44118 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

33 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act 

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 an 

SRO. See Securities Acts Amendments of 1975, 

Report of the Senate Committee on Banking, 

Housing and Urban Affairs to Accompany S. 249, 

S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). 

34 15 U.S.C. 78s(b)(3)(C). 

35 17 CFR 200.30–3(a)(57) and (58). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 91767 

(May 4, 2021), 86 FR 25026. 4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 92204, 

86 FR 33395 (June 24, 2021). The Commission 

designated August 8, 2021, as the date by which the 

Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

approve or disapprove, the proposed rule change. 

6 In Amendment No. 1, the Exchange: (1) Reduced 

the proposed position limit for GLD options from 

1,000,000 contracts to 500,000 contracts; and (2) 

provided additional justification and analysis in 

support of the proposal. The additional justification 

and analysis provided by Amendment No. 1 is 

included in the description below of the proposal 

as amended. The full text of Amendment No. 1 is 

available on the Commission’s website at: https:// 

www.sec.gov/comments/sr-cboe-2021-029/ 

srcboe2021029-9094584-246812.pdf. 

7 15 U.S.C. 78s(b)(2)(B). 

V. Commission’s Solicitation of 

Comments 

The Commission requests written 

views, data, and arguments with respect 

to the concerns identified above as well 

as any other relevant concerns. Such 

comments should be submitted by 

September 1, 2021. Rebuttal comments 

should be submitted by September 15, 

2021. Although there do not appear to 

be any issues relevant to approval or 

disapproval which 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.33

The Commission asks that 

commenters address the sufficiency and 

merit of the Exchange’s statements in 

support of the proposal, in addition to 

any other comments they may wish to 

submit about the proposed rule change. 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the proposed rule 

changes, including whether the 

proposed rule change is consistent with 

the Act. Comments may be submitted by 

any of the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File No. SR– 

NYSEArca–2021–52 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 No. 

SR–NYSEArca–2021–52. The 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 (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for 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 

10:00 a.m. and 3:00 p.m. Copies of such 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make publicly available. All 

submissions should refer to File No. 

SR–NYSEArca–2021–52 and should be 

submitted on or before September 1, 

2021. Rebuttal comments should be 

submitted by September 15, 2021. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(3)(C) of the Act,34 that File 

No. SR–NYSEArca–2021–52, be and 

hereby is, temporarily suspended. In 

addition, the Commission is instituting 

proceedings to determine whether the 

proposed rule change should be 

approved or disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.35

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–17087 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92581; File No. SR–CBOE– 

2021–029] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing of 

Amendment No. 1 and Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove a Proposed 

Rule Change, as Modified by 

Amendment No. 1, To Increase 

Position Limits for Options on Certain 

Exchange-Traded Funds and an 

Exchange-Traded Note 

August 5, 2021. 

I. Introduction 

On April 21, 2021, 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’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend Interpretation and Policy .07 of 

Exchange Rule 8.30, Position Limits, to 

increase the position limits for options 

on the following exchange traded funds 

(‘‘ETFs’’) and exchange traded note 

(‘‘ETN’’) (collectively, ‘‘Exchange 

Traded Products’’ or ‘‘ETP(s)’’): SPDR 

Gold Shares (‘‘GLD’’), iShares iBoxx $ 

Investment Grade Corporate Bond ETF 

(‘‘LQD’’), iShares Silver Trust (‘‘SLV’’), 

iPath S&P 500 VIX Short-Term Futures 

ETN (‘‘VXX’’), ProShares Ultra VIX 

Short-Term Futures ETF (‘‘UVXY’’), and 

VanEck Vectors Gold Miners ETF 

(‘‘GDX’’). The proposed rule change was 

published for comment in the Federal 

Register on May 10, 2021.3 On June 17, 

2021, pursuant to Section 19(b)(2) of the 

Act,4 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 

approve or disapprove the proposed 

rule change.5 On July 27, 2021, the 

Exchange submitted Amendment No. 1 

to the proposed rule change, which 

replaced and superseded the proposed 

rule change as originally filed.6 The 

Commission is publishing this notice 

and order to solicit comments on the 

proposed rule change, as modified by 

Amendment No. 1, from interested 

persons and to institute proceedings 

pursuant to Section 19(b)(2)(B) of the 

Act 7 to determine whether to approve 

or disapprove the proposed rule change, 

as modified by Amendment No. 1. 

