Document ID: SEC-2019-0203-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2019-02-25T05:00Z

[Federal Register Volume 84, Number 37 (Monday, February 25, 2019)]
[Notices]
[Pages 6039-6040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03206]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85167; File No. SR-CBOE-2019-011]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Relating 
To Amend a Fee for the S&P Select Sector Index Options (``Sector Index 
Options'')

February 20, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 7, 2019, Cboe Exchange, Inc. (``Exchange'' or ``Cboe 
Options'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') [sic] 
proposes to amend a fee for the S&P Select Sector Index options 
(``Sector Index options''). The text of the proposed rule change is 
provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to waive the transaction fee for Clearing 
Trading Permit Holder Proprietary (origin code ``F'' and ``L'') 
facilitation orders in Sector Index options, executed in open outcry or 
electronically via AIM or as a Qualified Contingent Cross (``QCC'') or 
CFLEX transaction, through June 30, 2019. By way of background 
``facilitation orders'' are defined as any order in which a Clearing 
Trading Permit Holder (``F'' origin code) or Non-Trading Permit Holder 
Affiliate (``L'' origin code) is contra to any other origin code order, 
provided the same executing broker and clearing firm are on both sides 
of the transaction (for open outcry) or both sides of a paired order 
(for orders executed electronically).\3\ Currently, the Fees Schedule 
provides that Clearing Trading Permit Holder Proprietary orders in 
Sector Index options will be assessed $0.25 per contract. The Exchange 
recognizes however, that Clearing Trading Permit Holders can be an 
important source of liquidity when they facilitate their own customers' 
trading activity and, as such, the Exchange proposes to apply a waiver 
of Clearing Trading Permit Holder Proprietary transaction fees for 
facilitation orders through June 30, 2019. Accordingly the Exchange 
proposes to update the Fees Schedule, including the Specified 
Proprietary Index Options Rate Table--Underlying Symbol List A and 
Sector Indexes, along with Footnotes 11 and 22 of the Fees Schedule, to 
reflect the proposed fee waiver.
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    \3\ See Cboe Options Fees Schedule, Footnote 11.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') [sic] and the rules 
and regulations thereunder applicable to the Exchange and, in 
particular, the requirements of Section 6(b) of the Act.\4\ 
Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \5\ requirements that the rules of 
an exchange be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitation transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
Additionally, the Exchange believes the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\6\ which requires that 
Exchange rules provide for the equitable allocation of reasonable dues, 
fees, and other charges among its Trading Permit Holders and other 
persons using its facilities.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78f(b)(4).
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    Particularly, the Exchange believes the proposed waiver of Clearing 
Trading Permit Holder Proprietary transaction fees for facilitation 
orders in Sector Index options is reasonable because it will exempt 
such orders from being assessed a fee. The Exchange believes that this 
is equitable and not unfairly discriminatory because a similar waiver 
also applies to other products, including other proprietary index 
products (e.g., MXEA, MXEF, DJX and XSP).\7\ Further, the Exchange 
recognizes that Clearing Trading Permit Holders can be an important 
source of liquidity when they facilitate their own customers' trading 
activity. Such trades add transparency and promote price discovery to 
the benefit of all market participants. Moreover, the exemption from 
any fee for Sector Index facilitation orders executed in AIM, open 
outcry, or as a CFLEX transaction will apply to all such orders. 
Lastly, the Exchange notes that the proposal to waive facilitation fees 
for Clearing Trading Permit Holder Proprietary orders through June 30, 
2019 is reasonable, equitable and not unfairly discriminatory as the 
Exchange has previously exempted certain transaction fees for newly 
listed options products for a period of time in order to promote and 
encourage trading in such products.\8\
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    \7\ See Cboe Fees Schedule, ``Equity Options Rate Table, ``ETF 
and ETN Options Rate Table'' and ``Index Options Rate Table--All 
Index Products Excluding Underlying Symbol List A and Sector 
Indexes'', all of which provide a $0.00 facilitation fee for origin 
code ``F'' and ``L'' orders.
    \8\ See Securities and Exchange Release 34-77547 (April 6, 2016) 
81 FR 21611 (April 12, 2016) (SR-CBOE-2016-021) (Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Establish 
Fees for Options That Overlie a Reduced Value of the FTSE 100 Index 
and the FTSE China 50 Index).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose

[[Page 6040]]

any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the proposed rule change will impose any burden on intramarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because the proposed rule change will apply to all 
Clearing Trading Permit Holder Proprietary facilitation orders 
uniformly. Additionally, while the proposed transaction waiver applies 
only to Clearing Trading Permit Holders Proprietary facilitation 
orders, Clearing Trading Permit Holders can be an important source of 
liquidity when they facilitate their own customers' trading activity, 
as further discussed above. Additionally, such trades add transparency 
and promote price discovery to the benefit of all market participants.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because Sector 
Index options will be exclusively listed on Cboe Options. To the extent 
that the proposed change makes Cboe Options a more attractive 
marketplace for market participants at other exchanges, such market 
participants are welcome to become Cboe Options market participants.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \9\ and paragraph (f) of Rule 19b-4 \10\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2019-011 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-2019-011. 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 (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 Number SR-CBOE-2019-011 and should be submitted on 
or before March 18, 2019.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-03206 Filed 2-22-19; 8:45 am]
BILLING CODE 8011-01-P