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[Federal Register Volume 89, Number 224 (Wednesday, November 20, 2024)]
[Notices]
[Pages 91811-91815]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27013]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101631; File No. SR-CBOE-2024-036]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Order 
Instituting Proceedings To Determine Whether To Approve or Disapprove a 
Proposed Rule Change To List and Trade Options on Ethereum Exchange-
Traded Funds

November 14, 2024.

I. Introduction

    On August 19, 2024, Cboe Exchange, Inc. (``Exchange'') filed with 
the Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'' or 
``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule 
change to allow the listing and trading of options on Units \3\ that 
represent interests in the Fidelity Ethereum Fund (the ``Fidelity 
Fund''), the 21Shares Core Ethereum ETF (the ``21Shares Fund''), the 
Invesco Galaxy Ethereum ETF (the ``Invesco Fund''), the Franklin 
Ethereum ETF (the ``Franklin Fund''), the VanEck Ethereum Trust (the 
``VanEck Fund''), the Grayscale Ethereum Trust (the ``Grayscale 
Fund''), the Grayscale Mini Ethereum Trust (the ``Grayscale Mini 
Fund''), the Bitwise Ethereum ETF (the ``Bitwise Fund''), and the 
iShares Ethereum Trust ETF (the ``iShares Fund'' and, collectively, the 
``Ethereum Funds'').\4\ The proposed rule change was published for 
comment in the Federal Register on September 4, 2024.\5\ The Commission 
has received no comments regarding the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Cboe Rule 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.
    \4\ The Commission approved proposals by several exchanges to 
list and trade shares of trusts that hold Ether, including the 
Ethereum Funds. See Securities Exchange Act Release Nos. 100224 (May 
23, 2024), 89 FR 46937 (May 30, 2024); and 100541 (July 17, 2024), 
89 FR 59786 (July 23, 2024).
    \5\ See Securities Exchange Act Release No. 100862 (Aug. 28, 
2024), 89 FR 72146 (``Notice'').
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    On October 11, 2024, pursuant to Section 19(b)(2) of the Exchange 
Act,\6\ the Commission designated a longer period within which to 
approve the proposed rule change, disapprove the proposed rule change, 
or institute proceedings to determine whether to disapprove the 
proposed rule change.\7\ This order institutes proceedings under 
Section 19(b)(2)(B) of the Act \8\ to determine whether to approve or 
disapprove the proposed rule change.
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    \6\ 15 U.S.C. 78s(b)(2).
    \7\ See Securities Exchange Act Release No. 101321 (Oct. 11, 
2024), 89 FR 83723 (Oct. 17, 2024) (designating December 3, 2024, as 
the date by which the Commission shall either approve, disapprove, 
or institute proceedings to determine whether to disapprove the 
proposed rule change).
    \8\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change

