Document ID: SEC-2023-0228-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2023-02-28T05:00Z

[Federal Register Volume 88, Number 39 (Tuesday, February 28, 2023)]
[Notices]
[Pages 12705-12710]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04032]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96965; File No. SR-CBOE-2022-057]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Order 
Instituting Proceedings To Determine Whether To Approve or Disapprove a 
Proposed Rule Change To Increase Position Limits for Options on Apple 
Inc. Stock

February 22, 2023.

I. Introduction

    On November 7, 2022, Cboe Exchange, Inc. (``Exchange'' or ``Cboe 
Options'') 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 Cboe Rules 8.30 and 8.42 to increase the 
position and exercise limits for options on Apple Inc. (``AAPL'') 
stock. The proposed rule change was published for comment in the 
Federal Register on

[[Page 12706]]

November 25, 2022.\3\ On December 22, 2022, 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\ This order 
institutes proceedings pursuant to Section 19(b)(2)(B) of the Act \6\ 
to determine whether to approve or disapprove the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 96353 (November 18, 
2022), 87 FR 72568 (November 25, 2022) (``Notice'').
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 96570 (December 22, 
2022), 87 FR 80212 (December 29, 2022). The Commission designated 
February 23, 2023, 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\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposal

    Currently, Exchange Rule 8.30 establishes position limits for 
equity options of 25,000 contracts, 50,000 contracts, 75,000 contracts, 
200,000 contracts, or 250,000 contracts on the same side of the market 
or such other number of option contracts as may be fixed from time to 
time by the Exchange.\7\ The position limit applicable to a class is 
determined based on the trading volume and outstanding shares of the 
underlying security.\8\ Based on the criteria in Exchange Rule 8.30, 
Interpretation and Policy .02, the position limit for AAPL options 
currently is 250,000 contracts and, pursuant to Exchange Rule 8.42, the 
exercise limit for AAPL options is also 250,000 contracts.\9\
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    \7\ Pursuant to Exchange Rule 8.42, the exercise limit for an 
equity option is the same as the position limit established in 
Exchange Rule 8.30 for that equity option. See id. at n. 3.
    \8\ See Notice, 87 FR at 72568 and Exchange Rule 8.30, 
Interpretation and Policy .02.
    \9\ See Notice, 87 FR at 72569.
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    The Exchange states that when an underlying security undergoes a 
stock split, the number of outstanding options is proportionately 
increased and the exercise price is proportionately decreased.\10\ For 
example, if a security undergoes a 4-1 stock split, an investor that 
held one option with an exercise price of $100 on 100 shares of stock 
ABC prior to the stock split would hold four ABC options, each on 100 
shares and each with an exercise price of $25, following the stock 
split.\11\ In response to the increase in option positions that results 
from a stock split, the position (and exercise) limit for the option 
overlying that security is multiplied by the number of shares issued 
per single outstanding share as part of the stock split.\12\ For 
example, using the same 4-1 example, if the position limit for an 
option before a 4-1 stock split is 250,000 contracts, the position 
limit for the option overlying that security will be multiplied by four 
to 1,000,000 contracts.\13\ The Exchange states that this increase 
prevents investors holding the maximum positions from immediately being 
over the position limit at the time of the stock split.\14\ The 
Exchange further states that this position limit increase is temporary 
and lasts until the last outstanding option position at the time of the 
stock split has expired, at which time the position limit reverts to 
the pre-stock-split level.\15\
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    \10\ See id. (citing Options Clearing Corporation (``OCC'') 
Bylaws, Article VI, Section 11A(a); and Characteristics and Risks of 
Standardized Options at 19).
    \11\ See Notice, 87 FR at 72569.
    \12\ See id.
    \13\ See id.
    \14\ See id.
    \15\ See id.
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    The Exchange states that the position and exercise limits for AAPL 
options were 250,000 contracts at the time of the AAPL 4-1 stock split 
on August 31, 2020.\16\ Following the stock split, the position limit 
was increased to 1,000,000 contracts.\17\ The position limit for AAPL 
options remained at 1,000,000 contracts until September 16, 2022 (when 
the last option position that was outstanding at the time of the stock 
split expired), when the position limit reverted back to 250,000 
contracts.\18\ The Exchange states that, given the significant activity 
