83 FR 19365 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 24.6, Days and Hours of Business

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 85 (May 2, 2018)

[Federal Register Volume 83, Number 85 (Wednesday, May 2, 2018)]
[Notices]
[Pages 19365-19367]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-09257]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83112; File No. SR-CBOE-2018-030]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 24.6, Days and Hours of Business

April 26, 2018.
    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 13, 2018, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe 
Options'') 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 24.6.
    (additions are italicized; deletions are [bracketed])
* * * * *
Cboe Exchange, Inc.
Rules
* * * * *
Chapter XXIV. Index Options
* * * * *
Rule 24.6. Days and Hours of Business
    (a) (No change).
    (b) Transactions in the following index options may be effected on 
the Exchange during the Regular Trading Hours of 8:30 a.m. Chicago time 
to 3:00 p.m. Chicago time:

(i)-(xli) (No change)
(xlii) S&P Financial Select Sector Index (SIXM)
(xliii) S&P Energy Select Sector Index (SIXE)
(xliv) S&P Technology Select Sector Index (SIXT)
(xlv) S&P Health Care Select Sector Index (SIXV)
(xlvi) S&P Utilities Select Sector Index (SIXU)
(xlvii) S&P Consumer Staples Select Sector Index (SIXR)
(xlviii) S&P Industrials Select Sector Index (SIXI)
(xlix) S&P Consumer Discretionary Select Sector Index (SIXY)
(xlx) S&P Materials Select Sector Index (SIXB)
(xlxi) S&P Real Estate Select Sector Index (SIXRE)

    . . . Interpretations and Policies:
    .01-.06 (No change).
* * * * *
    The text of the proposed rule change is also available on the 
Exchange's website (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
    Recently, the Exchange proposed to amend certain rules in 
connection with the Exchange's plans to list and trade ten S&P Select 
Sector Index options. Each S&P Select Sector Index (``Sector Index'') 
\5\ represents the performance of stocks that are components of the 
Standard & Poor's 500 Index (``S&P 500'') within one of the following 
sectors (each of which is referred to as a ``Sector Index''):
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    \5\ Each Sector Index is a narrow-based index as defined in Rule 
24.1(i)(2).

------------------------------------------------------------------------
                                                              Number of
                Sector                      Symbol \6\        components
------------------------------------------------------------------------
Financial............................  IXM                            66
Energy...............................  IXE                            32
Technology...........................  IXT                            72
Health Care..........................  IXV                            61
Utilities............................  IXU                            28
Consumer Staples.....................  IXR                            35
Industrials..........................  IXI                            68
Consumer Discretionary...............  IXY                            85
Materials............................  IXB                            26
Real Estate..........................  IXRE                           32
------------------------------------------------------------------------

    Currently, pursuant to Rule 24.6(a), options on the Sector Indexes 
may trade on the Exchange from 8:30 a.m. until 3:15 p.m. Chicago time. 
In connection with the listing of options on the Sector Indexes,\7\ the 
Exchange proposes to amend Rule 24.6(b) to add options on

[[Page 19366]]

the Sector Indexes to the list of index options that may trade on the 
Exchange from 8:30 a.m. until 3:00 p.m. Chicago time. The Exchange 
understands that investors who plan to trade options on Sector Indexes 
would often use the prices of the stock components of Sector Indexes to 
price options rather than futures on the Sector Indexes (which are 
often used to price index options, such as options on the S&P 500). 
Investors similarly use pricing of underlying stocks to price shares of 
exchange-traded funds (``ETFs'') derived from the Sector Indexes (e.g., 
Select Sector SPDR ETFs), the components of which are stocks that are 
components of the Sector Indexes. The underlying stocks end regular 
trading at 3:00 p.m. Chicago time each day. Closing trading in the 
Select Sector Index options at the same time the stocks end regular 
trading \8\ will ensure investors have access to robust pricing of the 
underlying stock components they use to price the options, thus 
reducing investors' price risk. Various other index options, including 
narrow-based index options, may trade from 8:30 a.m. to 3:00 p.m. 
Chicago time.\9\
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    \6\ These symbols represent the index. The corresponding option 
symbols are SIXM, SIXE, SIXT, SIXV, SIXU, SIXR, SIXI, SIXY, SIXB, 
and SIXRE, respectively.
    \7\ The Exchange has not yet begun listing options on the Sector 
Indexes, but expects to begin listing them as early as April 2018.
    \8\ While the stocks may continue to trade in an aftermarket 
trading session on the listing exchanges, there is less liquidity in 
aftermarket trading, which generally leads to wider spreads and more 
volatile pricing.
    \9\ See Rule 24.6(b) (for example, options on the S&P 
transportation, retail, health care, banking, insurance, and 
chemical indices, and the Cboe PowerPacks SM bank, biotechnology, 
gold, internet, iron & steel, oil, oil services, pharmaceuticals, 
retail, semiconductor, technology, and telecom indices).
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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.\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.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ Id.
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    In particular, closing trading in the Select Sector Index options 
at the same time the stocks end regular trading will ensure investors 
have access to robust pricing of the underlying stock components they 
use to price the options, which protects investors by reducing their 
price risk. Various other index options, including narrow-based index 
options, may trade from 8:30 a.m. to 3:00 p.m. Chicago time.\13\
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    \13\ See supra note 9.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Cboe Options 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. All market participants will 
be able to trade options on the Sector Indexes during the same trading 
hours. Various other index options, including narrow-based index 
options, may trade from 8:30 a.m. to 3:00 p.m. Chicago time.\14\ The 
Exchange believes the proposed rule change will promote competition, as 
it brings the trading hours for Sector Index options in line with 
competitive products trading on other exchanges. Additionally, Sector 
Index options trade exclusively on Cboe Options. To the extent that the 
proposed changes make Cboe Options a more attractive marketplace for 
market participants at other exchanges, such market participants are 
welcome to become Cboe Options market participants.
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    \14\ Id.
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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)(iii) of the Act \15\ and 
subparagraph (f)(6) Rule 19b-4 thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
does not become operative for 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \18\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay to permit the proposed rule 
change to be operative at the time the Exchange begins listing Sector 
Index options for trading. The Commission believes that waiver of the 
30-day operative delay is consistent with the protection of investors 
and the public interest because the proposal to add ten new S&P Select 
Sector Index options to the existing list of similar index options, 
including narrow-based index options, that trade until 3:00 p.m. 
Chicago time does not raise any new or novel issues. Therefore, the 
Commission hereby waives the 30-day operative delay and designates the 
proposed rule change operative upon filing.\19\
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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:

[[Page 19367]]

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-2018-030 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-2018-030. 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 website (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 website 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-2018-030 and should be 
submitted on or before May 23, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-09257 Filed 5-1-18; 8:45 am]
 BILLING CODE 8011-01-P