[Federal Register Volume 83, Number 162 (Tuesday, August 21, 2018)]
[Notices]
[Pages 42330-42340]
[FR Doc No: 2018-17957]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83852; File No. SR-CboeBZX-2018-058]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To Permit the Listing and Trading of
Options That Overlie the Mini-SPX Index, the Russell 2000 Index, and
the Dow Jones Industrial Average

August 15, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on August 2, 2018, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``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

    The Exchange filed a proposal to permit the listing and trading of
options that overlie the Mini-SPX Index (``XSP options''), the Russell
2000 Index (``RUT options''), and the Dow Jones Industrial Average
(``DJX options'').
    The text of the proposed rule change is available at the Exchange's
website at www.markets.cboe.com, at the principal office of the
Exchange, 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 parts of such
statements.

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

1. Purpose
    The proposed rule change amends the Exchange's index rules to
permit the listing and trading of XSP options, RUT options, and DJX
options. XSP options are options on the Mini SPX Index, the current
value of which is 1/10th the value of the Standard & Poor's 500 ``Stock
Index reported by the reporting authority.\3\ RUT options are options
on the Russell 2000 Index. DJX options are options based on 1/100th of
the value of the Dow Jones Industrial Average. The index underlying
each of XSP, RUT, and DJX options satisfies the criteria of a broad-
based index for the initial listing of options on that index, as set
forth in Rule 29.3(b):
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    \3\ See proposed Rule 29.11, Interpretation and Policy .01.
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    (1) The index is broad-based index, as defined in Rule 29.2(j) (an
index designed to be representative of a stock market as a whole or of
a range of companies in unrelated industries);
    (2) the options are designated as A.M.-settled;
    (3) the index is capitalization-weighted, modified capitalization-
weighted, price-weighted or equal dollar-weighted;
    (4) the index consists of 50 or more component securities;
    (5) component securities that account for at least 95% of the
weight of the index have a market capitalization of at least $75
million, except that component securities that account for at least 65%
of the weight of the index have a market capitalization of at least
$100 million;
    (6) component securities that account for at least 80% of the
weight of the index satisfy the requirements of Rule 19.3 applicable to
individual underlying securities;
    (7) each component security that accounts for at least 1% of the
weight of the index has an average daily trading volume of at least
90,000 shares during the last six-month period;
    (8) no single component security accounts for more than 10% of the
weight of the index, and the five highest-weighted component securities
in the index do not, in the aggregate, account for more than 33% of the
weight of the index;
    (9) each component security must be an ``NMS stock'' as defined in
Rule 600 of Regulation NMS under the Securities Exchange Act of 1934
(the ``Exchange Act'');
    (10) non-U.S. component securities (stocks or ADRs) that are not
subject to comprehensive surveillance agreements do not, in the
aggregate, represent more than 20% of the weight of the index;
    (11) the current underlying index value is widely disseminated at
least once every 15 seconds by OPRA, CTA/CQ, NIDS, or one or more major
market data vendors during the time the index options are traded on the
Exchange;
    (12) the Exchange reasonably believes it has adequate system
capacity to support the trading of options on the index, based on a
calculation of the Exchange's current ISCA allocation and the number of
new messages per second expected to be generated by options on such
index;
    (13) an equal dollar-weighted index is rebalanced at least once
every calendar quarter;
    (14) if an index is maintained by a broker-dealer, the index is
calculated by a third party who is not a broker-dealer, and the broker-
dealer has erected an information barrier around its personnel who have
access to information concerning changes in, and adjustments to, the
index; and
    (15) the Exchange has written surveillance procedures in place with
respect to surveillance of trading of options on the index.
    XSP, RUT, and DJX options will be subject to the maintenance
listing standards set forth in Rule 29.3(c):
    (1) The conditions stated in (1) through (3) and (9) through (15)
above must continue to be satisfied, provided that the requirements in
(5) through (8) must be satisfied only as of the first day of January
and July in each year; and
    (2) the total number of component securities in the index may not
increase or decrease by more than 10% from the number of component
securities in the index at the time of its initial listing.\4\
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    \4\ In the event XSP, RUT, or DJX options fails to satisfy the
maintenance listing standards set forth herein, the Exchange will
not open for trading any additional series of options of that class
unless the continued listing of that class of index options has been
approved by the Securities and Exchange Commission (the
``Commission'') under Section 19(b)(2) of the Exchange Act.
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Reporting Authority
    S&P Dow Jones Indices is the reporting authority for the Mini-SPX
Index and the Dow Jones Industrial Average, and Frank Russell Company
is the reporting authority for the Russell 2000 Index. The proposed
rule change adds these indexes and reporting authorities to Rule 29.2,
Interpretation and Policy .01. The proposed rule change also lists the
reporting authorities in Rule 29.13(b), which is the disclaimer for
reporting authorities. Rule 29.13(b) would apply to these reporting
authorities even if not specifically listed; however, the proposed rule
change adds the names of the reporting authority to the rule for
transparency and clarification.
Minimum Increments
    Rule 29.11(a) states bids and offers are expressed in terms of
dollars and cents per unit of the index. The minimum increment
applicable to index options is set forth in Rule 21.5. The proposed
rule change adds Interpretation and Policy .02 to Rule 21.5, which
states for so long as SPDR options (SPY) and Diamonds options (DIA)
participate in the Penny Pilot Program pursuant to Interpretation and
Policy .01, the minimum increments for XSP options and DJX options,
respectively, will be the same as SPY and DIA, respectively for all
option series (including long-term option series). Such minimum
increment would be $0.01 for all SPY series, regardless of price, and
$0.01 for DJX series trading at less than $3.00 and $0.05 for DJX
series trading at $3.00 or higher, respectively, as set forth in Rule
21.5(a).
    SPY options are options on the SPDR S&P 500 exchange-traded fund
(ETF), which is an ETF that tracks the performance of 1/10th the value
of the S&P 500 Index. DIA options are options on the SPDR Dow Jones
Industrial

