83 FR 44098 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Delay the Implementation Date of Changes to Cboe Options Rule 24A.4, Interpretation and Policy .02, Concerning FLEX Options
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 168 (August 29, 2018)
Federal Register Volume 83, Issue 168 (August 29, 2018)
| Page Range | 44098-44101 | |
| FR Document | 2018-18675 |
[Federal Register Volume 83, Number 168 (Wednesday, August 29, 2018)] [Notices] [Pages 44098-44101] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-18675] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83923; File No. SR-CBOE-2018-059] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Delay the Implementation Date of Changes to Cboe Options Rule 24A.4, Interpretation and Policy .02, Concerning FLEX Options August 23, 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 August 14, 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. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to delay the implementation date of rule change SR-CBOE-2018-008 to permit all FLEX series to be fungible with the corresponding non-FLEX series once an identical non-FLEX series becomes listed. (additions are in italics; deletions are [bracketed]) * * * * * Rules of Cboe Exchange, Inc. * * * * * Rule 24A.4. Terms of FLEX Options * * * * * . . . Interpretations and Policies: .01 No change. .02 The below version of Interpretation and Policy .02 will remain in effect until [an effective date specified by the Exchange in a Regulatory Circular. The effective date shall be no later than July 31, 2018, and the Regulatory Circular announcing the effective date shall be [[Page 44099]] issued at least 30 days prior to the effective date] August 21, 2018. Provided the options on an underlying security or index are otherwise eligible for FLEX trading, FLEX Options shall be permitted in puts and calls that do not have the same exercise style, same expiration date and same exercise price as Non-FLEX Options that are already available for trading on the same underlying security or index. FLEX Options shall also be permitted before the options are listed for trading as Non-FLEX Options. Once and if the option series are listed for trading as Non-FLEX Options, (i) all existing open positions established under the FLEX trading procedures shall be fully fungible with transactions in the respective Non-FLEX Option series and (ii) any further trading in the series would be as Non-FLEX Options subject to the Non-FLEX trading procedures and rules. However, in the event the Non-FLEX series is added intra-day, a position established under the FLEX trading procedures would be permitted to be closed using the FLEX trading procedures for the balance of the trading day on which the Non- FLEX series is added against another closing only FLEX position. For such FLEX series, the FLEX Official will make an announcement that the FLEX series is now restricted to closing transactions; a FLEX Request for Quotes may not be disseminated for any order representing a FLEX series having the same terms as a Non-FLEX series, unless such FLEX Order is a closing order (and it is the day the Non-FLEX series has been added); and only responses that close out an existing FLEX position are permitted. Any transactions in a restricted series that occur that do not conform to these requirements will be nullified by the FLEX Official pursuant to Rule 24A.14. The below version of Interpretation and Policy .02 shall be in effect on [the effective date specified by the Exchange in a Regulatory Circular. The effective date shall be no later than July 31, 2018, and the Regulatory Circular announcing the effective date shall be issued at least 30 days prior to the effective date]August 21, 2018. * * * * * 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 On May 9, 2018, the Securities and Exchange Commission (the ``Commission'') approved certain changes to Rule 24A.4, Interpretation and Policy .02 (SR-CBOE-2018-008), which changes allowed flexibility structured options (``FLEX Options'') with quarterly expirations, short-term expirations, weekly expirations, and End-of-Month expirations to be fungible with Non-FLEX Options that have identical terms.\5\ Pursuant to SR-CBOE-2018-008, the proposed changes would not take effect until a date specified by the Exchange in a Regulatory Circular, which date would be no later than July 31, 2018. The Regulatory Circular announcing the effective date was required to be issued at least 30 days prior to the effective date. --------------------------------------------------------------------------- \5\ Securities Exchange Act Release No. 83205 (May 9, 2018), 83 FR 22550 (May 15, 2018) (SR-CBOE-2018-008). --------------------------------------------------------------------------- As noted in SR-CBOE-2018-008, to give effect to the Cboe Options rule change, the Options Clearing Corporation (``OCC'') would need to amend its By-Laws after Cboe Options amended its Rules.\6\ However, OCC did not submit proposed changes to its By-Laws until July 16, 2018, on which date those changes became effective.