
[Federal Register Volume 80, Number 227 (Wednesday, November 25, 2015)]
[Notices]
[Pages 73839-73841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-29929]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76482; File No. SR-CBOE-2015-104]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Proposed Rule Change To Trade Expiring MSCI 
EAFE Index Options Until 3:00 p.m.

November 19, 2015.
    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 13, 2015, the 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 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.

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[[Page 73840]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CBOE proposes to change the trading hours for expiring MSCI EEAFE 
[sic] Index (``EAFE'') options. The text of the proposed rule change is 
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.

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 self-regulatory organization 
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 those 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 parts 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 April 8, 2015, the Commission approved CBOE's proposal to list 
and trade options on the MSCI EAFE Index (``EAFE'') and the MSCI 
Emerging Market Index (``EM'').\3\ This filing is solely concerned with 
EAFE options.
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    \3\ See Securities Exchange Act Release No. 74681 (April 8, 
2015), 80 FR 20032 (April 14, 2015) (approving SR-CBOE-2015-023).
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    When the Exchange filed to list EAFE options, the MSCI EAFE Index 
was not calculated and disseminated during the entire time period 
during which EAFE options would be traded.\4\ Specifically, the MSCI 
EAFE Index was not calculated from approximately 11:30 a.m. (Chicago 
time) to 3:15 p.m. (Chicago time).\5\
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    \4\ The closing MSCI EAFE Index level is distributed between 
1:00 p.m. and 2:00 p.m. (Chicago time) each trading day after the 
European markets close.
    \5\ As a result, the Exchange established listing criteria that 
permits the trading of EAFE options ``after trading in all component 
securities has closed for the day and the index level is no longer 
widely disseminated at least once every fifteen (15) seconds by one 
or more major market data vendors, provided that EAFE futures 
contracts are trading and prices for those contract may be used as a 
proxy for the current index value.'' See CBOE Rule 24.2.01(a)(8).
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    Also, when CBOE originally filed to list EAFE options, MSCI, Inc. 
only included the companies of a component country that were listed on 
the component country's home market. For example, only those securities 
listed on domestic markets such as the Amsterdam Exchange were included 
for The Netherlands, a component country of the MSCI EAFE Index. 
Securities of Dutch companies listed on exchanges outside of The 
Netherlands were not included in the Index.
    Beginning on December 1, 2015, foreign listed companies will become 
eligible for inclusion in the MSCI EAFE Index. This means that the MSCI 
EAFE Index will now include the prices of certain foreign listed 
companies that are listed and traded outside of their home markets on 
U.S. markets during the time that the U.S. equity markets are open, 
which is until 3:00 p.m. (Chicago time).\6\ As a result, MSCI, Inc. 
will be now be calculating and disseminating the MSCI EAFE Index value 
during the majority of the time that CBOE trades EAFE options.\7\ In 
addition, the closing MSCI EAFE Index level will now be distributed 
after the U.S. markets close.
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    \6\ The expected foreign listings for the MSCI EAFE Index would 
be components from Hong Kong, Israel and the Netherlands.
    \7\ The trading hours for non-expiring EAFE options are from 
8:30 a.m. to 3:15 p.m. (Chicago time).
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    As a result, the Exchange proposes to change the trading hours for 
expiring EAFE options. Currently, trading in expiring EAFE options ends 
at 10:00 a.m. (Chicago time) on their expiration date. The Exchange 
established these trading hours for expiring EAFE options to align the 
trading hours of expiring EAFE options with expiring EAFE futures 
traded on the Intercontinental Exchange, Inc. (``ICE''). Expiring EAFE 
futures listed on ICE trade stop trading at 10:00 a.m. (Chicago time) 
on the third Friday of the futures contract month.
    Because the MSCI EAFE Index will now be calculated and disseminated 
through the close of trading on U.S. markets (until 3:00 p.m. (Chicago 
time)) and because ICE \8\ is also changing the trading hours for 
expiring EAFE futures (to close at 3:15 p.m. (Chicago time)), CBOE 
proposes to change the closing time for trading in expiring EAFE 
options from 10:00 a.m. (Chicago time) to 3:00 p.m. (Chicago time) on 
their expiration date.
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    \8\ See ICE Submission No. 15-183 (filed November 2, 2015), 
available at: http://www.cftc.gov/filings/ptc/ptc110315iceusdcm001.pdf.
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    CBOE it [sic] is not proposing to close expiring EAFE option 
contracts at 3:15 p.m. (Chicago time) as ICE is doing for expiring EAFE 
futures contracts. This is because on the last day of trading, the 
closing prices of the component stocks, which are used to derive the 
exercise settlement value, are known at 3:00 p.m. (Chicago time) (or 
shortly soon after) when the U.S. equity markets close. As a result, 
the Exchange believes that it is appropriate to cease trading in 
expiring EAFE options at 3:00 p.m. (Chicago time) on their expiration 
day. The Exchange notes that this approach is consistent with the 
closing times for other expiring P.M.-settled contracts that underlie 
indexes that close when the U.S. equity markets close at 3:00 p.m. 
(Chicago time).\9\
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    \9\ See CBOE Rules 24.6.01, 24.6.03, 24.6.04 and 24.9(e).
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    To effectuate this change, CBOE proposes to amend Rule 24.6.05, 
which sets forth that expiring EAFE options may trade between 8:30 a.m. 
and 10:00 a.m. (Chicago time), by replacing 10:00 a.m. (Chicago time) 
with 3:00 p.m. (Chicago time).
    The Exchange proposes to begin using the change set forth in this 
rule filing beginning with the December 2015 expiration, which occurs 
on December 18, 2015. The Exchange states that this change is needed to 
closely align the trading hours in expiring EAFE options with the 
trading hours in expiring EAFE futures that trade on ICE.\10\ As a 
result, the Exchange is proposing to have this change apply to all EAFE 
options listed on or before the effective date of this filing and all 
EAFE options listed afterward.
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    \10\ CBOE understands that ICE is changing the trading hours for 
the expiring EAFE futures contract that trades on ICE from 10:00 
a.m. (Chicago time) to 3:15 p.m. (Chicago), beginning with the 
December 2015 EAFE futures expiration.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder, including the 
requirements of Section 6(b) of the Act.\11\ In particular, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \12\ requirements that the rules of an exchange be 
designed to promote just and equitable principles of trade, to prevent 
fraudulent and manipulative acts, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and to perfect the mechanism for a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    Specifically, the Exchange believes the filing would benefit 
investors by permitting them to trade expiring EAFE options throughout 
their expiration day and not just during a portion of their

[[Page 73841]]

expiration day. Also, by closely aligning the trading hours for options 
and futures products which trade on the MSCI EAFE Index, the Exchange 
would provide investors and market makers with greater opportunities to 
hedge across markets.

B. Self-Regulatory Organization's Statement on Burden on Competition

    This proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. Specifically, CBOE believes that the filing would enable 
cross-market competition and facilitate hedging opportunities by 
closely aligning the trading hours in expiring EAFE options and 
futures. As a result, the Exchange does not believe that the filing 
would impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. By order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.
    The Exchange has requested accelerated approval of the proposed 
rule change. The Commission is considering granting accelerated 
approval of the proposed rule change at the end of a 15-day comment 
period.

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 rule-comments@sec.gov. Please include 
File Number SR-CBOE-2015-104 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-2015-104. 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 such filing also will be available 
for inspection and copying at the principal office of the CBOE. 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-2015-104 and should be 
submitted on or before December 10, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-29929 Filed 11-24-15; 8:45 am]
BILLING CODE 8011-01-P