II. Description of the Proposal, as 

Modified by Amendment No. 1 

Currently, position limits for options 

on ETFs and ETNs traded on the 

Exchange, such as those subject to this 


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8See Interpretation and Policy .02(e) to Exchange 

Rule 8.30. 

9See Amendment No. 1, supra note 6, at 6; see 

also id. at 10, 12, 16, 17, 19, for descriptions 

provided by the Exchange regarding the 

composition, design, and investment objectives of 

the ETPs underlying each of the options subject to 

this proposal. 

10Pursuant to Exchange Rule 8.42, Interpretation 

and Policy .02, the text of which is not being 

amended by this proposal, the exercise limits for 

GLD, SLV, LQD, GDX, VXX, and UVXY options 

would be similarly increased as a result of this 

proposal. 

11See Amendment No. 1, supra note 6, at 24. 

12See id. at 9–13. See also Exchange Rule 8.30, 

Interpretation and Policy .07. Prior to the 

submission of Amendment No. 1, the Exchange 

originally proposed to increase the position limit 

for options on GLD to 1,000,000 contracts. 

13See Amendment No. 1, supra note 6, at 11–12. 

14See id. at 9–10. 

15See id. at 9–12. The Exchange also states that 

demand for trading GLD and SLV options has 

increased whereas the position limits for these 

products have remained the same, which may 

impact the ability of Trading Permit Holders 

(‘‘TPHs’’) to effectively hedge against exposure to 

physical gold and silver. See id. at 13. 

16See id. at 14. 

17See id. The Exchange understands that its 

market-makers use both GLD and gold futures to 

hedge their GLD options positions, which the 

Exchange believes provides for a balance across the 

gold-related marketplaces, mitigating potential 

concerns that either the underlying or the futures 

market might experience additional pressure as a 

result of an increase in activity in the GLD options 

space. See id. 

18See id. 19See id. at 14–15. 20See id. at 15. 21See id. at 15–16. 22See id. at 9–10, 19–20. See also Exchange Rule 

8.30, Interpretation and Policy .07. The Exchange 

also states that, while VIX options share similar 

trading characteristics with options on VXX and 

UVXY, VIX options are not currently subject to 

position limits. See Amendment No. 1, supra note 

6, at 20. 

23See Amendment No. 1, supra note 6, at 19–20. 24See id. at 9–10. 

proposal, as amended, are determined 

pursuant to Exchange Rule 8.30, and 

generally vary according to the number 

of outstanding shares and past sixmonth trading volume of the underlying 

security. Options on the securities with 

the largest numbers of outstanding 

shares and trading volume have a 

standard option position limit of 

250,000 contracts (with adjustments for 

splits, re-capitalizations, etc.) on the 

same side of the market.8 In addition, 

Interpretation and Policy .07 of 

Exchange Rule 8.30 currently sets forth 

separate position limits for options on 

certain ETFs that range from 300,000 to 

3.6 million contracts. 

Options on GLD, SLV, LQD, GDX, 

VXX, and UVXY are currently subject to 

the standard position limit of 250,000 

contracts as set forth in Exchange Rule 

8.30.9 The purpose of the proposed rule 

change, as modified by Amendment 

No.1, is to amend Interpretation and 

Policy .07 to Exchange Rule 8.30 to 

increase the position limits for options 

on GLD, SLV, LQD, GDX, VXX, and 

UVXY from 250,000 contracts to 

500,000 contracts.10 The Exchange 

believes that the proposed position limit 

increases will lead to a more liquid and 

competitive market environment for 

these options that will benefit customers 

interested in trading these products.11

The Exchange states that, to support the 

proposed position limit increases, it has 

considered, and provided statistics 

regarding, the liquidity of the 

underlying ETPs, the value of the 

underlying securities or index 

components and relevant marketplace, 

the share and option volume for the 

underlying ETPs, and, where applicable, 

the availability or comparison of 

economically equivalent products to 

options on the underlying ETPs. 

