Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices 5069 

76 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The Clearing Member documents consist of 

contracts and forms, that in conjunction with OCC’s 

By-Laws and Rules, establish and govern the 

relationship between OCC and each Clearing 

Member. See Exchange Act Release No. 73577 (Nov. 

12, 2014), 79 FR 68733 (Nov. 18, 2014) (File No. 

SR–OCC–2014–20). 

4 17 CFR 240.15c6–1(a). 

5 Id. 

6OCC’s By-Laws and Rules can be found on 

OCC’s public website, available https://

www.theocc.com/Company-Information/ 

Documents-and-Archives/By-Laws-and-Rules. 

7Exchange Act Release No. 96930 (Feb. 15, 2023), 

88 FR 13872 (Mar. 6, 2023) (‘‘T+1 Adopting 

Release’’). 

8 Id. 

9Exchange Act Release No. 33023 (Oct. 6, 1993), 

58 FR 52891 (Oct. 13, 1993) (final rule adopting 

Rule 15c6–1); Exchange Act Release No. 34952 

(Nov. 9, 1994), 59 FR 59137 (changing the effective 

date of the final rule from June 1, 1995 to June 7, 

1995). 

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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

OCC–2024–001 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Vanessa Countryman, Secretary, 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 

20549–1090. 

All submissions should refer to file 

number SR–OCC–2024–001. 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 (https://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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of OCC 

and on OCC’s website at https://

www.theocc.com/CompanyInformation/Documents-and-Archives/ 

By-Laws-and-Rules. 

Do not include personal identifiable 

information in submissions; you should 

submit only information that you wish 

to make available publicly. We may 

redact in part or withhold entirely from 

publication submitted material that is 

obscene or subject to copyright 

protection. 

All submissions should refer to file 

number SR–OCC–2024–001 and should 

be submitted on or before February 15, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.76

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–01386 Filed 1–24–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99392; File No. SR–OCC– 

2024–002] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing of Proposed Rule Change 

Concerning Amendments to The 

Options Clearing Corporation’s Rules, 

By-Laws, and Certain Clearing Member 

Documents 

January 19, 2024. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule 

19b–4 thereunder,2 notice is hereby 

given that on January 10, 2024, The 

Options Clearing Corporation (‘‘OCC’’ or 

‘‘Corporation’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared primarily by OCC. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

This proposed rule change would 

amend the OCC Rules, By-Laws, certain 

Clearing Member documents 3 in 

connection with the recent amendments 

adopted by the Commission to Rule 

15c6–1(a) 4 under the Exchange Act. The 

amendments to Rule 15c6–1(a) 5 shorten 

the standard settlement cycle for most 

broker-dealer securities transactions 

from two business days after the trade 

date to one business day after the trade 

date. 

The proposed changes are included in 

Exhibits 5A through 5F to File No. SR– 

OCC–2024–002. Material proposed to be 

added as currently in effect is 

underlined and material proposed to be 

deleted is marked in strikethrough text. 

All capitalized terms not defined herein 

have the same meaning as set forth in 

the OCC By-Laws and Rules.6

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, 

OCC 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. OCC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

(1) Purpose 

The proposed rule change consists of 

modifications to OCC Rules, By-Laws, 

and certain Clearing Member documents 

in connection with the recently adopted 

amendments to Commission Rule 15c6– 

1(a) to shorten the standard settlement 

cycle for most broker-dealer securities 

transactions from two business days 

after the trade date (‘‘T+2’’) to one 

business day after the trade date 

(‘‘T+1’’).7 Specifically, OCC proposes to 

(i) revise provisions connected to late 

exercise that are impacted by a 

shortened settlement cycle, (ii) change 

timeframes related to the standard 

settlement cycle to reflect T+1, and (iii) 

make certain other conforming and 

clarifying changes. The compliance date 

regarding the amendments to Rule 

15c6–1(a) is May 28, 2024.8

Background 

Rule 15c6–1 establishes a standard 

settlement cycle for most purchases or 

sales of securities by broker-dealers. The 

Commission adopted Rule 15c6–1(a) in 

1993 to establish T+3 as the standard 

trade settlement cycle (instead of five 

business days after the trade date), and 

it became effective in June 1995.9 In 


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10Exchange Act Release No. 35552 (Mar. 30, 

1995), 60 FR 17600 (Apr. 6, 1995) (SR–OCC–94–11). 

11Exchange Act Release No. 80295 (Mar. 22, 

2017), 82 FR 15564 (Mar. 29, 2017). 

12Exchange Act Release No. 81008 (June 23, 

2017), 82 FR 29598 (June 29, 2017) (SR–OCC–2017– 

015) (filed for immediate effectiveness on June 9, 

2017). 

13See DTCC, ‘‘Advancing Together: Leading the 

Industry to Accelerated Settlement’’ (Feb. 2021), 

available at https://www.dtcc.com/-/media/Files/ 

PDFs/White%20Paper/DTCC-Accelerated-SettleWP-2021.pdf. 

14Exchange Act Release No. 94196 (Feb. 9, 2022), 

87 FR 10436 (Feb. 24, 2022) (‘‘T+1 Proposing 

Release’’). 

15 Id. 

16See Deloitte, DTCC, Investment Company 

Institute (‘‘ICI’’), and Securities Industry and 

Financial Markets Association (‘‘SIFMA’’), 

‘‘Accelerating the U.S. Securities Settlement Cycle 

to T+1’’ (Dec. 1, 2021), available at https://

www.sifma.org/wp-content/uploads/2021/12/ 

Accelerating-the-U.S.-Securities-Settlement-Cycleto-T1-December-1-2021.pdf. 

