[Federal Register Volume 83, Number 102 (Friday, May 25, 2018)]
[Notices]
[Pages 24372-24376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-11222]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83292; File No. SR-CBOE-2018-040]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 5.3, Criteria for Underlying Securities

May 21, 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 May 7, 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, II, 
and III 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 amend Rule 5.3, Interpretation and Policy 
.01.
(additions are italicized; deletions are [bracketed])
* * * * *

Cboe Exchange, Inc.

Rules

* * * * *

Rule 5.3. Criteria for Underlying Securities

    (a)-(b) (No change).
    . . . Interpretations and Policies:
    .01 The Board of Directors has established guidelines to be 
considered by the Exchange in evaluating potential underlying 
securities for Exchange option transactions. Absent exceptional 
circumstances with respect to Paragraphs (a)(1) or (2), or (b)(1) or 
(2) listed below, at the time the Exchange selects an underlying 
security for Exchange option transactions, the following guidelines 
with respect to the issuer shall be met.
    (a) (No change).
    (b) Guidelines applicable to the market for the security are:
    (1) (No change).
    (2)
    (A) If the underlying security is a ``covered security'' as defined 
under Section 18(b)(1)(A) of the Securities Act of 1933, the market 
price per share of the underlying security has been at least $3.00 for 
the previous [five]three consecutive business days preceding the date 
on which the Exchange submits a certificate to the Options Clearing 
Corporation for listing and trading. For purposes of this 
Interpretation .01(b)(2)(A), the market price of such underlying 
security is measured by the closing price reported in the primary 
market in which the underlying security is traded.
    (B) (No change).
    (c) (No change).
    .02-.13 (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.

[[Page 24373]]

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 Interpretation and Policy .01 of 
Rule 5.3, Criteria for Underlying Securities, to modify the criteria 
for listing options on an underlying security as defined in Section 
18(b)(1)(A) of the Securities Act of 1933 (hereinafter ``covered 
security'' or ``covered securities''). This is a competitive filing 
that is based on a proposal recently submitted by Nasdaq PHLX LLC 
(``Nasdaq Phlx'') and approved by the Commission.\5\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 82474 (January 9, 
2018), 83 FR 2240 (January 16, 2018) (order approving SR-Phlx-2017-
75); see also Securities Exchange Act Release No. 82828 (March 8, 
2018), 83 FR 11278 (March 14, 2018) (notice of filing and immediate 
effectiveness of SR-MIAX-2018-06).
---------------------------------------------------------------------------

    In particular, the Exchange proposes to modify Rule 5.3, 
Interpretation and Policy .01(b)(2)(A) to permit the listing of an 
option on an underlying covered security that has a market price of at 
least $3.00 per share for the previous three (3) consecutive business 
days preceding the date on which the Exchange submits a certificate to 
the Options Clearing Corporation (``OCC'') for listing and trading. The 
Exchange does not intend to amend any other criteria for listing 
options on an underlying security in Rule 5.3.
    Currently the underlying covered security must have a closing 
market price of $3.00 per share for the previous five (5) consecutive 
business days preceding the date on which the Exchange submits a 
listing certificate to OCC. In the proposed amendment, the market price 
will still be measured by the closing price reported in the primary 
market in which the underlying covered security is traded, but the 
measurement will be the price over the prior three (3) consecutive 
business day period preceding the submission of the listing certificate 
to OCC, instead of the prior five (5) business day period.
    The Exchange acknowledges that the Options Listing Procedures Plan 
\6\ requires that the listing certificate be provided to OCC no earlier 
than 12:01 a.m. and no later than 11:00 a.m. (Chicago time) on the 
trading day prior to the day on which trading is to begin.\7\ The 
proposed amendment will still comport with that requirement. For 
example, if an initial public offering (``IPO'') occurs at 11:00 a.m. 
on Monday, the earliest date the Exchange could submit its listing 
certificate to OCC would be on Thursday by 12:01 a.m. (Chicago time), 
with the market price determined by the closing price over the three-
day period from Monday through Wednesday. The option on the IPO would 
then be eligible for trading on the Exchange on Friday. The proposed 
amendment would essentially enable options trading within four (4) 
business days of an IPO becoming available instead of six (6) business 
days (five (5) consecutive days plus the day the listing certificate is 
submitted to OCC).
---------------------------------------------------------------------------

