[Federal Register Volume 80, Number 242 (Thursday, December 17, 2015)]
[Notices]
[Pages 78799-78800]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31678]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76632; File No. SR-CBOE-2015-104]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Order Granting Accelerated Approval of a Proposed Rule
Change To Trade Expiring MSCI EAFE Index Options Until 3:00 p.m.
December 11, 2015.
I. Introduction
On November 13, 2015, the Chicago Board Options Exchange,
Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities
and Exchange Commission (the ``Commission''), pursuant to Section
19(b)(1) of the Securities Exchange Act of 1934 (the ``Act'') \1\ and
Rule 19b-4 thereunder,\2\ a proposed rule change to change the trading
hours for expiring MSCI EAFE Index (``EAFE'') options. This proposal
was published for comment in the Federal Register on November 25,
2015.\3\ The Commission received no comments regarding the proposal.
This order approves the proposed rule change on an accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 76482 (November 19,
2015), 80 FR 73839 (``Notice'').
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II. Description of the Proposed Rule Change
The Exchange proposes to change the trading hours for expiring EAFE
options from 10:00 a.m. (Chicago time) on their expiration date to 3:00
p.m. (Chicago time) on their expiration date. When the Exchange first
listed EAFE options, the MSCI EAFE Index was not calculated and
disseminated during the entire time period during which EAFE options
were traded on the Exchange. Accordingly, the Exchange set the initial
trading hours for expiring EAFE options to align with expiring EAFE
futures contracts traded on the Intercontinental Exchange, Inc.
(``ICE''), which stopped trading at 10:00 a.m. (Chicago time) on the
third Friday of the futures contracts month.\4\
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\4\ See Notice, supra note 3, at 73840. The Exchange established
listing criteria that permits the trading of EAFE options ``after
trading in all component securities has closed for the day and the
index level is no longer widely disseminated at least once every
fifteen (15) seconds by one or more major market data vendors,
provided that EAFE futures contracts are trading and prices for
those contract may be used as a proxy for the current index value.''
See CBOE Rule 24.2.01(a)(8).
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The MSCI EAFE Index, however, will now be calculated and
disseminated through the close of trading on U.S.
[[Page 78800]]
markets at 3:00 p.m. (Chicago time). As such, the Exchange understands
that ICE is changing the trading hours for expiring EAFE futures
contracts listed on ICE from 10:00 a.m. (Chicago time) to 3:15 p.m.
(Chicago time).\5\ Because the MSCI EAFE Index will now be calculated
and disseminated through the close of trading on U.S. markets (until
3:00 p.m. (Chicago time)) and because ICE is also changing the trading
hours for expiring EAFE futures (to close at 3:15 p.m. (Chicago time)),
the Exchange proposes to change the closing time for trading in
expiring EAFE options from 10:00 a.m. (Chicago time) to 3:00 p.m.
(Chicago time) on their expiration date.
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\5\ See Notice, supra note 3, at 73840.
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The Exchange proposes to close trading at 3:00 p.m. (Chicago
time)--rather than at 3:15 p.m. (Chicago time), the time ICE ceases
trading for expiring EAFE futures contracts--because, according to the
Exchange, on the last day of trading, the closing prices of the
component stocks, which are used to derive the exercise settlement
value of the EAFE options, are known at 3:00 p.m. (Chicago time) (or
shortly thereafter).\6\ The Exchange further notes that this proposed
rule change is consistent with the closing times for other expiring
P.M.-settled contracts that underlie indexes that close when the U.S.
equity markets close at 3:00 p.m. (Chicago time).\7\
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\6\ Id.
\7\ Id.
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The Exchange proposes to change the trading hours for expiring EAFE
options beginning with the December 2015 expiration, which occurs on
December 18, 2015. The Exchange is proposing to have this change apply
to all EAFE options listed on or before the effective date of this
filing and all EAFE options listed afterward.
III. Discussion and Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\8\
In particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\9\ which requires, among
other things, that the rules of a national securities exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, 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.
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\8\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\9\ 15 U.S.C. 78f(b)(5).
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The Commission believes that it is consistent with the Act for the
Exchange to change the trading hours for expiring EAFE options from a
close of 10:00 a.m. (Chicago time) to 3:00 p.m. (Chicago time), because
the MSCI EAFE Index will now be calculated and disseminated through the
close of trading at 3:00 p.m. (Chicago time) and thus the current index
value should be widely available to market participants throughout the
entire trading day. Further, the proposed rule change will allow the
trading hours of EAFE options to continue to closely align with the
trading hours of expiring EAFE futures contracts, which the Commission
believes will afford investors and market participants the ability to
continue to hedge across markets. The Commission also notes that the
trading hours are consistent with the closing times of other P.M.-
settled contracts listed on the Exchange that underlie indexes that
close when the U.S. equity markets close at 3:00 p.m. (Chicago
time).\10\
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\10\ See CBOE Rules 24.6.01, 24.6.03, 24.6.04 and 24.9(e).
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In addition, the Commission finds good cause, pursuant to Section
19(b)(2) of the Act,\11\ for approving the proposed rule change prior
to the 45th day after publication of notice in the Federal Register.
The proposed rule change to modify the trading hours of EAFE options
was published for a 15-day comment period to ensure that the public had
an opportunity to review the proposal and no comments were received.
The proposed rule change will increase the trading hours during which
EAFE options may be traded, which the Commission believes should
broaden the trading and hedging opportunities for investors. Further,
the Commission notes that the Exchange represents that the change to
the trading hours for EAFE futures will be implemented with the
December 2015 expiration. Accordingly, the Commission believes that
accelerated approval will maintain consistency in the trading hours of
EAFE options and EAFE futures contracts, which should enable cross-
market competition and facilitate hedging opportunities. For these
reasons, the Commission finds that good cause exists for approving the
proposed rule change on an accelerated basis.
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\11\ 15 U.S.C. 78s(b)(2).
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\12\ that the proposed rule change (File No. SR-CBOE-2015-104) be,
and hereby is, approved on an accelerated basis.
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\12\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31678 Filed 12-16-15; 8:45 am]
BILLING CODE 8011-01-P