17T+1 Proposing Release, supra note 14; see also 

Commission Press Release 2022–21: ‘‘SEC Issues 

Proposal to Reduce Risks in Clearance and 

Settlement’’ (Feb. 9, 2022). 

18T+1 Adopting Release, supra note 7. 

19The current deadline for submitting exercise 

notices other than at expiration is 6:00 p.m. CT. The 

current deadline for submitting exercise notices at 

expiration is 8:00 p.m. CT on monthly standard 

Friday expirations, 7:00 p.m. CT on weekly Friday 

expirations, and 6:30 p.m. CT on Monday and 

Wednesday expirations. 

20Under Rule 801, the deadline for submitting 

late exercise notices is 6:00 a.m. CT. Under Rule 

805, the deadline for submitting late exercise 

notices is the expiration time of the option, which 

is currently 10:59 p.m. CT (as set forth in Article 

1, Section 1(E)(23) of the By-Laws). 

21OCC maintains a link with NSCC to facilitate 

the settlement of physically settled stock options 

and stock futures. More specifically, OCC and 

NSCC are parties to a Stock Options and Futures 

Settlement Agreement that specifies the time at 

which responsibility for the settlement of such 

obligations passes from OCC to NSCC (the 

‘‘Accord’’). See Exchange Act Release No. 81266 

(July 31, 2017), 82 FR 36484 (Aug. 4, 2017) (File 

No. SR–OCC–2017–013). 

March 1995, the Commission approved 

changes to OCC’s Rules that were 

proposed to ensure consistency with the 

new T+3 standard settlement cycle.10 In 

2017, the Commission amended Rule 

15c6–1(a) to shorten the standard 

settlement cycle from T+3 to T+2.11 In 

coordination with the Commission’s 

designated September 2017 compliance 

date, OCC adopted changes to its Rules 

and By-Laws to ensure consistency with 

the new T+2 standard settlement 

cycle.12

Since the change to T+2, the 

Commission and the financial services 

industry have continued to explore the 

idea of shortening the settlement cycle 

even further. In February 2021, the 

Depository Trust and Clearing 

Corporation (‘‘DTCC’’) published a 

White Paper discussing the benefits of 

accelerated settlement beyond T+2.13

Following the publication, the securities 

industry formed an Industry Steering 

Committee (‘‘ISC’’) and an Industry 

Working Group (‘‘IWG’’) to develop 

industry consensus to transition to an 

accelerated settlement cycle.14 The ISC 

engaged Deloitte & Touche LLP 

(‘‘Deloitte’’) to support the effort, 

including facilitating analysis on the 

benefits and barriers to transitioning to 

T+1 and coordinating with the industry 

on the transition.15 In December 2021, 

DTCC, SIFMA, and ICI, together with 

Deloitte, published a report containing 

the ISC’s recommendations for 

migrating to a T+1 standard settlement 

cycle.16

On February 9, 2022, the Commission 

proposed amendments to Rule 15c6– 

1(a) to shorten the standard settlement 

cycle to T+1 on the basis that the shorter 

settlement cycle would reduce the 

credit, market and liquidity risks in 

securities transactions faced by market 

participants and U.S. investors.17 On 

February 15, 2023, the Commission 

adopted these amendments to Rule 

15c6–1(a).18 In light of this action by the 

Commission, OCC proposes to 

implement the changes described herein 

in connection with the T+1 settlement 

cycle on the Commission’s designated 

T+1 compliance date. 

Proposed Changes 

OCC proposes certain amendments in 

light of the anticipated industry move to 

a T+1 settlement cycle. OCC has 

determined that shortening the 

settlement cycle to T+1 would require 

revisions to OCC Rules, By-Laws, and 

Clearing Member documents, which are 

currently aligned with a T+2 settlement 

cycle. Specifically, OCC proposes to (i) 

revise provisions connected to late 

exercise that are impacted by a 

shortened settlement cycle, (ii) change 

timeframes related to the standard 

settlement cycle to reflect T+1, and (iii) 

make certain other conforming and 

clarifying changes. 

(i) Provisions Connected to Late 

Exercise 

OCC proposes to amend provisions in 

Chapter VIII of the Rules that are 

affected by a shortened settlement cycle. 

Rules 801 and 805 require Clearing 

Members to submit exercise notices 

within the timeframes prescribed by 

OCC.19 These Rules currently set out an 

exception process to accommodate 

notices submitted after these 

timeframes. OCC’s late exercise process 

provides final deadlines by which late 

exercise notices must be received by 

OCC and subjects Clearing Members to 

potential disciplinary action (as the 

filing of such notice may be deemed a 

violation) and liability for a late filing 

fee, among other things.20 More 

specifically, subject to certain 

conditions, Rule 801, which addresses 

the exercise of options other than at 

expiration, allows a Clearing Member to 

file an exercise notice after the 

prescribed deadline solely for the 

purpose of correcting a bona fide error 

on the part of the Clearing Member or 

a customer and imposes liability for a 

late filing fee of $250,000 per line item 

listed on the notice. Similarly, OCC 

Rule 805, which addresses exercises on 

expiration, imposes liability for a late 

filing fee of $250,000 per line item on 

a Clearing Member that submits an 

exercise notice after the prescribed 

deadline. 

