[Federal Register Volume 89, Number 195 (Tuesday, October 8, 2024)]
[Notices]
[Pages 81592-81600]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-23064]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101229; File No. SR-CBOE-2024-042]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To Amend Its Rules To Permit Orders 
Comprised of Options and Futures Legs (``Future-Option Orders'')

October 1, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 17, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 amend its Rules to permit orders comprised of options and futures 
legs (``future-option orders''). 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/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

[[Page 81593]]

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
    The Exchange proposes to amend its Rules to permit future-option 
orders, which would be comprised of both options and futures legs. The 
Exchange understands it is common for investors to engage in hedging or 
other investment strategies that involve options and related futures 
products. However, to execute those investment strategies, investors 
must submit the options order to the Exchange and separately submit the 
futures order to a designated contract market (``DCM'') on which the 
futures trade. For example, market participants may obtain positions in 
Cboe Volatility Index (``VIX'') options through transactions on the 
Exchange and hedge those positions entering into a separate transaction 
on Cboe Futures Exchange, LLC's (``CFE'') centralized market in VIX 
futures (``VX futures''). Separate executions of this sort create 
additional risks, including risk that one order will execute while the 
other does not and price risk resulting from the time it takes to 
complete both transactions. The Exchange understands that due to those 
risks and the complexities of multi-part transactions, market 
participants may instead transact in the over-the-counter (``OTC'') 
market or not obtain a hedge at all. The proposed rule change adopts a 
mechanism to facilitate the execution of these cross-product 
transactions in a simple, efficient manner that reduces these execution 
and price risks.
    The Exchange first proposes to adopt a definition of a future-
option order. Specifically, the proposed rule change amends Rule 1.1 to 
define a ``future-option order'' \3\ as an order to buy or sell a 
stated number of units of an underlying or a related futures 
contract(s) coupled with the purchase or sale of an option contract(s) 
on the Exchange.\4\ The Exchange would designate in which classes 
future-option orders would be available.\5\
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    \3\ As proposed, a ``future-option order'' is deemed an inter-
regulatory spread order for purposes of the Rules. Rule 1.1 defines 
an inter-regulatory spread order as an order involving the 
simultaneous purchase and/or sale of at least one unit in contracts 
each of which is subject to different regulatory jurisdictions at 
stated limits, or at a stated differential, or at market prices on 
the floor of the Exchange. The proposed rule change modernizes this 
definition to apply it to the Exchange in general, as opposed to the 
floor of the Exchange (the definition of inter-regulatory spread 
order was adopted when all trading on the Exchange occurred in open 
outcry).
    \4\ The proposed definition of a future-option order is similar 
to the definition of a stock-option order. Rule 1.1 defines a 
``stock-option order'' as an order to buy or sell a stated number of 
units of an underlying or a related security coupled with either (a) 
the purchase or sale of option contract(s) on the opposite side of 
the market representing either the same number of units of the 
underlying or related security or the number of units of the 
underlying security necessary to create a delta neutral position or 
(b) the purchase or sale of an equal number of put and call option 
contracts, each having the same exercise price and expiration date, 
and each representing the same number of units of stock as, and on 
the opposite side of the market from, the underlying or related 
security portion of the order. The primary difference is the stock-
option order definition requires the order to be delta neutral, 
while the proposed definition of a future-option order requires the 
order to have a risk offset within a specified range (as described 
below).
    \5\ Pursuant to Rule 1.5, the Exchange announces all 
determinations it makes pursuant to the Rules via specifications, 
Notices, or Regulatory Circulars with appropriate advanced notice, 
which will be posted on the Exchange's website, or as otherwise 
provided in the Rules; electronic message; or other communication 
method as provided in the Rules. The Exchange intends to initially 
permit future-option orders overlying VIX. However, the Exchange may 
expand the availability of future-option orders to other underlying 
securities or indexes in the future. If required, the Exchange and 
would submit rule filings in connection with any such expansion; for 
example, the Exchange may determine that a different risk offset 
requirement than what is proposed in this filing is appropriate for 
another underlying based on the characteristics of the overlying 
options and futures.
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    The proposed definition of a future-option order includes a risk 
offset requirement. A user may only submit a future-option order if it 
satisfies the applicable risk offset requirement. The Exchange believes 
a risk offset requirement will provide market participants with 
sufficient flexibility to execute legitimate strategies comprised of 
options and futures while preventing a market participant from using 
the proposed execution mechanism to execute a futures trade outside of 
the normal trading process on the applicable designated contract market 
by combining the future leg(s), for example, with an inexpensive out-
of-the-money option leg.
    Pursuant to paragraph (a) of the proposed definition of future-
option order, the System will accept a future-option order if the 
future leg(s) provides no less than 10% and no greater than 125% risk 
offset to the option leg(s).\6\ A future-option order satisfies this 
risk offset requirement if the net delta value of the order is no 
greater than -0.10 and no less than -1.25. The delta value of an option 
leg equals the expected change in the price of that options contract 
given a $1.00 change in the price of the underlying security or index. 
The delta value of a future leg equals the amount set forth in the 
rules or contract specifications of the designated contract market 
(``DCM'') on which the future contract trades. The delta value of each 
option and future leg is multiplied by the applicable multiplier. The 
sum of the future legs delta values divided by the sum of the option 
legs delta values, which equals the net delta value for the order.
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    \6\ The user must include a delta value for each option leg of 
the order when submitting a future-option order. See Rule 1.1 
(proposed paragraph (b)(2) of definition of future-option order). 
While a user may use any methodology it chooses to calculate the 
delta value of option legs, the value must be reasonable and will be 
subject to surveillance by the Exchange's regulatory division. The 
System will use the user-submitted delta values to calculate the 
risk offset for the entire order.
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    For VIX future-option orders, the System will calculate the risk 
offset described above using the net delta value for each ``group'' of 
option legs and future legs with the same expiration date. The net 
delta value of each group must be no greater than -0.10 and no less 
than -1.25.\7\ For example, suppose a VIX future-option order is 
submitted with the following components:
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    \7\ If any option contract leg or future contract leg cannot be 
grouped with any future leg(s) or option leg(s), respectively, the 
System rejects a VIX future-option order.