Average ETF, which is an ETF that tracks the performance of the Dow
Jones Industrial Average. SPY and DIA options currently participate in
the Penny Pilot Program. XSP options are also based on the S&P 500
Index, and DJX options are also based on the Dow Jones Industrial
Average, as discussed above. The Exchange believes it is important that
these products have the same minimum increments for consistency and
competitive reasons. The proposed rule change is also the same as
another options exchange.\5\
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    \5\ See Cboe Options Rule 6.42, Interpretation and Policy .03.
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    The minimum increment for RUT will be as set forth in current Rule
21.5: Five cents if the series is trading below $3.00, and ten cents if
the series is trading at or above $3.00.
Settlement and Exercise Style
    RUT, XSP, and DJX options will be A.M., cash-settled contracts with
European-style exercise. A.M.-settlement is consistent with the generic
listing criteria for broad-based indexes,\6\ and thus it is common for
index options to be A.M.-settled. The Exchange proposes to amend Rule
29.11(a)(5)(B) to add XSP, RUT, and DJX options to the list of other
A.M.-settled options. The Exchange proposes to amend Rule 29.11(a)(4)
to add XSP, RUT, and DJX options to the list of other European-style
index options.
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    \6\ See Rule 29.3(b).
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Long-Term Index Options
    Rule 29.11(b)(1) currently states the Exchange may list long-term
index options series that expire from 12 to 60 months from the date of
issuance. The proposed rule change permits listing of long-term index
options series that expire from 12 to 180 months from the date of
issuance. The Exchange understands that market participants may enter
into over-the-counter (``OTC'') positions with longer-dated expirations
than currently available on the Exchange. The proposed rule change will
permit the Exchange to list long-term index options contracts with
longer-dated expirations. The Exchange believes expanding the eligible
term for long-term index options contracts to 180 months is important
and necessary to the Exchange's efforts to offer products in an
exchange-traded environment that compete with OTC products. The
Exchange believes long-term index options contracts provide market
participants and investors with a competitive comparable alternative to
the OTC market in long-term index options, which can take on contract
characteristics similar to long-term index options contracts but are
not subject to the same maximum term restriction. By expanding the
eligible term for long-term index options contracts, market
participants will now have greater flexibility in determining whether
to execute their long-term index options in an exchange environment or
in the OTC market. The Exchange believes market participants can
benefit from being able to trade these long-term index options in an
exchange environment in several ways, including, but not limited to the
following: (1) Enhanced efficiency in initiating and closing out
positions; (2) increased market transparency; and (3) heightened
contra-party creditworthiness due to the role of OCC as issuer and
guarantor of long-term index options contracts.
    The Exchange has confirmed with the OCC that OCC can configure its
systems to support long-term equity options contracts that have a
maximum term of 180 months (15 years). The proposed rule change is also
consistent with the rules of other options exchanges.\7\ Pursuant to
the proposed rule change, the Exchange may list XSP, RUT, and DJX
options with expirations from 12 to 180 months from the date of
issuance.\8\
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    \7\ See, e.g., Cboe Options Rule 24.9(b)(1).
    \8\ See id.
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    Rule 29.11(b)(2) provides that reduced-value long-term option
series may be approved for trading on specified indices.\9\ A reduced-
value long-term option series is an option series overlying an index
that trades in units based upon a percentage of the value of the
underlying index (such as 10%). As set forth in current Rule
29.11(b)(2)(B), reduced-value long-term options series may expire at
six-month intervals. The proposed rule change adds RUT to the list of
indices on which the Exchange may list reduced-value long-term option
series. Reduced-value long-term RUT series will be subject to the same
trading rules as long-term RUT series, except the minimum strike price
interval will be $2.50 for all premiums, as discussed below.\10\ For
reduced-value long-term RUT series, the underlying value will be
computed at 10% of the value of the Russell 2000.
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    \9\ See proposed Rule 29.11(b)(2)(A).
    \10\ See proposed Rule 29.11(c)(1).
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    Rule 29.11(b)(1)(A) also states strike price intervals, bid/ask
differential, and continuity rules do not apply to long-term index
options series until the time to expiration is less than twelve months.
Rule 29.11(c) describes the strike price intervals applicable to long-
term index options. Additionally, Rule 22.6(d) describes continuous
quoting requirements for Market Makers.\11\ The Exchange has no rules
imposing bid/ask differential requirements. The Exchange views these
other Rules regarding strike price interval and quote continuity
requirements as superseding the language proposed to be deleted.
Additionally, stating bid/ask different rules do not apply to long-term
index option contracts is unnecessary, as no such rules are included in
the Exchange's Rules. The Exchange believes deletion of the language
Rule 29.11(b)(1)(A) will provide additional clarity and eliminate any
confusion on the applicability of the strike price interval and quote
continuity requirements that may otherwise result by including
duplicative rules on these topics.
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    \11\ This rule excludes series with time to expiration of nine
months or more from Market Makers' quoting obligations.
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Strike Intervals
RUT Options
    The proposed rule change amends Rule 29.11(c)(1) to provide that
the interval between strike prices will be no less than $2.50 for RUT
options (if the strike price is less than $200) and reduced-value long-
term option series. This is the same strike interval that applies to
RUT options and reduced-value long-term option series pursuant to rules
of other options exchanges.\12\
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    \12\ See, e.g., Cboe Options Rule 24.9, Interpretation and
Policy .01(a); and Nasdaq PHLX LLC (``Phlx'') Rule 1101A(a).
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XSP Options
    Additionally, the proposed rule change adds Rule 29.11(c)(5), which
provides that the strike prices for new and additional series of XSP
options are subject to the following:
    (1) If the current value of the Mini-SPX Index is less than or
equal to 20, the Exchange will not list XSP option series with a strike
price of more than 100% above or below the current value of the Mini-
SPX Index;
    (2) if the current value of the Mini-SPX Index is greater than 20,
the Exchange will not list XSP option series with a strike price of
more than 50% above or below the current value of the Mini-SPX Index;
and
    (3) the lowest strike price interval that may be listed for
standard XSP option series is $1, including the long-term option
series, and the lowest strike price interval that may be listed for XSP
option series under the Short Term Option Series Program in paragraph
(h) of Rule 29.11.
    The proposed strike prices for XSP options will permit strike
prices closely