    As described more fully in the Notice,\9\ the Exchange proposes to 
amend Exchange Rule 4.3, Interpretation and Policy .06(a)(4) to allow 
the Exchange to list and trade options on Units of the Ethereum Funds. 
The Exchange states that current Exchange Rule 4.3, Interpretation and 
Policy .06(a) 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, including 
interests in certain specific trusts that hold financial instruments, 
money market instruments, or precious metals (which are deemed 
commodities).\10\
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    \9\ See supra note 5.
    \10\ See Notice, 89 FR at 72146-7.
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    The Exchange states that the Ethereum Funds are Ethereum-backed 
commodity ETFs structured as trusts, and that, similar to any Unit 
currently deemed appropriate for options trading under Exchange Rule 
4.3, Interpretation and Policy .06, the investment objective of each 
Ethereum Fund trust is for its shares to reflect the performance of 
Ethereum (less the expenses of the trust's operations), offering 
investors an opportunity to gain exposure to Ethereum without the 
complexities of Ethereum delivery.\11\ The Exchange states that, as is 
the case for Units currently deemed appropriate for options trading, an 
Ethereum Fund's shares represent units of fractional undivided 
beneficial interest in the trust, the assets of which consist 
principally of Ethereum and are designed to track Ethereum or the 
performance of the price of Ethereum and offer access to the Ethereum 
market.\12\ The Exchange states that the Ethereum Funds provide 
investors with cost-efficient alternatives that allow a level of 
participation in the Ethereum market through the securities market, and 
that the primary substantive difference between Ethereum Funds and 
Units currently deemed appropriate for options trading are that Units 
may hold securities, certain financial instruments, and specified 
precious metals (which are deemed commodities), while Ethereum Funds 
hold Ethereum (which is also deemed a commodity).\13\
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    \11\ See id. at 72147.
    \12\ The Exchange states that the trusts may include minimal 
cash. See id. at note 5.
    \13\ See Notice, 89 FR at 72147.
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    The Exchange states that it believes that the Ethereum Funds 
satisfy the Exchange's initial listing standards in Exchange Rule 4.3, 
Interpretation and Policy .06(b) that Units must either (1) meet the 
criteria and standards set forth in Rule 4.3, Interpretation and Policy 
.01(a), or (2) be available for creation or redemption each business 
day from or through the issuer in cash or in kind at a price related to 
net asset value, and the issuer must be obligated to issue Units in a 
specified aggregate number even if some or all of the investment assets 
required to be deposited have not been received by the issuer, subject 
to the condition that the person obligated to deposit the investments 
has undertaken to deliver the investment assets as soon as possible and 
such undertaking is secured by the delivery and maintenance of 
collateral consisting of cash or cash equivalents satisfactory to the 
issuer, as provided in the respective prospectus.\14\ The Exchange 
states that the Ethereum Funds satisfy Exchange Rule 4.3, 
Interpretation and Policy .06(b)(2), as they are all subject to this 
creation and redemption process.\15\
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    \14\ See id.
    \15\ See id.
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    The Exchange further states that, while not required by the 
Exchange's Rules for purposes of options listings, the majority of the 
Ethereum Funds satisfy the criteria and guidelines set forth in 
Exchange Rule 4.3, Interpretation and Policy .01.\16\ The Exchange 
states that, pursuant to Exchange Rule 4.3(a), a security (which 
includes a Unit) on which options may be listed and traded on the 
Exchange must be duly registered (with the Commission) and be an NMS 
stock (as defined in Rule 600 of Regulation NMS under the Act), and be 
characterized by a substantial number of outstanding shares that are 
widely held and actively traded.\17\ The Exchange states that each of 
the Ethereum Funds is an NMS Stock, as defined in Rule 600 of 
Regulation

[[Page 91812]]

NMS under the Act, and that each Ethereum Fund is characterized by a 
substantial number of outstanding shares that are widely held and 
actively traded.\18\
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    \16\ See id.
    \17\ The Exchange states that the criteria and guidelines for a 
security to be considered widely held and actively traded are set 
forth in Exchange Rule 4.3, Interpretation and Policy .01, subject 
to exceptions. See id. at note 7.
    \18\ See Notice, 89 FR at 72147.
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    The Exchange states that, as of August 7, 2024, the Ethereum Funds 
had the following number of shares outstanding: \19\
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    \19\ See id.

------------------------------------------------------------------------
                                                             Shares
                    Ethereum fund                         outstanding
------------------------------------------------------------------------
Fidelity Fund........................................         10,850,000
21Shares Fund........................................            760,000
Invesco Fund.........................................            468,000
Franklin Fund........................................          1,500,000
VanEck Fund..........................................          1,725,000
Grayscale Fund.......................................        228,468,500
Grayscale Mini Fund..................................        380,898,500
Bitwise Fund.........................................         12,370,000
iShares Fund.........................................         37,200,000
------------------------------------------------------------------------

    The Exchange states that, despite the fact that these Ethereum 
Funds were in only their third week of trading (they began trading on 
July 23, 2024), five of these funds already have more than 7,000,000 
shares outstanding, which is the minimum number of shares of a 
corporate stock that the Exchange generally requires to list options on 
that stock pursuant to Exchange Rule 4.3, Interpretation and Policy 
.01(a)(1).\20\ However, the Exchange states that shares outstanding 
(i.e., free float),\21\ while commonly used to determine investable 
capacities of corporate stocks, has little utility with respect to ETFs 
due to the market structure of ETFs.\22\ The Exchange states that 
proofing of ETF baskets, in addition to the efficiency of creation/
redemption mechanisms, decouple concepts of ``floating'' ETF shares 
against the impacts of ETF liquidity to the liquidity of ETF 
constituents.\23\ The Exchange states that although ETF market makers 
may often limit the amount of floating ETF shares, primary market 
mechanisms enable virtually limitless capacity to create and redeem ETF 
shares on a daily basis.\24\ The Exchange states that, as evidenced 
during their brief time in market, the gross value of daily shares 
created or redeemed for each Ethereum Fund approximates its assets 
under management (``AUM'') as of July 24, 2024, which were as follows: 
\25\
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    \20\ See id.
    \21\ The Exchange states that all outstanding ETF shares are 
considered free float because there are no restricted ETF shares or 
shares held by insiders, as is the case with respect to corporate 
stocks. See id. at note 9.
    \22\ See id.
    \23\ See Notice, 89 FR at 72147.
    \24\ The Exchange states that this is the primary reasoning for 
why the Exchange may list options on ETFs as long as they are 
subject to the creation and redemption process and generally do not 
need to satisfy the criteria set forth in Interpretation and Policy 
.01. See id. note 10.
    \25\ See Notice, 89 FR at 72148.