\7\ Cboe Options understands that OCC does not intend to implement those changes as to Cboe Options until the implementation date Cboe Options announced for the proposed rule change in SR-CBOE-2018-008. Because Cboe Options was unable to determine an implementation date for the proposed changes until it knew the effective time of OCC's By-Law amendments, Cboe Options was unable to announce an implementation date until after OCC amended its By-Laws (and thus not until after July 16, 2018). On July 20, 2018, after the OCC By-Law amendment was filed, Cboe Options announced an implementation date of August 21, 2018, which was more than 30 days after the notice to Trading Permit Holders.\8\ Because this implementation date is past July 31, 2018, the Exchange proposes to extend the implementation date of the rule changes in SR-CBOE-2018-008 to August 21, 2018. --------------------------------------------------------------------------- \6\ See id. \7\ Securities Exchange Act Release No. 83724 (July 27, 2018), 83 FR 37875 (August 2, 2018) (SR-OCC-2018-010). \8\ Exchange Notice C2018072002 announcing the implementation date of rule change SR-CBOE-2018-008 is available at: http://cdn.batstrading.com/resources/release_notes/2018/Exchange-Notice-on-Open-Interest-Consolidation-for-Quarterly-and-Short-term-FLEX-products.pdf, which can be accessed through the markets.cboe.com website. Cboe Options previously informed market participants of its change in company practice to announce information such as the proposed rule change in SR-CBOE-2018-008 by Exchange Notice rather than Regulatory Circular: https://www.cboe.com/publish/RegCir/RG17-191.pdf. --------------------------------------------------------------------------- Historically, Cboe Options would have announced this information pursuant to a Regulatory Circular as required by the rule text. However, Cboe Options announced the implementation date pursuant to an Exchange Notice in accordance with new company practice.\9\ This is merely a change in the name of the document issued to market participants to announce this information. The substance of the announcement in the Exchange Notice was the same as it would have been if announced in a Regulatory Circular. Exchange Notices are distributed to the same group of market participants to which Regulatory Circulars were distributed before this change in company practice. Additionally, Exchange Notices are posted to Cboe Options' website, just as Regulatory Circulars are posted. As a result, the Exchange believes announcement of the implementation date by Exchange Notice provided market participants with sufficient notice of the proposed rule change in SR-CBOE-2018-008. The Exchange plans to issue a reminder of the implementation date to market participants by Regulatory Circular. --------------------------------------------------------------------------- \9\ Id. --------------------------------------------------------------------------- 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 [[Page 44100]] 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. --------------------------------------------------------------------------- The proposed rule change is merely delaying the implementation date of a proposed rule change, the rule filing for which addressed why that change and the need for at least 30 days' notice of implementation of that change was consistent with the Act and was previously approved by the Commission. This will ensure market participants receive sufficient notice of the implementation date of the proposed rule change. 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. The proposed rule change is merely delaying the implementation date of a proposed rule change, the rule filing for which addressed any potential competitive impact that change and the need for at least 30 days' notice of implementation of that change may have and was previously approved by the Commission. The proposed delay to the implementation date ensures market participants receive sufficient notice of the implementation date of the proposed rule change, which ultimately protects investors. The Exchange believes the proposed delay to the implementation date will have 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 \13\ and Rule 19b- 4(f)(6) thereunder.\14\ --------------------------------------------------------------------------- \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 Cboe Options to give the Commission written notice of its 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. Cboe Options has satisfied this requirement. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally does not become operative prior to 30 days after the date of filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission may 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. The Commission is waiving the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiver of the operative delay is consistent with the protection of investors and the public interest because such waiver will allow the rule change to be implemented as detailed in the Exchange Notice whereas keeping the 30-day operative delay in place could create confusion. Therefore, the Commission designates the proposal operative upon filing.