[Federal Register Volume 78, Number 36 (Friday, February 22, 2013)]
[Notices]
[Pages 12374-12376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-04014]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68933; File No. SR-CBOE-2013-020]
Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Renew an Existing Pilot Program for an
Additional Fourteen Months
February 14, 2013.
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 February 7, 2013, 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
[[Page 12375]]
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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to renew an existing pilot program for an
additional fourteen months. Under the existing pilot program, the
Exchange is permitted to list P.M.-settled options on broad-based
indexes that expire on: (a) any Friday of the month, other than the
third Friday-of-the-month (``End of Week Expirations'' or ``EOWs''),
and (b) the last trading day of the month (``End of Month Expirations''
or ``EOMs''). The text of the proposed rule change is provided below.
(additions are italicized; deletions are [bracketed])
* * * * *
Chicago Board Options Exchange, Incorporated Rules
* * * * *
Rule 24.9. Terms of Index Option Contracts
(a)-(d) No change.
(e) End of Week/End of Month Expirations Pilot Program (``EOW/EOM
Pilot Program'')
(1) End of Week (``EOW'') Expirations. The Exchange may open for
trading EOWs on any broad-based index eligible for regular options
trading to expire on any Friday of the month, other than the third
Friday-of-the-month. EOWs shall be subject to all provisions of this
Rule and treated the same as options on the same underlying index that
expire on the Saturday following the third Friday of the month;
provided, however, that EOWs shall be P.M.-settled.
(2) End of Month (``EOM'') Expirations. The Exchange may open for
trading EOMs on any broad-based index eligible for regular options
trading to expire on last trading day of the month. EOMs shall be
subject to all provisions of this Rule and treated the same as options
on the same underlying index that expire on the Saturday following the
third Friday of the month; provided, however, that EOMs shall be P.M.-
settled.
(3) Duration of EOW/EOM Pilot Program. The EOW/EOM Pilot Program
shall be through [February 14, 2013] April 14, 2014.
(4) EOW/EOM Trading Hours on the Last Trading Day. On the last
trading day, transactions in expiring EOWs and EOMs may be effected on
the Exchange between the hours of 8:30 a.m. (Chicago time) and 3:00
p.m. (Chicago time). This subsection (4) applies to all outstanding
expiring EOW and EOM Expirations listed on or before May 6, 2011 and
all EOWs and EOMs listed thereafter under the EOW/EOM Pilot Program.
* * * Interpretations and Policies:
.01-.13 No change
* * * * *
The text of the proposed rule change is also 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 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 Commission approved a CBOE 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.\3\ Under the terms of the End of Week/
End of Month Expirations Pilot Program (``Program''), EOWs and EOMs are
permitted on any broad-based index that is eligible for regular options
trading. EOWs 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 \4\ and was subsequently
extended.\5\ The Program is scheduled to expire on February 14, 2013.
The Exchange believes that the Program has been successful and well
received by its Trading Permit Holders and the investing public during
that [sic] the time that it has been in operation. The Exchange hereby
proposes to extend the Program for an additional fourteen months, so
that it will expire on April 14, 2014. This proposal does not request
any other changes to the Program.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 62911 (September 14,
2010), 75 FR 57539 (September 21, 2010) (order approving SR-CBOE-
2009-075).
\4\ Id.
\5\ See Securities Exchange Act Release No. 65741 (November 14,
2011), 76 FR 72016 (November 21, 2011) (immediately effective rule
change extending the Program through February 14, 2013).
---------------------------------------------------------------------------
Pursuant to the order approving the establishment of the Program,
two months prior to the conclusion of the pilot period, CBOE is
required to submit an annual report to the Commission, which addresses
the following areas: Analysis of Volume & Open Interest, Monthly
Analysis of EOW & 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. Confidential treatment under the Freedom of Information Act is
requested regarding the annual report.
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. The annual report will be provided to the
Commission on a confidential basis. 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.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section
[[Page 12376]]
6(b)(5) \7\ 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) \8\ requirement that the rules of an exchange not be designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
---------------------------------------------------------------------------
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 EOWs 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 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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
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 prior to
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 \11\ and Rule 19b-
4(f)(6)(iii) thereunder.\12\
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6)(iii). 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 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.
---------------------------------------------------------------------------
The Exchange has asked the Commission to waive the 30-day operative
delay.\13\ The Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest because it will allow the Program to continue uninterrupted.
Accordingly, the Commission designates the proposal operative upon
filing.\14\
---------------------------------------------------------------------------
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. 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 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-2013-020 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2013-020. 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 Exchange. 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-2013-020 and should be
submitted on or before March 15, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------
\15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-04014 Filed 2-21-13; 8:45 am]
BILLING CODE 8011-01-P