Specifically, in support of its proposal 

to increase the position limits for 

options on GLD and SLV from 250,000 

contracts to 500,000 contracts, the 

Exchange, among other things, 

compares the trading characteristics of 

GLD and SLV to those of the iShares 

MSCI Brazil Capped ETF (‘‘EWZ’’), the 

iShares 20+ Year Treasury Bond Fund 

ETF (‘‘TLT’’), the iShares MSCI Japan 

ETF (‘‘EWJ’’), and the iShares iBoxx 

High Yield Corporate Bond Fund 

(‘‘HYG’’), all of which currently have a 

position limit of 500,000 contracts.12

The Exchange states that the average 

daily trading volume (‘‘ADV’’) in 

calendar year 2020 for GLD was 12.3 

million shares and SLV was 33.1 

million shares compared to 29.2 million 

shares for EWZ, 11.5 million shares for 

TLT, 8.2 million shares for EWJ, and 

30.5 million shares for HYG; 13 the total 

shares outstanding as of April 5, 2021 

for GLD was 354.3 million and SLV was 

619.3 million compared to 173.8 million 

for EWZ, 103.7 million for TLT, 185.3 

million for EWJ, and 254.5 million for 

HYG; 14 and the fund market cap as of 

January 14, 2021 for GLD was $70,195.7 

and SLV was $14,228.4 million 

compared to $6,506.8 million for EWZ, 

$17,121.3 million for TLT, $13,860.7 

million for EWJ, and $24,067.5 million 

for HYG.15

In addition, the Exchange states that 

it recognizes that the spot metal markets 

underlying SLV and GLD differ from the 

equities markets underlying EWZ, EWJ, 

TLT, and HYG, but that it does not 

believe that position limit increases for 

options on GLD and SLV will have any 

adverse impact on the underlying spot 

gold and silver markets.16 Specifically, 

the Exchange states that gold futures 

currently have a value of approximately 

$93.2 billion in open interest, have 

experienced an ADV of approximately 

264,000 contracts (equivalent to 

approximately 264 million GLD 

contracts) from January through May 

2021, and currently are subject to a 

position limit of 6,000 contracts, which 

is notionally equivalent to 6,000,000 

GLD option contracts.17 The Exchange 

similarly states that silver futures 

currently have a value of approximately 

$25.7 billion in open interest, have 

experienced an ADV of approximately 

93,000 contracts (equivalent to 

approximately 465 million SLV 

contracts) from January through May 

2021, and currently are subject to a 

position limit of 3,000 contracts, which 

is notionally equivalent to 15,000,000 

SLV option contracts.18 The Exchange 

believes that the volume in and value of 

the gold and silver futures markets 

indicate that the underlying markets are 

sufficiently large and liquid enough to 

absorb potential price movements and 

large-sized trades as a result of position 

limit increases for options on GLD and 

SLV.19

The Exchange also provides data 

showing that the volume-weighted 

average of the absolute value of deltas 

for GLD and SLV options trades from 

March 2019 through June 2021 was 

approximately 0.34 per GLD options 

trade and approximately 0.28 per SLV 

options trade.20 The Exchange believes 

these low absolute value deltas indicate 

that increases in GLD and SLV options 

trading would have minimal impact on 

the ability of the underlying metals 

markets to absorb any additional 

volume related to increased position 

limits and hedging activity.21

In support of its proposal to increase 

the position limits for options on VXX 

and UVXY from 250,000 contracts to 

500,000 contracts, the Exchange, among 

other things, compares the trading 

characteristics of VXX and UVXY to 

those of EWZ, TLT, EWJ, and HYG, all 

of which currently have a position limit 

of 500,000 contracts.22 The Exchange 

states that the ADV in calendar year 

2020 for VXX was 39.3 million shares 

and UVXY was 29.3 million shares 

compared to 29.2 million shares for 

EWZ, 11.5 million shares for TLT, 8.2 

million shares for EWJ, and 30.5 million 

shares for HYG; 23 the total shares 

outstanding as of April 14, 2021 for 

VXX was 110.8 million and UVXY was 

228.7 million compared to 173.8 million 

for EWZ, 103.7 million for TLT, 185.3 

million for EWJ, and 254.5 million for 

HYG; 24 and the fund market cap as of 

January 14, 2021 for VXX was $1,023 

million and UVXY was $1,580.6 million 

compared to $6,506.8 million for EWZ, 

$17,121.3 million for TLT, $13,860.7 


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25See id. 

26See id. at 20. 

27See id. 

28See id. 

29See id. 

30See id. at 20–21. 

31See id. at 21. 