OCC proposes to cease facilitating the 

late exercise process after the move to 

T+1. OCC reviewed its internal 

operational processes to assess the 

implications of the shortened settlement 

cycle on late exercises. Currently, when 

a late exercise is processed, OCC sends 

the delivery information to the National 

Securities Clearing Corporation 

(‘‘NSCC’’) for T+1 settlement.21

Reducing the standard settlement time 

to T+1 would reduce the time available 

to OCC and NSCC to transmit 

information and perform operational 

and risk management steps associated 

with their arrangement. Specifically, 

moving to T+1 would require settlement 

activity from a late exercise to be sent 

to NSCC for same-day settlement, which 

is not supported by the Accord. Late 

exercise activity would thus not be 

guaranteed by NSCC, resulting in 

various implications, as the link 

between OCC and NSCC allows 

common clearing members, and their 

customers, to realize financial and 

operational efficiencies through the 

combined settlement of obligations from 

their OCC and NSCC cleared positions. 

OCC proposes to no longer 

accommodate late exercises due to 

operational challenges for same-day 

settlement and limitations under the 

Accord. Even if OCC were to find 

another operational mechanism outside 

of NSCC to process the settlement of a 

late exercise submission in a T+1 

environment, any such processing 

would negate the settlement certainty 

for all market participants that the 

Commission seeks to achieve in its T+1 

proposal. 

OCC does not believe that such 

changes represent a significant 

departure from its current practices or 

the practices of other self-regulatory 

organizations. As described above, 

OCC’s Rules allow OCC to prescribe 

timeframes during which Clearing 


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22See e.g., FINRA Rule 2360(b)(23)(A)(iii); 

Nasdaq Options 6B, Section 1(c); NYSE Arca Rule 

6.24–O(c). 

23See Exchange Act Release No. 88310 (Mar. 2, 

2020), 85 FR 13198 (Mar. 6, 2020) (File No. SR– 

OCC–2020–001) (noting that the late exercise fee is 

intended to encourage Clearing Members to be 

diligent in processing exercise notices and to 

improve back office procedures). 

24For the avoidance of doubt, Clearing Members 

may still correct errors following the proposed 

changes but must make any corrections prior to 

daily processing deadlines. OCC discussed the 

cessation of late exercises following T+1 with the 

Operations Roundtable, which solicits feedback 

from interested stakeholders such as Clearing 

Members. No substantive opposing views were 

raised in these discussions. See confidential Exhibit 

3A to File no. SR–OCC–2024–002 for supporting 

data and analysis, including materials from 

Operations Roundtable meetings and information 

on past instances of late exercises. 

25Article I, Section 1.C.(32) of OCC’s By-Laws 

defines the term ‘‘correspondent clearing 

corporation’’ to mean National Securities Clearing 

Corporation (‘‘NSCC’’) or any successor thereto 

which, ‘‘by agreement with [OCC], provides 

facilities for settlements in respect of exercised 

option contracts or BOUNDs or in respect of 

delivery obligations arising from physically-settled 

stock futures.’’ The Accord is the current agreement 

that governs NSCC settlement of OCC related 

activity. 

26CDS is Canada’s national securities depository, 

which, among other things, facilitates the 

settlement of cross-border transactions with the 

U.S. and has relationships with NSCC and The 

Depository Trust Company (‘‘DTC’’). 

Members may submit exercise notices. 

Following the proposed changes, OCC 

would continue to maintain deadlines 

for receiving exercise notices. The 

Financial Industry Regulatory Authority 

(‘‘FINRA’’) and the options exchanges 

have similarly established a cut-off time 

for receiving exercise notices.22

Moreover, the late exercise process at 

OCC is intended to be used in 

extenuating circumstances and is not 

routinely performed. The filing of a late 

exercise notice may be deemed a 

violation subject to disciplinary action 

under Rules 801 and 805. Most recently, 

in 2020, OCC raised the late filing fee 

from $75,000 to $250,000 per line item 

to further disincentivize late exercises.23

For these reasons, OCC would cease 

accepting late exercise notices and 

proposes to amend the following 

provisions in connection with such 

change. 

OCC proposes to revise Rule 801, 

which addresses the exercise of options 

other than at expiration. OCC propose to 

remove language in paragraph (a) that 

requires a Clearing Member to prepare 

and preserve a memorandum describing 

the error that gave rise to a late filing. 

OCC also proposes to remove paragraph 

(d) that grants certain individuals the 

discretion to permit a Clearing Member 

to file a late exercise notice to correct a 

bona fide error, subject to certain 

conditions, including liability for a late 

filing fee, a final deadline for 

submission, and potential disciplinary 

action.24 OCC accordingly proposes to 

remove a reference to paragraph (d) in 

Rule 801, Interpretation and Policy .02. 

OCC propose similar changes to Rule 

805, which addresses exercises on 

expiration. OCC proposes to remove the 

language in paragraph (c) and related 

language in paragraph (e) that allows 

Clearing Members to file late exercise 

notices subject to a final deadline for 

submission. OCC would replace the text 

in paragraph (c) with the term 

‘‘Reserved.’’ OCC proposes to remove 

paragraphs (g), (h), and (i) that set out 

various terms and conditions governing 

the submission of late exercise notices, 

including liability for a late filing fee 

and potential disciplinary action for the 

Clearing Member. OCC would eliminate 

and update references to the provisions 

in Rule 805 (including the Interpretation 

and Policy) and make conforming 

changes throughout the Rules, including 

in Rules 1305, 1401, and 2702. 

(ii) Timeframes Related to the Standard 

Settlement Cycle 

OCC proposes changes to timeframes 

in its Rules, By-Laws, and Clearing 

Member documents that are related to 

the current T+2 standard settlement 

cycle. The following provisions would 

need to be updated to facilitate the 

move to T+1 and are discussed in more 

detail below: 

• OCC Rule 901 (Settlement Through 

Correspondent Clearing 

Corporations); 25

• OCC Rule 903 (Obligation to 

Deliver); 

• OCC Rule 1302 (Delivery of 

Underlying Securities); 

• OCC Rule 1302B (Delivery of 

Underlying Treasury Securities); 

• OCC Rule 1503 (Exercise Settlement 

Date for Event Options and Range 

Options); 

• OCC Rule 2201 (Instructions to the 

Corporation); 

• OCC Rule 2208 (Settlement Date); 

• Article XXI of OCC’s By-Laws 

(Stock Loan/Hedge Program); 

• OCC Rule 2209A (Termination of 

Market Loans); and 

• OCC Rule 2502 (Settlement Date for 

BOUNDs). 