aligned with SPX options.\13\ Additionally, the proposed strike price
range limitations for XSP options are closely aligned with the strike
price range limitations for equity and exchange-traded fund (``ETF'')
options.\14\ The proposed strike prices and limitations for XSP options
are the same as those on another options exchange.\15\ XSP options
allow smaller-scale investors to gain broad exposure to the SPX options
market and hedge S&P 500 Index cash positions.\16\ As a result, XSP
options provide retail investors with the benefit of trading the broad
market in a manageably sized contract.
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    \13\ See Cboe Options Rule 24.9, Interpretation and Policy
.01(a).
    \14\ See Rule 19.6, Interpretations and Policies .02(b), .04(c)
[sic], and .05(c).
    \15\ See Cboe Options Rule 24.9, Interpretation and Policy .11.
    \16\ See Securities Exchange Act Release No. 32893 (September
14, 1993), 58 FR 49070 (September 21, 1993) (SR-CBOE-93-12) (order
approving listing of XSP options).
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    Current Rule 29.11(c)(1) provides that strike prices are permitted
only in intervals of at least $5. SPX options may be listed in
intervals of at least $5.\17\ If the S&P 500 Index value was 2700, then
the Mini-S&P 500 value would be 270. SPX options would be permitted to
be listed with strikes of 2710, 2720, and 2730. Corresponding XSP
options strikes would be 271, 272, and 273; however, under the current
rule, the Exchange could only list strikes of 270 and 275 for XSP
options. The proposed $1 strike interval for XSP options will permit
the listing of series with strikes that correspond to SPX option
strikes.
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    \17\ See Cboe Options Rule 24.9, Interpretation and Policy
.01(a).
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    Additionally, current Rule 29.11(c)(3) requires the exercise price
of each series of index options to be reasonably related to the current
index value of the underlying index to which the series relates at or
about the time the series of options is first opened for trading on the
Exchange. Pursuant to Rule 29.11(c)(4), the term ``reasonably related
to the current index value of the underlying index'' means the exercise
price must be within 30% of the current index value. The Exchange may
also open for trading additional series of index options that are more
than 30% away from the current index value, provided that demonstrated
customer interest exists for the series. The Options Listing Procedures
Plan sets forth exercise price range limitations for equity and ETF
options (which are the same as those being proposed for XSP options).
Those limitations differ from the limitations set forth in the current
Rule. For example, if the underlying price of an equity or ETF option
is $200, the Exchange would be permitted to list strikes ranging from
$100 through $300 (50% above and below the current value). However, if
the value of the Mini-SPX Index was $200, the Exchange would only be
permitted to list strikes ranging from $140 to $260. To put XSP options
on equal standing with equity and ETF options with respect to exercise
price range limitations, the Exchange proposes to impose exercise price
range limitations on XSP options that are equal to those applicable to
equity and ETF exercise price range limitations.\18\
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    \18\ See proposed Rule 29.11(c)(5).
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    The Exchange believes these permitted strike prices will permit the
Exchange to list XSP options with strikes that more closely reflect the
current values of the S&P 500 Index, as they provide more flexibility
and allow the Exchange to better respond to customer demand for XSP
option strike prices that relate to current S&P 500 Index values. In
addition, the Exchange believes that because the number of strikes that
may be listed would be contained by the percentages above and below the
current XSP Index value, there is no need to restrict the use of $1
strike price intervals based on the amount of the strike price.
    The Exchange recognizes the proposed approach does not achieve full
harmonization between strikes in XSP options and SPX options. For
example, if there is a 2715 strike in SPX options, the Exchange is not
seeking the ability to list a 271.5 strike in XSP options. The Exchange
believes being able to list the 271 and 272 strikes in XSP options
would provide the marketplace with a sufficient number of strike prices
over a range of XSP values.\19\ The Exchange believes this proposed
rule change would allow retail investors to better use XSP options to
gain exposure to the SPX options market and hedge S&P 500 cash
positions in the event that the S&P 500 Index value continues to
increase.
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    \19\ Nothing in this rule filing precludes the Exchange from
submitting a future rule filing requesting even finer strike price
increments for XSP options.
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    The S&P 500 Index is widely used to gauge large cap U.S. equities,
and as a result, investors often use S&P 500 Index-related products to
diversify their portfolios and benefit from market trends. Full-size
SPX options offer these benefits to investors, but may be expensive
given its large notional value. Those options are primarily used by
institutional market participants. By contrast, XSP options offer
individual investors a lower cost options to obtain the potential
benefits of options on the S&P 500 Index.
DJX Options
    Proposed Rule 29.11(c)(6) provides the interval between strike
prices may be no less than $0.50 for options based on 1/100th of the
value of the Dow Jones Industrial Average, including for series listed
under the Short Term Options Program.\20\ As noted above, current Rule
29.11(c)(1) provides that strike prices are permitted only in intervals
of at least $5. As noted above, DJX options are based on 1/100th the
value of the Dow Jones Industrial Average. For example, if the value of
the Dow Jones Industrial Average was 25100, series of an option based
on the full value of that average could be listed with strike prices of
25105, 25110, and 25115. One-one hundredth of the value of the Dow
Jones Industrial Average would be 251.05, 251.10, and 251.15, but the
Exchange would only be able to list series with strike prices of $250
and $255. Pursuant to the proposed rule change, the Exchange could list
series with strike prices of 251.50, 252, 252.50, and 253. The Exchange
recognizes the proposed approach does not achieve full harmonization
between strikes in DJX options and the full value of the Dow Jones
Industrial Average. However, the Exchange believes being able to list
the DJX options at strike intervals of $0.50 would provide the
marketplace with a sufficient number of strike prices over a range of
DJX values.\21\ The Exchange believes this proposed rule change would
allow retail investors to better use DJX options to gain exposure to
the market and hedge Dow Jones Industrial Average cash positions in the
event that the value continues to increase. The proposed strike price
interval for DJX options is the same as those on another options
exchange.\22\
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    \20\ See Rule 29.11, Interpretation and Policy .05 [sic] for a
description of the Short Term Options Program.
    \21\ Nothing in this rule filing precludes the Exchange from
submitting a future rule filing requesting even finer strike price
increments for DJX options.
    \22\ See Cboe Options Rule 24.9, Interpretation and Policy
.01(b).
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Opening Process
    The proposed rule change adds paragraph (c) to Rule 21.7 to
describe the opening process for index options. Current Rule 21.7(b)
states the System will open index options for trading at 9:30 a.m.
Eastern time. Pursuant to the current opening process, following 9:30
a.m., the System will determine a price at which a particular series
will be opened (the ``Opening Price'') within 30