<bullet> Sell 1 Dec VX future \8\ with a delta of -1
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    \8\ VX futures have a contract multiplier of 1,000.
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<bullet> Buy 2 Jan VX futures with delta of 1
<bullet> Buy 16 Dec VIX option \9\ calls with a delta of 0.50
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    \9\ VIX options have a contract multiplier of 100.
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<bullet> Buy 35 Jan VIX option puts with a delta of -0.60

    The 1 short Dec VX future is grouped with the 16 long Dec VIX 
calls, which group has a net delta of/(-1 x 1,000)/(16 x .50 x 100) = -
1,000/800 = -0.125. The 2 long Jan VX futures are grouped with the 35 
short Jan VIX puts, which group has a net delta of (2 x 1,000)/(35 x -
0.60 x 100) = -2,000/2,100 = -0.9524. This order would satisfy the risk 
offset requirement, as both groups have a net delta between -0.10 and -
1.25. If the System determines that a complex strategy comprised of 
future and option legs satisfies the risk offset requirement, it 
accepts all future-option orders for that complex strategy for the 
remainder of that trading day. This will prevent a situation in which 
the Exchange accepts a future-option order for a specific complex 
strategy on a trading day but cannot execute against

[[Page 81594]]

future-option orders for the same complex strategy submitted later that 
trading day but no longer satisfies the risk offset requirement because 
the delta values have changed since the initial order was 
submitted.\10\
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    \10\ It is for this reason a user may not designate a future-
option order submitted for electronic processing as GTC or GTD. See 
proposed Rule 1.1 (proposed paragraph (b)(1) of definition of 
future-option order).
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    The proposed rule change also amends the definition of ``complex 
order'' in Rule 1.1 to provide that unless the context otherwise 
requires, the term complex order will include future-option orders.\11\
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    \11\ The term complex order already includes cross-product 
orders such as stock-option orders and security future-option 
orders.
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    As proposed in Rule 5.33(o), when a user submits a future-option 
order to the Exchange:
    <bullet> if the User is also a member of the DCM on which the 
applicable future trades and the Exchange has established electronic 
communication with the DCM, the Exchange will electronically 
communicate the future component of the future-option order to the DCM 
on behalf of the User \12\; or
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    \12\ Unlike stock, a future trades on one DCM, which would make 
such direct communication with the DCM possible. This would only be 
available if the DCM and Exchange established electronic 
communication between the two markets to permit this direct 
communication of the futures component.
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    <bullet> if the User is not also a member of the DCM on which the 
applicable future trades or opts out of the direct communication 
described in the above bulleted paragraph (or such direct communication 
is unavailable), the User must designate a specific futures commission 
merchant (``FCM'') or introducing broker (``IB'') with which it has 
entered into an agreement pursuant to proposed Rule 5.33, 
Interpretation and Policy .05 (the ``designated FCM/IB'') to which the 
Exchange will communicate the futures component of the future-option 
order on behalf of the user.\13\ Proposed Interpretation and Policy .05 
provides that if the user is not also a member of the DCM on which the 
applicable future trades or opts out of the direct communication (or 
such direct communication is unavailable), to submit a future-option 
order to the Exchange for execution, a user must enter into an 
agreement with one or more FCMs or IBs that are not affiliated with the 
Exchange, which FCM/IB(s) the Exchange has identified as having 
connectivity to electronically communicate the futures components of 
future-option orders to the designated contract market on which the 
futures trade.\14\ This will provide users with flexibility to pick 
which FCM/IB will communicate the futures components of their orders 
for execution (if an FCM/IB is necessary for communication of the 
futures component to the DCM).\15\
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    \13\ As is the case with any order submitted to the Exchange, 
only authorized Users and associated persons of Users may establish 
connectivity to and access the Exchange to submit orders. See Rule 
5.5(a). A ``User'' is defined as a Trading Permit Holder (``TPH'') 
or Sponsored User who is authorized to obtain access to the System 
pursuant to Rule 5.5. See Rule 1.1 (definition of User). The 
Exchange currently has no Sponsored Users, so the term ``User'' at 
present is synonymous with the term ``TPH.'' The User and any 
individuals associated with the User that submits a future-option 