\17\ --------------------------------------------------------------------------- \15\ 17 CFR 240.19b-4(f)(6). \16\ 17 CFR 240.19b-4(f)(6)(iii). \17\ For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- 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 shall institute proceedings to determine whether the proposed rule 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 CommentsUse 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-2018-059 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-2018-059. 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. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2018-059 and should be submitted on or before September 19, 2018. [[Page 44101]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\18\ --------------------------------------------------------------------------- \18\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-18675 Filed 8-28-18; 8:45 am] BILLING CODE 8011-01-P
![44098 Federal Register / Vol. 83, No. 168 / Wednesday, August 29, 2018 / Notices
no impact on the transaction fees be submitted by any of the following SECURITIES AND EXCHANGE
actually assessed to Members. methods: COMMISSION
(B) Self-Regulatory Organization’s Electronic Comments [Release No. 34–83923; File No. SR–CBOE–
Statement on Burden on Competition 2018–059]
• Use the Commission’s internet
The Exchange does not believe that comment form (http://www.sec.gov/ Self-Regulatory Organizations; Cboe
the proposed rule change will result in rules/sro.shtml); or Exchange, Inc.; Notice of Filing and
any burden on competition that is not
• Send an email to rule-comments@ Immediate Effectiveness of a Proposed
necessary or appropriate in furtherance Rule Change To Delay the
sec.gov. Please include File Number SR–
of the purposes of the Act, as amended. Implementation Date of Changes to
CboeBYX–2018–017 on the subject line.
The proposed changes to the Add/ Cboe Options Rule 24A.4,
Remove Tiers are designed to Paper Comments Interpretation and Policy .02,
incentivize Members to bring more Concerning FLEX Options
order flow to BYX as the Exchange • Send paper comments in triplicate
competes for order flow with other to Secretary, Securities and Exchange August 23, 2018.
equities markets. Furthermore, the Commission, 100 F Street NE, Pursuant to Section 19(b)(1) of the
proposed changes to the IEX routing Washington, DC 20549–1090. Securities Exchange Act of 1934 (the
fees are meant to recoup costs All submissions should refer to File ‘‘Act’’),1 and Rule 19b–4 thereunder,2
associated with executing orders on that Number SR–CboeBYX–2018–017. This notice is hereby given that on August
market, and to increase transparency by file number should be included on the 14, 2018, Cboe Exchange, Inc. (the
properly reflecting the routing strategies subject line if email is used. To help the ‘‘Exchange’’ or ‘‘Cboe Options’’) filed
available for IEX, and are therefore not Commission process and review your with the Securities and Exchange
designed to have any significant impact comments more efficiently, please use Commission (the ‘‘Commission’’) the
on competition. The Exchange operates only one method. The Commission will proposed rule change as described in
in a highly competitive market in which post all comments on the Commission’s Items I and II below, which Items have
market participants can readily direct internet website (http://www.sec.gov/ been prepared by the Exchange. The
their order flow to competing venues. In rules/sro.shtml). Copies of the Exchange filed the proposal as a ‘‘non-
such an environment, the Exchange submission, all subsequent controversial’’ proposed rule change
must continually review, and consider amendments, all written statements pursuant to Section 19(b)(3)(A)(iii) of
adjusting, its fees and rebates to remain with respect to the proposed rule the Act 3 and Rule 19b–4(f)(6)
competitive with other exchanges. For change that are filed with the thereunder.4 The Commission is
the reasons described above, the Commission, and all written publishing this notice to solicit
Exchange believes that the proposed fee communications relating to the comments on the proposed rule change
changes reflect this competitive proposed rule change between the from interested persons.
environment. Commission and any person, other than I. Self-Regulatory Organization’s
(C) Self-Regulatory Organization’s those that may be withheld from the Statement of the Terms of Substance of
Statement on Comments on the public in accordance with the the Proposed Rule Change
Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be
available for website viewing and The Exchange proposes to delay the
Members, Participants or Others
printing in the Commission’s Public implementation date of rule change SR–
No written comments were either Reference Room, 100 F Street NE, CBOE–2018–008 to permit all FLEX
solicited or received. Washington, DC 20549, on official series to be fungible with the
business days between the hours of corresponding non-FLEX series once an
III. Date of Effectiveness of the identical non-FLEX series becomes
Proposed Rule Change and Timing for 10:00 a.m. and 3:00 p.m. Copies of such
filing will also be available for listed.