OCC proposes to amend certain of its 

Rules that govern the settlement of 

physically-settled options and futures 

through NSCC. Rule 901 requires that 

certain obligations be settled through 

the facilities of NSCC. Consistent with 

the new standard settlement cycle, OCC 

proposes to amend paragraph (c) of Rule 

901 to remove a parenthetical indicating 

that ‘‘regular way’’ settlement under 

NSCC’s rules and procedures does not 

occur on T+1. Further, paragraph (d) 

permits OCC to revoke a specification in 

any delivery advice that settlement be 

made through the facilities of NSCC at 

any time prior to the obligation time. In 

such event, Rule 901(d) allows specified 

OCC senior officers to extend or 

postpone the time for delivery to no 

more than two business days after the 

date of such revocation. To be 

consistent with the T+1 settlement 

cycle, OCC proposes to change the 

amount of time that OCC has to extend 

or postpone the time of delivery to one 

business day. 

OCC proposes related changes to 

conform language with the T+1 

settlement cycle in Rule 901(f) and (g) 

and in certain associated Clearing 

Member documents. Rule 901(f) permits 

a Clearing Member (the ‘‘Appointing 

Clearing Member’’) that is not an NSCC 

member to appoint another Clearing 

Member that is an NSCC member (the 

‘‘Appointed Clearing Member’’) to act 

on its behalf with respect to the 

settlement of exercised or matured 

cleared securities in its accounts 

through NSCC. OCC maintains a related 

Clearing Member document (the 

‘‘Appointment of Clearing Member 

Form’’ or an ‘‘appointment form’’) that 

permits the Appointed Clearing Member 

to act on behalf of the Appointing 

Clearing Member for this purpose. Rule 

901(g) permits a Canadian Clearing 

Member, on behalf of which CDS 

Clearing and Depository Services Inc. 

(‘‘CDS’’) 26 maintains a subaccount at 

NSCC, to appoint CDS to act on its 

behalf with respect to the settlement of 

exercised or matured cleared securities 

in its accounts through NSCC. OCC also 

maintains a related Clearing Member 

document (the ‘‘Appointment of CDS— 

Stock Settlement Form’’ or an 

‘‘appointment form’’) that permits CDS 

to act on behalf of the Canadian Clearing 

Member for this purpose. Such 

appointments currently become 

effective as of the second business day 

following the day on which OCC 

receives written notice, or such later 

date as may be specified. Under the 

proposed rule change, OCC would 

replace the ‘‘second’’ business day with 

the ‘‘first’’ business day in Rule 901(f) 

and (g) and in the appointment forms. 

Rule 903 governs a Clearing Member’s 

obligation to deliver when either a 

delivery advice or OCC directs that 

settlement be made on a broker-tobroker basis. Under Rule 903, the 

delivery date for physically-settled 

options is the second business day 

following the day on which the exercise 

notice was, or is deemed to have been, 

properly tendered to OCC, and the 


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27FICC provides central counterparty services to 

firms that participate in the U.S. Government and 

mortgage-backed securities markets. 

28 Information on the Stock Loan/Hedge Program 

and Market Loan Program can be found on OCC’s 

public website, available at https://

www.theocc.com/clearance-and-settlement/stockloan-programs. 

29Article I, Section 1.L.(5) of OCC’s By-Laws 

defines ‘‘Loan Market’’ as an electronic platform 

included in OCC’s Market Loan Program that 

supports securities lending and borrowing 

transactions by matching lenders and borrowers 

based on loan terms that each party is willing to 

accept. 

30Member specific deposits are equity securities 

deposited by clearing members at DTC at the 

direction of their customers; third-party specific 

deposits are equity securities deposited by 

custodian banks at DTC at the direction of their 

customers; and escrow deposits can consist of cash 

deposits held at a custodian bank for the benefit of 

OCC, in addition to equities, and U.S. Government 

securities pledged to OCC through DTC by escrow 

deposit banks at the direction of their customers. 

delivery date for physically settled 

security futures is generally the second 

business day following the maturity 

date. OCC proposes to replace 

references to the ‘‘second’’ business day 

with the ‘‘first’’ business day. 

In Chapter XIII regarding futures, 

futures options and commodity options, 

OCC proposes to revise Rule 1302 

concerning the delivery of underlying 

securities and Rule 1302B concerning 

the delivery of underlying Treasury 

securities. With certain exceptions, Rule 

1302 currently provides that the 

delivery date for a physically-settled 

stock future is the second business day 

following the maturity date of the 

applicable series. Rule 1302B(a) 

currently provides that the delivery date 

for each physically-settled Treasury 

future in respect of which a delivery 

intent has been submitted (or deemed 

submitted) is the second business day 

following such submission (or deemed 

submission). OCC also maintains a 

related Clearing Member document (the 

‘‘Designation of Clearing Member’’ or a 

‘‘designation form’’) that permits, among 

other things, a Clearing Member to 

designate another Clearing Member for 

the purposes of effecting settlement of 

physically-settled treasury futures 

through the Fixed Income Clearing 

Corporation (‘‘FICC’’).27 OCC proposes 

to replace references to the ‘‘second’’ 

business day in Rules 1302 and 1302B 

and in the designation form with the 

‘‘first’’ business day. OCC also proposes 

corresponding changes to update 

references from the ‘‘second’’ business 

day to the ‘‘first’’ business day with 

respect to applicable deadlines specified 

in paragraphs (d), (e), and (j) of Rule 

1302B. 

