83 FR 56119 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Renew the Nonstandard Expirations Pilot Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 218 (November 9, 2018)

[Federal Register Volume 83, Number 218 (Friday, November 9, 2018)]
[Notices]
[Pages 56119-56121]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-24522]



[[Page 56119]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84534; File No. SR-CBOE-2018-070]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Renew 
the Nonstandard Expirations Pilot Program

November 5, 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 November 2, 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

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to renew an existing pilot program until May 6, 2019. Under the 
existing pilot program, the Exchange is permitted to list P.M.-settled 
options on broad-based indexes that expire on: (a) Any Monday, 
Wednesday, or Friday (``Weekly Expirations'') and (b) the last trading 
day of the month (``End of Month Expirations'' or ``EOMs'').
(additions are italicized; deletions are [bracketed])
* * * * *

Cboe Exchange, Inc. Rules [sic]

* * * * *
Rule 24.9. Terms of Index Option Contracts
    (a)-(d) (No change).
    (e) Nonstandard Expirations Pilot Program
    (1)-(2) (No change).
    (3) Duration of Nonstandard Expirations Pilot Program. The 
Nonstandard Expirations Pilot Program shall be through [November 5, 
2018] May 6, 2019.
    (4) (No change).
    . . . Interpretations and Policies:
    .01-.14 (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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On September 14, 2010, the Commission approved a Cboe Options 
proposal to establish a pilot program under which the Exchange is 
permitted to list P.M.-settled options on broad-based indexes to expire 
on (a) any Friday of the month, other than the third Friday-of-the-
month, and (b) the last trading day of the month.\5\ On January 14, 
2016, the Commission approved a Cboe Options proposal to expand the 
pilot program to allow P.M.-settled options on broad-based indexes to 
expire on any Wednesday of month, other than those that coincide with 
an EOM.\6\ On August 10, 2016, the Commission approved a Cboe Options 
proposal to expand the pilot program to allow P.M.-settled options on 
broad-based indexes to expire on any Monday of month, other than those 
that coincide with an EOM.\7\ Under the terms of the Nonstandard 
Expirations Pilot Program (``Program''), Weekly Expirations and EOMs 
are permitted on any broad-based index that is eligible for regular 
options trading. Weekly Expirations and EOMs are cash-settled and have 
European-style exercise. The proposal became effective on a pilot basis 
for a period of fourteen months that commenced on the next full month 
after approval was received to establish the Program \8\ and was 
subsequently extended.\9\ The Program is scheduled to expire on 
November 5, 2018. The Exchange believes that the Program has been 
successful and well received by its Trading Permit Holders and the 
investing public during that the time that it has been in operation. 
The Exchange hereby proposes to extend the Program until May 6, 2019. 
This proposal does not request any other changes to the Program.
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    \5\ See Securities Exchange Act Release 62911 (September 14, 
2010), 75 FR 57539 (September 21, 2010) (order approving SR-CBOE-
2009-075).
    \6\ See Securities Exchange Act Release 76909 (January 14, 
2016), 81 FR 3512 (January 21, 2016) (order approving SR-CBOE-2015-
106).
    \7\ See Securities Exchange Act Release 78531 (August 10, 2016), 
81 FR 54643 (August 16, 2016) (order approving SR-CBOE-2016-046).
    \8\ Id.
    \9\ See Securities Exchange Act Release 65741 (November 14, 
2011), 76 FR 72016 (November 21, 2011) (immediately effective rule 
change extending the Program through February 14, 2013). See also 
Securities Exchange Act Release 68933 (February 14, 2013), 78 FR 
12374 (February 22, 2013) (immediately effective rule change 
extending the Program through April 14, 2014); 71836 (April 1, 
2014), 79 FR 19139 (April 7, 2014) (immediately effective rule 
change extending the Program through November 3, 2014); 73422 
(October 24, 2014), 79 FR 64640 (October 30, 2014) (immediately 
effective rule change extending the Program through May 3, 2016); 
76909 (January 14, 2016), 81 FR 3512 (January 21, 2016) (extending 
the Program through May 3, 2017); 80387 (April 6, 2017), 82 FR 17706 
(April 12, 2017) (extending the Program through May 3, 2018); and 
83165 (May 3, 2018), 83 FR 21316 (May 9, 2018) (SR-CBOE-2018-038) 
(extending the Program through November 8, 2018).
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    Pursuant to the order approving the establishment of the Program, 
two months prior to the conclusion of the pilot period, Cboe Options is 
required to submit an annual report to the Commission, which addresses 
the following areas: Analysis of Volume & Open Interest, Monthly 
Analysis of Weekly Expirations & EOM Trading Patterns and Provisional 
Analysis of Index Price Volatility. The Exchange has submitted, under 
separate cover, the annual report in connection with the present 
proposed rule change. Additionally, the Exchange will provide the 
Commission with any additional data or analyses the Commission requests 
because it deems such data or analyses necessary to determine whether 
the Program is consistent with the Exchange Act. The Exchange is in the 
process of making public on its website data and analyses previously 
submitted to the Commission under the Program, which it expects to 
complete in the fourth quarter of 2018, and will make public any data 
and analyses it submits to the Commission under the Program in the 
future.

[[Page 56120]]

    If, in the future, the Exchange proposes an additional extension of 
the Program, or should the Exchange propose to make the Program 
permanent (which the Exchange currently intends to do), the Exchange 
will submit an annual report (addressing the same areas referenced 
above and consistent with the order approving the establishment of the 
Program) to the Commission at least two months prior to the expiration 
date of the Program. Any positions established under the Program will 
not be impacted by the expiration of the Program.
    The Exchange believes there is sufficient investor interest and 
demand in the Program to warrant its extension. The Exchange believes 
that the Program has provided investors with additional means of 
managing their risk exposures and carrying out their investment 
objectives. Furthermore, the Exchange has not experienced any adverse 
market effects with respect to the Program.
    The Exchange believes that the proposed extension of the Program 
will not have an adverse impact on capacity.
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 facilitation 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \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, the Exchange believes that the Program has been 
successful to date and states that it has not encountered any problems 
with the Program. The proposed rule change allows for an extension of 
the Program for the benefit of market participants. Additionally, the 
Exchange believes that there is demand for the expirations offered 
under the Program and believes that that Weekly Expirations and EOMs 
will continue to provide the investing public and other market 
participants increased opportunities to better manage their risk 
exposure.

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. Specifically, the Exchange 
believes that, by extending the expiration of the Program, the proposed 
rule change will allow for further analysis of the Program and a 
determination of how the Program shall be structured in the future. In 
doing so, the proposed rule change will also serve to promote 
regulatory clarity and consistency, thereby reducing burdens on the 
marketplace and facilitating investor protection.

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 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 if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) 
thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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) \15\ normally 
does not become operative for 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 asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange states that 
such waiver will allow the Exchange to extend the pilot program prior 
to its expiration on November 5, 2018, and maintain the status quo, 
thereby reducing market disruption. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest as it will allow the pilot program to 
continue uninterrupted, thereby avoiding investor confusion that could 
result from a temporary interruption in the pilot program. For this 
reason, the Commission designates the proposed rule change to be 
operative upon filing.\17\
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    \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 also 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 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 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-2018-070 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-2018-070. This file 
number should be included on the

[[Page 56121]]

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 a.m. and 3 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-2018-070, and should be submitted on or before November 30, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-24522 Filed 11-8-18; 8:45 am]
 BILLING CODE 8011-01-P