Commission Action
inspection and copying at the principal (additions are in italics; deletions are
The foregoing rule change has become office of the Exchange. All comments [bracketed])
effective pursuant to Section 19(b)(3)(A) received will be posted without change. * * * * *
of the Act 17 and paragraph (f) of Rule Persons submitting comments are Rules of Cboe Exchange, Inc.
19b–4 thereunder.18 At any time within cautioned that we do not redact or edit * * * * *
60 days of the filing of the proposed rule personal identifying information from
change, the Commission summarily may comment submissions. You should Rule 24A.4. Terms of FLEX Options
temporarily suspend such rule change if submit only information that you wish * * * * *
it appears to the Commission that such to make available publicly. All . . . Interpretations and Policies:
action is necessary or appropriate in the submissions should refer to File .01 No change.
public interest, for the protection of Number SR–CboeBYX–2018–017 and .02
investors, or otherwise in furtherance of should be submitted on or before The below version of Interpretation
the purposes of the Act. September 19, 2018. and Policy .02 will remain in effect until
IV. Solicitation of Comments For the Commission, by the Division of [an effective date specified by the
Trading and Markets, pursuant to delegated Exchange in a Regulatory Circular. The
Interested persons are invited to
sradovich on DSK3GMQ082PROD with NOTICES
authority.19 effective date shall be no later than July
submit written data, views and 31, 2018, and the Regulatory Circular
Eduardo A. Aleman,
arguments concerning the foregoing, announcing the effective date shall be
including whether the proposal is Assistant Secretary.
consistent with the Act. Comments may [FR Doc. 2018–18676 Filed 8–28–18; 8:45 am] 1 15 U.S.C. 78s(b)(1).
BILLING CODE 8011–01–P 2 17 CFR 240.19b–4.
17 15 U.S.C. 78s(b)(3)(A). 3 15 U.S.C. 78s(b)(3)(A)(iii).
18 17 CFR 240.19b–4(f). 19 17 CFR 200.30–3(a)(12). 4 17 CFR 240.19b–4(f)(6).
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![Federal Register / Vol. 83, No. 168 / Wednesday, August 29, 2018 / Notices 44099
issued at least 30 days prior to the II. Self-Regulatory Organization’s unable to announce an implementation
effective date] August 21, 2018. Statement of the Purpose of, and date until after OCC amended its By-
Provided the options on an Statutory Basis for, the Proposed Rule Laws (and thus not until after July 16,
Change 2018). On July 20, 2018, after the OCC
underlying security or index are
In its filing with the Commission, the By-Law amendment was filed, Cboe
otherwise eligible for FLEX trading,
Exchange included statements Options announced an implementation
FLEX Options shall be permitted in puts
concerning the purpose of and basis for date of August 21, 2018, which was
and calls that do not have the same more than 30 days after the notice to
exercise style, same expiration date and the proposed rule change and discussed
any comments it received on the Trading Permit Holders.8 Because this
same exercise price as Non-FLEX implementation date is past July 31,
Options that are already available for proposed rule change. The text of these
statements may be examined at the 2018, the Exchange proposes to extend
trading on the same underlying security the implementation date of the rule
places specified in Item IV below. The
or index. FLEX Options shall also be changes in SR–CBOE–2018–008 to
Exchange has prepared summaries, set
permitted before the options are listed forth in sections A, B, and C below, of August 21, 2018.