in AAPL options (and the underlying security), it understands that 
numerous customers held more than 250,000 AAPL option contracts at that 
time, putting their holdings above the position limit.\19\ The Exchange 
further states that it understands from these customers that the 
reduced position limit may be impeding trading activity and their 
ability to implement investment strategies in AAPL options, including 
the use of effective hedging vehicles or income generating strategies 
(e.g., buy-write or put-write strategies), and the ability of market-
makers to make liquid markets with tighter spreads in AAPL options, 
potentially causing the transfer of volume to the over-the-counter 
(``OTC'') market.\20\ The Exchange states that OTC transactions, which 
are not publicly disclosed, do not contribute to the price discovery 
process on a public exchange or other lit markets.\21\
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    \16\ See id.
    \17\ See id.
    \18\ See id. The Commission understands that this type of 
temporary position limit increase following a stock split occurs 
pursuant to the direction of the OCC.
    \19\ See id.
    \20\ See id.
    \21\ See id.
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    The Exchange believes that it is appropriate to increase the AAPL 
option position limit to 1,000,000 contracts so market participants may 
continue to trade AAPL options in the same manner and at the same 
levels as they have for the prior two years, which could enable 
liquidity providers to maintain liquidity levels on the Exchange and 
allow other market participants to continue to trade on the Exchange 
rather than shift their volume to the OTC market.\22\ The Exchange 
believes the larger market capitalization of AAPL stock, as well as the 
highly liquid market for AAPL stock and the overlying options since the 
stock split, reduces the concerns regarding potential market 
manipulation and/or disruption in the underlying market following an 
increase in the position limit.\23\ The Exchange states that the 
continued demand for trading AAPL options for legitimate economic 
purposes despite the reduced position limit warrants a reversion to the 
1,000,000-contract position limit that existed for the prior two 
years.\24\
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    \22\ See id.
    \23\ See id.
    \24\ See id.
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    The Exchange further states that the proposed position limit of 
1,000,000 contracts for AAPL options, which was the AAPL option 
position limit for two years, is the same as existing position limits 
for options on the iShares Russell 2000 ETF (``IWM''), the iShares MSCI 
Emerging Markets ETF (``EEM''), iShares China Large-Cap ETF (``FXI''), 
and iShares MSCI EAFE ETF (``EFA'').\25\ The Exchange states that, to 
support the proposed position limit increase, it considered the 
liquidity of the underlying security, the value of the underlying 
security and relevant marketplace, the AAPL share and option volume, 
and the liquidity of the noted exchange-traded products (``ETPs'').\26\
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    \25\ See id. and Exchange Rule 8.30, Interpretation and Policy 
.07.
    \26\ See Notice, 87 FR at 72569.
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    The Exchange provided the information in the table below regarding 
the average daily volume (``ADV'') for AAPL shares and options on AAPL 
stock traded during specified time periods prior to the 2020 stock 
split, between the stock split and the position limit reversion, and 
since the position limit reversion: \27\
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    \27\ See id.

[[Page 12707]]

------------------------------------------------------------------------
                                                          ADV (option
            Date range                 ADV (shares)        contracts)
------------------------------------------------------------------------
January 3, 2020 through August 31,        170,468,316            870,304
 2020 (date of the stock split)...
September 1, 2020 through December        101,001,141          1,661,627
 31, 2021.........................
January 1, 2022 through September          88,458,041          1,354,430
 16, 2022 (date of the position
 limit reversion).................
September 17, 2022 through October         91,683,969          1,425,372
 24, 2022 (time since the position
 limit reversion).................
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    In addition, the Exchange states that as of October 24, 2022, AAPL 
had a market capitalization of $2.4 trillion (16.07 billion shares 
outstanding with a share price of $149.45).\28\ For comparison, the 
Exchange provided the information below for IWM, EEM, FXI, and EFA from 
January 1, 2022, through October 24, 2022: \29\
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    \28\ See id.
    \29\ See id. at 72570.