order must have any required futures industry registrations and 
comply with applicable rules of the designated contract market on 
which the futures trades and the Commodity Futures Trading 
Commission (``CFTC'').
    \14\ This requirement is substantially identical to that 
required for stock-option orders.
    \15\ The Exchange intends to establish an arrangement with one 
or more FCMs/IBs that are members of the applicable designated 
contract market, pursuant to which arrangement those FCMs/IBs will 
have connectivity to the Exchange to receive the futures components 
of future-option orders and communicate those to the applicable 
designated contract market for execution of these futures 
components.
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    The proposed rule change first amends Rule 5.33 to describe how 
future-option orders may execute electronically on the Exchange. The 
proposed rule change adds future-option order to the list of types of 
complex orders that may be accepted for electronic trading.\16\ 
Specifically, the proposed rule change amends Rule 5.33(b)(5) to 
reference the proposed definition of future-option order in Rule 1.1 
and state that only future-option orders in the classes designated by 
the Exchange \17\ with no more than the applicable number of legs are 
eligible for electronic processing.\18\ Future-option orders submitted 
for electronic processing may execute pursuant to a complex order 
auction (``COA'') if eligible as described in Rule 5.33(d) or in the 
complex order book (``COB'') as described in Rule 5.33(e) and will 
execute in the same manner as other complex orders, except as described 
below.
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    \16\ The proposed rule change also amends Rule 5.70(b) to 
provide that the Exchange may make future-option orders available 
for flexible (FLEX) options trading.
    \17\ This flexibility with respect to classes is necessary given 
the Exchange would need to establish a relationship with appropriate 
DCMs on which futures trade before it would be able to accept 
future-option orders that contain futures legs that trade on those 
DCMs.
    \18\ The proposed rule change also provides that future-option 
orders will execute (electronically) in the same manner as other 
complex orders except as otherwise specified in Rule 5.33.
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    The proposed rule change adopts rule 5.33(f)(1)(C) to provide that 
users may express bids and offers for a future-option order in any 
decimal price the Exchange determines, which will permit the Exchange 
to accommodate the available pricing of futures. The minimum increment 
for the option leg(s) of a future-option order is $0.01 or greater, 
which the Exchange may determine on a class-by-class basis, regardless 
of the minimum increments otherwise applicable to the option 
leg(s),\19\ and the future leg(s) of a future-option order may be 
executed in any decimal price permitted in the designated contract 
market on which the applicable futures trade. Smaller minimum 
increments are appropriate for future-option orders as the future 
component may be able to trade at finer decimal increments permitted by 
the designated contract market on which the futures trade. The Exchange 
notes that even with the flexibility provided in the proposed rule, the 
individual options legs must trade at increments allowed by the 
Commission.
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    \19\ This is consistent with the permissible pricing of options 
legs of complex orders and stock-option orders. See Rule 5.4(b) and 
5.33(f)(A) and (B).
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    The proposed electronic execution process of future-option orders 
is substantially similar to that of stock-option orders. Proposed Rule 
5.33(o)(2) provides that a future-option order may execute against 
other future-option orders (or COA Responses, if applicable), but may 
not execute against orders in the simple book.\20\ If a future-option 
order can execute upon entry or following a COA, or if it can execute 
following evaluation while resting in the COB pursuant to Rule 5.33(i), 
the System executes the option component (which may consist of one or 
more option legs) of a future-option order against the option component 
of other future-option orders resting in the COB or COA responses 
pursuant to the allocation algorithm applicable to the class (pursuant 
Rule 5.33(d)(5)(A)(ii)), as applicable, but does not immediately send 
the user a trade execution report, and then automatically communicates 
the future component(s) to the DCM or the designated FCM/IB, as 
applicable, for execution at the DCM on which the futures trade. If the 
System receives an execution report for the future component from the 
DCM or the designated FCM/IB, as applicable, the Exchange sends the 
user the trade execution report for the future-option order, including 
execution information for the future and option components. If the 
System receives a report from the DCM or the designated FCM/IB, as 
applicable, that the future component(s)