32See id. at 21–22. In contrast, the Exchange 

believes that the current position limits for VXX 

and UVXY options may, at times in which there is 

higher volatility and, thus, higher demand in 

connection with these options, reduce liquidity and 

create further volatility. See id. at 21. 

33See id. at 22. 34See id. 35See id. at 9–10, 18. See also Exchange Rule 

8.30, Interpretation and Policy .07. 36See Amendment No. 1, supra note 6, at 18. 37See id. at 9–10. 38See id. at 9–10, 18. 39See id. at 18. 40See id. at 17–18. 

41See id. at 9–10, 16–17. See also Exchange Rule 

8.30, Interpretation and Policy .07. 42See Amendment No. 1, supra note 6, at 16. 43See id. at 9–10. 44See id. at 9–10, 16. 

45See id. at 16–17. 

46See id. at 5. 

47See id. at 5, 27–28. 

48See id. at 5, 28. 

million for EWJ, and $24,067.5 million 

for HYG.25 The Exchange also states that 

the 2020 ADV for trading in VIX futures 

was approximately 192,000 contracts 

and VIX futures currently have a value 

of approximately $7.6 billion in open 

interest.26 The Exchange believes that 

its proffered data indicates that the 

market for VXX and UVXY is 

sufficiently large and liquid enough to 

absorb price movements and large-sized 

trades.27

The Exchange further states that the 

VIX futures that comprise both VXX and 

UVXY are a perfect hedge to the 

underlying delta risk, but that such 

futures are not recognized as hedges for 

options contract equivalent of the net 

delta (‘‘OCEND’’) purposes.28 A TPH 

that is not delta neutral must be hedged 

to the extent that the OCEND stays 

within the applicable position limit.29

According to the Exchange, due to the 

OCEND limitations and current position 

limits for options on VXX and UVXY, 

heightened demand for liquidity in VXX 

and UVXY options can cause TPHs that 

are hedged via the component futures to 

approach position limits more rapidly.30

In order to stay within the applicable 

position limit, TPHs may shift out of 

futures hedges into hedges with options 

or may purchase or create shares of the 

underlying ETPs. As a result, TPHs may 

be unable to provide the most concise 

pricing to customers participating in 

these ETPs due to increased costs 

associated with transacting in additional 

or alternative hedging vehicles, and risk 

may concentrate in the ETP issuer rather 

than being spread across multiple 

market participants, which may 

exacerbate an already volatile market.31

The Exchange believes that increasing 

position limits for options on VXX and 

UVXY may assist in maintaining a fair 

and orderly market during times of 

higher market volatility, and may 

reduce any potential additional impact 

on the futures markets as a result of an 

increased demand (or, conversely, 

supply) for shares of the ETPs during 

periods of higher market volatility or 

illiquidity.32

The Exchange further believes that the 

VIX futures markets, including in the 

Trade at Settlement (‘‘TAS’’) VIX futures 

market, wherein VXX and UVXY are 

primarily rebalanced, maintain robust, 

liquid markets such that they can 

sufficiently handle any additional 

options delta exposure and resulting 

increase in volatility options trading, 

including during the rebalancing 

period.33 Specifically, the Exchange 

states that it has observed that the ADV 

in the VIX futures TAS market has 

grown from approximately 32,200 

contracts in 2018 to approximately 

42,200 contracts in 2021.34

In support of its proposal to increase 

the position limits for options on GDX 

from 250,000 contracts to 500,000 

contracts, the Exchange, among other 

things, compares the trading 

characteristics of GDX to those of EWZ, 

TLT, EWJ, and HYG, all of which 

currently have a position limit of 

500,000 contracts.35 The Exchange 

states that the ADV in calendar year 

2020 for GDX was 39.4 million shares 

compared to 29.2 million shares for 

EWZ, 11.5 million shares for TLT, 8.2 

million shares for EWJ, and 30.5 million 

shares for HYG; 36 the total shares 

outstanding as of April 5, 2021 for GDX 

was 419.8 million compared to 173.8 

million for EWZ, 103.7 million for TLT, 

185.3 million for EWJ, and 254.5 million 

for HYG; 37 and the fund market cap as 

of January 14, 2021 for GDX was 

$16,170.5 million compared to $6,506.8 

million for EWZ, $17,121.3 million for 

TLT, $13,860.7 million for EWJ, and 

$24,067.5 million for HYG.38 The 

Exchange also states that many of the 

Brazil-based gold mining constituents 

included in GDX are also included in 

EWZ, and that the Exchange has not 

identified any issues with the continued 