for trading as Non-FLEX Options. Once the most significant aspects of such Historically, Cboe Options would
and if the option series are listed for statements. have announced this information
trading as Non-FLEX Options, (i) all pursuant to a Regulatory Circular as
existing open positions established A. Self-Regulatory Organization’s required by the rule text. However, Cboe
under the FLEX trading procedures Statement of the Purpose of, and Options announced the implementation
shall be fully fungible with transactions Statutory Basis for, the Proposed Rule date pursuant to an Exchange Notice in
in the respective Non-FLEX Option Change accordance with new company
series and (ii) any further trading in the 1. Purpose practice.9 This is merely a change in the
series would be as Non-FLEX Options name of the document issued to market
On May 9, 2018, the Securities and participants to announce this
subject to the Non-FLEX trading Exchange Commission (the
procedures and rules. However, in the information. The substance of the
‘‘Commission’’) approved certain announcement in the Exchange Notice
event the Non-FLEX series is added changes to Rule 24A.4, Interpretation was the same as it would have been if
intra-day, a position established under and Policy .02 (SR–CBOE–2018–008), announced in a Regulatory Circular.
the FLEX trading procedures would be which changes allowed flexibility Exchange Notices are distributed to the
permitted to be closed using the FLEX structured options (‘‘FLEX Options’’) same group of market participants to
trading procedures for the balance of the with quarterly expirations, short-term which Regulatory Circulars were
trading day on which the Non-FLEX expirations, weekly expirations, and distributed before this change in
series is added against another closing End-of-Month expirations to be fungible company practice. Additionally,
only FLEX position. For such FLEX with Non-FLEX Options that have Exchange Notices are posted to Cboe
series, the FLEX Official will make an identical terms.5 Pursuant to SR–CBOE– Options’ website, just as Regulatory
announcement that the FLEX series is 2018–008, the proposed changes would Circulars are posted. As a result, the
now restricted to closing transactions; a not take effect until a date specified by Exchange believes announcement of the
FLEX Request for Quotes may not be the Exchange in a Regulatory Circular, implementation date by Exchange
disseminated for any order representing which date would be no later than July Notice provided market participants
a FLEX series having the same terms as 31, 2018. The Regulatory Circular with sufficient notice of the proposed
a Non-FLEX series, unless such FLEX announcing the effective date was rule change in SR–CBOE–2018–008.
Order is a closing order (and it is the required to be issued at least 30 days The Exchange plans to issue a reminder
day the Non-FLEX series has been prior to the effective date. of the implementation date to market
added); and only responses that close As noted in SR–CBOE–2018–008, to participants by Regulatory Circular.
out an existing FLEX position are give effect to the Cboe Options rule
change, the Options Clearing 2. Statutory Basis
permitted. Any transactions in a
Corporation (‘‘OCC’’) would need to The Exchange believes the proposed
restricted series that occur that do not
amend its By-Laws after Cboe Options rule change is consistent with the
conform to these requirements will be
amended its Rules.6 However, OCC did Securities Exchange Act of 1934 (the
nullified by the FLEX Official pursuant not submit proposed changes to its By- ‘‘Act’’) and the rules and regulations
to Rule 24A.14. Laws until July 16, 2018, on which date thereunder applicable to the Exchange
The below version of Interpretation those changes became effective.7 Cboe and, in particular, the requirements of
and Policy .02 shall be in effect on [the Options understands that OCC does not Section 6(b) of the Act.10 Specifically,
effective date specified by the Exchange intend to implement those changes as to the Exchange believes the proposed rule
in a Regulatory Circular. The effective Cboe Options until the implementation change is consistent with the Section
date shall be no later than July 31, 2018, date Cboe Options announced for the
and the Regulatory Circular announcing proposed rule change in SR–CBOE– 8 Exchange Notice C2018072002 announcing the
2018–008. Because Cboe Options was implementation date of rule change SR–CBOE–
the effective date shall be issued at least 2018–008 is available at: http://
30 days prior to the effective unable to determine an implementation cdn.batstrading.com/resources/release_notes/2018/
date]August 21, 2018. date for the proposed changes until it Exchange-Notice-on-Open-Interest-Consolidation-
knew the effective time of OCC’s By- for-Quarterly-and-Short-term-FLEX-products.pdf,
* * * * * which can be accessed through the
sradovich on DSK3GMQ082PROD with NOTICES
Law amendments, Cboe Options was markets.cboe.com website. Cboe Options previously
The text of the proposed rule change
informed market participants of its change in
is also available on the Exchange’s 5 Securities Exchange Act Release No. 83205 (May
company practice to announce information such as
website (http://www.cboe.com/ 9, 2018), 83 FR 22550 (May 15, 2018) (SR–CBOE– the proposed rule change in SR–CBOE–2018–008
AboutCBOE/CBOELegalRegulatory 2018–008). by Exchange Notice rather than Regulatory Circular:
6 See id. https://www.cboe.com/publish/RegCir/RG17-
Home.aspx), at the Exchange’s Office of 7 Securities Exchange Act Release No. 83724 (July 191.pdf.
the Secretary, and at the Commission’s 27, 2018), 83 FR 37875 (August 2, 2018) (SR–OCC– 9 Id.