seconds of that time. Where there are no contracts in a particular
series that would execute at any price, the System will open such
options for trading without determining an Opening Price. The Opening
Price of a series must be a Valid Price, as determined by current
subparagraph (a)(2), and will be:
     The midpoint of the NBBO (the ``NBBO Midpoint'');
     Where there is no NBBO Midpoint at a Valid Price, the last
regular way print disseminated pursuant to the OPRA Plan after 9:30
a.m. Eastern Time (the ``Print'');
     Where there is both no NBBO Midpoint and no Print at a
Valid Price, the last regular way transaction from the previous trading
day as disseminated pursuant to the OPRA Plan (the ``Previous Close'');
or
     Where there is no NBBO Midpoint, no Print, and no Previous
Close at a Valid Price, the Order Entry Period may be extended by 30
seconds or less or the series may be opened for trading at the
discretion of the Exchange.
    A NBBO Midpoint, a Print, and a Previous Close will be at a Valid
Price:
     Where there is no NBB and no NBO;
     Where there is either a NBB and no NBO or a NBO and no NBB
and the price is equal to or greater than the NBB or equal to or less
than the NBO; or
     Where there is both a NBB and NBO, the price is equal to
or within the NBBO, and the price is less than a specified minimum
amount away from the NBB or NBO for the series.
    Under this Opening Process, if a series has not opened yet on
another exchange on a trading (and thus there is no NBBO and no Last
Print), if there is a Previous Close Price, it will be a valid price
and will be the Opening Price. Additionally, if there are no crossed
contracts in a series, the series opens immediately following the time
period referenced above.
    The Exchange proposes to modify this process with respect to index
options. Pursuant to the proposed rule change, for index options, the
System will determine the Opening Price within 30 seconds of an away
options exchange(s) disseminating a quote in a series. Following an
away options exchange's dissemination of a quote in a series, if there
are no contracts in a series that would execute at any price, the
System opens the series for trading without determining an Opening
Price. The Opening Price, if valid, of a series will be the NBBO
Midpoint. Pursuant to proposed subparagraph (c)(2), for index options,
the NBBO Midpoint is a valid price if it is less than a specified
minimum amount away from the NBB or NBO for the series.\23\ If the NBBO
Midpoint is not valid, the Exchange in its discretion may extend the
order entry period by up to 30 seconds or open the series for trading.
In other words, the proposed rule change provides that an index option
series will not open (with or without a trade) until after the series
is open on another exchange. To the extent the Exchange receives a
quote from another Exchange within the time period referenced above,
and there are contracts that may trade, the Opening Process will
essentially be the same, and a series will open with the NBBO Midpoint
as an Opening Price (if valid). Additionally, the Exchange will
continue to have the ability to use a contingent opening to open a
series for trading if there is no valid Opening Price. The proposed
rule change delays opening of a series on the Exchange in an index
option series if there are no crossed contracts, and eliminates the
possibility to open using the Last Print or Previous Close (as those
will generally not be necessary if the Exchange waits for another
exchange to open).
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    \23\ There are currently three criteria for an opening price to
be valid. See current Rule 21.7(a)(2) (proposed Rule 21.7(b)(2)).
Since the proposed rule change provides that an index option series
will only open once it receives an NBBO from another exchange, in
which case there will always be an NBB and NBO and thus an NBBO
midpoint, the only criteria for an opening price to be valid that
would apply to index options is the criteria regarding how far away
the NBBO midpoint is from the NBB or NBO.
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    Currently, RUT options trade on Cboe Options and C2 Exchange, Inc.
(``C2''), and XSP options trade on Cboe Options, which are affiliated
exchanges of the Exchange. Under current Rule 21.7, if a RUT series was
open on Cboe Options, and if there are crossed orders on the Exchange,
the RUT series on the Exchange would open with an Opening Price equal
to the NBBO Midpoint (if valid). If a RUT series was not yet open on
another Exchange after 9:30 a.m. (eastern), and there was a Previous
Close for the series, the series would open on the Exchange with the
Previous Close as the Opening Price. If there are no crossing orders on
the Exchange, a RUT series would open without an opening price,
possibly before the RUT series was open on Cboe Options.
    RUT options on Cboe Options generally open within 30 seconds after
9:30 a.m., and thus the Exchange expects RUT options to open for
trading within 30 seconds (as set forth in the rule) at an Opening
Price equal to the NBBO Midpoint if there are orders that can be
crossed. However, it will be possible for a RUT series to open prior to
the opening of that series on Cboe Options. This is significant
because, on certain dates, Cboe Options uses prices of RUT options
trading on Cboe Options to determine settlement values for volatility
index derivatives.\24\ While trading in these options on volatility
index derivative settlement days also generally opens within a few
seconds after 9:30 a.m., there have been times when series being used
to determine the settlement value took longer to open. Under the
proposed rule, series on the Exchange would open without an Opening
Price (if there are no crossed orders) or with an Opening Price equal
to the Previous Close (if there are crossed orders) prior to the
settlement value determination being completed on Cboe Options. If this
were to occur, trading on the Exchange may then be occurring at very
different prices than what is ultimately the opening trade price on
Cboe Options. Trading on another Exchange while Cboe Options is not yet
open may impact the volatility settlement value determination and
disrupt trading of volatility index derivatives. The proposed rule
change eliminates the possibility of RUT options on the Exchange
automatically opening for trading prior to those options being open on
Cboe Options and thus interfering with the calculation of volatility
index derivative settlement values.
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    \24\ See Cboe Options Rule 6.2, Interpretation and Policy .01.
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    The proposed rule change is the same as the opening process for
index options on C2.\25\ Additionally, the opening process on Nasdaq
BX, LLC (``BX'') is similar to the proposed rule change. Pursuant to BX
Chapter VI, Section 8(b), if there is a possible trade on BX, a series
will open with a valid width NBBO.\26\ This is similar to the proposed
rule change, in that a valid NBBO Midpoint must be present for an index
option series to open with a trade (which on the Exchange would only
occur if another exchange was open for trading, because on the
Exchange, the NBBO that is used to determine the Opening Price is based
on disseminated quotes of other exchanges and does not include orders
and quotes on the Exchange prior to the opening of trading \27\).
Additionally, if no trade is possible on BX, then BX will depend on one
of the following to open: (1) A valid

width NBBO, (2) a certain number of other options exchanges (as
determined by BX) having disseminated a firm quote on OPRA, or (3) a
certain period of time (as determined by the Exchange) has elapsed. As
proposed, if no trade is possible, the Exchange will open an index
option series after another exchange as disseminated a quote, which is
consistent with number (2) above (for example, under BX's rule, it
could determine to open if one other options exchange was open). While
the proposed rule change does not explicitly provide for additional
alternatives in the event no trade is possible, pursuant to Rule
21.7(f), the Exchange may adjust the timing of the Opening Process in a
class if it believes it is necessary in the interests of a fair and
orderly market.\28\ Therefore, like BX, the Exchange could open a
series after a certain amount of time has passed if the series does not
open on another exchange.
---------------------------------------------------------------------------