OCC proposes similar changes to 

make language consistent with the T+1 

settlement cycle in Rule 1503. With 

certain exceptions, Rule 1503 currently 

provides that the exercise settlement 

date for a credit default option and 

credit default basket option is the 

second business day following the date 

on which the option is deemed to have 

been exercised. Under the proposed rule 

change, OCC would replace the 

‘‘second’’ business day with the ‘‘first’’ 

business day. 

OCC also proposes to amend 

provisions of its Rules and By-Laws 

concerning its two Stock Loan 

Programs. OCC operates two programs 

in which it acts as a central 

counterparty for stock loan transactions: 

the Stock Loan/Hedge Program and 

Market Loan Program.28 The Stock 

Loan/Hedge Program allows Clearing 

Members to use borrowed and loaned 

securities to reduce OCC margin 

requirements. The Market Loan Program 

is a program whereby OCC processes 

and maintains stock loan positions that 

have originated through a Loan 

Market.29

In respect of the Stock Loan/Hedge 

Program, Rule 2201(c) currently permits 

a Canadian Clearing Member on behalf 

of which CDS maintains a subaccount at 

DTC to appoint CDS to act on its behalf 

with respect to effecting delivery orders 

for stock loan and stock borrow 

transactions in its accounts through 

DTC. OCC also maintains a related 

Clearing Member document (the 

‘‘Appointment of CDS—Stock Loan 

Form’’ or an ‘‘appointment form’’) that 

permits CDS to act on behalf of the 

Canadian Clearing Member for this 

purpose. Such appointment currently 

becomes effective as of the second 

business day following the day on 

which OCC receives written notice, or 

such later date as may be specified. 

Under the proposed rule change, OCC 

would replace the ‘‘second’’ business 

day with the ‘‘first’’ business day in 

Rule 2201(c) and in the appointment 

form. 

In addition, with respect to the Stock 

Loan/Hedge Program, Rule 2208(a) 

currently provides that the settlement 

date for the termination of a stock loan 

will be the earlier of: (1) the date on 

which the borrowing Clearing Member 

initiates the termination or (2) the date 

that is two stock loan business days 

after the date on which the lending 

Clearing Member initiates the 

termination. OCC proposes to amend 

Rule 2208(a) to change ‘‘two stock loan 

business days’’ to ‘‘one stock loan 

business day.’’ 

OCC may terminate outstanding stock 

loans under certain conditions pursuant 

to Article XXI, Section 2(c) of OCC’s ByLaws with respect to the Stock Loan/ 

Hedge Program. If any stock loans are so 

terminated, OCC is required to provide 

written notice to the affected Clearing 

Members specifying the date on which 

such termination is to become effective, 

which will be at least two stock loan 

business days after the date of such 

notice. OCC proposes to make the 

effective date consistent with the new 

T+1 settlement cycle by changing the 

minimum number of days between 

notice and termination from two to one. 

Regarding the Market Loan Program, a 

market loan (i.e., a loan of eligible stock 

effected through a Loan Market) is 

terminated by the relevant Clearing 

Member providing a return or recall 

notice to the Loan Market with respect 

to a specified quantity of loaned stock 

under Rule 2209A. Rule 2209A(a)(3) 

discusses the scenario where a recall 

transaction fails to settle by the 

settlement time on the second stock 

loan business day following the day that 

the transaction was first submitted. OCC 

proposes to replace ‘‘second’’ stock loan 

business day with ‘‘first’’ stock loan 

business day. Under Rule 2209A(d), 

OCC may terminate outstanding market 

loans under certain conditions. If any 

market loans are so terminated, OCC is 

required to provide written notice to the 

affected Clearing Members specifying 

the date on which such termination is 

to become effective, which will be at 

least two stock loan business days after 

the date of such notice. OCC proposes 

to make the effective date consistent 

with the new T+1 settlement cycle by 

changing the minimum number of days 

between notice and termination from 

two to one. 

OCC proposes to amend Rule 2502 

concerning the settlement date for 

BOUNDs. Namely, OCC proposes to 

update the settlement date for a BOUND 

contract from the second business day 

following the expiration date to the first 

business day. 

(iii) Conforming and Clarifying Changes 

OCC proposes changes to Chapter VI 

of its Rules related to deposits in lieu of 

margin. In lieu of depositing margin, 

OCC permits a Clearing Member or an 

approved custodian to deposit eligible 

collateral in respect of certain option 

contracts included in a short position in 

accordance with OCC Rule 610. More 

specifically, OCC permits certain types 

of deposits in lieu of margin, including 

member specific deposits, third-party 

specific deposits, and escrow deposits, 

which are further described in Rules 

610A, 610B and 610C, respectively.30

With certain exceptions, OCC Rule 

610C(o) provides that any escrow 


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Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices 5073 

31The exceptions in OCC Rule 610C(o) include 

that (1) the Clearing Member’s obligations in respect 

of such short position have not been satisfied or (2) 

the deposit is subject to a ‘‘hold’’ instruction (i.e., 

an instruction requesting that OCC not release such 

deposit). 

32See Confidential Exhibit 3B to File no. SR– 

OCC–2024–002 containing the changes to the 

Operations Manual with material to be added in 

underlined text and material to be deleted in 

strikethrough text. 

33See T+1 Adopting Release, supra note 7. 