listing and trading of EWZ options or 

any adverse market impact on EWZ in 

connection with the current 500,000 

position limit in place for EWZ 

options.39 Further, the Exchange states 

that the components of the NYSE Arca 

Gold Miners Index—the price and yield 

performance of which GDX seeks to 

replicate as closely as possible—can be 

used to create the GDX ETF, and 

currently must each have a market 

capitalization greater than $750 million, 

an ADV of at least 50,000 shares, and an 

average daily value traded of at least $1 

million in order to be eligible for 

inclusion in the index.40

In support of its proposal to increase 

the position limit for LQD from 250,000 

contracts to 500,000 contracts, the 

Exchange, among other things, 

compared the trading characteristics of 

LQD to those of EWZ, TLT, and EWJ, all 

of which currently have a position limit 

of 500,000 contracts.41 The Exchange 

provides data demonstrating that the 

ADV in calendar year 2020 for LQD was 

14.1 million shares compared to 29.2 

million shares for EWZ, 11.5 million 

shares for TLT, and 8.2 million shares 

for EWJ; 42 the total shares outstanding 

as of April 5, 2021 for LQD was 308.1 

million compared to 173.8 million for 

EWZ, 103.7 million for TLT, and 185.3 

million for EWJ; 43 and the fund market 

cap as of January 14, 2021 for LQD was 

$54,113.7 million compared to $6,506.8 

million for EWZ, $17,121.3 million for 

TLT, and $13,860.7 million for EWJ.44

The Exchange also states that LQD 

tracks the performance of the Markit 

iBoxx USD Liquid Investment Grade 

Index, which is an index designed as a 

subset of the broader U.S. dollardenominated corporate bond market 

and can be used in creating a basket of 

securities that equate to the LQD ETF, 

and which is comprised of over 8,000 

bonds for which the outstanding face 

value of each must be greater than or 

equal to $2 billion.45

The Exchange states that the current 

position limits for the options subject to 

the proposal may have impeded the 

ability of market makers to make 

markets on the Exchange.46 Specifically, 

the Exchange avers, the proposal is 

designed to encourage liquidity 

providers to provide additional liquidity 

to the Exchange and other market 

participants to shift liquidity from overthe-counter markets onto the Exchange, 

which, it believes, would enhance the 

process of price discovery conducted on 

the Exchange through increased order 

flow.47 The proposal also would benefit 

market participants, the Exchange 

maintains, by providing them with the 

ability to more effectively execute their 

trading and hedging activities.48

With regard to the concerns that 

position limits generally are meant to 

address, the Exchange represents that 

the structure of the underlying ETPs 

subject to this proposal, the 

considerable market capitalization of 

the ETPs and their underlying 


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49See id. 

50With regard to the ETN option included in the 

proposal—VXX—the Exchange stated that there is 

no direct analogue to ETF ‘‘creation,’’ but observed 

that the ETN issuer may sell additional VXX shares 

from its inventory. Regardless of whether VXX 

shares are redeemed or new VXX shares are issued, 

the Exchange stated, an issuer may transact in VIX 

futures in order to hedge its exposure, resulting in 

an arbitrage process similar to the one described for 

ETFs described above, thereby helping to keep an 

ETN’s price in line with the value of its underlying 

index. See id. at 23. 

51See id. at 22–24. 

52See id. at 24–25. 

53The report must include, for each such class of 

options, the number of option contracts comprising 

each such position and, in the case of short 

positions, whether covered or uncovered. See 

Exchange Rule 8.43(a). 

54According to the Exchange, market-makers 

(including designated primary market-makers) are 

exempt from the referenced reporting requirement 

because market-maker information can be accessed 

through the Exchange’s market surveillance 

systems. See Amendment No. 1, supra note 6, at 25. 

55According to the Exchange, this information 

would include, but would not be limited to, the 

option position, whether such position is hedged 

and, if so, a description of the hedge. See id. at 24– 

25. 

56See id. at 25. 

57See id. at 25–26. 

58See id. at 26 n.36. The Exchange represents that 

non-U.S. component securities that are not subject 

to a comprehensive surveillance agreement do not, 

in the aggregate, represent more than 50% of the 

weight of any of the underlying ETPs that are ETFs. 

See id. at 7. 

