82, No. 36 / Friday, February 24, 2017 / Notices 11673 Reference Room, 100 F Street NE., third-Friday of the month (‘‘third- participants.12 Specifically, the Washington, DC 20549 on official Friday’’), currently listed in a separate Exchange noted that it expects a smooth business days between the hours of class and trading under the symbol transition of the SPXPM series to the 10:00 a.m. and 3:00 p.m. Copies of such ‘‘SPXPM’’, to the Hybrid 3.0 S&P 500 SPXW symbol because SPXPM and filing also will be available for Index options class. In connection with SPXW options both trade on the Hybrid inspection and copying at the principal the move, the Exchange proposes Trading System 13 and the Exchange’s office of the Exchange. All comments changing the trading symbol for these rules and systems treat SPXPM and received will be posted without change; options from ‘‘SPXPM’’ to ‘‘SPXW.’’ SPXW the same in many respects.14 the Commission does not edit personal The Exchange currently lists A.M.- Pilot Reports identifying information from settled 4 and P.M.-settled 5 S&P 500 submissions. You should submit only Index options that have standard third- SPXPM options currently are information that you wish to make Friday expirations. Third-Friday A.M.- approved for listing and trading on a available publicly. All submissions settled S&P 500 Index options trade pilot basis.15 The Exchange represents should refer to File No. SR–MIAX– under the symbol ‘‘SPX’’ on the that the pilot will continue under the 2017–05, and should be submitted on or Exchange’s Hybrid 3.0 platform.6 Third- same terms that established the pilot.16 before March 17, 2017. Friday P.M.-settled S&P 500 Index III. Discussion and Commission For the Commission, by the Division of options trade on the Hybrid Trading Findings Trading and Markets, pursuant to delegated System in a separate options class under authority.13 After careful review, the Commission the symbol ‘‘SPXPM’’.7 finds that the proposed rule change is Eduardo A. Aleman, In addition, the Hybrid 3.0 options consistent with the requirements of the Assistant Secretary. class also includes nonstandard P.M.- Act 17 and the rules and regulations [FR Doc. 2017–03575 Filed 2–23–17; 8:45 am] settled S&P 500 Index options trading thereunder applicable to a national BILLING CODE 8011–01–P under the symbol ‘‘SPXW,’’ which may securities exchange.18 In particular, the expire on Mondays, Wednesdays, Commission finds that the proposed Fridays (other than the third-Friday-of- rule change is consistent with Section SECURITIES AND EXCHANGE the-month) (i.e., nonstandard weekly 6(b)(5) of the Act, 19 which requires, COMMISSION expirations pursuant to Rule 24.9(e)), among other things, that the rules of a and the last trading day of the month.8 national securities exchange be [Release No. 34–80060; File No. SR–CBOE– 2016–091] Although SPXW options are included in designed to remove impediments to and the Hybrid 3.0 class, they trade on the perfect the mechanism of a free and Self-Regulatory Organizations; Hybrid Trading System.9 open market and a national market Chicago Board Options Exchange, In its filing, the Exchange noted that system, and, in general, to protect Incorporated; Order Approving a a gap exists currently in Friday investors and the public interest. Proposed Rule Change Related to a expirations for SPXW as a user of SPXW The Exchange represents that trading Change to the Trading Symbol for options cannot roll an existing SPXW P.M.-settled third-Friday expirations as P.M.-Settled Options on the Standard & position that expires on a first or second part of the S&P 500 Index options class Poor’s 500 Index Friday of a month into a SPXW position under the SPXW symbol, rather than as that expires on a third-Friday, because a separate class under the SPXPM February 17, 2017. the latter is part of the separate SPXPM symbol, will help remove impediments I. Introduction class.10 Moving SPXPM into the SPX to and perfect the mechanism of a free class under symbol SPXW will remove and open market by providing market On December 16, 2016, Chicago Board Options Exchange, Incorporated (the this gap and allow market participants participants with access to a single class ‘‘Exchange’’ or ‘‘CBOE’’) filed with the to maintain exposure to SPXW Friday Securities and Exchange Commission expirations throughout the month if 12 See id. (‘‘Commission’’), pursuant to Section they so choose. The Exchange also 13 See Rules 8.3(c)(i) (identifying P.M.-settled 19(b)(1) of the Securities Exchange Act noted that offering access to all P.M.- third-Friday S&P Index options as a Tier AA Hybrid settled S&P 500 Index options in a Options Class) and 8.14.01 (allowing the Exchange of 1934 (‘‘Act’’) 1 and Rule 19b–4 to authorize a group of series of a class for trading thereunder,2 a proposed rule change single class with expirations every on the Hybrid Trading System). amending CBOE’s rules related to P.M.