34Rule 610B(d)(2) provides that any third-party 

specific deposit will be released by OCC on its own 

initiative at a specified time on the business day 

following the exercise settlement date unless (1) the 

settlement obligations in respect of such short 

position have not been met, that NSCC has 

determined to suspend, decline or cease to act for 

the Clearing Member in respect of whose account 

such deposit was made, or, that NSCC has 

determined to prohibit or limit such Clearing 

Member’s access to services; (2) OCC has directed 

that the exercise be settled otherwise than through 

NSCC; or (3) the deposit is subject to a ‘‘hold’’ 

instruction. 

35Rule 610C(p) provides that such escrow deposit 

will be released by OCC on its own initiative at a 

specified time on the first business day following 

the expiration date unless (1) the Clearing Member 

carrying the short position is not in full compliance 

with its obligations to OCC or (2) the deposit is 

subject to a ‘‘hold’’ instruction. 

36The proposed text in Rule 610A(c)(2) would 

mirror the amended text in Rule 610B(d)(2) with 

minor changes to remove or replace provisions 

associated with third-party specific deposits with 

member specific deposits. 

37See T+1 Adopting Release, supra note 7. 

38Under Rule 1403, OCC requires every Treasury 

Securities Clearing Member to be a participant in 

the Government Securities Division (‘‘GSD’’) of 

FICC or designate a GSD participant as its 

representative to submit trade information into 

FICC’s real-time trade matching system. 

39 15 U.S.C. 78q–1(b)(3)(F). 

40 17 CFR 240.17Ad–22(e)(1). 

41 15 U.S.C. 78q–1(b)(3)(F). 

deposit in respect of a short position in 

stock put options will be released by 

OCC on its own initiative at a specified 

time on the fourth business day 

following the expiration date.31 OCC 

proposes to amend this outdated 

provision to state that such deposits will 

be released by OCC at a specified time 

following the expiration date. Reference 

to the specific business day would be 

removed from the Rules and, instead, 

would be centralized in and made 

available through the Operations 

Manual, along with other timeframes 

and deadlines specified by OCC.32 The 

Operations Manual would state that this 

release of collateral would occur on the 

next business day following the 

expiration date. Shortening the period 

for the automatic release of collateral to 

the next business day following the 

expiration date would be in line with 

the changes described above to shorten 

the current settlement cycle to T+1. 

OCC believes that such change would 

align with the goals of the T+1 Adopting 

Release to reduce central counterparty 

exposure to credit, market, and liquidity 

risk arising from its obligations to its 

participants, as there is no need for OCC 

to hold the collateral for an extended 

period of time.33

OCC proposes conforming changes 

throughout Chapter VI. OCC proposes to 

amend Rule 610B(d)(2) regarding thirdparty specific deposits 34 and Rule 

610C(p) regarding escrow deposits in 

respect of a short position in index 

options 35 to uniformly state that such 

deposits will be released by OCC at a 

specified time following the expiration 

date, which would be consistent with 

the language described above in 

amended Rule 610C(o). OCC also 

proposes language in new paragraph (2) 

of Rule 610A(c) to address the automatic 

release of any member specific deposits 

by OCC, which would largely align with 

the language in amended Rule 

610B(d)(2).36 This addition is intended 

to be clarifying in nature, as OCC 

currently releases member specific 

deposits in the same general manner as 

set out in Rule 610B(d)(2) for third-party 

specific deposits. Consistent with the 

change described above, automatic 

release would occur on the next 

business day following the expiration 

date for member specific, third-party 

specific and escrow deposits and would 

be set out in the Operations Manual. 

These changes are intended to ensure 

consistent language and practices to 

promote clarity for market participants. 

These changes are made in conjunction 

with the revisions to Rule 610C(o) and 

align with the goals of the T+1 Adopting 

Release to reduce central counterparty 

exposure to credit, market, and liquidity 

risk arising from its obligations to its 

participants, as there is no need for OCC 

to hold the collateral for an extended 

period of time.37

OCC further proposes revisions to 

Chapter XIV in relation to Treasury 

securities options. As U.S. Treasury 

securities commonly settle on a T+1 

basis, OCC proposes to update the 

exercise settlement date for Treasury 

securities options from the second 

business day following the expiration 

date to the first business day in Rule 

1402(a). Additionally, Clearing 

Members are required to notify OCC 

within a prescribed timeframe if a trade 

required to be completed pursuant to 

Rule 1403 has not been successfully 

matched at FICC.38 Under Rule 1404, if 

OCC receives timely notice of a failure 

to match a trade, the affected Clearing 

Members are required to attempt to 

resolve the failure such that settlement 

could occur through FICC by the 

specified deadline on the second 

business day following the expiration 

date. If the failure is not resolved by 

such deadline, the Clearing Members 

are required to notify OCC within a 

specified time on the second business 

day following the expiration date. OCC 

also proposes to update these references 

from the ‘‘second’’ business day to the 

‘‘first’’ business day in Rule 1404. 

Similar to the changes described above, 

these changes would promote 

consistency between OCC’s Rules and 

the settlement cycle for the relevant 

asset class. 

Implementation Timeframe 

As discussed above, OCC would 

implement the proposed rule change in 

coordination with the Commission’s 

compliance date for the amendments to 

Rule 15c6–1(a) and the transition to 

T+1. OCC would provide notice to 

Clearing Members of the 

implementation through an Information 

Memorandum posted to its public 

website at least two (2) weeks prior to 

implementation. 