----------------------------------------------------------------------------------------------------------------
                                                                      Shares        Fund market
             Product                 ADV (ETF       ADV (option     outstanding      cap (USD)      Share value
                                      shares)       contracts)      (millions)      (billions)         (USD)
----------------------------------------------------------------------------------------------------------------
IWM.............................      31,358,610         840,721          291.10           50.49          173.44
EEM.............................      47,767,767         183,342          578.25           19.62           33.93
FXI.............................      39,007,654         159,703          176.70            3.80           21.53
EFA.............................      29,953,566         123,262          705.60           41.83           59.28
----------------------------------------------------------------------------------------------------------------

    The Exchange states that while these are ETPs, rather than stocks, 
ETP shares trade in the same manner as stocks and, except for those set 
forth in Exchange Rule 8.30, Interpretation and Policy .07, position 
limits on ETP options are determined in the same manner as the position 
limits for options on stocks.\30\
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    \30\ See id. Exchange Rule 8.30, Interpretation and Policy .07 
provides that the position limits under Exchange Rule 8.30 
applicable to options on shares or other securities that represent 
interests in registered investment companies (or series thereof) 
organized as open-end management investment companies, unit 
investment trusts or similar entities that satisfy the criteria set 
forth in Exchange Rule 4.3.06 shall be the same as the position 
limits applicable to equity options under Exchange Rule 8.30 and 
Interpretations and Policies thereunder, except for the position 
limits established in Exchange Rule 8.30, Interpretation and Policy 
.07 for specified securities, including IWM, EEM, FXI, and EFA.
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    The Exchange believes that the liquidity in the AAPL shares and 
their overlying options, AAPL's significantly large market 
capitalization, and the overall market landscape for AAPL stock and 
options support the proposal to increase its position limit.\31\ The 
Exchange states that, given the robust liquidity in and value of AAPL 
stock, the Exchange does not anticipate that the proposed increase in 
the position limit would create significant price movements because the 
relevant market is large enough to adequately absorb potential price 
movements that may be caused by larger trades.\32\ To reduce the 
chances of potential manipulation if trading in AAPL stock declines, 
proposed Exchange Rule 8.30, Interpretation and Policy .02(g) provides 
that if the most recent six-month trading volume of AAPL stock totals 
less than 200,000,000 shares or the most recent six-month trading 
volume of AAPL stock totals less than 150,000,000 shares and AAPL stock 
has fewer than 600,000,000 shares currently outstanding, the position 
limit for AAPL options will be determined as set forth in paragraphs 
(a) through (e) of Interpretation and Policy .02.\33\ The Exchange 
states that these proposed levels are twice the current volume and 
share levels of an underlying security for the overlying option to be 
eligible for the 250,000-contract option position limit.\34\
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    \31\ See id.
    \32\ See id.
    \33\ See id.
    \34\ See id.
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    The Exchange states that the reporting requirements for AAPL 
options will remain unchanged under the proposal.\35\ The Exchange 
states that it will continue to require that each Trading Permit Holder 
(``TPH'') or TPH organization that maintains positions in AAPL options 
on the same side of the market, for its own account or for the account 
of a customer, report certain information to the Exchange, including 
the options' positions, whether such positions are hedged and, if so, a 
description of the hedge(s).\36\ Although Market-Makers, including 
Designated Primary Market-Makers,\37\ will continue to be exempt from 
the reporting requirement, the Exchange states that it may access 
Market-Maker position information.\38\ In addition, the Exchange states 
that its requirement that TPHs file reports with the Exchange for any 
customer who held aggregate large long or short positions on the same 
side of the market of 200 or more option contracts of any single class 
for the previous day will remain at this level for AAPL options and 
will continue to serve as an important part of the Exchange's 
surveillance efforts.\39\
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    \35\ See id.
    \36\ See id.
    \37\ A Market-Maker is a ``Trading Permit Holder registered with 
the Exchange pursuant to Rule 3.52 for the purpose of making markets 
in option contracts traded on the Exchange and that has the rights 
and responsibilities set forth in Chapter 5, Section D of the 
Rules.'' A Designated Primary Market-Maker is a ``TPH organization 
that is approved by the Exchange to function in allocated securities 
as a Market-Maker (as defined in Rule 8.1) and is subject to the 
obligations under Rule 5.54 or as otherwise provided under the rules 
of the Exchange.'' See Exchange Rule 1.1.
    \38\ The Exchange states that the OCC, through the Large Option 
Position Reporting system, acts as a centralized service provider 
for TPH compliance with position reporting requirements by 
collecting data from each TPH or TPH organization, consolidating the 
information, and ultimately providing detailed listings of each 
TPH's report to the Exchange and to the Financial Industry 
Regulatory Authority, Inc., acting as its agent pursuant to a 
regulatory services agreement. See Notice, 87 FR at 72570, n. 11.
    \39\ See Notice, 87 FR at 72570. See also Exchange Rule 8.43.
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    The Exchange believes that its and other SROs' existing 
surveillance procedures and reporting requirements are capable of 
properly identifying disruptive and/or manipulative trading 
activity.\40\ The Exchange represents that it has adequate 
surveillances in place to detect potential manipulation, as well as 
reviews in place to identify continued compliance with the Exchange's 
listing standards.\41\ According to the Exchange, these procedures 
utilize daily