[[Page 81595]]

cannot execute,\21\ the Exchange nullifies the option component trade 
and notifies the user of the reason for the nullification. If a future-
option order is not marketable, it rests in the COB (if eligible to 
rest) or routes to PAR for manual handling, subject to a user's 
instructions. The Exchange believes this proposed process is 
reasonable, because the options and futures components of a future-
option order are submitted for execution as part of the same investment 
strategy. Given this, if the future component does not execute, the 
Exchange believes it is reasonable to expect that a user that submitted 
a future-option order to request nullification of the options trade (as 
permitted by Rule 6.5). If the future component does not execute, 
rather than require the user that submitted the future-option order to 
contact the Exchange to request nullification of the option component 
execution pursuant to Rule 6.5, the proposed rule eliminates this 
requirement for the user to make such request. Instead, the proposed 
rule change provides that the Exchange will automatically nullify the 
option transaction if the future component does not execute. The 
Exchange believes such nullification without a request from the user is 
consistent with the purpose of future-option orders, as contingent 
execution at or near the same time (and thus reduction in price and 
execution risk) is one of the primary goals of future-option orders (as 
further discussed below).
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    \20\ See also proposed Rule 5.33(g)(5) (which provides that 
future-option orders, like stock-option orders, may not leg into the 
simple book).
    \21\ Execution of the futures components will need to satisfy 
requirements of the applicable designated contract market, including 
informational and reporting time requirements, risk controls, and 
price restrictions (such as needing to be within the daily quotation 
range). Pursuant to Rule 5.33(k), trading in any complex strategy 
(including one that comprises a future-option order) is suspended if 
any component of a complex strategy (including a future leg) is 
halted. Therefore, if trading in a future is halted, it could not 
execute and would result in the future-option order not being 
executed.
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    Future-option orders may also be submitted for execution (if 
eligible) in the complex automated improvement mechanism (``C-AIM'') as 
described in Rule 5.38 or complex solicitation auction mechanism (``C-
SAM'') as described in Rule 5.40. Processing of future-option orders 
through C-AIM or C-SAM will occur in the same manner as any other 
complex orders submitted into those execution mechanisms.
    Proposed Rule 5.33(o)(2) provides that a future-option order may 
only execute if the price complies with subparagraph (f)(2)(B). The 
proposed rule change amends Rule 5.33(f)(2) to describe the permissible 
execution prices and priority of future-option orders, which is 
substantially similar to that of stock-option orders. Specifically, 
proposed Rule 5.33(f)(2)(C) states for a future-option order with one 
option leg, the option leg may not trade at a price worse than the 
individual component price on the simple book or at the same price as a 
priority customer order on the simple book. For a future-option order 
with more than one option leg, the option legs must trade at price 
pursuant to Rule 5.33(f)(2)(A), which is the permissible execution 
prices and priority for complex orders comprised of option legs. The 
System, therefore, will not execute a future-option order at a net 
price: (1) that would cause any option component of the complex 
strategy to be executed at a price of zero; (2) that would cause any 
option component of the complex strategy to be executed at a price 
worse than the individual component prices on the simple book; (3) 
worse than the price that would be available if the complex order 
legged into the simple book; or (4) worse than the synthetic best bid 
or offer (``SBBO'') \22\ or equal to the SBBO when there is a priority 
customer order on any leg comprising the SBBO and, if a conforming 
complex order,\23\ at least one option component of the complex order 
must execute at a price that improves the best bid or offer (``BBO'') 
for that component by at least one minimum increment or, if a 
nonconforming complex order,\24\ the option component(s) of the complex 
order for the leg(s) with a priority customer order at the BBO must 
execute at a price that improves the price of that priority customer 
order(s) on the simple book by at least one minimum increment.\25\ 
Pursuant to these proposed changes, the option component(s) of a 
future-option order will ultimately trade in the same manner and in 
accordance with the same priority principles as they would if they had 
been submitted without a future leg.
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    \22\ The proposed rule change adds subparagraph (3) to the 
definition of SBBO in Rule 5.33(a) to provide that the SBBO is the 
best net bid and best net offer on the Exchange for a complex 
strategy calculated using, for future-option orders, the BBO for 
each component (or the national best bid or offer (``NBBO'') for a 
component if the BBO for that component is not available) and the 
daily quotation range for each future component. Similarly, the 
proposed rule change adds subparagraph (3) to the definition of 
synthetic national best bid or offer (``SNBBO'') in Rule 5.33(a) to 
provide that the SNBBO is the national best net bid and net offer 
for a complex strategy calculated using, for future-option orders, 
the NBBO for each option component and the daily quotation range for 
each future component.
    \23\ The proposed rule change amends the definition of 
``conforming complex order'' in Rule 1.1 to provide that a future-
option order is conforming (1) if the ratio on the options legs is 
greater than or equal to one-to-three (.333) or less than or equal 
to three-to-one (3.00) or (2) the options legs comprise an Index 
Combo order (as defined in Rule 5.33(b)).
    \24\ The proposed rule change amends the definition of 
``nonconforming complex order'' in Rule 1.1 to provide that a 
future-option order is nonconforming if the ratio of its options 
legs is less than one-to-three (.333) or greater than three-to-one 
(3.00) (unless the options legs comprise an Index Combo order).
    \25\ All-or-none complex orders (including future-option orders) 
may only execute at prices better than the SBBO.
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    The proposed rule change also amends Rules in Chapter 5, Section G 
of the Rulebook to describe how future-option orders may execute in 
open outcry on the Exchange's trading floor, which is substantially 
similar to the open outcry execution process of stock-option orders. 
Specifically, the proposed rule change amends Rule 5.83(b) to provide 
that the Exchange may make future-option orders available for PAR 
routing for manual handling (as is the case for other complex orders, 
including stock-option orders). The proposed rule change further amends 
this provision to provide that the Exchange may determine (as it can 
for other nonconforming complex orders and non-conforming stock-option 
orders) to make nonconforming future-option orders not eligible for 
electronic processing, in which case such orders would only be eligible 
for manual handling and open outcry trading. The proposed rule change 
amends Rule 5.85(g) to provide that a bid or offer that is identified 
to the trading crowd as part of a future-option order is made and 
accepted subject to the following conditions (which are the same 
conditions applicable to stock-option orders): (1) at the time the 
future-option order is announced, the TPH initiating the order must 
disclose to the crowd all legs of the order and identify the specific 
market(s) on which and the price(s) at which the non-option leg(s) of 
the order is to be filled; and (2) concurrent with the execution of the 
options leg of the order, the initiating TPH and each TPH that agrees 
to be a contra-party on the non-option leg(s) of the order must take 
steps immediately to transmit the non-option leg(s) to the identified 
market(s) for execution.\26\ Proposed Rule 5.85(b)(3) provides, 
however, that (like the stock component of stock-option orders) a floor 
broker or PAR official may, subject to a User's instructions, route the 
future component of a future-option order represented in open outcry to 
the DCM or an Exchange-

[[Page 81596]]