Public Reference Room. 2018–010). 10 15 U.S.C. 78f(b).
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![Federal Register / Vol. 83, No. 168 / Wednesday, August 29, 2018 / Notices 44101
For the Commission, by the Division of [Section 6(b)] that are equal to the target It is hereby ordered that the fee rates
Trading and Markets, pursuant to delegated fee collection amount for [fiscal year applicable under Section 6(b) of the
authority.18 2019].’’ That is, the adjusted rate is Securities Act and Sections 13(e) and
Eduardo A. Aleman, determined by dividing the ‘‘target fee 14(g) of the Exchange Act shall be
Assistant Secretary. collection amount’’ for fiscal year 2019 $121.20 per million effective on October
[FR Doc. 2018–18675 Filed 8–28–18; 8:45 am] by the ‘‘baseline estimate of the 1, 2018.
BILLING CODE 8011–01–P aggregate maximum offering prices’’ for By the Commission.
fiscal year 2019. Brent J. Fields,
Section 6(b)(6)(A) specifies that the Secretary.
SECURITIES AND EXCHANGE ‘‘target fee collection amount’’ for fiscal
COMMISSION year 2019 is $660,000,000. Section Appendix A
[Release Nos. 33–10538; 34–83935/August 6(b)(6)(B) defines the ‘‘baseline estimate Congress has established a target amount of
24, 2018] of the aggregate maximum offering monies to be collected from fees charged to
prices’’ for fiscal year 2019 as ‘‘the issuers based on the value of their
Order Making Fiscal Year 2019 Annual baseline estimate of the aggregate registrations. This appendix provides the
Adjustments to Registration Fee Rates maximum offering price at which formula for determining such fees, which the
securities are proposed to be offered Commission adjusts annually. Congress has
I. Background mandated that the Commission determine
pursuant to registration statements filed these fees based on the ‘‘aggregate maximum
The Commission collects fees under with the Commission during [fiscal year offering prices,’’ which measures the
various provisions of the securities 2019] as determined by the aggregate dollar amount of securities
laws. Section 6(b) of the Securities Act Commission, after consultation with the registered with the Commission over the
of 1933 (‘‘Securities Act’’) requires the Congressional Budget Office and the course of the year. In order to maximize the
Commission to collect fees from issuers Office of Management and Budget likelihood that the amount of monies targeted
on the registration of securities.1 Section . . . .’’ by Congress will be collected, the fee rate
13(e) of the Securities Exchange Act of To make the baseline estimate of the
must be set to reflect projected aggregate
1934 (‘‘Exchange Act’’) requires the maximum offering prices. As a percentage,
aggregate maximum offering price for the fee rate equals the ratio of the target
Commission to collect fees on specified fiscal year 2019, the Commission is
repurchases of securities.2 Section 14(g) amounts of monies to the projected aggregate
using a methodology that has been used maximum offering prices.
of the Exchange Act requires the
in prior fiscal years and that was For 2019, the Commission has estimated
Commission to collect fees on specified the aggregate maximum offering prices by
developed in consultation with the
proxy solicitations and statements in projecting forward the trend established in
Congressional Budget Office and Office
corporate control transactions.3 These the previous decade. More specifically, an
of Management and Budget.6 Using this
provisions require the Commission to ARIMA model was used to forecast the value
methodology, the Commission of the aggregate maximum offering prices for
make annual adjustments to the
determines the ‘‘baseline estimate of the months subsequent to July 2018, the last
applicable fee rates.
aggregate maximum offering price’’ for month for which the Commission has data on
II. Fiscal Year 2019 Annual Adjustment fiscal year 2019 to be the aggregate maximum offering prices.
to Fee Rates $5,447,649,888,566. Based on this The following sections describe this
estimate, the Commission calculates the process in detail.