[[Page 12708]]

monitoring of market activity via automated surveillance techniques to 
identify unusual activity in both options and the underlying 
securities, as applicable.\42\ In addition, the Exchange states that 
the disclosures in Schedules 13D or 13G,\43\ which are used to report 
ownership of stock that exceeds 5% of a company's total stock issue, 
could assist in providing information in monitoring for potential 
manipulative schemes.\44\
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    \40\ See Notice, 87 FR at 72570.
    \41\ See id.
    \42\ See id. The Exchange believes these procedures have been 
effective for the surveillance of AAPL option trading and the 
Exchange will continue to employ them. See id. at n. 13.
    \43\ 17 CFR 240.13d-1.
    \44\ See Notice, 87 FR at 72570.
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    The Exchange believes that the current financial requirements 
imposed by the Exchange and by the Commission adequately address 
concerns regarding potentially large, unhedged positions in AAPL 
options.\45\ The Exchange states that current margin and risk-based 
haircut methodologies 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.\46\ In addition, the Exchange states that Rule 15c3-1 under 
the Act \47\ imposes a capital charge on TPHs to the extent of any 
margin deficiency resulting from the higher margin requirement.\48\
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    \45\ See id.
    \46\ See id. at 72570, n. 15 (citing Exchange Rule 10.3 
regarding margin requirements).
    \47\ 17 CFR 240.15c3-1.
    \48\ See Notice, 87 FR at 72570.
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III. Proceedings To Determine Whether To Approve or Disapprove SR-CBOE-
2022-057 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \49\ to determine whether the proposed rule 
change 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.
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    \49\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\50\ 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 with the Act and, in particular, Section 
6(b)(5) of the Act,\51\ 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.
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    \50\ Id.
    \51\ 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 [Act] 
and the rules and regulations issued thereunder . . . is on the self-
regulatory organization that proposed the rule change.'' \52\ 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,\53\ 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.\54\
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    \52\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR 
201.700(b)(3).
    \53\ See id.
    \54\ See id.
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    As discussed above, the Exchange has proposed to increase the 
position and exercise limits for AAPL options from 250,000 contracts to 
1,000,000 contracts. Following the AAPL 4-1 stock split on August 31, 
2020, the AAPL option position limit temporarily increased from 250,000 
contracts to 1,000,000 contracts until September 16, 2022, when the 
position limit reverted to 250,000 contracts.\55\ The Exchange states 
that it understands from customers that the reduced position limit may 
be impeding trading activity and their ability to implement investment 
strategies in AAPL options, including the use of effective hedging 
vehicles or income generating strategies, and the ability of market-
makers to make liquid markets with tighter spreads in AAPL options.\56\ 
The Exchange believes that it is appropriate to increase the AAPL 
position limit to 1,000,000 option contracts so market participants may 
continue to trade AAPL options in the same manner and at the same 
levels as they did when the position limit temporarily was 1,000,000 
contracts.\57\
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    \55\ See Notice, 87 FR at 72569.
    \56\ See id.
    \57\ See id.
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    Position and exercise limits serve as a regulatory tool designed to 
address manipulative schemes and adverse market impact surrounding the 
use of options.\58\ The proposal is novel in that currently, outside of 
exceptions to accommodate temporary OCC-initiated adjustments, the 
maximum stock option position and exercise limits permitted under 
exchange rules are 250,000 contracts. In addition to being novel, the 
proposed fourfold increase in the position and exercise limits for AAPL 
options would be a substantial increase from current levels, and raises 
the potential for adverse impacts in the underlying market for AAPL 
stock. According to the Exchange, the larger market capitalization of 
AAPL stock, as well as the highly liquid market for AAPL stock and the 
overlying options since the stock split, mitigates these concerns.\59\
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    \58\ See, e.g., Securities Exchange Act Release No. 68086 
(October 23, 2012), 77 FR 65600 (October 29, 2012) (SR-CBOE-2012-
066).
    \59\ See Notice, 87 FR at 72569.
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    The trading volume of the stock underlying a stock option is one of 
the two metrics that determines a stock option's position limit.\60\ As 
set forth in the proposal, AAPL stock ADV declined significantly during 
the post-split period when the AAPL option position limit temporarily 
was 1,000,000 contracts, and as of October 24, 2022, AAPL stock's ADV 
had decreased almost by half from its ADV prior to the stock split.\61\ 
While the Exchange states that