    \6\ The Plan for the Purpose of Developing and Implementing 
Procedures Designed to Facilitate the Listing and Trading of 
Standardized Options Submitted Pursuant to Section 11a(2)(3)(B) of 
the Securities Exchange Act of 1934 (a/k/a the Options Listing 
Procedures Plan (``OLPP'')) is a national market system plan that, 
among other things, sets forth procedures governing the listing of 
new options series. See Securities Exchange Act Release No. 44521 
(July 6, 2001), 66 FR 36809 (July 13, 2001) (Order approving OLPP). 
The sponsors of OLPP include OCC; Cboe BZX Exchange, Inc. (formerly 
BATS Exchange, Inc.); BOX Options Exchange LLC; Cboe C2 Exchange, 
Inc. (formerly C2 Options Exchange, Incorporated); Cboe Exchange, 
Inc. (formerly Chicago Board Options Exchange, Incorporated); Cboe 
EDGX Exchange, Inc. (formerly EDGX Exchange, Inc.); Miami 
International Securities Exchange, LLC; MIAX PEARL, LLC; The Nasdaq 
Stock Market LLC; NASDAQ BX, Inc.; Nasdaq PHLX LLC; Nasdaq GEMX, 
LLC; Nasdaq ISE, LLC; Nasdaq MRX, LLC; NYSE American, LLC; and NYSE 
Arca, Inc.
    \7\ See OLPP at page 3.
---------------------------------------------------------------------------

    The Exchange's initial listing standards for equity options in Rule 
5.3 (including the current price/time standard of $3.00 per share for 
five (5) consecutive business days) are substantially similar to the 
initial listing standards adopted by other options exchanges.\8\ At the 
time the options industry adopted the ``look back'' period of five 
consecutive business days, it was determined that the five-day period 
was sufficient to protect against attempts to manipulate the market 
price of the underlying security and would provide a reliable test for 
stability.\9\ Surveillance technologies and procedures concerning 
manipulation have evolved since then to provide adequate prevention or 
detection of rule or securities law violations within the proposed time 
frame.
---------------------------------------------------------------------------

    \8\ See, e.g., Phlx Rule 1009, Commentary .01; see also MIAX 
Rule 402(b)(5) and BOX Rule 5020(b)(5).
    \9\ See Securities Exchange Act Release Nos. 47190 (January 15, 
2003), 68 FR 3072 (January 22, 2003) (SR-CBOE-2002-62); 47352 
(February 11, 2003), 68 FR 8319 (February 20, 2003) (SR-PCX-2003-
06); 47483 (March 11, 2003), 68 FR 13352 (March 19,2003) (SR-ISE-
2003-04); 47613 (April 1, 2003), 68 FR 17120 (April 8, 2003) (SR-
Amex-2003-19); and 47794 (May 5, 2003), 68 FR 25076 (May 9, 2003) 
(SR-Phlx-2003-27).
---------------------------------------------------------------------------

    The Exchange notes that the proposed listing criteria would still 
require that the underlying security be listed on NYSE, the American 
Stock Exchange (now known as NYSE American), or the National Market 
System of The Nasdaq Stock Market (now known as the Nasdaq Global 
Market), or listed on a national securities exchange that has listing 
standards the Commission determines by rule are substantially similar 
to the listing standards applicable to securities listed the exchanges 
noted in the previous clause (collectively, the ``Designated 
Markets''), as provided for in the definition of ``covered security'' 
from Section 18(b)(1) of the 1933 Act. Accordingly, the Exchange 
believes that the proposed rule change would still ensure that the 
underlying security meets the high listing standards of a Designated 
Market, and would also ensure that the underlying is covered by the 
regulatory protections (including market surveillance, investigation 
and enforcement) offered by these exchanges for trading in covered 
securities conducted on their facilities.
    Furthermore, the Nasdaq, Nasdaq Phlx's affiliated listing market, 
had no cases within the past five years where an IPO-related issue for 
which it had pricing information qualified for the $3.00 price 
requirement during the first three (3) days of trading and did not 
qualify for the $3.00 price requirement during the first five (5) 
days.\10\ In other words, none of these qualifying issues fell below 
the $3.00 threshold within the first three (3) or five (5) days of 
trading. As such, the Exchange believes that its existing surveillance 
technologies and procedures, coupled with Nasdaq's findings related to 
the IPO-related issues as described herein, adequately address 
potential concerns regarding possible manipulation or price stability 
within the proposed timeframe.
---------------------------------------------------------------------------

