82 FR 19414 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Rule 5.7

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 80 (April 27, 2017)

Page Range		19414-19415
FR Document		2017-08467
Federal Register, Volume 82 Issue 80 (Thursday, April 27, 2017)
[Federal Register Volume 82, Number 80 (Thursday, April 27, 2017)]
[Notices]
[Pages 19414-19415]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-08467]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80510; File No. SR-CBOE-2017-034]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to Rule 5.7

April 21, 2017.
    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 April 12, 2017, 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 amend Rule 5.7. The text of the proposed 
rule change is provided below.
(additions are italicized; deletions are [bracketed])
* * * * *

Chicago Board Options Exchange, Incorporated Rules

* * * * *

Rule 5.7. Adjustments

    Options contracts are subject to adjustments in accordance with 
the Rules of the Options Clearing Corporation. [When adjustments 
have been made, announcement of that fact will be made by the 
Exchange, and the adjusted unit of trading and the adjusted exercise 
price will be posted at the post at which the series is traded and 
will be effective at the time specified in the announcement for all 
subsequent transactions in that series.]

* * * * *
    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 proposes to amend Rule 5.7. Currently, Rule 5.7 states 
options contracts are subject to adjustments in accordance with the 
Rules of the Options Clearing Corporation (``OCC''). When adjustments 
have been made, announcement of that fact will be made by the Exchange, 
and the adjusted unit of trading and the adjusted exercise price will 
be posted at the post at which the series is traded and will be 
effective at the time specified in the announcement for all subsequent 
transactions in that series.
    OCC lists and clears all options that trade on national securities 
exchanges. As stated in Rule 5.7, OCC rules govern options contract 
adjustments. OCC has sole discretion for adjustment decisions to ensure 
those decisions are consistent, efficient and free from undue 
influence. Because OCC's rules govern and provide OCC with sole 
discretion regarding options contract adjustments, including how and 
when these adjustments are made,\5\ CBOE does not believe it is 
necessary to have any role in the contract adjustment process.\6\ When 
OCC adjusts an options contract, OCC issues an information circular and 
publishes other information regarding the adjustment on its Web site. 
As a result, all Trading Permit Holders have access to information 
regarding contract adjustments from OCC.\7\ Therefore, CBOE does not 
believe its rules should impose any requirements on CBOE to announce 
contract adjustments made by OCC.\8\ CBOE proposes to amend Rule 5.7 by 
deleting the requirement to announce contract adjustments, as it is 
duplicative of OCC's requirement to publish this information. The 
Exchange also proposes to delete the requirement to post the adjusted 
unit of trading and exercise price at the post at which the series is 
traded. The concept of posting information at a trading post on the 
trading floor is outdated, as the Exchange's current primary means of 
communicating information to Trading Permit Holders is electronic 
means,

[[Page 19415]]

such as via Regulatory Circular or Web site posting.
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    \5\ See Securities Exchange Act Release No. 34-69977 (July 11, 
2013), 78 FR 42815, 42816-42817 (July 17, 2013) (SR-OCC-2013-05) 
(order approving proposed rule change to provide that OCC, rather 
than adjustment panel of the securities committee, will determine 
adjustments to the terms of options contracts to account for certain 
events, such as certain dividend distributions or other corporate 
actions, that affect the underlying security or other underlying 
interest).
    \6\ CBOE does not comment on contract adjustments, and directs 
investors to contact OCC for information on contract adjustments. 
CBOE cannot provide guidance as to how OCC's by-laws or rules may be 
applied in any particular situation.
    \7\ See http://www.theocc.com/webapps/infomemos. OCC's Web site 
permits investors to subscribe (free of charge) to directly receive 
information memos regarding contract adjustments from OCC when 
issued.
    \8\ Currently, CBOE publishes information regarding contract 
adjustments on its Web site. See http://www.cboe.com/trading-resources/contract-adjustments.
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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.\9\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \10\ 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) \11\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ Id.
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    In particular, the proposed rule change is consistent with the 
rules of OCC, the lister and clearer of all listed options, with 
respect to contract adjustments. OCC will continue to make contract 
adjustments in accordance with its rules (as set forth in Rule 5.7), 
and all investors will continue to have access to information regarding 
contract adjustments directly from OCC. The proposed rule change has no 
impact on the manner in which contract adjustments are made, as OCC has 
sole discretion to make those determinations. The proposed rule change 
merely deletes CBOE's duplicative obligation to announce and post this 
information, which benefits investors.

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. OCC will continue to make 
contract adjustments in accordance with its rules, and all investors 
will continue to have access to information regarding contract 
adjustments directly from OCC. The proposed rule change has no impact 
on the manner in which contract adjustments are made, as OCC has sole 
discretion to make those determinations. The proposed rule change 
merely deletes CBOE's duplicative obligation to announce and post this 
information, and thus has no impact on competition.