    \25\ See C2 Rule 6.11(a)(2)(B).
    \26\ On BX, a valid width NBBO means a combination of all away
market quotes and any combination of BX Options-registered Market-
Maker orders and quotes received over a BX-provided system component
through which Market-Makers communicate their quotes within a
specified bid/ask differential established by BX. See BX Chapter VI,
Section 8(a)(6).
    \27\ See Rule 16.1(a)(29) (definition of NBBO).
    \28\ Number (1) above would not apply because, as noted above,
the NBBO on the Exchange prior to the opening of trading does not
include orders and quotes on the Exchange.
---------------------------------------------------------------------------

    Once the System determines an opening price for an index option, it
will open a series with an opening trade in the same manner as it does
for equity options. The proposed rule change moves the description of
this process from current Rule 21.7(a)(3) to proposed Rule 21.7(d). The
proposed rule change also adds to proposed paragraph (d) that the
System cancels any OPG (also called at the open orders) (or unexecuted
portions) that do not execute during the opening process. This is
consistent with the behavior of orders with the OPG time-in-force
instruction.\29\ Additionally, the proposed rule change moves the
description of a contingent open, which will also apply to index and
equity options, from current Rule 21.7(a)(4) to proposed Rule
21.7(e).\30\ The proposed rule change makes other nonsubstantive
changes (e.g. adding headings and updating paragraph lettering and
numbering). Additionally, the proposed rule change clarifies in Rule
21.7(a) that re-opening after regulatory halts applies only to equity
options, as regulatory halts only occur in equity options.
---------------------------------------------------------------------------

    \29\ See Rule 21.1(f)(6).
    \30\ The proposed rule change makes nonsubstantive changes to
this provision, including to make the rule plain English and
eliminate passive voice.
---------------------------------------------------------------------------

Trading Halts
    Current Rule 29.10(b) describes when the Exchange may halt trading
in an index option. It permits the Exchange to halt trading in an index
option when, in its \31\ judgment, such action is appropriate in the
interests of a fair and orderly market and to protect investors. The
Exchange may consider the following factors, among others:
---------------------------------------------------------------------------

    \31\ The proposed rule change modifies the rule to say ``its''
(as the sentence refers to the Exchange) rather than ``his or her.''
---------------------------------------------------------------------------

     Whether all trading has been halted or suspended in the
market that is the primary market for a plurality of the underlying
stocks;
     Whether the current calculation of the index derived from
the current market prices of the stocks is not available;
     The extent to which the opening has been completed or
other factors regarding the status of the opening; and
     Other unusual conditions or circumstances detrimental to
the maintenance of a fair and orderly market are present, including,
but not limited to, the activation of price limits on futures
exchanges.
    The proposed rule change amends the first factor to state the
Exchange may consider the extent to which trading is not occurring in
the stocks or options underlying the index. This provides the Exchange
with additional flexibility to consider trading on all markets on which
the underlying components trade when determining whether to halt
trading in an index option. The Exchange believes flexibility is
appropriate when determining whether to halt trading in an index option
so it can make such a determination based on then-current circumstances
to determine what will contribute to a fair and orderly market. For
example, less than a ``plurality'' of underlying components may trade
on one market, but if trading on that market is halted, the Exchange
may determine halting trading in the index option is in the interests
of a fair and orderly market because of the specific components that
are not trading. This proposed change is consistent with the rules of
another options exchange.\32\
---------------------------------------------------------------------------

    \32\ See, e.g., Cboe Options Rule 24.7(a).
---------------------------------------------------------------------------

    Rule 29.10 also states trading on the Exchange will be halted or
suspended whenever trading in underlying securities whose weighted
value represents more than 20%, in the case of a broad-based index, and
10% for all other indices, of the index value is halted or suspended.
The proposed rule change deletes this provision. The first factor, as
amended by this proposed rule change, permits the Exchange to determine
to halt trading in an index option in this specific circumstance. This
provision provides the Exchange with no flexibility to determine what
is in the interests of a fair and orderly market. The rules of other
exchanges do not have this provision.\33\
---------------------------------------------------------------------------

    \33\ See, e.g., Cboe Options Rule 24.7(a); Phlx Rule 1047A(c).
---------------------------------------------------------------------------

Expirations Listed on Other Exchanges
    Proposed Rule 29.11(j) permits the Exchange to list additional
expiration months on option classes opened for trading on the Exchange
if such expiration months are opened for trading on at least one other
registered national securities exchange. As noted above, Rule
29.11(a)(3) permits the Exchange to list up to six expiration months at
any one time for an index option class. Other options exchange have
rules that permit them to list additional expiration months if they are
opened for trading on at least one other options exchange.\34\ This
proposed rule change will allow the Exchange to compete with other
exchanges by matching the expiration months that other exchanges list.
---------------------------------------------------------------------------

    \34\ See, e.g., Cboe Options Rule 24.9, Interpretation and
Policy .13; and NASDAQ ISE, LLC Rule 2009, Supplementary Material
.04.
---------------------------------------------------------------------------

    The Exchange notes that the proposed rule change affords additional
flexibility in that it will permit the exchange to list those
additional expiration months that have an actual demand from market
participants thereby potentially reducing the proliferation of classes
and series. The Exchange believes the proposed rule change is proper,
and indeed necessary, in light of the need to have rules that permit
the listing of identical expiration months across exchanges for
products that multiply-listed and fungible with one another. The
Exchange believes that the proposed rule change should encourage
competition and be beneficial to traders and market participants by
providing them with a means to trade on the Exchange securities that
are listed and traded on other exchanges.
Obvious Error
    The proposed rule change adds to Rule 20.6(g) and (h) language to
clarify that, for purposes of determining whether a trade resulted from
an erroneous print or quote in the underlying, the underlying may
include index values (as well as Fund Shares and HOLDRs, which may also
underlie options trading on the Exchange pursuant to Rule 19.3(g) and
(i),

respectively).\35\ This is consistent with the rules of another options
exchange.\36\
---------------------------------------------------------------------------