    \10\ There were over 750 IPO-related issues on Nasdaq within the 
past five years. Out of all of the issues with pricing information, 
there was only one issue that had a price below $3 during the first 
five consecutive business days. The Exchange notes, however, that 
Nasdaq allows for companies to list on the Nasdaq Capital Market at 
$2.00 or $3.00 per share in some instances, which was the case for 
this particular issue. See Nasdaq Rule 5500 Series for initial 
listing standards on the Nasdaq Capital Market; see also Release No. 
82474 in supra note 5.
---------------------------------------------------------------------------

    Additionally, the Exchange represents that its existing trading 
surveillances are adequate to monitor the trading of options on the 
Exchange.\11\ Cboe Options and C2, either themselves or through FINRA, 
utilize an array of patterns that monitor manipulation of

[[Page 24374]]

options, or manipulation of equity securities (regardless of venue) for 
the purpose of impacting options prices on both Cboe Options and C2 
options markets (i.e., mini-manipulation strategies). Accordingly, the 
Exchange believes that the cross-market surveillance performed by the 
Designated Markets, coupled with the Exchange staff's monitoring of 
similarly violative activity on Cboe Options and C2 as described 
herein, reflects a comprehensive surveillance program that is adequate 
to monitor for manipulation of the underlying security within the 
proposed three-day look back period. The Exchange notes certain of its 
affiliated exchanges, Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., 
Cboe EDGA Exchange, Inc., and Cboe EDGX Exchange, Inc., list stock for 
trading and have surveillance programs in place that include cross-
market surveillance for trading not just limited to those exchanges. 
The cross-market patters (sic) in those surveillance programs 
incorporate relevant data from various markets beyond the Exchange and 
its affiliates, including NYSE and Nasdaq.
---------------------------------------------------------------------------

    \11\ Such surveillance procedures generally focus on detecting 
securities trading subject to price manipulation, layering, spoofing 
or other unlawful activity impacting an underlying security, the 
option, or both. The Exchange and its affiliate C2, themselves or 
through the Financial Industry Regulatory Authority (``FINRA''), 
have price movement alerts, unusual market activity and order book 
alerts active for all trading symbols.
---------------------------------------------------------------------------

    The Exchange also believes that the proposed look back period can 
be implemented in connection with the other initial listing criteria 
for underlying covered securities. In particular, the Exchange 
recognizes that it may be difficult to verify the number of 
shareholders in the days immediately following an IPO due to the fact 
that stock trades generally clear within two business days (T+2) of 
their trade date and therefore the shareholder count will generally not 
be known until T+2.\12\ The Exchange notes that the current T+2 
settlement cycle was recently reduced from T+3 on September 5, 2017 in 
connection with the Commission's amendments to Rule 15c6-1(a) to adopt 
the shortened settlement cycle,\13\ and the look back period of three 
(3) consecutive business days proposed herein reflects this shortened 
T+2 settlement period. As proposed, stock trades would clear within T+2 
of their trade date (i.e., within three (3) business days) and 
therefore the number of shareholders could be verified within three (3) 
business days, thereby enabling options trading within four (4) 
business days of an IPO (three (3) consecutive business days plus the 
day the listing certificate is submitted to OCC).
---------------------------------------------------------------------------

    \12\ The number of shareholders of record can be validated by 
large clearing agencies such as T+2).
    \13\ See Securities Exchange Act Release No. 78962 (September 
28, 2016), 81 FR 69240 (October 5, 2016) (Amendment to Securities 
Transaction Settlement Cycle) (File No. S7-22-16).
---------------------------------------------------------------------------

