[Federal Register Volume 87, Number 216 (Wednesday, November 9, 2022)]
[Notices]
[Pages 67728-67731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24412]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96223; File No. SR-CBOE-2022-055]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Renew 
an Existing Pilot Program Until May 8, 2023

November 3, 2022.
    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 October 24, 2022, 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

[[Page 67729]]

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 8, 2023. The text of the 
proposed rule change is provided below. (additions are italicized; 
deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *

Rule 4.13. Series of Index Options

    (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 7, 
2022]May 8, 2023.
* * * * *
    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 September 14, 2010, the Securities and Exchange Commission (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\ On April 12, 2022, the Commission approved a Cboe Options 
proposal to expand the pilot program to allow P.M.-settled SPX options 
to also expire on Tuesday or Thursday.\8\ On September 15, 2022, the 
Commission approved a Cboe Options proposal to expand the pilot program 
to allow P.M.-settled XSP options to similarly expire on Tuesday or 
Thursday.\9\ 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 \10\ and was subsequently 
extended.\11\ Pursuant to Rule 4.13(e)(3), the Program is scheduled to 
expire on November 7, 2022. 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 8, 2023. 
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\ See Securities Exchange Act Release 94682 (April 12, 2022) 
(order approving SR-CBOE-2022-005).
    \9\ See Securities Exchange Act Release 95795 (September 21, 
2022) (order approving SR-CBOE-2022-039).
    \10\ See supra note 7.
    \11\ 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); 83165 
(May 3, 2018), 83 FR 21316 (May 9, 2018) (SR-CBOE-2018-038) 
(extending the Program through November 5, 2018); 84534 (November 5, 
2019), 83 FR 56119 (November 9, 2018) (SR-CBOE-2018-070) (extending 
the Program through May 6, 2019); 85650 (April 15, 2019), 84 FR 
16552 (April 19, 2019) (SR-CBOE-2019-022) (extending the Program 
through November 4, 2019); 87462 (November 5, 2019), 84 FR 61108 
(November 12, 2019) (SR-CBOE-2019-104) (extending the Program 
through May 4, 2020); 88673 (April 16, 2020), 85 FR 22507 (April 22, 
2020) (SR-CBOE-2020-035) (extending the Program through November 2, 
2020); 90262 (October 23, 2020) 85 FR 68616 (October 29, 2020) (SR-
CBOE-2020-101); 91697 (April 28, 2021), 86 FR 23775 (May 4, 2021) 
(SR-CBOE-2021-026) (extending the Program through November 1, 2021); 
93459 (October 28, 2021), 86 FR 60663 (November 3, 2021) (SR-CBOE-
2021-063) (extending the Program through May 2, 2022); and 94800 
(April 27, 2022) 87 FR 26248 (May 3, 2022) (SR-CBOE-2022-021 
(extending the Program through November 7, 2022).
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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; Provisional 
Analysis of Index Price Volatility; and, for SPX and XSP options 
specifically, certain market quality data.\12\ 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 all data and 
analyses previously submitted to the Commission under the Program,\13\ 
and will make public any data and analyses it makes to the

[[Page 67730]]

Commission under the Program in the future.
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    \12\ The SPX and XSP options market quality data includes time-
weighted relative quoted spreads, relative effective spreads and 
time-weighted bid and offer sizes, over sample periods determined by 
the Exchange and the Commission.
    \13\ Available at https://www.cboe.com/aboutcboe/legal-regulatory/national-market-system-plans/non-standard-expiration-data.
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    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 next bi-
annual expiration date of the Program.\14\ The Exchange will also make 
this report public. Any positions established under the Program will 
not be impacted by the expiration of the Program.
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    \14\ The Exchange notes that from the Program's implementation 
in 2010 through 2014, the Program ran on a 14-month basis, and, in 
2014, the Program was extended to run on a bi-annual pilot basis. 
See Securities Exchange Act Release No. 71836 (April 1, 2014), 79 FR 
19139 (April 7, 2014) (SR-CBOE-2014-027). The Program continues to 
run on a bi-annual basis today.
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    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.\15\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \16\ 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) \17\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
    \17\ 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 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 \18\ and Rule 19b-
4(f)(6) thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 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 under Rule 19b-4(f)(6) \20\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \21\ 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. The Exchange states that 
waiver of the 30-day operative delay will allow it to extend the 
Program prior to its expiration on November 7, 2022, 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 
Program. Accordingly, the Commission hereby waives the 30-day operative 
delay and designates the proposed rule change as operative upon 
filing.\22\
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    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
    \22\ 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 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

[[Page 67731]]

     Send an email to [email protected]. Please include 
File Number SR-CBOE-2022-055 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-2022-055. 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-2022-055 and should be submitted on 
or before November 30, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12), (59).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-24412 Filed 11-8-22; 8:45 am]
BILLING CODE 8011-01-P