    \35\ While adding language in this rule provision regarding Fund
Shares and HOLDRs is unrelated to the purpose of this filing, which
is to permit the listing and trading of certain index options on the
Exchange, the Exchange believes it is appropriate to include this
language in the proposed rule text to ensure continued harmonization
of obvious error rules across all exchanges.
    \36\ See, e.g., Cboe Options Rule 6.25(g) and (h).
---------------------------------------------------------------------------

Restrictions on Contracts
    The proposed rule change adds Rule 29.15, which states contracts
provided for in Chapter 29 of the Rules will not be subject to the
restriction in Rule 18.12(b). Rule 18.12(b) states whenever the issue
of a security underlying a call option traded on the Exchange is
engaged or proposes to engage in a public underwritten distribution
(``public distribution'') of such underlying security or securities
exchangeable for or convertible into such underlying security, the
underwriters may request that the exchange impose restrictions upon all
opening writing transactions in such options at a discount where the
resulting short position will be uncovered. The rule includes
additional conditions that are necessary to impose these restrictions.
    Rule 18.12(b) applies to equity options, and to restrictions the
issuer of the security underlying the equity option may request. As
there is no issuer of an ``index,'' and thus there is no possibility of
a public distribution of an index, the Rule does not apply to index
options. Rule 29.15 merely states this explicitly in the Rules. This
will also ensure it is clear in the Rules that an issuer of a security
that is a component of an index may not request restrictions on the
index options, as the Exchange does not believe it would be appropriate
for an issuer of a single underlying component to have the ability to
restrict trading in the index option. The proposed rule change is
consistent with the rules of at least one other options exchange.\37\
---------------------------------------------------------------------------

    \37\ See Cboe Options Rule 24.10.
---------------------------------------------------------------------------

Capacity and Surveillance
    The Exchange represents it has an adequate surveillance program in
place for index options. The Exchange is a member of the Intermarket
Surveillance Group (``ISG''), which is comprised of an international
group of exchanges, market centers, and market regulators. The purpose
of ISG is to provide a framework for the sharing of information and the
coordination of regulatory efforts among exchanges trading securities
and related products to address potential intermarket manipulations and
trading abuses. ISG plays a crucial role in information sharing among
markets that trade securities, options on securities, security futures
products, and futures and options on broad-based security indexes. A
list of identifying current ISG members is available at https://www.isgportal.org/isgPortal/public/members.htm.
    The Exchange has analyzed its capacity and represents that it
believes the Exchange and OPRA have the necessary systems capacity to
handle the additional traffic associated with the listing of XSP, RUT,
and DJX options up to the proposed number of possible expirations and
strike prices. The Exchange believes any additional traffic that would
be generated from the introduction of XSP, RUT, and DJX options will be
manageable. The Exchange believes its Members will not have a capacity
issue as a result of this proposed rule change. The Exchange also
represents that it does not believe this expansion will cause
fragmentation of liquidity. The Exchange will monitor the trading
volume associated with the additional options series listed as a result
of this proposed rule change and the effect (if any) of these
additional series on market fragmentation and on the capacity of the
Exchange's automated systems.
Position Limits and Margin
    XSP, RUT, and DJX options will be subject to the margin
requirements set forth in Chapter 28 and the position limits set forth
in Rule 29.5. Chapter 28 imposes the margin requirements of either Cboe
Options or the New York Stock Exchange on Exchange Options Members.
Similarly, Rule 29.5 imposes position (and exercise) limits for broad-
based index options of Cboe Options on Exchange Options Members. XSP,
RUT, and DJX options are currently listed and traded on Cboe
Options,\38\ and thus the same margin requirements and position and
exercise limits that apply to these products as traded on Cboe Options
will apply to these products when listed and traded on the Exchange.
---------------------------------------------------------------------------

    \38\ Similarly, pursuant to Cboe Options Chapter 12, Cboe
Options Trading Permit Holders may request to have New York Stock
Exchange margin requirements apply to their trading.
---------------------------------------------------------------------------

    The Exchange Rules and Cboe Options rules regarding position and
exercise limits and margin requirements are substantially the same as
each other, as the Exchange rules currently refer to the corresponding
Cboe Options rules. Therefore, Options Members must comply with these
Cboe Options rules pursuant to the Exchange Rules. Pursuant to the
proposed rule change, the Exchange will be trading index options also
authorized for trading on Cboe Options, so the position and exercise
limits and margin requirements currently applicable to these index
options that trade on Cboe Options will apply to these index options
that may be listed for trading on the Exchange. The proposed rule
regarding the listing and trading of XSP, RUT, and DJX are
substantially the same as Cboe Options rules regarding the listing and
trading of XSP, RUT, and DJX, which rules were previously approved by
the Commission and thus they are consistent with the Act. Additionally,
the rules regarding position and exercise limits and margin
requirements that will apply to XSP, RUT, and DJX options listed for
trading on the Exchange were previously approved by the Commission, and
thus they are consistent with the Act. The proposed rule change will
also result in similar regulatory treatment for similar option
products.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\39\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \40\ 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 facilitating
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 the
Section 6(b)(5) \41\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78f(b).
    \40\ 15 U.S.C. 78f(b)(5).
    \41\ Id.
---------------------------------------------------------------------------

    The index underlying each of XSP, RUT, and DJX options satisfies
the initial listing criteria of a broad-based index in the Exchange's
Rules. The proposed rule change adds these indexes to the table
regarding reporting authorities for indexes, to the list of European-
style exercise index options,

and to the list of A.M.-settled index options. These changes are
consistent with the Exchange's existing Rules.\42\
---------------------------------------------------------------------------

    \42\ See also Cboe Options Rules 24.1, Interpretation and Policy
.01 and 24.9(a)(3) and (4).
---------------------------------------------------------------------------

    The proposed rule change related to the minimum increment for XSP
and DJX options will permit consistency between pricing of SPY options
and XSP options, which are both based, in some manner, on the value of
the S&P 500 Index, and between DIA options and DJX options, which are
both based, in some manner, on the value of the Dow Jones Industrial
Average. As a result, the Exchange believes it is important that these
products have the same minimum increments for competitive reasons. The
proposed rule change is also the same as another options exchange.\43\
---------------------------------------------------------------------------

    \43\ See Cboe Options Rule 6.42, Interpretation and Policy .03.
---------------------------------------------------------------------------