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 \12\ and Rule 19b-
4(f)(6) \13\ thereunder.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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.
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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-2017-034 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-2017-034. 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-2017-034 and should be 
submitted on or before May 18, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-08467 Filed 4-26-17; 8:45 am]
BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 80 / Thursday, April 27, 2017 / Notices 19415

such as via Regulatory Circular or Web proposed rule change has no impact on • Send an email to rule-comments@
site posting. the manner in which contract sec.gov. Please include File Number SR–
adjustments are made, as OCC has sole CBOE–2017–034 on the subject line.
2. Statutory Basis
discretion to make those
The Exchange believes the proposed determinations. The proposed rule Paper Comments
rule change is consistent with the change merely deletes CBOE’s
Securities Exchange Act of 1934 (the • Send paper comments in triplicate
duplicative obligation to announce and to Secretary, Securities and Exchange
‘‘Act’’) and the rules and regulations post this information, and thus has no
thereunder applicable to the Exchange Commission, 100 F Street NE.,
impact on competition.
and, in particular, the requirements of Washington, DC 20549–1090.
Section 6(b) of the Act.9 Specifically, C. Self-Regulatory Organization’s
All submissions should refer to File
the Exchange believes the proposed rule Statement on Comments on the
Proposed Rule Change Received From Number SR–CBOE–2017–034. This file
change is consistent with the Section number should be included on the
6(b)(5) 10 requirements that the rules of Members, Participants, or Others
subject line if email is used. To help the
an exchange be designed to prevent The Exchange neither solicited nor Commission process and review your
fraudulent and manipulative acts and received comments on the proposed comments more efficiently, please use
practices, to promote just and equitable rule change. only one method. The Commission will
principles of trade, to foster cooperation
and coordination with persons engaged III. Date of Effectiveness of the post all comments on the Commission’s
in regulating, clearing, settling, Proposed Rule Change and Timing for Internet Web site (http://www.sec.gov/
processing information with respect to, Commission Action rules/sro.shtml). Copies of the
and facilitating transactions in Because the foregoing proposed rule submission, all subsequent
securities, to remove impediments to change does not (i) significantly affect amendments, all written statements
and perfect the mechanism of a free and the protection of investors or the public with respect to the proposed rule
open market and a national market interest; (ii) impose any significant change that are filed with the
system, and, in general, to protect burden on competition; and (iii) become Commission, and all written
investors and the public interest. operative for 30 days from the date on communications relating to the
Additionally, the Exchange believes the which it was filed, or such shorter time proposed rule change between the
proposed rule change is consistent with as the Commission may designate, it has Commission and any person, other than
the Section 6(b)(5) 11 requirement that become effective pursuant to Section those that may be withheld from the
the rules of an exchange not be designed 19(b)(3)(A) of the Act 12 and Rule 19b– public in accordance with the
to permit unfair discrimination between 4(f)(6) 13 thereunder. provisions of 5 U.S.C. 552, will be
customers, issuers, brokers, or dealers. At any time within 60 days of the available for Web site viewing and
In particular, the proposed rule filing of the proposed rule change, the printing in the Commission’s Public
change is consistent with the rules of Commission summarily may Reference Room, 100 F Street NE.,
OCC, the lister and clearer of all listed temporarily suspend such rule change if Washington, DC 20549 on official
options, with respect to contract it appears to the Commission that such business days between the hours of
adjustments. OCC will continue to make action is necessary or appropriate in the 10:00 a.m. and 3:00 p.m. Copies of the
contract adjustments in accordance with public interest, for the protection of filing also will be available for
its rules (as set forth in Rule 5.7), and investors, or otherwise in furtherance of inspection and copying at the principal
all investors will continue to have the purposes of the Act. If the office of the Exchange. All comments
access to information regarding contract Commission takes such action, the
adjustments directly from OCC. The received will be posted without change;
Commission will institute proceedings
proposed rule change has no impact on the Commission does not edit personal
to determine whether the proposed rule
the manner in which contract identifying information from
change should be approved or
adjustments are made, as OCC has sole disapproved. submissions. You should submit only
discretion to make those information that you wish to make
determinations. The proposed rule IV. Solicitation of Comments available publicly. All submissions
change merely deletes CBOE’s Interested persons are invited to should refer to File Number SR–CBOE–
duplicative obligation to announce and submit written data, views, and 2017–034 and should be submitted on
post this information, which benefits arguments concerning the foregoing, or before May 18, 2017.
investors. including whether the proposed rule For the Commission, by the Division of
B. Self-Regulatory Organization’s change is consistent with the Act. Trading and Markets, pursuant to delegated
Statement on Burden on Competition Comments may be submitted by any of authority.14
the following methods: Eduardo A. Aleman,
CBOE does not believe that the
proposed rule change will impose any Electronic Comments Assistant Secretary.
burden on competition that is not • Use the Commission’s Internet [FR Doc. 2017–08467 Filed 4–26–17; 8:45 am]
necessary or appropriate in furtherance comment form (http://www.sec.gov/ BILLING CODE 8011–01–P
of the purposes of the Act. OCC will rules/sro.shtml); or
continue to make contract adjustments
mstockstill on DSK30JT082PROD with NOTICES

in accordance with its rules, and all 12 15 U.S.C. 78s(b)(3)(A).
investors will continue to have access to 13 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
information regarding contract 4(f)(6) requires a self-regulatory organization to give
adjustments directly from OCC. The 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
9 15 U.S.C. 78f(b). change, or such shorter time as designated by the
10 15 U.S.C. 78f(b)(5). Commission. The Exchange has satisfied this
11 Id. requirement. 14 17 CFR 200.30–3(a)(12).

VerDate Sep<11>2014 17:07 Apr 26, 2017 Jkt 241001 PO 00000 Frm 00066 Fmt 4703 Sfmt 9990 E:\FR\FM\27APN1.SGM 27APN1
Document Created: 2017-04-27 01:40:00
Document Modified: 2017-04-27 01:40:00
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		82 FR 19414