------------------------------------------------------------------------
                    Ethereum Fund                             AUM
------------------------------------------------------------------------
Fidelity Fund........................................          9,481,360
21Shares Fund........................................        148,080,600
Invesco Fund.........................................         37,197,280
Franklin Fund........................................         19,301,340
VanEck Fund..........................................          9,013,556
Grayscale Fund.......................................      8,040,436,000
Grayscale Mini Fund..................................      1,043,203,000
Bitwise Fund.........................................        230,788,700
iShares Fund.........................................        287,328,200
------------------------------------------------------------------------

    The Exchange states that this demonstrates that each Ethereum Fund 
is characterized by a substantial number of outstanding shares.\26\ The 
Exchange further states that, given how recently Ethereum Funds began 
trading, the Exchange does not have access to the number of beneficial 
holders of Ethereum Funds at this time. \27\ However, the Exchange 
states that, given the significant trading volumes of the Ethereum 
Funds, it is reasonable to expect that shares of all of the Ethereum 
Funds are characterized by a substantial number of outstanding shares 
that are widely held.\28\ The Exchange also believes each Ethereum Fund 
is characterized by a substantial number of outstanding shares that are 
actively traded.\29\ The Exchange states that, as of August 7, 2024, 
the total trading volume (by shares and notional) for each fund since 
they began trading on July 23, 2024, and the average daily volume 
(``ADV'') over the five-day period of August 2 through August 7, 2024, 
for each Ethereum Fund was as follows: \30\
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    \26\ See id.
    \27\ See id.
    \28\ See id.
    \29\ See id.
    \30\ See id.

----------------------------------------------------------------------------------------------------------------
                                                     Trading volume        Trading volume
                  Ethereum Fund                         (shares)            (notional $)          ADV (shares)
----------------------------------------------------------------------------------------------------------------
Fidelity Fund....................................         32,751,647         1,023,590,893.88       1,279,085.00
21Shares Fund....................................          2,995,673            46,584,597.69         183,032.80
Invesco Fund.....................................          2,398,977            75,800,517.49         116,423.80
Franklin Fund....................................          3,726,018            89,987,417.90         114,194.60
VanEck Fund......................................          5,557,411           247,424,935.45         288,519.00
Grayscale Fund...................................        221,839,519         5,934,238,584.03       7,429,260.00
Grayscale Mini Fund..............................        387,753,619         1,117,121,565.01      24,800,550.00
Bitwise Fund.....................................         27,454,355           638,820,845.28         806,202.19
iShares Fund.....................................        124,839,230         2,896,601,784.35       6,720,303.00
----------------------------------------------------------------------------------------------------------------

    The Exchange states that the trading volume for each except one 
Ethereum Fund is higher (and several significantly higher) than 
2,400,000 shares (and that one is only 1,023 shares below that number), 
which is the minimum 12-month volume the Exchange generally requires 
for a security in order to list options on that security as set forth 
in Exchange Rule 4.3, Interpretation and Policy .01.\31\ Additionally, 
the Exchange states that from July 23 (the first day the Ethereum Funds 
began trading) through August 7, 2024, the ADV for each Ethereum Fund 
is in the top 25% of all ETFs that are currently trading.\32\ The 
Exchange states that this data demonstrates each Ethereum Fund is 
characterized by a substantial number of outstanding shares that are 
actively traded.\33\
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    \31\ See id.
    \32\ See id.
    \33\ See id.
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    The Exchange states that options on Ethereum Funds will be subject 
to the Exchange's continued listing standards in Exchange Rule 4.4, 
Interpretation and Policy .06 for Units deemed appropriate for options 
trading pursuant to Exchange Rule 4.3, Interpretation and Policy 
.06.\34\ The Exchange states that Exchange Rule 4.4, Interpretation and 
Policy .06 provides that Units that were initially approved for options 
trading pursuant to Exchange Rule 4.3, Interpretation and Policy .06 
shall be deemed not to meet the requirements for continued approval, 
and the Exchange

