[Federal Register Volume 79, Number 244 (Friday, December 19, 2014)]
[Notices]
[Pages 75850-75852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29699]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73837; File No. SR-CBOE-2014-091]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change to Extend the Credit Option Margin Pilot Program
Through January 15, 2016
December 15, 2014.
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 December 2, 2014, 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, 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.
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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 proposes to amend Rule 12.3 by extending the Credit Option
Margin Pilot Program through January 15, 2016.
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'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
[[Page 75851]]
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 February 2, 2011, the Commission approved the Exchange's
proposal to establish a Credit Option Margin Pilot Program
(``Program'').\5\ The proposal became effective on a pilot basis to run
on a parallel track with Financial Industry Regulatory Authority
(``FINRA'') Rule 4240 that similarly operates on an interim pilot
basis.\6\
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\5\ See Securities Exchange Act Release No. 63819 (February 2,
2011), 76 FR 6838 (February 8, 2011) order approving (SR-CBOE-2010-
106). To implement the Program, the Exchange amended Rule 12.3(l),
Margin Requirements, to make CBOE's margin requirements for Credit
Options consistent with Financial Industry Regulatory Authority
(``FINRA'') Rule 4240, Margin Requirements for Credit Default Swaps.
CBOE's Credit Options (i.e., Credit Default Options and Credit
Default Basket Options) are analogous to credit default swaps.
\6\ See Securities Exchange Act Release No. 59955 (May 22,
2009), 74 FR 25586 (May 28, 2009) (Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change; SR-FINRA-
2009-012).
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On January 17, 2012, the Exchange filed a rule change to, among
other things, decouple the Program with the FINRA program and to extend
the expiration date of the Program to January 17, 2013.\7\ The Program,
however, continues to be substantially similar to the provisions of the
FINRA program. Subsequently, the Exchange filed rule changes to extend
the program until January 17, 2014 and January 16, 2015,
respectively.\8\ The Exchange believes that extending the expiration
date of the Program further will allow for further analysis of the
Program and a determination of how the Program should be structured in
the future. Thus, the Exchange is now currently proposing to extend the
duration of the Program for an additional year until January 15, 2016.
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\7\ See Securities and Exchange Act Release Nos. 66163 (January
17, 2012), 77 FR 3318 (January 23, 2012) (SR-CBOE-2012-007) and
71124 (December 18, 2013), 78 FR 77754 (December 24, 2013) (SR-CBOE-
2013-123).
\8\ See Securities and Exchange Act Release No. 68539 (December
27, 2012), 78 FR 138 (January 2, 2013) (SR-CBOE-2013-125).
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The Exchange notes that there are currently Credit Options listed
for trading on the Exchange that have open interest. As a result, the
Exchange believes that is in the public interest for the Program to
continue uninterrupted. In the future, if the Exchange proposes an
additional extension of the Credit Option Margin Pilot Program or
proposes to make the Program permanent, then the Exchange will submit a
filing proposing such amendments to the Program.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\9\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \10\ 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) \11\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ Id.
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In particular, the Exchange believes that the proposed rule change
will further the purposes of the Act because, consistent with the goals
of the Commission at the initial adoption of the Program, the margin
requirements set forth by the proposed rule change will help to
stabilize the financial markets. In addition, the proposed rule change
is substantially similar to existing FINRA Rule 4240.
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
Because the foregoing proposed rule change does not:
A. Significantly affect the protection of investors or the public
interest;
B. impose any significant burden on competition; and
C. 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) \13\ thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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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 will 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 [email protected]. Please include
File Number SR-CBOE-2014-091 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-2014-091. This file
number should be included on the subject line if email is used. To help
the Commission process and review your
[[Page 75852]]
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
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; 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-2014-091 and should be submitted on or before
January 9, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29699 Filed 12-18-14; 8:45 am]
BILLING CODE 8011-01-P