- Friday of the month will provide market 14 See Notice, supra note 3, at 1384–85 settled options on the Standard & Poor’s participants with greater flexibility in (discussing areas where trading parameters for 500 Index (‘‘S&P 500 Index’’). The submitting complex orders using S&P SPXPM and SPXW are the same, such as the 500 index options.11 minimum increment for bids and offers, and where proposed rule change was published for they differ, such as the appointment costs). comment in the Federal Register on In its filing, the Exchange noted its 15 See Rule 24.9.14 and Securities Exchange Act January 5, 2017.3 The Commission belief that moving SPXPM into the SPX Release No. 68457 (December 18, 2012), 77 FR received no comment letters on the options class under the symbol SPXW 76135 (December 26, 2012) (SR–CBOE–2012–120). proposed rule change. This order should not adversely impact market 16 See Notice, supra note 3, at 1385. As part of the pilot, the Exchange submits quarterly reports approves the proposed rule change. 4 See Rule 24.9(a)(4)(i) (A.M.-settled index and annual reports that analyze the market impact and trading patterns of third-Friday P.M.-settled II. Description of the Proposed Rule options). S&P 500 options. The Exchange will modify the 5 See Rule 24.9.14 (authorizing the Exchange to Change reports to provide the same data and analysis for asabaliauskas on DSK3SPTVN1PROD with NOTICES list P.M.-settled S&P 500 options for a specified third-Friday P.M.-settled S&P 500 Index options CBOE proposes to move P.M.-settled pilot period). trading under symbol SPXW that it currently S&P 500 Index options expiring on the 6 See Rule 8.3(c)(iii). submits for third-Friday P.M.-settled S&P 500 Index 7 See Rule 8.3(c)(i) (identifying P.M.-settled third- options trading under symbol SPXPM. See id. 13 17 CFR 200.30–3(a)(12). Friday S&P 500 options as a Tier AA Hybrid 17 15 U.S.C. 78f. 1 15 U.S.C. 78s(b)(1). Options Class). 18 In approving this proposed rule change, the 8 See Rule 24.9(e). 2 17 CFR 240.19b–4. Commission has considered the proposed rule’s 9 See Rule 8.14.01. 3 See Securities Exchange Act Release No. 79712 impact on efficiency, competition, and capital 10 See Notice, supra note 3, at 1384. formation. See 15 U.S.C. 78c(f). (December 29, 2016), 82 FR 1383 (January 5, 2017) (‘‘Notice’’). 11 See id. 19 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 17:20 Feb 23, 2017 Jkt 241001 PO 00000 Frm 00151 Fmt 4703 Sfmt 4703 E:\FR\FM\24FEN1.SGM 24FEN1

11674 Federal Register / Vol. 82, No. 36 / Friday, February 24, 2017 / Notices of P.M.-settled S&P 500 Index options SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s with expirations every Friday of the COMMISSION Statement of the Purpose of, and the month.20 The Commission believes that Statutory Basis for, the Proposed Rule the proposal can thus benefit investors [Release No. 34–80059; File No. SR– Change by providing them with additional NYSEArca–2017–16] 1. Purpose trading flexibility for both simple and complex orders. Self-Regulatory Organizations; NYSE The Exchange proposes to amend Arca, Inc.; Notice of Filing and Rule 6.62 to eliminate Price Improving Further, the Exchange represents that Immediate Effectiveness of Proposed Orders and Quotes, and amend Rule there are minimal differences in the Rule Change Amending Rules 6.62, 6.73 to eliminate the electronic and trading parameters of the two options 6.73 and Make a Conforming Change open outcry bidding and offering classes.21 Although the appointment to Rule 6.47A requirements associated with a Price costs for SPXPM and SPX are different, Improving Order or Quote, and make a the Exchange represents that market February 17, 2017. conforming change to Rule 6.47A. The makers should not be adversely Exchange proposes to eliminate these impacted by this proposal because all Pursuant to Section 19(b)(1) 1 of the order types in order to streamline its market-makers currently appointed in Securities Exchange Act of 1934 rules and reduce complexity among its SPXPM also are appointed in SPX, (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 order type offerings.4 which confers the right to trade SPXW notice is hereby given that, on February options.22 The Commission believes 10, 2017, NYSE Arca, Inc. (‘‘Exchange’’ Elimination of Price Improving Orders that, to the extent the trading parameters or ‘‘NYSE Arca’’) filed with the and Quotes of the two classes are substantively Securities and Exchange Commission The Exchange proposes to eliminate, similar, the Exchange’s proposal to (‘‘Commission’’) the proposed rule and thus delete from its rules, Price move SPXPM options into the SPX change as described in Items I, II, and Improving Orders and Quotes, as options class does not raise novel III below, which Items have been defined in Rule 6.62(s). issues. prepared by the self-regulatory A Price Improving Order or Price Finally, SPXPM options currently are organization. The Commission is Improving Quote is an order or quote to listed on a pilot basis. As part of the publishing this notice to solicit buy or sell an option at a specified price pilot, the Exchange has been required to comments on the proposed rule change at an increment smaller than the submit to the Commission quarterly from interested persons. minimum price variation in the reports and annual reports that analyze security. Price Improving Orders and I. Self-Regulatory Organization’s the market impact and trading patterns Quotes may be entered in increments as Statement of the Terms of Substance of of third-Friday P.M.