59See id. at 26. 

60See id. 

61 17 CFR 240.15c3–1. 

62See Amendment No. 1, supra note 6, at 26. 

63 15 U.S.C. 78s(b)(2)(B). 

64 Id. 

65 15 U.S.C. 78f(b)(5). 

66Rule 700(b)(3), Commission Rules of Practice, 

17 CFR 201.700(b)(3). 

67See id. 

68See id. 

component securities, and the liquidity 

of the market for options on these ETPs 

and the underlying component 

securities mitigate concerns regarding 

potential manipulation of the products 

and disruption of the underlying 

markets due to the increased position 

limits.49 The Exchange also describes: 

(i) The creation and redemption process 

for ETFs (and a similar process for the 

ETN to which the proposal relates); 50

(ii) the arbitrage activity that ensues 

when such instruments are overpriced 

or are trading at a discount to the 

securities on which they are based and 

helps to keep the instrument’s price in 

line with the value of its underlying 

portfolio; and (iii) how these processes, 

in the Exchange’s view, serve to mitigate 

the potential price impact of the ETF or 

ETN shares that might otherwise result 

from increased position limits.51

In addition, the Exchange states that 

the options reporting requirements of 

Exchange Rule 8.43 would continue to 

be applicable to the options subject to 

this proposal.52 As set forth in Exchange 

Rule 8.43(a), each TPH must report to 

the Exchange certain information in 

relation to any customer who, acting 

alone, or in concert with others, on the 

previous business day maintained 

aggregate long or short positions on the 

same side of the market of 200 or more 

contracts in any single class of option 

contracts dealt in on the Exchange.53

Further, Exchange Rule 8.43(b) requires 

each TPH (other than an Exchange 

market-maker or designated primary 

market-maker) 54 that maintains a 

position in excess of 10,000 non-FLEX 

equity option contracts on the same side 

of the market, on behalf of its own 

account or for the account of a 

customer, to report to the Exchange 

information as to whether such 

positions are hedged, and provide 

documentation as to how such contracts 

are hedged.55

The Exchange also represents that the 

existing surveillance procedures and 

reporting requirements at the Exchange 

and other self-regulatory organizations 

are capable of properly identifying 

disruptive and/or manipulative trading 

activity.56 According to the Exchange, 

its surveillance procedures utilize daily 

monitoring of market activity via 

automated surveillance techniques to 

identify unusual activity in both options 

and the underlying products.57 In 

addition, the Exchange states that its 

surveillance procedures have been 

effective for the surveillance of trading 

in the options subject to this proposal, 

and will continue to be employed.58

The Exchange further states its belief 

that the current financial requirements 

imposed by the Exchange and by the 

Commission adequately address 

concerns that a TPH or its customer may 

try to maintain an inordinately large 

unhedged position in the options 

subject to this proposal.59 Current 

margin and risk-based haircut 

methodologies, the Exchange states, 

serve to limit the size of positions 

maintained by any one account by 

increasing the margin and/or capital 

that a TPH must maintain for a large 

position held by itself or by its 

customer.60 In addition, the Exchange 

notes that the Commission’s net capital 

rule, Rule 15c3–1 under the Act,61

imposes a capital charge on TPHs to the 

extent of any margin deficiency 

resulting from the higher margin 

requirement.62

III. Proceedings To Determine Whether 

To Approve or Disapprove SR–CBOE– 

2021–029, as Modified by Amendment 

No. 1, and Grounds for Disapproval 

Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 63 to determine 

whether the proposed rule change, as 

modified by Amendment No. 1, should 

be approved or disapproved. Institution 

of proceedings is appropriate at this 

time in view of the legal and policy 

issues raised by the proposal, as 

discussed below. 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 comment on the proposed rule 

change, as modified by Amendment No. 

1. 

Pursuant to Section 19(b)(2)(B) of the 

Act,64 the Commission is providing 

notice of the grounds for disapproval 

under consideration. The Commission is 

instituting proceedings to allow for 

additional analysis of, and input from 

commenters with respect to, the 

consistency of the proposed rule 

change, as modified by Amendment No. 