designated FCM/IB not affiliated with the Exchange for execution at a 
designated contract market on which the futures trade in accordance 
with proposed Rule 5.33, Interpretation and Policy .05.\27\ The 
Exchange also proposes to add subparagraph (5) to Rule 5.85(g) (which 
is substantially similar to Rule 5.85(g)(4) for stock-option orders) to 
provide that a TPH or PAR official may route the future component of an 
eligible future-option order represented in open outcry from PAR 
directly to a designated FCM/IB (as defined in Rule 5.33(o)) not 
affiliated with the Exchange for electronic execution at the designated 
contract market on which the futures trade (1) in accordance with the 
order's terms, and (2) as a single order or as a paired matching order 
(including with orders transmitted from separate PAR workstations). 
TPHs seeking to route the future component of a future-option order 
represented in open outcry through PAR to an Exchange-designated FCM/IB 
not affiliated with the Exchange for electronic execution at the 
designated contract market on which the futures trade must comply with 
proposed Rule 5.33(o).\28\ The Exchange proposes to amend Rule 5.91(g) 
to provide that as they currently can for complex orders (including 
stock-option orders), floor brokers may leg future-option orders where 
one of the legs is executed on the Exchange.
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    \26\ The proposed rule change also updates Rule 5.85(g)(2) to 
provide that a trade representing execution of the options leg of a 
future-option order may be cancelled at the request of any TPH that 
is a party to that trade only if market conditions in any of the 
non-Exchange market(s) prevent the execution of the non-option 
leg(s) at the price(s) agreed upon.
    \27\ The proposed rule change also makes a nonsubstantive 
amendment to Rule 5.85(b)(3) to correct the current cross-reference 
to Rule 5.11 to Rule 5.33, Interpretation and Policy .04, which is 
the applicable rule to be referenced.
    \28\ If any TPH that is a party to a trade representing the 
execution of the options leg of a future-option order requests, if 
market conditions in any of the non-Exchange market(s) prevent the 
execution of the non-option leg(s) at the price(s) agreed upon, the 
execution of the option leg may be cancelled. See proposed Rule 
5.87, Interpretation and Policy .03. This is consistent with what is 
permissible for stock-option orders, as well as the proposed 
electronic processing of future-option orders set forth in proposed 
Rule 5.33(o).
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    The proposed rule change amends Rule 5.85(b)(3) to describe the 
priority that will apply to future-option orders executed on the 
Exchange's trading floor. Specifically, the proposed rule change 
provides that future-option orders have priority over bids (offers) of 
in-crowd market participants but not over priority customer bids 
(offers) in the book. Specifically, future-option orders, like stock-
option orders, will have priority over bids and offers of in-crowd 
market participants on the trading floor. Further, the options legs of 
conforming and nonconforming future-option orders may be executed at 
the same net debit and credit prices as the options legs of stock-
option orders. Pursuant to proposed Rule 5.85(b)(4), a conforming 
future-option order may be executed at a net debit or credit price 
without giving priority to equivalent bids (offers) in the individual 
series legs that are represented in the trading crowd or in the book if 
the price of at least one option leg of the order improves the 
corresponding bid (offer) of a priority customer order(s) in the book 
by at least one minimum trading increment as set forth in Rule 
5.4(b).\29\ Additionally, pursuant to proposed Rule 5.85(b)(5), a 
nonconforming future-option order may be executed at a net debit or 
credit price without giving priority to equivalent bids (offers) in the 
individual series legs that are represented in the trading crowd or in 
the book if each option leg of the order betters the corresponding bid 
(offer) of a priority customer order(s) in the book on each leg by at 
least one minimum trading increment as set forth in Rule 5.4(b).\30\
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    \29\ In other words, if there is a priority customer order on 
every leg comprising the SBBO, at least one option leg of the 
future-option order must execute at a price that improves the price 
of the priority customer order on the simple book for that leg by at 
least one minimum increment. This is the same priority that applies 
to a conforming complex order (comprised of all option legs) as set 
forth in Rule 5.85(b)(1), and thus the options legs of a conforming 
future-option order will execute subject to the same priority as 
they would if they had been submitted without a future leg.
    \30\ In other words, if there is a priority customer order on 
any leg(s) comprising the SBBO, the component(s) of the future-
option order for the option leg(s) with a priority customer order at 
the BBO must execute at a price that improves the price of that 
priority customer order(s) on the simple book by at least one 
minimum increment. This is the same priority that applies to a 
nonconforming complex order (comprised of all option legs) as set 
forth in Rule 5.85(b)(2), and thus the options legs of a 
nonconforming future-option order will execute subject to the same 
priority as they would if they had been submitted without a future 
leg.
---------------------------------------------------------------------------

    The Exchange proposes to amend Rule 6.5, Interpretation and Policy 
.07 to describe how a future-option order may qualify as an obvious 
error. As proposed, future-option orders will be handled in a similar 
manner as stock-option orders for purposes of Rule 6.5. Specifically, 
if the option leg of a future-option order qualifies as an obvious 
error under Rule 6.5(c)(1) or catastrophic error under Rule 6.5(d)(1), 
then the option leg that is an obvious or catastrophic error will be 
adjusted in accordance with Rule 6.5(c)(4)(A) or (d)(3), respectively, 
regardless of whether one of the parties is a customer. However, the 
option leg of any customer future-option order will be nullified if the 
adjustment would result in an execution price higher (lower) for buy 
(sell) transactions than the customer's limit price on the future-
option order, and the Exchange will attempt to nullify the future leg. 
Whenever a DCM nullifies the futures leg(s) of a future-option order or 
whenever the future leg(s) cannot be executed, the Exchange will 
nullify the option leg upon request of one of the parties to the 
transaction or in accordance with Rule 6.5(c)(3).
    Finally, the proposed rule change adds Interpretation and Policy 
.02 to Rule 6.6 to clarify that TPHs may update only the option 
component of a future-option order trade using Clearing Editor (and as 
permitted by Rule 6.6). Any updates to the future component would need 
to be done in accordance with the Rules of the applicable DCM (if 
permissible).
    Execution of the options components of future-option orders will be 
subject to Commission jurisdiction, and execution of the futures 
components of future-option orders will be subject to Commodity Futures 
Trading Commission (``CFTC'') jurisdiction. Further, each of the 
Exchange and the designated contract market on which the futures 
component of a future-option order trades will regulate conduct 
relating to future-option orders and trades with respect to compliance 
with its rules, including bringing disciplinary actions for violations 
of its rules. Before authorizing a class of future-option orders to 
trade on the Exchange, the Exchange would enter into an information 
sharing agreement with the designated contract market on which the 
applicable future trades that encompasses information relating to 
future-option orders and trades.\31\ This would allow for the sharing 
of information between the Exchange and the DCM to permit the Exchange 
(and the DCM) to have access to all order, trade, regulatory, and other 
data relating to these orders and trades.
---------------------------------------------------------------------------

    \31\ The Exchange already has one in place with CFE for purposes 
of VIX future-option orders.
---------------------------------------------------------------------------

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.\32\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \33\ 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

