Document ID: SEC-2017-0294-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2017-02-24T05:00Z

[Federal Register Volume 82, Number 36 (Friday, February 24, 2017)]
[Notices]
[Pages 11673-11674]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-03573]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80060; File No. SR-CBOE-2016-091]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving a Proposed Rule Change Related to a 
Change to the Trading Symbol for P.M.-Settled Options on the Standard & 
Poor's 500 Index

February 17, 2017.

I. Introduction

    On December 16, 2016, Chicago Board Options Exchange, Incorporated 
(the ``Exchange'' or ``CBOE'') 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 amending CBOE's rules related to 
P.M.-settled options on the Standard & Poor's 500 Index (``S&P 500 
Index''). The proposed rule change was published for comment in the 
Federal Register on January 5, 2017.\3\ The Commission received no 
comment letters on the proposed rule change. This order approves 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. 79712 (December 29, 
2016), 82 FR 1383 (January 5, 2017) (``Notice'').
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II. Description of the Proposed Rule Change

    CBOE proposes to move P.M.-settled S&P 500 Index options expiring 
on the third-Friday of the month (``third-Friday''), currently listed 
in a separate class and trading under the symbol ``SPXPM'', to the 
Hybrid 3.0 S&P 500 Index options class. In connection with the move, 
the Exchange proposes changing the trading symbol for these options 
from ``SPXPM'' to ``SPXW.''
    The Exchange currently lists A.M.-settled \4\ and P.M.-settled \5\ 
S&P 500 Index options that have standard third-Friday expirations. 
Third-Friday A.M.-settled S&P 500 Index options trade under the symbol 
``SPX'' on the Exchange's Hybrid 3.0 platform.\6\ Third-Friday P.M.-
settled S&P 500 Index options trade on the Hybrid Trading System in a 
separate options class under the symbol ``SPXPM''.\7\
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    \4\ See Rule 24.9(a)(4)(i) (A.M.-settled index options).
    \5\ See Rule 24.9.14 (authorizing the Exchange to list P.M.-
settled S&P 500 options for a specified pilot period).
    \6\ See Rule 8.3(c)(iii).
    \7\ See Rule 8.3(c)(i) (identifying P.M.-settled third-Friday 
S&P 500 options as a Tier AA Hybrid Options Class).
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    In addition, the Hybrid 3.0 options class also includes nonstandard 
P.M.-settled S&P 500 Index options trading under the symbol ``SPXW,'' 
which may expire on Mondays, Wednesdays, Fridays (other than the third-
Friday-of-the-month) (i.e., nonstandard weekly expirations pursuant to 
Rule 24.9(e)), and the last trading day of the month.\8\ Although SPXW 
options are included in the Hybrid 3.0 class, they trade on the Hybrid 
Trading System.\9\
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    \8\ See Rule 24.9(e).
    \9\ See Rule 8.14.01.
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    In its filing, the Exchange noted that a gap exists currently in 
Friday expirations for SPXW as a user of SPXW options cannot roll an 
existing SPXW position that expires on a first or second Friday of a 
month into a SPXW position that expires on a third-Friday, because the 
latter is part of the separate SPXPM class.\10\ Moving SPXPM into the 
SPX class under symbol SPXW will remove this gap and allow market 
participants to maintain exposure to SPXW Friday expirations throughout 
the month if they so choose. The Exchange also noted that offering 
access to all P.M.-settled S&P 500 Index options in a single class with 
expirations every Friday of the month will provide market participants 
with greater flexibility in submitting complex orders using S&P 500 
index options.\11\
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    \10\ See Notice, supra note 3, at 1384.
    \11\ See id.
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    In its filing, the Exchange noted its belief that moving SPXPM into 
the SPX options class under the symbol SPXW should not adversely impact 
market participants.\12\ Specifically, the Exchange noted that it 
expects a smooth transition of the SPXPM series to the SPXW symbol 
because SPXPM and SPXW options both trade on the Hybrid Trading System 
\13\ and the Exchange's rules and systems treat SPXPM and SPXW the same 
in many respects.\14\
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    \12\ See id.
    \13\ See Rules 8.3(c)(i) (identifying P.M.-settled third-Friday 
S&P Index options as a Tier AA Hybrid Options Class) and 8.14.01 
(allowing the Exchange to authorize a group of series of a class for 
trading on the Hybrid Trading System).
    \14\ See Notice, supra note 3, at 1384-85 (discussing areas 
where trading parameters for SPXPM and SPXW are the same, such as 
the minimum increment for bids and offers, and where they differ, 
such as the appointment costs).
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Pilot Reports