(2) Statutory Basis 

For the following reasons, OCC 

believes that the proposed rule change 

is consistent with Section 17A(b)(3)(F) 

of the Act 39 and Rule 17Ad–22(e)(1) 40

thereunder. Section 17A(b)(3)(F) of the 

Act 41 requires, among other things, that 

the rules of a clearing agency be 

designed to promote the prompt and 

accurate clearance and settlement of 

securities transactions, to assure the 

safeguarding of securities and funds 

which are in the custody or control of 

the clearing agency or for which it is 

responsible, and, in general, to protect 

investors and the public interest. OCC 

believes the proposed rule change is 

consistent with these requirements 

because it would coordinate the terms of 

certain provisions in OCC’s Rules, ByLaws, and Clearing Member documents 

with the Commission’s amendments to 

Rule 15c6–1(a) to support a T+1 

standard settlement cycle. First, OCC 

proposes to remove provisions 

connected to late exercise that are 

impacted by a shortened settlement 

cycle. As discussed above, OCC would 

no longer accommodate late exercise 

notices due to operational challenges for 

same-day settlement and limitations 

under the Accord. In OCC’s view, this 

change does not represent a significant 

departure from OCC’s current practices 

or the practices of other self-regulatory 

organizations. OCC would continue to 

maintain timeframes during which 

Clearing Members may submit exercise 

notices following the amendments. The 

proposed change is intended to preserve 

the successful and timely completion of 

exercise and assignment processes, 


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5074 Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices 

42 Id. 

43 Id. 

44 Id. 

45 17 CFR 240.17Ad–22(e)(1). 

46 Id. 

47 15 U.S.C. 78q–1(b)(3)(I). 

which are important to the prompt and 

accurate settlement of securities 

transactions, following the transition to 

a T+1 settlement cycle. 

OCC believes that the proposed 

changes to amend timeframes related to 

the standard settlement cycle are also 

consistent with Section 17A(b)(3)(F) of 

the Act.42 Where a current OCC Rule, 

By-Law, or Clearing Member document 

is based upon or otherwise references 

the T+2 standard securities settlement 

cycle, the provision would be changed 

to support T+1. Harmonizing OCC’s 

Rules, By-Laws, and Clearing Member 

documents with the new T+1 standard 

settlement cycle would remove 

impediments to and support the prompt 

and accurate clearance and settlement of 

securities transactions by, for example, 

ensuring that provisions in these 

documents that are related to T+1 are 

consistent with the rules concerning the 

standard settlement cycle that are 

maintained by the exchanges for which 

OCC clears and settles transactions and 

the rules of clearing agencies that 

provide clearance and settlement 

services for securities transactions that 

underlie physically-settled stock option 

and stock future contracts cleared by 

OCC. OCC believes that conforming its 

Rules, By-Laws, and Clearing Member 

documents to the new T+1 standard 

settlement cycle would also protect 

investors and the public interest by 

ensuring that OCC provides clearance 

and settlement services in a manner that 

supports the Commission’s 

requirements for the T+1 standard 

settlement cycle. 

Additionally, OCC believes that the 

proposed conforming and clarifying 

changes to its Rules are consistent with 

Section 17A(b)(3)(F) of the Act.43

Automatic release would consistently 

occur on the next business day 

following the expiration date for 

member specific, third-party specific 

and escrow deposits and associated 

language would be set out in the 

Operations Manual, along with other 

timeframes and deadlines specified by 

OCC. As described above, the proposed 

changes would ensure consistent 

language and practices by OCC, 

including with respect to the settlement 

cycle for the relevant asset class and the 

automatic release of deposits, thereby 

promoting clarity and avoiding potential 

confusion for market participants, 

which would help support OCC’s 

prompt and accurate clearance and 

settlement of securities transactions. For 

these reasons, the proposed changes are 

reasonably designed to promote the 

prompt and accurate clearance and 

settlement of securities transactions, to 

assure the safeguarding of securities and 

funds in OCC’s custody or control, and, 

in general, to protect investors and the 

public interest in accordance with 

Section 17A(b)(3)(F) of the Act.44

OCC believes the proposed changes 

are also consistent with the 

requirements in Rule 17Ad–22(e)(1) 

under the Act.45 Rule 17Ad–22(e)(1) 

requires that each covered clearing 

agency establish, implement, maintain 

and enforce written policies and 

procedures reasonably designed to 

provide for a well-founded, clear, 

transparent, and enforceable legal basis 

for each aspect of its activities in all 

relevant jurisdictions.46 The changes are 

designed to modify OCC’s Rules, ByLaws, and Clearing Member documents 

that would otherwise become outdated 

upon the change to the T+1 standard 

settlement cycle, or present other 

operational difficulties or concerns. The 

proposed changes would allow OCC to 

maintain provisions and practices that 

are both clear and consistent with the 

standard settlement cycle that is 

specified in Rule 15c6–1(a), which 

would help ensure that OCC’s Rules, 

By-Laws, and Clearing Member 

documents remain well-founded, clear, 

transparent, and enforceable. Additional 

changes are proposed to OCC’s Rules 

that would amend an outdated 

provision and ensure consistency with 

the settlement cycle for the relevant 

asset class and regarding the automatic 

release of deposits, which would ensure 

that OCC’s Rules are well-founded, 

clear, transparent, and enforceable. 

Therefore, OCC believes that the 

proposed changes promote compliance 

and consistency with the requirements 

in Rule 17Ad–22(e)(1) to establish, 

implement, maintain and enforce 

written policies and procedures 

reasonably designed to provide for a 

well-founded, clear, transparent and 

enforceable legal basis. 