[[Page 91813]]

shall not open for trading any additional series of option contracts of 
the class covering such Unit, if the Units cease to be an NMS stock or 
the Units are halted from trading in their primary market.\35\ 
Additionally, the Exchange states that options on Units may be subject 
to the suspension of opening transactions in any of the following 
circumstances: (1) in the case of options covering Units approved for 
trading under Exchange Rule 4.3, Interpretation and Policy .06(b)(1), 
in accordance with the terms of paragraphs (a), (b), and (c) of 
Exchange Rule 4.4, Interpretation and Policy .01; (2) in the case of 
options covering Units approved for trading under Exchange Rule 4.3, 
Interpretation and Policy .06(b)(2) (as is the case for the Ethereum 
Funds), following the initial twelve-month period beginning upon the 
commencement of trading in the Units on a national securities exchange, 
there are fewer than 50 record and/or beneficial holders of such Units 
for 30 or more consecutive trading days; (3) the value of the index or 
portfolio of securities, non-U.S. currency, or portfolio of commodities 
including commodity futures contracts, options on commodity futures 
contracts, swaps, forward contracts and/or options on physical 
commodities and/or financial instruments and money market instruments 
on which the Units are based is no longer calculated or available; or 
(4) such other event shall occur or condition exist that in the opinion 
of the Exchange makes further dealing in such options on the Exchange 
inadvisable.\36\
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    \34\ See id.
    \35\ See id.
    \36\ See id.
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    The Exchange states that options on each Ethereum Fund will be 
physically settled contracts with American-style exercise.\37\ As 
described more fully in the Notice, the Exchange states that Ethereum 
Fund options will trade in the same manner as any other Unit options on 
the Exchange.\38\ The Exchange states that Exchange Rules that 
currently apply to the listing and trading of all Unit options on the 
Exchange, including, for example, Exchange Rules that govern listing 
criteria, expiration and exercise prices, minimum increments, position 
and exercise limits, margin requirements, customer accounts and trading 
halt procedures will apply to the listing and trading of Ethereum Funds 
on the Exchange in the same manner as they apply to other options on 
all other Units that are listed and traded on the Exchange, including 
the precious-metal backed commodity Units already deemed appropriate 
for options trading on the Exchange pursuant to current Exchange Rule 
4.3, Interpretation and Policy .06(a)(4).\39\
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    \37\ See id.
    \38\ See id. at 72149.
    \39\ See id.
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    The Exchange states that position and exercise limits for options 
on Units, including options on Ethereum Funds, will be determined 
pursuant to Exchange Rules 8.30 and 8.42, respectively.\40\ The 
Exchange states that position and exercise limits for Unit options vary 
according to the number of outstanding shares and the trading volumes 
of the underlying Unit over the past six months, where the largest in 
capitalization and the most frequently traded Units have an option 
position and exercise limit of 250,000 contracts (with adjustments for 
splits, re-capitalizations, etc.) on the same side of the market; and 
smaller capitalization Units have position and exercise limits of 
200,000, 75,000, 50,000 or 25,000 contracts (with adjustments for 
splits, re-capitalizations, etc.) on the same side of the market.\41\
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    \40\ See id.
    \41\ See id.
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    The Exchange represents that the same surveillance procedures 
applicable to all other options on Units currently listed and traded on 
the Exchange will apply to options on Ethereum Funds, and that it has 
the necessary systems capacity to support the new option series.\42\ 
The Exchange states that its existing surveillance and reporting 
safeguards are designed to deter and detect possible manipulative 
behavior which might potentially arise from listing and trading Unit 
options.\43\ The Exchange further states that it may obtain information 
from CME Group Inc.'s designated contract markets that are members of 
the Intermarket Surveillance Group related to any financial instrument 
that is based, in whole or in part, upon an interest in or performance 
of Ethereum, as applicable.\44\ The Exchange states that it has 
analyzed its capacity and believes that the Exchange and the Options 
Price Reporting Authority have the necessary systems capacity to handle 
the additional traffic associated with the listing of new series that 
may result from the introduction of options on Ethereum Funds up to the 
number of expirations currently permissible under the Exchange's 
Rules.\45\ The Exchange states that because the proposal is limited to 
Units on a single commodity, any additional traffic that may be 
generated from the introduction of Ethereum Fund options will be 
manageable.\46\
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    \42\ See id.
    \43\ See id.
    \44\ See id.
    \45\ See id.
    \46\ See id.
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    The Exchange states that offering options on Ethereum Funds will 
benefit investors by providing them with an additional, relatively 
lower cost investing tool to gain exposure to the price of Ethereum and 
a hedging vehicle to meet their investment needs in connection with 
Ethereum-related products and positions.\47\ The Exchange states that 
it expects investors will transact in options on Ethereum Funds in the 
unregulated over-the-counter (``OTC'') options market, but may prefer 
to trade such options in a listed environment to receive the benefits 
of trading listed options, including (1) enhanced efficiency in 
initiating and closing out position; (2) increased market transparency; 
and (3) heightened contra party creditworthiness due to the role of OCC 
as issuer and guarantor of all listed options.\48\ The Exchange states 
that listing Ethereum Fund options may cause investors to bring this 
liquidity to the Exchange, which would increase market transparency and 
enhance the process of price discovery conducted on the Exchange 
through increased order flow.\49\ The Exchange states that Units that 
hold financial instruments, money market instruments, or precious metal 
commodities on which the Exchange may already list and trade options 
are trusts structured in substantially the same manner as the Ethereum 
Funds and essentially offer the same objectives and benefits to 
investors, just with respect to different assets.\50\ The Exchange 
states that it has not identified any issues with the continued listing 
and trading of any Unit options, including Units that hold commodities 
(i.e., precious metals) that it currently lists and trades on the 
Exchange.\51\
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    \47\ See id.
    \48\ See id.
    \49\ See id.
    \50\ See id.
    \51\ See id. at 72150.
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    The Exchange states that the proposed rule change is consistent 
with the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b)(5) of the 
Act.\52\ The Exchange states that the proposal to list and trade 
options on Ethereum Funds will remove impediments to and perfect the 
mechanism of a free and open market and a national market system and, 
in general, protect investors because offering options on Ethereum 
Funds will provide investors with an