[[Page 12709]]

the market for AAPL stock and the overlying options is highly 
liquid,\62\ the proposal does not adequately explain why a fourfold 
position (and exercise) limit increase is warranted given the 
significant decrease in AAPL stock ADV described in the proposal.
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    \60\ See id. at 72568 and Exchange Rule 8.30, Interpretation and 
Policy .02.
    \61\ See Notice, 87 FR at 72569. The Commission cannot discern 
whether the post-stock-split ADV figures for AAPL stock set forth in 
the proposal are adjusted for the split; here, the Commission 
assumes that they are not. In addition, a Cboe study on the impact 
of stock splits on trading activities finds that split-adjusted 
volume in mega-capitalization stocks increased slightly one-week 
post-split but, in the two-week to six-month period post-split, the 
median executed share volume decreased about 48%, compared to volume 
a week pre-split. See Cboe study on the impact of stock split on 
trading activities at: https://www.cboe.com/insights/posts/stock-splits-lead-to-split-results-in-trading/. This study also finds that 
the median number of options contracts traded in mega-capitalization 
stocks decreased approximately 49% one week post-split and remained 
down through the six-month period post-split. In the case of option 
contracts in AAPL, the study finds that the split-adjusted number of 
AAPL option contracts traded decreased about 52%, averaging 0.9 
million contracts traded daily post-split compared to 1.9 million 
contracts traded daily pre-split. Also, while the Exchange's 
proposal focuses on AAPL, the Commission understands that some 
evidence suggests that, as a general matter, share trading volume 
may be unchanged or decrease after a stock split. See, e.g., Patrick 
Dennis, Stock Splits and Liquidity: The Case of the Nasdaq -100 
Index Tracking Stock, the Financial Review, 38, 2003, 415-433; 
Thomas E. Copeland, Liquidity Changes Following Stock Splits, the 
Journal of Finance, 34, 1, 1979, 115-141.
    \62\ See Notice, 87 FR at 72569; see also id. at 72571 (stating 
that, while the ADV of AAPL stock is lower than it was prior to the 
2020 stock split, it is still more than 50% of the pre-stock-split 
ADV, and that the ADV of AAPL options since the 2020 stock split is 
almost double the ADV prior to the stock split).
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    In addition, the proposal does not explain why, in light of the 
AAPL stock trading volume decrease described in the proposal, a 
1,000,000-contract position limit for AAPL options is necessary for 
market participants to trade in the same manner and at the same levels 
as they did when the position limit temporarily was 1,000,000 
contracts. Although the Exchange states that the 250,000-contract 
position limit for AAPL options may be impeding customers' trading 
activity and their ability to implement investment and hedging 
strategies, the proposal provides no detail to support these 
assertions, such as the number of customers affected or the hedging or 
investment strategies that these customers are unable to execute 
because of the lower position limit.\63\ Similarly, the Exchange states 
that the 250,000-contract positon limit may be impeding the ability of 
market makers to make liquid markets with tighter spreads in AAPL 
options, but the proposal provides no information indicating that 
market makers' quoted spreads have widened or that they have reduced 
the size associated with their quotes. Further, market makers' 
positions in AAPL options would not count towards the current position 
limit to the extent covered by existing equity hedge or other 
exemptions.\64\