(B) Clearing Agency’s Statement on 

Burden on Competition 

Section 17A(b)(3)(I) of the Act 47

requires that the rules of a clearing 

agency not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. OCC does not 

believe that the proposed rule change 

would impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. As discussed 

above, OCC proposes amendments to its 

Rules, By-Laws, and Clearing Member 

documents to (i) revise provisions 

connected to late exercise that are 

impacted by a shortened settlement 

cycle, (ii) change timeframes related to 

the standard settlement cycle to reflect 

T+1, and (iii) make certain other 

conforming and clarifying changes. OCC 

does not believe that the proposed rule 

change would impose any burden or 

have any impact on competition. The 

proposed rule change would implement 

revisions that ensure consistency with 

amendments recently adopted by the 

Commission in Rule 15c6–1(a) to 

change the standard securities 

settlement cycle to T+1 and additional 

changes that promote clarity or 

uniformity amongst OCC’s Rules, ByLaws, and Clearing Member documents, 

as described above. All Clearing 

Members would be equally subject to 

the changes, and the proposed changes 

would not provide any Clearing Member 

with a competitive advantage over any 

other Clearing Member. This proposed 

rule change would also not inhibit 

access to OCC’s services or disadvantage 

or favor any particular user in 

relationship to another. As a result, OCC 

believes the proposed rule change 

would not impact or impose a burden 

on competition. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants or Others 

Written comments were not and are 

not intended to be solicited with respect 

to the proposed rule change, and none 

have been received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) by order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

The proposal shall not take effect 

until all regulatory actions required 

with respect to the proposal are 

completed. 


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Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices 5075 

48 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Rule 1.1 defines a ‘‘Unit’’ (which may also be 

referred to as an exchange-traded fund (‘‘ETF’’)) as 

a share or other security traded on a national 

securities exchange and defined as an NMS stock 

as set forth in Rule 4.3. 

4See Rule 4.3, Interpretation and Policy .06(a), 

which permits options trading on Units that 

represent (1) interests in registered investment 

companies (or series thereof) organized as open-end 

management investment companies, unit 

investment trusts or similar entities that hold 

portfolios of securities and/or financial instruments 

including, but not limited to, stock index futures 

contracts, options on futures, options on securities 

and indexes, equity caps, collars and floors, swap 

agreements, forward contracts, repurchase 

agreements and reverse purchase agreements (the 

‘‘Financial Instruments’’), and money market 

instruments, including, but no limited to, U.S. 

government securities and repurchase agreements 

(the ‘‘Money Market Instruments’’) comprising or 

otherwise based on or representing investments in 

indexes or portfolios of securities and/or Financial 

Instruments and Money Market Instruments (or that 

hold securities in one or more other registered 

investment companies that themselves hold such 

portfolios of securities and/or Financial Instruments 

and Money Market Instruments); (2) interests in a 

trust or similar entity that holds a specified nonU.S. currency deposited with the trust or similar 

entity when aggregated in some specified minimum 

number may be surrendered to the trust by the 

beneficial owner to receive the specified non-U.S. 

currency and pays the beneficial owner interest and 

other distributions on deposited non-U.S. currency, 

if any, declared and paid by the trust (‘‘Currency 

Trust Shares’’); (3) commodity pool interests 

principally engaged, directly or indirectly, in 

holding and/or managing portfolios or baskets of 

securities, commodity futures contracts, options on 

commodity futures contracts, swaps, forward 

contracts and/or options on physical commodities 

and/or non-U.S. currency (‘‘Commodity Pool 

Units’’); (4) interests in the SPDR Gold Trust, the 

iShares COMEX Gold Trust, the iShares Silver 

Trust, the Aberdeen Standard Physical Silver Trust, 

the Aberdeen Standard Physical Gold Trust, the 

Aberdeen Standard Physical Palladium Trust, the 

Aberdeen Standard Physical Platinum Trust, the 

Sprott Physical Gold Trust or the Goldman Sachs 

Physical Gold ETF; or (5) an interest in a registered 

Continued 

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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

OCC–2024–002 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Vanessa Countryman, Secretary, 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 

20549–1090. 

All submissions should refer to file 

number SR–OCC–2024–002. 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 (https://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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of OCC 

and on OCC’s website at https://

www.theocc.com/CompanyInformation/Documents-and-Archives/ 

By-Laws-and-Rules. 

Do not include personal identifiable 

information in submissions; you should 

submit only information that you wish 

to make available publicly. We may 

redact in part or withhold entirely from 

publication submitted material that is 

obscene or subject to copyright 

protection. 

All submissions should refer to file 

number SR–OCC–2024–002 and should 

be submitted on or before February 15, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.48

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–01385 Filed 1–24–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99395; File No. SR–CBOE– 

2024–005] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing of a 

Proposed Rule Change To Permit Cboe 

To List and Trade Options on ETPs 

That Hold Bitcoin 

January 19, 2024. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (‘‘Act’’) 

and Rule 19b–4 thereunder,2 notice is 

hereby given that on January 5, 2024, 

Cboe Exchange, Inc. (the ‘‘Exchange’’ or 

‘‘Cboe Options’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

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 4.3. The text of the proposed rule 

change is provided in Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://www.cboe.com/ 

AboutCBOE/CBOELegalRegulatory

Home.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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 4.3 regarding the criteria for 

underlying securities. Specifically, the 

Exchange proposes to amend Rule 4.3, 

Interpretation and Policy .06(a)(4) to 

allow the Exchange to list and trade 

options on Units 3 that represent 

interests in a trust that holds bitcoin 

(‘‘Bitcoin ETPs’’), designating them as 

‘‘Units’’ deemed appropriate for options 

trading on the Exchange. Current Rule 

4.3, Interpretation and Policy .06 

provides that, subject to certain other 

criteria set forth in that Rule, securities 

deemed appropriate for options trading 

include Units that represent certain 

types of interests,4 including interests in 


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