    The proposed rule change to permit listing of long-term index
options contracts with terms up to 180 months is designed to promote
just and equitable principles of trade in that the availability of
long-term index options contracts with longer dated expirations will
give market participants an alternative to trading similar products in
the OTC market. By trading a product in an exchange-traded environment
(that is currently being used in the OTC market), the Exchange will be
able to compete more effectively with the OTC market. The Exchange
believes the proposed rule change is designed to prevent fraudulent and
manipulative acts and practices in that it will hopefully lead to the
migration of options currently trading in the OTC market to trading to
the Exchange. Also, any migration to the Exchange from the OTC market
will result in increased market transparency. Additionally, the
Exchange believes the proposed rule change is designed to remove
impediments to and to perfect the mechanism for a free and open market
and a national market system, and, in general, to protect investors and
the public interest in that it should create greater trading and
hedging opportunities and flexibility. The proposed rule change should
also result in enhanced efficiency in initiating and closing out
positions and heightened contra-party creditworthiness due to the role
of OCC as issuer and guarantor of long-term index option series.
Further, the proposed rule change will result in increased competition
by permitting the Exchange to offer products that are currently used in
the OTC market and on other exchanges. Additionally, the proposed rule
change is consistent with the series listing rules of other
exchanges.\44\
---------------------------------------------------------------------------

    \44\ See, e.g., Cboe Options Rule 24.9(b)(1).
---------------------------------------------------------------------------

    The proposed rule change to eliminate the rule provision regarding
the applicability of strike price intervals, bid/ask differentials and
quote continuity requirements to long-term index option contracts will
protect investors by eliminating potential confusion that may result
from inclusion of duplicative rules. As discussed above, other rules
address requirements related to strike price intervals and quote
continuity requirements and supersede the language regarding these
topics, and the Exchange has no rules imposing bid/ask differential
requirements (and thus no such requirements apply to long-term equity
option contracts), thus rendering this language unnecessary. The
Exchange will continue to impose these requirements in the manner it
does today, consistent with the provisions in other existing rules, and
thus this proposed rule change has no impact on how the Exchange
imposes these requirements. The rules of other options exchanges do not
include this provision.\45\
---------------------------------------------------------------------------

    \45\ See, e.g., Cboe Options Rule 24.9.
---------------------------------------------------------------------------

    The proposed minimum strike interval for RUT options (if the strike
price is less than $200) and reduced-value long-term option series is
the same as that on another options exchanges.\46\
---------------------------------------------------------------------------

    \46\ See, e.g., Cboe Options Rule 24.9, Interpretation and
Policy .01(a); and Nasdaq PHLX LLC (``Phlx'') Rule 1101A(a).
---------------------------------------------------------------------------

    With respect to the proposed strike prices for XSP options, the
proposed rule change would more closely align XSP option strike prices
with those of SPX option strike prices, and would more closely align
strike price range limitations on XSP options with those of equity and
ETF options. This would provide more flexibility and allow the Exchange
to better respond to customer demand for XSP option strike prices that
relate to current S&P 500 Index values. The Exchange believes this
proposed rule change would allow retail investors to better use XSP
options to gain exposure to the SPX options market and hedge S&P 500
cash positions in the event that the S&P 500 Index value continues to
increase. The Exchange does not believe the proposed rule change will
create additional capacity issues. In addition, the Exchange believes
that because the number of strikes that may be listed would be
contained by the percentages above and below the current XSP Index
value, the number of XSP strikes that may be listed will not be
unbounded. The proposed XSP strike prices and restrictions are the same
as those on another options exchange.\47\
---------------------------------------------------------------------------

    \47\ See Cboe Options Rule 24.9, Interpretation and Policy .11.
---------------------------------------------------------------------------

    With respect to the proposed strike prices for DJX options, the
proposed rule change would more closely align DJX option strike prices
with 1/100th the value of the Dow Jones Industrial Average. This would
provide more flexibility and allow the Exchange to better respond to
customer demand for DJX option strike prices that relate to current Dow
Jones Industrial Average values. The Exchange believes this proposed
rule change would allow retail investors to better use DJX options to
gain exposure to the market and hedge Dow Jones Industrial Average cash
positions in the event that the Dow Jones Industrial Average value
continues to increase. The Exchange does not believe the proposed rule
change will create additional capacity issues. The proposed DJX strike
prices are the same as those on another options exchange.\48\
---------------------------------------------------------------------------

    \48\ See Cboe Options Rule 24.9, Interpretation and Policy
.01(b).
---------------------------------------------------------------------------

    The proposed rule change that permits the Exchange to list
additional expiration months if they are listed on another options
exchange will permit the Exchange to accommodate requests made by its
Trading Permit Holders and other market participants to list the
additional expiration months and thus encourage competition without
harming investors or the public interest.
    The proposed rule change with respect to the opening process for
index options eliminates the possibility of RUT options on the Exchange
automatically opening for trading prior to those options being open on
Cboe Options and thus interfering with the calculation of volatility
index derivative settlement values, which promotes just and equitable
principles of trade and perfects the mechanism of a free and open
market and national market system. As discussed above, under certain
circumstances, the proposed rule change is expected to have a de
minimis impact on the opening of index option series on the Exchange
because, to the extent the Exchange receives a quote from another
Exchange within the time period following 9:30 a.m., and there are
contracts that may trade, the Opening Process will essentially be the
same, and a series will open with the NBBO Midpoint as an Opening Price
(if valid). Additionally, the Exchange will continue to have the
ability to use a contingent opening to open a series for

trading if there is no valid Opening Price. Therefore, if an index
option series is not yet open on another exchange, the Exchange will
still have the ability to open the series for trading. As discussed
above, the proposed rule change is the same as the opening process for
index options on C2,\49\ and similar to the opening process of another
options exchange, which also provides that opening for trading may be
dependent on whether another options exchange is open.\50\
---------------------------------------------------------------------------

    \49\ See C2 Rule 6.11(a)(2)(B).
    \50\ See BX Rule [sic] Section 8(b).
---------------------------------------------------------------------------

    The proposed rule change to permit the Exchange to list additional
expiration months on option classes opened for trading on the Exchange
if such expiration months are opened for trading on at least one other
registered national securities exchange is the same as rules of other
options exchanges.\51\ The proposed rule change will remove impediments
to and perfect the mechanism of a free and open market and a national
market system by allowing the Exchange to match the expiration months
that other exchanges list. This will promote competition among
exchanges, which benefits investors.
---------------------------------------------------------------------------