[[Page 81597]]

in regulating, clearing, settling, processing information with respect 
to, and facilitating 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) \34\ requirement that the rules 
of an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78f(b).
    \33\ 15 U.S.C. 78f(b)(5).
    \34\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes the proposed rule change will 
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 because it will provide investors 
with greater opportunities to manage risk. The proposed rule change 
would provide investors with a more efficient mechanism to execute 
options and related future products, which investors regularly trade as 
part of hedging and other investment strategies. The proposed execution 
mechanism for future-option orders will make the trading and hedging 
process for investment strategies comprised of option and future 
components more efficient, which will reduce execution, legging, and 
price drift risk that otherwise accompanies the current execution 
process for these strategies. For example, today, investors looking to 
execute an investment strategy comprised of option and future 
components must do so through separate trades--one for the options and 
one for the futures. This creates risk that one trade occurs but the 
other does not, which may leave an investor with an unhedged position. 
Additionally, separate transactions create risk because market 
conditions may change between the time it takes to execute both 
transactions, which may make the full package execute in an unfavorable 
manner for the investor. Investors may continue to execute these 
strategies as separate transactions if they so choose. However, the 
addition of the proposed execution process (both electronic and open 
outcry) would provide investors with an optional, alternative means to 
execute strategies comprised of future and options components that 
would reduce these risks, as it would permit the entire package to be 
priced together and will result in an execution only if both the 
options and futures components are able to trade. The proposed single 
execution mechanism, therefore, expands the ability of market 
participants to engage in cross-product investment and hedging 
transactions, which the Exchange believes will contribute to reduced 
overall market risk and increased liquidity.
    The Exchange believes the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices and to promote 
just and equitable principles of trade. The proposed risk offset 
requirement is designed to provide market participants with sufficient 
flexibility to execute legitimate options strategies comprised of 
options and futures while preventing misuse of this mechanism, such as 
a market participant from using the proposed execution mechanism to 
execute a futures trade outside of the normal trading process on the 
applicable designated contract market by combining the future leg(s), 
for example, with an inexpensive out-of-the-money option leg.
    As discussed above, the Commission and the CFTC will maintain 
jurisdiction over execution of the options and futures components, 
respectively, of future-option orders. Further, each of the Exchange 
and the DCM on which the futures component of a future-option order 
trades will regulate conduct relating to future-option orders and 
trades with respect to compliance with its rules, including bringing 
disciplinary actions for violations of its rules.\35\ The Exchange is a 
member of the Intermarket Surveillance Group (``ISG''). The ISG members 
work together to coordinate surveillance and investigative information 
sharing in the futures and options markets, and the Exchange would 
therefore have access to information regarding relevant trading 
activity from other ISG members, including applicable DCMs (as CFE is) 
that are also members. Before authorizing a class of future-option 
orders to trade on the Exchange, if the applicable DCM was not a member 
of ISG, or if the applicable DCM was a member of ISG but the Exchange 
still deemed appropriate, the Exchange would enter into an information 
sharing agreement with the designated contract market on which the 
applicable future trades that encompasses information relating to 
future-option orders and trades. This would allow for the sharing of 
information between the Exchange and the designated contract market to 
permit the Exchange (and the designated contract market) to have access 
to all order, trade, regulatory, and other data relating to these 
orders and trades, and thus facilitate the intermarket surveillance of 
future-option orders. As a self-regulatory organization, the Exchange 
recognizes the importance of surveillance, among other things, to 
detect and deter fraudulent and manipulative trading activity as well 
as other violations of Exchange rules and the federal securities laws. 
The Exchange's current rules prohibiting market manipulation and 
fraudulent, noncompetitive, and disruptive trading practices will apply 
to future-option orders. The Cboe Regulatory Division will incorporate 
information it receives from the designated contract market into its 
surveillance procedures to monitor trading of future-option orders, 
including to detect any manipulative trading activity. The Exchange 
believes its surveillance, along with the proposed risk offset 
requirement, are reasonably designed to detect manipulative trading and 
enforce compliance with the proposed rules and other Exchange Rules. 
The Exchange performs ongoing evaluations of its surveillance program 
to ensure its continued effectiveness and will continue to review its 
surveillance procedures on an ongoing basis and make any necessary 
enhancements and/or modifications that may be needed for future-option 
orders.
---------------------------------------------------------------------------

    \35\ This would include any rules the designated contract market 
related to the execution of the future component of a future-option 
order.
---------------------------------------------------------------------------

    The Exchange believes the proposed execution process will also 
promote just and equitable principles of trade. As described above, 
future-option orders will execute in a substantially similar way as 
complex orders, including stock-option orders. The proposed priority 
for future-option orders will protect customer orders in the simple 
book. As proposed, the option component(s) of a future-option order 
will ultimately trade in the same manner and in accordance with the 
same priority principles as they would if they had been submitted 
without a future leg. Further, the proposed process to nullify the 
option component execution if the future-option order does not execute 
is consistent with the purpose of the future-option order. Given the 
option and future components of a future-option order are submitted as 
part of the same investment strategy, if the future component does not 
execute, the Exchange believes it is reasonable to expect that a user 
that submitted a future-option to request nullification of the options 
trade in accordance with current Exchange Rules. If the future 
component does not execute, rather than require the user that submitted 
the future-option order to contact the Exchange to request 
nullification of the

[[Page 81598]]

option component execution, the proposed rule eliminates this 
requirement for the user to make such request. Instead, the proposed 
rule change provides that the Exchange will automatically nullify the 
option transaction if the future component does not execute. The 
Exchange believes such nullification without a request from the user is 
consistent with the purpose of future-option orders, as contingent 
execution at or near the same time (and thus reduction in price and 
execution risk) is one of the primary goals of future-option orders (as 
further discussed below).
    Additionally, the Exchange believes the availability of future-
option orders will 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 because it will provide 
investors with an alternative to the OTC market for investment 
strategies comprised of future and option components. The proposed rule 
change will provide investors with the ability to execute these 
investment strategies in a listed market environment as opposed to in 
the unregulated OTC market. The proposed rule change may shift 
liquidity from the OTC market onto the Exchange (as well as shift swaps 
and OTC combos from the OTC market onto designated contract markets in 
the form of futures), which the Exchange believes would increase market 
transparency as well as enhance the process of price discovery 
conducted on the Exchange through increased order flow to the benefit 
of all investors. The Exchange believes it may be a more attractive 
alternative to the OTC market, because trading these strategies in an 
exchange environment may benefit market participants in several ways, 
including but not limited to the following: (1) enhanced efficiency in 
initiating and closing out positions; (2) increased market 
transparency; and (3) heightened contra-party creditworthiness due to 
clearing requirements for listed options and futures.
    The Commission previously determined that permitting investors to 
submit an order for execution to Cboe that included components subject 
to different regulatory jurisdictions was consistent with the Act.\36\ 
Specifically, in 1988, the Commission approved a Cboe proposed rule 
change to allow inter-regulatory spread orders (which were defined as 
the simultaneous purchase and/or sale of at least one unit in contracts 
each of which is subject to different regulatory jurisdictions at 
stated limits, or at a stated differential, or at market prices on the 
floor of the Exchange) to trade on Cboe's trading floor.\37\ The only 
substantive differences between that proposal and the proposed rule 
change regarding future-option orders are as follows:
---------------------------------------------------------------------------