    SPXPM options currently are approved for listing and trading on a 
pilot basis.\15\ The Exchange represents that the pilot will continue 
under the same terms that established the pilot.\16\
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    \15\ See Rule 24.9.14 and Securities Exchange Act Release No. 
68457 (December 18, 2012), 77 FR 76135 (December 26, 2012) (SR-CBOE-
2012-120).
    \16\ See Notice, supra note 3, at 1385. As part of the pilot, 
the Exchange submits quarterly reports and annual reports that 
analyze the market impact and trading patterns of third-Friday P.M.-
settled S&P 500 options. The Exchange will modify the reports to 
provide the same data and analysis for third-Friday P.M.-settled S&P 
500 Index options trading under symbol SPXW that it currently 
submits for third-Friday P.M.-settled S&P 500 Index options trading 
under symbol SPXPM. See id.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act \17\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.\18\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act, \19\ which 
requires, among other things, that the rules of a national securities 
exchange be designed 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.
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    \17\ 15 U.S.C. 78f.
    \18\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \19\ 15 U.S.C. 78f(b)(5).
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    The Exchange represents that trading P.M.-settled third-Friday 
expirations as part of the S&P 500 Index options class under the SPXW 
symbol, rather than as a separate class under the SPXPM symbol, will 
help remove impediments to and perfect the mechanism of a free and open 
market by providing market participants with access to a single class

[[Page 11674]]

of P.M.-settled S&P 500 Index options with expirations every Friday of 
the month.\20\ The Commission believes that the proposal can thus 
benefit investors by providing them with additional trading flexibility 
for both simple and complex orders.
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    \20\ See Notice, supra note 3, at 1386.
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    Further, the Exchange represents that there are minimal differences 
in the trading parameters of the two options classes.\21\ Although the 
appointment costs for SPXPM and SPX are different, the Exchange 
represents that market makers should not be adversely impacted by this 
proposal because all market-makers currently appointed in SPXPM also 
are appointed in SPX, which confers the right to trade SPXW 
options.\22\ The Commission believes that, to the extent the trading 
parameters of the two classes are substantively similar, the Exchange's 
proposal to move SPXPM options into the SPX options class does not 
raise novel issues.
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    \21\ See id. at 1384-85.
    \22\ See id. at 1385.
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    Finally, SPXPM options currently are listed on a pilot basis. As 
part of the pilot, the Exchange has been required to submit to the 
Commission quarterly reports and annual reports that analyze the market 
impact and trading patterns of third-Friday P.M.-settled S&P 500 
options. The Exchange represents that it will continue to provide this 
data in exactly the same scope and format.\23\ The Commission believes 
that the continued pilot and reports will allow the Exchange and the 
Commission to monitor for and assess any potential adverse market 
impact caused by these P.M.-settled options.
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    \23\ See id.
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    Based on the Exchange's representations discussed above, and for 
the reasons noted above, the Commission believes that the proposal to 
move SPXPM options into the SPX options class is consistent with the 
Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\24\, that the proposed rule change (SR-CBOE-2016-091) be, and hereby 
is, approved.
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    \24\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03573 Filed 2-23-17; 8:45 am]
 BILLING CODE 8011-01-P