[[Page 91814]]

opportunity to realize the benefits of utilizing options on a Ethereum 
Fund, including cost efficiencies and increased hedging strategies.\53\ 
The Exchange further states that offering Ethereum Fund options will 
benefit investors by providing them with a relatively lower-cost risk 
management tool, which will allow them to manage their positions and 
associated risk in their portfolios more easily in connection with 
exposure to the price of Ethereum and with Ethereum-related products 
and positions.\54\ Additionally, the Exchange states that its offering 
of Ethereum Fund options will provide investors with the ability to 
transact in such options in a listed market environment as opposed to 
in the unregulated OTC options market, which would increase market 
transparency and enhance the process of price discovery conducted on 
the Exchange through increased order flow to the benefit of all 
investors.\55\ The Exchange states that it already lists options on 
other commodity-based Units, which are trusts structured in 
substantially the same manner as Ethereum Funds and essentially offer 
the same objectives and benefits to investors, just with respect to a 
different commodity (i.e., Ethereum rather than precious metals), and 
for which the Exchange has not identified any issues with their 
continued listing and trading.\56\ The Exchange states that the 
proposed rule change will remove impediments to and perfect the 
mechanism of a free and open market and a national market system, 
because it is consistent with current Exchange Rules previously filed 
with the Commission.\57\ The Exchange states that options on Ethereum 
Funds satisfy the initial listing standards and continued listing 
standards currently in the Exchange Rules applicable to options on all 
Units, including Units that hold other commodities already deemed 
appropriate for options trading on the Exchange.\58\ In addition, the 
Exchange states that each Ethereum Fund is characterized by a 
substantial number of shares that are widely held and actively 
traded.\59\ In addition, the Exchange states that Ethereum Fund options 
will trade in the same manner as any other Unit options--the same 
Exchange Rules that currently govern the listing and trading of all 
Unit options, including permissible expirations, strike prices and 
minimum increments, and applicable position and exercise limits and 
margin requirements, will govern the listing and trading of options on 
Ethereum Funds in the same manner.\60\
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    \52\ 15 U.S.C. 78f(b)(5). See Notice, 89 FR at 72150.
    \53\ See id.
    \54\ See id.
    \55\ See id.
    \56\ See id.
    \57\ See id.
    \58\ See id.
    \59\ See id.
    \60\ See id.
---------------------------------------------------------------------------