    \36\ Securities Exchange Act Release No. 26271 (November 10, 
1988), 53 FR 46727 (November 18, 1988) (SR-CBOE-88-17) (``CBOE-CBOT 
JV Approval Order''); see also Securities Exchange Act Release No. 
24235 (March 19, 1987), 52 FR 9750 (March 26, 1987) (SR-Phlx-86-43).
    \37\ See CBOE-CBOT JV Approval Order.
---------------------------------------------------------------------------

    <bullet> The proposed rule change would permit future-option orders 
in classes authorized by the Exchange, dependent upon agreements the 
Exchange may make with applicable DCMs, compared to the prior filing 
that was limited to orders comprised of two options and two related 
futures.\38\ The Exchange believes this is reasonable because the 
proposed rule change will provide the Exchange with the ability to 
expand the availability of future-option order functionality in the 
future to accommodate additional investment strategies of investors, 
and the proposed rules regarding future-option orders would apply in 
the same manner regardless of the underlying components.\39\
---------------------------------------------------------------------------

    \38\ Inter-regulatory spreads subject to that proposal were 
limited to those comprised of S&P 500 Index options and CBOE 50 
futures, and S&P 100 Index options and S&P 250 futures.
    \39\ As noted above, if the Exchange determines a different risk 
offset requirement would be appropriate for a different class of 
future-option orders, it will submit a rule filing as necessary to 
implement that requirement.
---------------------------------------------------------------------------

    <bullet> The proposed rule change would permit electronic execution 
in addition to open outcry execution of future-option orders. This 
merely reflects the advancement in the availability of electronic 
trading since 1988 and provides an additional manner of execution for 
future-option orders.
    <bullet> The proposed rule change does not create a separate pit on 
the Exchange's trading floor for the related futures as the prior 
proposal did. Given the advances in electronic trading (and the fact 
that many futures exchanges no longer have open outcry trading), the 
Exchange believes this is no longer necessary to permit future-option 
orders.\40\
---------------------------------------------------------------------------

    \40\ As an example, VX futures trade electronically only on CFE. 
For similar reasons, the Exchange believes structuring future-option 
orders as a joint venture is unnecessary, as the individual 
components will continue to trade on the applicable market as 
proposed. As noted above, the Exchange will be able to share 
information with the applicable DCM (through ISG or information 
sharing agreements) for regulatory purposes. It is possible the 
Exchange and the designated contract market may enter into other 
agreements as appropriate to permit future-option orders (e.g., to 
establish electronic connections for purposes of routing the futures 
component), but such agreements would have no impact on the proposed 
rules.
---------------------------------------------------------------------------

    These differences have no impact on the fundamental attributes of 
the underlying product that the Commission approved in 1988 and that 
the Exchange proposes in this filing, which is a multi-part order 
comprised of an option and a related future submitted to the Exchange 
for pricing as a package, with execution of each component contingent 
on the other. When approving the prior proposal, the Commission stated 
that permitting execution of inter-regulatory spreads (including for 
hedging purposes) on the Exchange would ``contribute to the mechanism 
of a free and open market by enhancing . . . market makers' ability to 
hedge their positions with futures [and] enable market makers to better 
accommodate customer orders and to provide deeper and tighter 
markets.'' \41\ The Commission further stated that the proposed rule 
change was designed to minimize regulatory concerns, and clarifying the 
regulatory responsibility for each leg of an inter-regulatory spread 
(as the current filing does) would ``expedite the enforcement of each 
jurisdiction's regulations and foster coordination and cooperation 
between the jurisdictions involved.'' \42\ Ultimately, the Commission 
found that the proposal to execute inter-regulatory spreads on Cboe to 
be consistent with the requirements of the Act.\43\ While some time has 
passed since approving inter-regulatory spreads (the Exchange notes the 
rules permitted execution of inter-regulatory spreads remained in 
Cboe's Rulebook until 2005,\44\ and the definition of an inter-
regulatory spreads remains in Cboe's Rulebook \45\), the Exchange is 
unaware of any changes to Section 6(b)(5) of the Act since the 
Commission approved that the trading of inter-regulatory spreads that 
would prevent the Commission from approving future-option orders at 
this time.
---------------------------------------------------------------------------

    \41\ See CBOE-CBOT JV Approval Order at 46729.
    \42\ Id. at 46730.
    \43\ Id.
    \44\ See Securities Exchange Act Release No. 52824 (November 22, 
2005), 70 FR 72318 (December 2, 2005) (SR-CBOE-2005-69).
    \45\ See Rule 1.1 (definition of inter-regulatory spread).
---------------------------------------------------------------------------

    Further, as discussed above, the proposed rules regarding the 
handling and execution of future-option orders are also substantially 
similar to that of stock-option orders,\46\ and rules previously filed 
with the Commission

[[Page 81599]]

for security-future option orders.\47\ The only substantive difference 
between stock-option orders (and security-future option orders) is that 
one component of a future-option order (the future leg(s)) is not 
subject to Commission jurisdiction. The Exchange believes market 
participants who trade want to trade these strategies because they have 
determined these strategies are the most appropriate to achieve their 
investment goals should be able to avail themselves of a more efficient 
and lower risk execution mechanism for these strategies, even though 
those strategies happen to include a component subject to jurisdiction 
of another regulator.
---------------------------------------------------------------------------

