[Federal Register Volume 85, Number 199 (Wednesday, October 14, 2020)]
[Notices]
[Pages 65130-65132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22713]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90132; File No. SR-CBOE-2020-091]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Relating 
To Amend Rule 5.1

October 8, 2020.
    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 September 30, 2020, 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 amend Rule 5.1. The text of the proposed rule change is provided 
below.

(additions are italics; deletions are [bracketed])
* * * * *

Rules of Cboe Exchange, Inc.

* * * * *

Rule 5.1. Trading Days and Hours

    (a) No change.
    (b) Regular Trading Hours.
    (1) No change.
    (2) Index Options. Except as otherwise set forth in the Rules or 
under unusual conditions as may be determined by the Exchange, Regular 
Trading Hours for transactions in index options are from 9:30 a.m. to 
4:15 p.m., except as follows:
    (A) Regular Trading Hours for the following index options are from 
9:30 a.m. to 4:00 p.m.:

S&P 500 ESG Index (SPESG)

* * * * *
    The text of the proposed rule change is also available on the 
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Recently, the Exchange proposed to amend certain rules in 
connection with the Exchange's plans to list S&P 500 ESG Index options 
(``SPESG options''), which options first listed for trading on 
September 21, 2020. The S&P 500 ESG Index is a broad-based, market-
capitalization-weighted index that is designed to measure the 
performance of securities meeting sustainability criteria, while 
maintaining similar overall industry group weights as the S&P 500. Each 
constituent of a S&P 500 ESG Index is a constituent of the S&P 500 
Index. S&P Dow Jones Indices' (``S&P DJI'') assigns constituents to a 
S&P 500 ESG Index based on S&P DJI ESG Scores and other environmental, 
social and governance (``ESG'') data to select companies, targeting 75% 
of the market capitalization of each global industry classification 
standard (``GICS'') industry group within the S&P 500. In addition to 
the exclusion of companies with S&P DJI ESG Scores in the bottom 25% of 
companies globally within their GICS industry groups, the S&P 500 ESG 
Index excludes tobacco, controversial weapons and other companies not 
in compliance with the UN Global Compact.
    Currently, pursuant to Rule 5.1(b)(2), SPESG options trade on the 
Exchange from 9:30 a.m. until 4:15 p.m. Eastern time. In connection 
with the listing of SPESG options, the Exchange proposes to amend Rule 
5.1(b)(2)(A) to add SPESG options to the list of index options that may 
trade on the Exchange from 9:30 a.m. until 4:00 p.m. Eastern time. The 
Exchange understands that market participants, including appointed 
Market-Makers that trade SPESG options generally use futures on the 
index to price index options, as they do for other options such as 
options on the S&P 500 Index. The e-mini S&P 500 ESG Index futures 
currently trade on the Chicago Mercantile Exchange (``CME'') and close 
for trading at 4:00 p.m. Eastern time each day, unlike the e-mini S&P 
500 Index futures, which currently trade on CME and close for trading 
at 4:15 p.m. Eastern time. Closing trading in SPESG options at the same 
time the futures end regular trading \5\ will provide investors with 
access to robust pricing of the futures they use to price the options, 
thus reducing investors' price risk. Other index options may currently 
trade from 9:30 a.m. to 4:00 p.m. Eastern time.\6\
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    \5\ While the futures may continue to trade in an aftermarket 
trading session on CME exchanges, there is less liquidity in 
aftermarket trading, which generally leads to wider spreads and more 
volatile pricing.
    \6\ See Rule 5.1(b)(2)(A) (pursuant to which options on the 
various S&P Select Sector Indexes may trade, the components of each 
of which are similarly comprised of stocks that are included in the 
S&P 500 Index).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\7\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \8\ 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) \9\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ Id.
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    In particular, closing trading in SPESG options at the same time 
the futures on the same index close for

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regular trading will provide investors with access to robust pricing of 
the futures they use to price the options for the entirety of the 
trading day, which protects investors by reducing their price risk. The 
Exchange believes lack of futures pricing may cause Market-Makers to 
widen their quote spreads and reduce their quote sizes for the part of 
the options trading day during which the futures pricing is not 
available. The Exchange believes the proposed rule change will, 
therefore, help maintain meaningful liquidity for the entirety of the 
SPESG options trading day, which liquidity may otherwise be impacted if 
appointed Market-Makers quote during times when futures pricing is not 
available. Other index options may currently trade from 9:30 a.m. to 
4:00 p.m. Eastern time, including options on the various S&P Select 
Sector Indexes, the components of each of which are comprised of stocks 
that are included in the S&P 500 Index (similar to the S&P 500 ESG 
Index).\10\
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    \10\ See Rule 5.1(b)(2)(A).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Cboe Options does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange does not 
believe the proposed rule change will impose any burden on intramarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act, because all market participants will be able to 
trade SPESG options during the same trading hours. Other index options 
may currently trade from 9:30 a.m. to 4:00 p.m. Eastern time, including 
options on the various S&P Select Sector Indexes, the components of 
each of which are comprised of stocks that are included in the S&P 500 
Index (similar to the S&P 500 ESG Index).\11\ The Exchange does not 
believe the proposed rule change will impose any burden on intermarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act, and may promote competition, because the proposed 
rule change will align the trading hours for SPESG options with the 
trading hours of the e-mini S&P 500 ESG Index futures. Additionally, 
SPESG options trade exclusively on Cboe Options. To the extent that the 
proposed changes make Cboe Options a more attractive marketplace for 
market participants at other exchanges, such market participants are 
welcome to become Cboe Options market participants.
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    \11\ Id.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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 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 pursuant to Rule 19b-4(f)(6) under the 
Act \14\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \15\ 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. The 
Exchange believes that waiver of the operative delay is consistent with 
the protection of investors and the public interest because the 
proposed rule change does not raise any novel or unique issues not 
previously considered by the Commission. The Exchange notes that the 
proposed rule change applies to SPESG options trading hours currently 
applicable to other index options and related futures products, like 
the e-mini S&P 500 ESG Index futures. Accordingly, the Commission 
believes that waiver of the 30-day operative delay is consistent with 
the protection of investors and the public interest. The Commission 
hereby waives the operative delay and designates the proposal as 
operative upon filing.\16\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

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-2020-091 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-2020-091. 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

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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-2020-091 
and should be submitted on or before November 4, 2020.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22713 Filed 10-13-20; 8:45 am]
BILLING CODE 8011-01-P