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    \63\ Some hedging transactions and positions are exempt from 
position limits. See Exchange Rule 8.30, Interpretation and Policy 
.04(a).
    \64\ See, e.g., Exchange Rule 8.30, Interpretation and Policy 
.04.
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    Further, the proposal justifies the proposed position limit, in 
part, through a comparison to options on certain broad-based index 
exchange-traded funds (``ETF(s)'') that currently have a 1,000,000-
contract position limit,\65\ but does not provide sufficient 
information to explain why the underlying markets for the broad-based 
index ETFs are sufficiently comparable to the market for AAPL stock, or 
sufficient information to independently support a finding that the 
proposed position limit increase would not have an adverse market 
impact. Unlike an ETF, a stock, such as AAPL, is not subject to the 
creation and redemption processes that apply to ETFs, nor to the issuer 
arbitrage mechanisms that help to keep an ETF's price in line with the 
value of its underlying portfolio when overpriced or trading at a 
discount to the securities on which it is based. The Commission 
previously has considered how these processes and mechanisms may serve 
to mitigate the potential price impact that might otherwise result from 
increased position limits for an ETF option.\66\
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    \65\ See Notice, 87 FR at 72571 (stating that AAPL stock ADV is 
currently approximately two to three time higher than the ADV of 
IWM, EEM, FXI, and EFA, and that AAPL option ADV is currently 
anywhere from almost twice to more than ten times the ADV of options 
on IWM, EEM, FXI, and EFA).
    \66\ See Securities Exchange Act Release No. 93525 (November 4, 
2021), 86 FR 62584, 62587 (November 10, 2021) (order approving File 
No. SR-Cboe-2021-029).
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    Accordingly, the proposal does not provide an adequate basis for 
the Commission to conclude that the proposal would be consistent with 
Section 6(b)(5) of the Act.

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 
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,\67\ any 
request for an opportunity to make an oral presentation.\68\
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    \67\ 17 CFR 240.19b-4.
    \68\ Section 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).
---------------------------------------------------------------------------

    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. In particular, the Commission seeks comment on 
its concerns expressed above regarding the proposal's consistency with 
the Act, and seeks commenters' views as to whether the proposed 
position and exercise limits for AAPL options could have an adverse 
market impact.
    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposed rule change should be approved 
or disapproved by March 21, 2023. Any person who wishes to file a 
rebuttal to any other person's submission must file that rebuttal by 
April 4, 2023. 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 [email protected]. Please include 
File No. SR-CBOE-2022-057 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-2022-057. 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

[[Page 12710]]

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-2022-057 and should be submitted by 
March 21, 2023. Rebuttal comments should be submitted by April 4, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\69\
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    \69\ 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-04032 Filed 2-27-23; 8:45 am]
BILLING CODE 8011-01-P