    \46\ See Rules 5.33 (including subparagraphs (f)(1)(B) and 
(2)(B), paragraph (l), and Interpretation and Policy .04), 5.70(b), 
5.83(b), and 5.85 (including subparagraphs (b)(3) through (5) and 
paragraph (g)).
    \47\ See Securities Exchange Act Release No. 49367 (March 5, 
2004), 69 FR 11678 (March 11, 2004) (SR-CBOE-2004-14); see also 
Securities Exchange Act Release Nos. 46390 (August 21, 2002), 67 FR 
55290 (August 28, 2002) (SR-ISE-2002-18); and 48894 (December 8, 
2003), 68 FR 70328 (December 17, 2003) (SR-PCX-2003-42).
---------------------------------------------------------------------------

    Ultimately, the Exchange believes the proposed rule change will 
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 because it will provide investors 
with a competitive and efficient market mechanism for executing 
investment strategies comprised of future-option orders on the 
Exchange, which will provide a venue for order exposure and price 
discovery. These are bona fide investment strategies that reduce market 
participants' risk and facilitate hedging. A robust and competitive 
market requires that exchanges respond to investors' evolving needs by 
constantly improving their offerings. When Congress charged the 
Commission with supervising the development of a ``national market 
system'' for securities, Congress stated its intent that the ``national 
market system evolve through the interplay of competitive forces as 
unnecessary regulatory restrictions are removed.\48\ Consistent with 
this purpose, Congress and the Commission have repeatedly stated their 
preference for competition, rather than regulatory intervention to 
determine products and services in the securities markets.\49\ This 
consistent and considered judgment of Congress and the Commission is 
correct, particularly in light of evidence of robust competition in the 
options trading industry. The fact that an exchange proposed something 
new is a reason to be receptive, not skeptical--innovation is the life-
blood of a vibrant competitive market--and that is particularly so 
given the continued internalization of the securities markets, as 
exchanges continue to implement new products and services to compete 
not only in the United States but throughout the world. Options 
exchanges continuously adopt new and different products and trading 
services in response to industry demands in order to attract order flow 
and liquidity to increase their trading volume. This competition has 
led to a growth in investment choices, which ultimately benefits the 
marketplace and the public. The Exchange believes that the proposed 
rule change will help further competition by providing market 
participants with yet another investment option for the listed options 
market.
---------------------------------------------------------------------------

    \48\ See H.R. Rep. No. 94-229, at 92 (1975) (Conf. Rep.).
    \49\ See S. Rep. No. 94-75, 94th Cong., 1st Sess. 8 (1975) 
(``The objective [in enacting the 1975 amendments to the Exchange 
Act] would be to enhance competition and to allow economic forces, 
interacting within a fair regulatory field, to arrive at appropriate 
variations in practices and services.''); Order Approving Proposed 
Rule Change Relating to NYSE Arca Data, Securities Exchange Act 
Release No. 59039 (December 2, 2008), 73 FR 74770 (December 9, 2008) 
(``The Exchange Act and its legislative history strongly support the 
Commission's reliance on competition, whenever possible, in meeting 
its regulatory responsibilities for overseeing the [self-regulatory 
organizations] and the national market system. Indeed, competition 
among multiple markets and market participants trading the same 
products is the hallmark of the national market system.''); and 
Regulation NMS, 70 FR at 37499 (observing that NMS regulation ``has 
been remarkably successful in promoting market competition in [the] 
forms that are most important to investors and listed companies'').
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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. The Exchange does not 
believe that the proposed rule change will impose any burden on 
intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, because future-option orders 
will be available to all TPHs and will execute in the same manner. 
Future-option orders will be available to all users on a voluntary 
basis, and users will not be required to use future-option orders to 
execute investment strategies comprised of option and future 
components. Users may continue to execute these strategies as they do 
today by entering an option order on the Exchange and separately 
executing the future component on a designated contract market. For 
users that elect to use the proposed functionality, the proposed rule 
change would reduce price and execution risk that currently exists when 
executing these strategies.
    The Exchange does not believe the proposed rule change will impose 
any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, because other 
options exchanges may propose similar functionality (and previously 
have, as noted above). The Exchange understands investors currently 
execute investment strategies comprised of option and future components 
today. Investors may continue to do so; however, the proposed rule 
change merely provides them a simple, efficient, transparent, and 
competitive execution mechanism for hedging and other investment 
strategies that contain options and related futures components.
    The Exchange believes the proposed rule change may relieve any 
burden on, or otherwise promote, competition. The proposed rule change 
is designed to provide investors with a more efficient and lower risk 
mechanism to execute investment strategies comprised of futures and 
options components. The Exchange believes this is an enhancement to 
executing these investment strategies in a riskier and more complex 
manner through separate transactions or in the unregulated and opaque 
OTC market. The proposed rule change would make a more attractive 
alternative to either of these options by providing investors with the 
ability to execute these strategies in a single transaction in an 
exchange environment. This would result in increased market 
transparency, enhanced efficiency in initiating and closing out 
positions, and heightened contra-party creditworthiness.

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 written comments on the 
proposed rule change.

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 Exchange 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.

[[Page 81600]]

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

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#0f7d7a636a226c6062626a617b7c4f7c6a6c21686079"><span class="__cf_email__" data-cfemail="ea989f868fc7898587878f849e99aa998f89c48d859c">[email protected]</span></a>. Please include 
file number SR-CBOE-2024-042 on the subject line.

Paper Comments

    <bullet> 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-2024-042. 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 the Exchange. 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-CBOE-2024-042 and should be 
submitted on or before October 29, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\50\
---------------------------------------------------------------------------

    \50\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-23064 Filed 10-7-24; 8:45 am]
BILLING CODE 8011-01-P


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