Section 6(b)(2) of the Securities Act
requires the Commission to make an fee rate for fiscal 2019 to be $121.20 per A. Baseline estimate of the aggregate
annual adjustment to the fee rate million. This adjusted fee rate applies to maximum offering prices for fiscal year
applicable under Section 6(b).4 The Section 6(b) of the Securities Act, as 2019.
annual adjustment to the fee rate under well as to Sections 13(e) and 14(g) of the First, calculate the aggregate maximum
Section 6(b) of the Securities Act also Exchange Act. offering prices (AMOP) for each month in the
sets the annual adjustment to the fee sample (July 2008–July 2018). Next, calculate
III. Effective Dates of the Annual the percentage change in the AMOP from
rates under Sections 13(e) and 14(g) of Adjustments
the Exchange Act.5 month to month.
The fiscal year 2019 annual Model the monthly percentage change in
Section 6(b)(2) sets forth the method
AMOP as a first order moving average
for determining the annual adjustment adjustments to the fee rates applicable
process. The moving average approach
to the fee rate under Section 6(b) for under Section 6(b) of the Securities Act allows one to model the effect that an
fiscal year 2019. Specifically, the and Sections 13(e) and 14(g) of the exceptionally high (or low) observation of
Commission must adjust the fee rate Exchange Act will be effective on AMOP tends to be followed by a more
under Section 6(b) to a ‘‘rate that, when October 1, 2018.7 ‘‘typical’’ value of AMOP.
applied to the baseline estimate of the Use the estimated moving average model to
IV. Conclusion forecast the monthly percent change in
aggregate maximum offering prices for
[fiscal year 2019], is reasonably likely to Accordingly, pursuant to Section 6(b) AMOP. These percent changes can then be
of the Securities Act and Sections 13(e) applied to obtain forecasts of the total dollar
produce aggregate fee collections under value of registrations. The following is a
and 14(g) of the Exchange Act,8 more formal (mathematical) description of
18 17 CFR 200.30–3(a)(12). the procedure:
1 15 U.S.C. 77f(b). 6 Appendix A explains how we determined the
1. Begin with the monthly data for AMOP.
2 15 U.S.C. 78m(e).
‘‘baseline estimate of the aggregate maximum The sample spans ten years, from July 2008
3 15 U.S.C. 78n(g). offering price’’ for fiscal year 2019 using our to July 2018.
sradovich on DSK3GMQ082PROD with NOTICES
4 15 U.S.C. 77f(b)(2). The annual adjustments are methodology, and then shows the arithmetical
2. Divide each month’s AMOP (column C)
designed to adjust the fee rate in a given fiscal year process of calculating the fiscal year 2019 annual
adjustment based on that estimate. The appendix by the number of trading days in that month
so that, when applied to the aggregate maximum
offering price at which securities are proposed to includes the data used by the Commission in (column B) to obtain the average daily AMOP
be offered for the fiscal year, it is reasonably likely making its ‘‘baseline estimate of the aggregate (AAMOP, column D).
to produce total fee collections under Section 6(b) maximum offering price’’ for fiscal year 2019. 3. For each month t, the natural logarithm
equal to the ‘‘target fee collection amount’’ specified 7 15 U.S.C. 77f(b)(4), 15 U.S.C. 78m(e)(6) and 15 of AAMOP is reported in column E.
in Section 6(b)(6)(A) for that fiscal year. U.S.C. 78n(g)(6). 4. Calculate the change in log(AAMOP)
5 15 U.S.C. 78m(e)(4) and 15 U.S.C. 78n(g)(4). 8 15 U.S.C. 77f(b), 78m(e) and 78n(g). from the previous month as Dt = log
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Document Created: 2018-08-29 00:13:53
Document Modified: 2018-08-29 00:13:53
| 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 | 83 FR 44098 |
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