-settled S&P 500 small as one cent. Because the Exchange the Proposed Rule Change options. The Exchange represents that it has not implemented this functionality, will continue to provide this data in The Exchange proposes to amend the Exchange believes it is appropriate exactly the same scope and format.23 Rule 6.62 to eliminate Price Improving to delete the functionality from its The Commission believes that the Orders and Quotes, and amend Rule rules.5 continued pilot and reports will allow 6.73 to eliminate the electronic and To reflect this elimination, the the Exchange and the Commission to open outcry bidding and offering Exchange proposes to delete all monitor for and assess any potential requirements associated with a Price references to Price Improving Orders adverse market impact caused by these Improving Order or Quote, and make a and Quotes in Rule 6.62(s), and to the P.M.-settled options. conforming change to Rule 6.47A. The electronic and open outcry bidding and Based on the Exchange’s proposed rule change is available on the offering requirements associated with a representations discussed above, and for Exchange’s Web site at www.nyse.com, Price Improving Order or Quote in the the reasons noted above, the at the principal office of the Exchange, second introductory paragraph of Rule Commission believes that the proposal and at the Commission’s Public 6.73 and Rules 6.73(a), 6.73(b) and to move SPXPM options into the SPX Reference Room. 6.73(c), and to delete in the options class is consistent with the Act. Commentary to Rule 6.47A references to II. Self-Regulatory Organization’s Rule 6.62(s) and 6.73, as follows: 6 IV. Conclusion Statement of the Purpose of, and Statutory Basis for, the Proposed Rule 4 See e.g., Mary Jo White, Chair, Securities and It is therefore ordered, pursuant to Change Exchange Commission, Speech at the Sandler Section 19(b)(2) of the Act 24, that the O’Neill & Partners, L.P. Global Exchange and proposed rule change (SR–CBOE–2016– Brokerage Conference (June 5, 2014) (available at In its filing with the Commission, the www.sec.gov/News/Speech/Detail/Speech/ 091) be, and hereby is, approved. self-regulatory organization included 1370542004312#.U5HI-fmwJiw) (‘‘I am asking the For the Commission, by the Division of statements concerning the purpose of, exchanges to conduct a comprehensive review of Trading and Markets, pursuant to delegated and basis for, the proposed rule change their order types and how they operate in practice. As part of this review, I expect that the exchanges authority.25 and discussed any comments it received will consider appropriate rule changes to help Eduardo A. Aleman, on the proposed rule change. The text clarify the nature of their order types and how they Assistant Secretary. of those statements may be examined at interact with each other, and how they support fair, orderly, and efficient markets.’’ Id.) asabaliauskas on DSK3SPTVN1PROD with NOTICES [FR Doc. 2017–03573 Filed 2–23–17; 8:45 am] the places specified in Item IV below. 5 Though originally adopted as a competitive BILLING CODE 8011–01–P The Exchange has prepared summaries, response to another options market introducing set forth in sections A, B, and C below, price improving orders, the Exchange never 20 See Notice, supra note 3, at 1386. of the most significant parts of such implemented this functionality for a variety of 21 See statements. reasons, including technology and because most id. at 1384–85. options volume was concentrated in Penny Pilot 22 See id. at 1385. issues where price improving orders would be of 23 See id. 1 15 U.S.C. 78s(b)(1). little or no value. 24 15 U.S.C. 78s(b)(2). 2 15 U.S.C. 78a. 6 See Securities Exchange Act Release No. 58079 25 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4. (July 2, 2008), 73 FR 39365 (July 9, 2009) (SR– VerDate Sep<11>2014 17:20 Feb 23, 2017 Jkt 241001 PO 00000 Frm 00152 Fmt 4703 Sfmt 4703 E:\FR\FM\24FEN1.SGM 24FEN1


Document Created: 2017-02-24 01:17:28
Document Modified: 2017-02-24 01:17:28
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 Citation82 FR 11673 
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