    Furthermore, the Exchange notes that it can verify the shareholder 
count with various brokerage firms that have a large retail customer 
clientele. Such firms can confirm the number of individual customers 
who have a position in the new issue. The earliest that these firms can 
provide confirmation is usually the day after the first day of trading 
(T+1) on an unsettled basis, while others can confirm on the third day 
of trading (T+2). The Exchange has confirmed with some of these 
brokerage firms who provide shareholder numbers to the Exchange that 
they are T+2 after an IPO. For the foregoing reasons, the Exchange 
believes that basing the proposed three (3) business day look back 
period on the T+2 settlement cycle would allow for sufficient 
verification of the number of shareholders.
    The proposed rule change will apply to all covered securities that 
meet the criteria of Rule 5.3. Pursuant to Rule 5.3, the Exchange 
establishes guidelines to be considered in evaluating the potential 
underlying securities for Exchange option transactions.\14\ However, 
the fact that a particular security may meet the guidelines established 
by the Exchange does not necessarily mean that it will be approved as 
an underlying security.\15\ As part of the established criteria, the 
issuer must be in compliance with any applicable requirement of the 
Securities Exchange Act of 1934.\16\ Additionally, in considering the 
underlying security, the Exchange relies on information made publicly 
available by the issuer and/or the markets in which the security is 
traded.\17\ Even if the proposed option meets the objective criteria, 
the Exchange may decide not to list, or place limitations or conditions 
upon listing.\18\ The Exchange believes that these measures, together 
with existing surveillance procedures, provide adequate safeguards in 
the review of any covered security that may meet the proposed criteria 
for consideration of the option within the timeframe contained in this 
proposal.
---------------------------------------------------------------------------

    \14\ See Rule 5.3 (b) and Interpretation and Policy .01. The 
Exchange established specific criteria to be considered in 
evaluating potential underlying securities for Exchange option 
transactions.
    \15\ See Rule 5.3(b).
    \16\ See Rule 5.3, Interpretation and Policy .01(a)(3).
    \17\ See Rule 5.3, Interpretation and Policy .02.
    \18\ See Rule 5.3, Interpretation and Policy .09.
---------------------------------------------------------------------------

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.\19\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \20\ 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) \21\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(5).
    \21\ Id.
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes to its listing 
standards for covered securities would allow the Exchange to more 
quickly list options on a qualifying covered security that has met the 
$3.00 eligibility price without sacrificing investor protection. As 
discussed above, the Exchange believes that its existing surveillance 
procedures provide a sufficient measure of protection against potential 
price manipulation within the proposed three (3) consecutive business 
day timeframe. The Exchange also believes that the proposed three (3) 
consecutive business day timeframe would continue to be a reliable test 
for price stability in light of Nasdaq's findings that none of the IPO-
related issues on Nasdaq within the past five years that qualified for 
the $3.00 per share price standard during the first three trading days 
fell below the $3.00 threshold during the fourth or fifth trading day. 
Furthermore, the established guidelines to be considered by the 
Exchange in evaluating the potential underlying securities for Exchange 
option transactions,\22\ together with existing trading surveillances, 
provide adequate safeguards in the review of any covered security that 
may meet the proposed criteria for consideration of the option within 
the proposed timeframe.
---------------------------------------------------------------------------

    \22\ See supra notes 14-18.
---------------------------------------------------------------------------

    In addition, the Exchange believes that basing the proposed 
timeframe on the T+2 settlement cycle adequately addresses the 
potential difficulties in confirming the number of shareholders of the 
underlying covered security.

[[Page 24375]]

Having some of the largest brokerage firms that provide these 
shareholder counts to the Exchange confirm that they are able to 
provide these numbers within T+2 further demonstrates that the 2,000 
shareholder requirement can be sufficiently verified within the 
proposed timeframe. For the foregoing reasons, the Exchange believes 
that the proposed amendments will remove and perfect the mechanism of a 
free and open market and a national market system by providing an 
avenue for investors to swiftly hedge their investment in the stock in 
a shorter amount of time than what is currently in place.\23\
---------------------------------------------------------------------------

    \23\ This proposed rule change does not alter any obligations of 
issuers or other investors of an IPO that may be subject to a lock-
up or other restrictions on trading related securities.
---------------------------------------------------------------------------

    Finally, it should be noted that a price/time standard for the 
underlying security was first adopted when the listed options market 
was in its infancy, and was intended to prevent the proliferation of 
options being listed on low-priced securities that presented special 
manipulation concerns and/or lacked liquidity needed to maintain fair 
and orderly markets.\24\ When options trading commenced in 1973, the 
Commission determined that it was necessary for securities underlying 
options to meet certain minimum standards regarding both the quality of 
the issuer and the quality of the market for a particular security.\25\ 
These standards, including a price/time standard, were imposed to 
ensure that those issuers upon whose securities options were to be 
traded were widely-held, financially sound companies whose shares had 
trading volume and float substantial enough so as not to be readily 
susceptible to manipulation.\26\ At the time, the Commission determined 
that the imposition of these standards was reasonable in view of the 
pilot nature of options trading and the limited experience of investors 
with options trading.\27\
---------------------------------------------------------------------------