1, with the Act and, in particular, 

Section 6(b)(5) of the Act,65 which 

requires that the rules of a national 

securities exchange be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

Under the Commission’s Rules of 

Practice, the ‘‘burden to demonstrate 

that a proposed rule change is 

consistent with the [Act] and the rules 

and regulations issued thereunder . . . 

is on the self-regulatory organization 

that proposed the rule change.’’ 66 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,67 and any failure of a selfregulatory 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.68

Position and exercise limits serve as 

a regulatory tool designed to address 

manipulative schemes and adverse 


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44122 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

69See, e.g., Securities Exchange Act Release No. 

68086 (October 23, 2012), 77 FR 65600 (October 29, 

2012) (SR–CBOE–2012–066). 

70 17 CFR 240.19b–4. 

71Section 19(b)(2) of the Act, as amended by the 

Securities Acts Amendments of 1975, Public Law 

94–29 (June 4, 1975), grants to 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). 

72 17 CFR 200.30–3(a)(12); 17 CFR 200.30– 

3(a)(57). 

market impact surrounding the use of 

options.69 As discussed above, the 

Exchange has proposed to increase the 

position and exercise limits for options 

on GLD, SLV, LQD, GDX, VXX, and 

UVXY from 250,000 contracts to 

500,000 contracts. The proposed 

doubling of the position and exercise 

limits for these options would be a 

substantial increase from current levels, 

and raises the potential for adverse 

impacts in the underlying markets 

implicated by this proposal. The initial 

proposal did not provide sufficient 

information to explain why all of these 

underlying markets are sufficiently 

comparable to the markets underlying 

the option products currently subject to 

a 500,000 contract position limit or 

sufficient information to independently 

support a finding that all of the 

proposed position limit increases would 

not have an adverse market impact. 

Accordingly, the initial proposal did not 

provide an adequate basis for the 

Commission to conclude that the 

proposal would be consistent with 

Section 6(b)(5) of the Act. 

The Exchange recently provided 

additional analysis and justification for 

its proposal in Amendment No. 1. 

Amendment No. 1 was submitted 

shortly before the expiration of the 

statutory deadline for the Commission 

to act on the Exchange’s proposal, 

leaving the Commission, as well as any 

potential commenters, with insufficient 

time to carefully consider the new data 

and analysis before the deadline. In the 

proceedings that the Commission is 

instituting today, the Commission will 

be evaluating, among other things, the 

Exchange’s amended statements, and 

invites comment on the extent to which 

they justify approval of the proposal. 

IV. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their data, views, 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 

proposed rule change, as modified by 

Amendment No. 1, is consistent with 

Section 6(b)(5), or any other provision of 

the Act, or the rules and regulations 

thereunder. Although there do not 

appear to be any issues relevant to 

approval or disapproval which would 

be facilitated by an oral presentation of 

data, views, and arguments, the 

Commission will consider, pursuant to 

Rule 19b–4 under the Act,70 any request 

for an opportunity to make an oral 

presentation.71

The Commission asks that 

commenters address the sufficiency and 

merit of the Exchange’s statements in 

support of the proposal, as modified by 

Amendment No. 1, in addition to any 

other comments they may wish to 

submit about the proposed rule change. 

In particular, the Commission seeks 

comment on whether the position and 

exercise limit for each option as 

proposed could impact markets 

adversely. 

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposed rule change, as modified by 

Amendment No. 1, should be approved 

or disapproved by September 1, 2021. 

Any person who wishes to file a rebuttal 

to any other person’s submission must 

file that rebuttal by September 15, 2021. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File No. SR– 

CBOE–2021–029 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 No. 

SR–CBOE–2021–029. The 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 (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for 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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File No. 

SR–CBOE–2021–029 and should be 

submitted by September 1, 2021. 

Rebuttal comments should be submitted 

by September 15, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.72

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–17086 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #17074 and #17075; 

Oklahoma Disaster Number OK–00150] 

Administrative Declaration of a 

Disaster for the State of Oklahoma 

AGENCY: Small Business Administration. 

ACTION: Notice. 

SUMMARY: This is a notice of an 

Administrative declaration of a disaster 

for the State of OKLAHOMA dated 08/ 

05/2021. 

Incident: Flooding. 

Incident Period: 06/07/2021. 

DATES: Issued on 08/05/2021. 

Physical Loan Application Deadline 

Date: 10/04/2021. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 05/05/2022. 

ADDRESSES: Submit completed loan 

applications to: 

U.S. Small Business Administration, 

Processing and Disbursement Center, 

14925 Kingsport Road, Fort Worth, TX 

76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 


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