    The Exchange states that the proposed position and exercise limits 
for the Ethereum Fund options are consistent with the Exchange Act, 
will remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general, protect investors 
and the public interest, because they are designed to address potential 
manipulative schemes and adverse market impacts surrounding the use of 
options, such as disrupting the market in the security underlying the 
options.\61\ The Exchange states that the proposed position and 
exercise limits are the same limits that apply to other ETF options, 
including other commodity ETF options.\62\ The Exchange states that the 
proposed position and exercise limits balance the liquidity 
provisioning in the market against the prevention of manipulation, as 
they currently do for other equity options (including commodity ETF 
options).\63\ The Exchange further states that the available supply in 
the markets of Ethereum is not relevant when establishing position 
limits for options on the Ethereum Funds, as what is held by an ETF has 
historically not been a relevant factor considered by the Commission 
when it has considered rule filings to list options on ETFs, including 
commodity ETFs.\64\ The Exchange states that when the Commission 
previously approved rules to list options on other commodity ETFs, the 
Commission did not require consideration of whether the available 
supply of those commodities should be considered when the Exchange 
established those position limits.\65\ The Exchange states that 
position limits in the Exchange's Rules at that time were the same as 
they are today as set forth in Exchange Rule 8.30 (and as proposed to 
be applicable to options on the Ethereum Funds).\66\
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    \61\ See id.
    \62\ See id.
    \63\ See id.
    \64\ See id.
    \65\ See id.
    \66\ See id.
---------------------------------------------------------------------------

III. Proceedings To Determine Whether To Approve or Disapprove SR-CBOE-
2024-036 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \67\ to determine whether the proposed rule 
change should be approved or disapproved. Institution of such 
proceedings is appropriate at this time in view of the legal and policy 
issues raised by the proposed rule change. Institution of proceedings 
does not indicate that the Commission has reached any conclusions with 
respect to any of the issues involved. Rather, as described below, the 
Commission seeks and encourages interested persons to provide comments 
on the proposed rule change.
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    \67\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\68\ the Commission is 
providing notice of the grounds for disapproval under consideration. 
The Commission is instituting proceedings to allow for additional 
analysis of the proposed rule change's consistency with Section 6(b)(5) 
of the Act,\69\ which requires, among other things, that the rules of a 
national securities exchange be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to remove impediments to and protect the mechanism 
of a free and open market and a national market system, and, in 
general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \68\ Id.
    \69\ 15 U.S.C. 78f(b)(5).
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    Under the Commission's Rules of Practice, the ``burden to 
demonstrate that a proposed rule change is consistent with the Exchange 
Act and the rules and regulations issued thereunder . . . is on the 
self-regulatory organization that proposed the rule change.'' \70\ The 
description of a proposed rule change, its purpose and operation, its 
effect, and a legal analysis of its consistency with applicable 
requirements must all be sufficiently detailed and specific to support 
an affirmative Commission finding,\71\ and any failure of a self-
regulatory organization to provide this information may result in the 
Commission not having a sufficient basis to make an affirmative finding 
that a proposed rule change is consistent with the Act and the 
applicable rules and regulations.\72\ The Commission is instituting 
proceedings to allow for additional consideration and comment on the 
issues raised herein, including as to whether the proposal is 
consistent with the Act. In particular, the Commission asks commenters 
to address whether the proposal includes sufficient data and analysis 
to support a conclusion that the proposal is consistent with the

[[Page 91815]]

requirements of Section 6(b)(5) of the Act.
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    \70\ 17 CFR 201.700(b)(3).
    \71\ See id.
    \72\ See id.
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IV. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
issues identified above, as well as any other concerns they may have 
with the proposal. In particular, the Commission invites the written 
views of interested persons concerning whether the proposal is 
consistent with Section 6(b)(5) or any other provision of the Act, and 
the rules and regulations thereunder. Although there do not appear to 
be any issues relevant to approval or disapproval that would be 
facilitated by an oral presentation of views, data, and arguments, the 
Commission will consider, pursuant to Rule 19b-4, any request for an 
opportunity to make an oral presentation.\73\
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    \73\ Section 19(b)(2) of the Act, as amended by the Securities 
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Acts Amendments of 1975, Senate Comm. 
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposed rule change should be approved 
or disapproved by December 11, 2024. Any person who wishes to file a 
rebuttal to any other person's submission must file that rebuttal by 
December 26, 2024.
    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 [email protected]. Please include 
file number SR-CBOE-2024-036 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-CBOE-2024-036. 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-2024-036 and should be 
submitted on or before December 11, 2024. Rebuttal comments should be 
submitted by December 26, 2024.
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    \74\ 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\74\
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-27013 Filed 11-19-24; 8:45 am]
BILLING CODE 8011-01-P
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