    \24\ See Securities Exchange Act Release No. 29628 (August 29, 
1991), 56 FR 43949-01 (September 5, 1991) (SR-AMEX-86-21; SR-CBOE-
86-15; SR-NYSE-86-20; SR-PSE-86-15; and SR-PHLX-86-21) (``1991 
Approval Order'') at 43949 (discussing the Commission's concerns 
when options trading initially commenced in 1973).
    \25\ See 1991 Approval Order at 43949.
    \26\ Id.
    \27\ Id.
---------------------------------------------------------------------------

    Now more than 40 years later, the listed options market has evolved 
into a mature market with sophisticated investors. In view of this 
evolution, the Commission has approved various exchange proposals to 
relax some of these initial listing standards throughout the years,\28\ 
including reducing the price/time standard in 2003 from $7.50 per share 
for the majority of business days over a three month period to the 
current $3.00 per share/five business day standard (``2003 
Proposal'').\29\ It has been almost fifteen years since the Commission 
approved the 2003 proposal, and both the listed options market and 
exchange technologies have continued to evolve since then. In this 
instance, Cboe Options is only proposing a modest reduction of the 
current five (5) business day standard to three (3) business days to 
correspond to the securities industry's move to a T+2 standard 
settlement cycle.\30\ The $3.00 per share standard and all other 
initial options listing criteria in Rule 5.3 will remain unchanged by 
this proposal. For the reasons discussed herein, the Exchange therefore 
believes that the proposed three (3) business day period will be 
beneficial to the marketplace without sacrificing investor protections.
---------------------------------------------------------------------------

    \28\ See, e.g., 1991 Approval Order (modifying a number of 
initial listing criteria, including the reduction of the price/time 
standard from $10 per share each day during the preceding three 
calendar months to $7.50 per share for the majority of days during 
the same period).
    \29\ See Securities Exchange Act Release Nos. 47190 (January 15, 
2003), 68 FR 3072 (January 22, 2003) (SR-CBOE-2002-62); 47352 
(February 11, 2003), 68 FR 8319 (February 20, 2003) (SR-PCX-2003-
06); 47483 (March 11, 2003), 68 FR 13352 (March 19, 2003) (SR-ISE-
2003-04); 47613 (April 1, 2003), 68 FR 17120 (April 8, 2003) (SR-
Amex-2003-19); and 47794 (May 5, 2003), 68 FR 25076 (May 9, 2003) 
(SR-Phlx\2003-27).
    \30\ See supra note 13.
---------------------------------------------------------------------------

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. In this regard and as 
indicated above, the Exchange notes that the rule change is being 
proposed as a competitive response to a filing submitted by Nasdaq Phlx 
that was recently approved by the Commission.\31\ The proposed rule 
change will reduce the number of days to list options on an underlying 
security, and is intended to bring new options listings to the 
marketplace quicker.
---------------------------------------------------------------------------

    \31\ See supra note 5.
---------------------------------------------------------------------------

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) \32\ of the Act and Rule 19b-
4(f)(6) thereunder.\33\
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78s(b)(3)(A).
    \33\ 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, along 
with a brief description and the 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.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \34\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \35\ 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 asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. As discussed 
above, the Exchange notes that its proposal is consistent with rules of 
other exchanges.\36\ Because the proposal does not raise any new or 
novel issues, the Commission believes that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest. Therefore, the Commission hereby waives the operative delay 
and designates the proposal operative upon filing.\37\
---------------------------------------------------------------------------

    \34\ 17 CFR 240.19b-4(f)(6).
    \35\ 17 CFR 240.19b-4(f)(6)(iii).
    \36\ See supra note 6 and accompanying text.
    \37\ 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).
---------------------------------------------------------------------------

    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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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.

[[Page 24376]]

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-2018-040 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-2018-040. 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-2018-040 and should be submitted on 
or before June 15, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\38\
---------------------------------------------------------------------------

    \38\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-11222 Filed 5-24-18; 8:45 am]
 BILLING CODE 8011-01-P