    \51\ See, e.g., Cboe Options Rule 24.9, Interpretation and
Policy .13; and NASDAQ ISE, LLC Rule 2009, Supplementary Material
.04.
---------------------------------------------------------------------------

    The proposed rule change regarding when the Exchange may halt
trading in index options promotes just and equitable principles of
trade and protects the public interest by providing the Exchange with
additional flexibility when determine whether to halt trading in an
index option, so it can make such a determination based on then-current
circumstances to determine what it will contribute to a fair and
orderly market. The proposed change is consistent with the rules of
another options exchange.\52\
---------------------------------------------------------------------------

    \52\ See, e.g., Cboe Options Rule 24.7(a); see also Phlx Rule
1047A(c).
---------------------------------------------------------------------------

    The proposed rule change to clarify that, for purposes of
determining whether a trade resulted from an erroneous print or quote
in the underlying, the underlying may include index values (as well as
Fund Shares and HOLDRs, which may also underlie options trading on the
Exchange pursuant to Rule 19.3(g) and (i), respectively) further
harmonizes the Exchange's rule related to the adjustment and
nullification of erroneous options transactions with those of other
options exchanges. The proposed rule change is based on the rules of
another options exchange.\53\
---------------------------------------------------------------------------

    \53\ Cboe Options Rule 6.25(g) and (h).
---------------------------------------------------------------------------

    Proposed Rule 29.15 is merely stating explicitly in the Rules that
Rule 18.12(b) does not apply to index options, which is consistent with
the current rule. The proposed rule change is based on the rules of
another options exchange.\54\
---------------------------------------------------------------------------

    \54\ Cboe Options Rule 24.10.
---------------------------------------------------------------------------

    The Exchange Rules and Cboe Options rules regarding position and
exercise limits and margin requirements are substantially the same as
each other, as the Exchange rules currently refer to the corresponding
Cboe Options rules. Therefore, Options Members must comply with these
Cboe Options rules pursuant to the Exchange Rules. Pursuant to the
proposed rule change the Exchange will be trading index options also
authorized for trading on Cboe Options, the Cboe Options position and
exercise limits and margin requirements applicable to these index
options will apply to these index options that may be listed for
trading on the Exchange. Additionally, the previously approved Cboe
Options rules regarding listing of XSP, RUT, and DJX index options on
the Exchange pursuant to this proposed rule change are subject to these
also previously approved Cboe Options rules regarding position and
exercise limits and margin requirements, and thus they are consistent
with the Act. The proposed rule change will also result in similar
regulatory treatment for similar option products.
    The Exchange represents it has an adequate surveillance program in
place for index options. The Exchange is a member of the Intermarket
Surveillance Group (``ISG''), which is comprised of an international
group of exchanges, market centers, and market regulators. The purpose
of ISG is to provide a framework for the sharing of information and the
coordination of regulatory efforts among exchanges trading securities
and related products to address potential intermarket manipulations and
trading abuses. ISG plays a crucial role in information sharing among
markets that trade securities, options on securities, security futures
products, and futures and options on broad-based security indexes. A
list of identifying current ISG members is available at https://www.isgportal.org/isgPortal/public/members.htm.
    The Exchange has analyzed its capacity and represents that it
believes the Exchange and OPRA have the necessary systems capacity to
handle the additional traffic associated with the listing of XSP, RUT,
and DJX options up to the proposed number of possible expirations and
strike prices. The Exchange believes any additional traffic that would
be generated from the introduction of XSP, RUT, and DJX options will be
manageable. The Exchange believes its Members will not have a capacity
issue as a result of this proposed rule change. The Exchange also
represents that it does not believe this expansion will cause
fragmentation of liquidity. The Exchange will monitor the trading
volume associated with the additional options series listed as a result
of this proposed rule change and the effect (if any) of these
additional series on market fragmentation and on the capacity of the
Exchange's automated systems.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
    The index underlying each of XSP, RUT, and DJX options satisfies
the initial listing criteria of a broad-based index in the Exchange's
Rules. The proposed rule change adds these indexes to the table
regarding reporting authorities for indexes, to the list of European-
style exercise index options, and to the list of A.M.-settled index
options. These changes are consistent with the Exchange's existing
Rules,\55\ as well as Cboe Options' rules.\56\
---------------------------------------------------------------------------

    \55\ See Rules 29.2, Interpretation and Policy .01 and
29.11(a)(4) and (5).
    \56\ See Cboe Options Rules 24.1, Interpretation and Policy .01
and 24.9(a)(3) and (4).
---------------------------------------------------------------------------

    The proposed rule change related to the minimum increment for XSP
and DJX options will permit consistency between pricing of SPY options
and XSP options, which are both based, in some manner, on the value of
the S&P 500 Index, and between pricing of DIA options and DJX options,
which are both based, in some manner, on the value of the Dow Jones
Industrial Average. As a result, the Exchange believes it is important
that these products have the same minimum increments for competitive
reasons. The proposed rule change is also the same as another options
exchange.\57\
---------------------------------------------------------------------------

    \57\ See Cboe Options Rule 6.42, Interpretation and Policy .03.
---------------------------------------------------------------------------

    The proposed rule change to permit listing of long-term index
options contracts with terms up to 180 months will give market
participants an alternative to trading similar products in the OTC
market. By trading a product in an exchange-traded environment (that is
currently being used in the OTC market), the Exchange will be able to
compete more effectively with the OTC market. Additionally, the
Exchange believes that the proposed rule change

will create greater trading and hedging opportunities and flexibility.
The proposed rule change should also result in enhanced efficiency in
initiating and closing out positions and heightened contra-party
creditworthiness due to the role of OCC as issuer and guarantor of
long-term index options contracts. Further, the proposal will result in
increased competition by permitting the Exchange to offer products that
are currently used in the OTC market. Additionally, the proposed rule
change is consistent with the series listing rules of other
exchanges.\58\
---------------------------------------------------------------------------

    \58\ See Cboe Options Rule 24.9(b)(1).
---------------------------------------------------------------------------

    The proposed rule change to eliminate the rule provision regarding
the applicability of strike price intervals, bid/ask differentials and
quote continuity requirements to long-term index option contracts will
have no impact on Members, as this merely eliminates potential
confusion that may result from inclusion of duplicative rules that have
been superseded by other rules. The Exchange will continue to impose
these requirements in the manner it does today, consistent with the
provisions in other existing rules, and thus this proposed rule change
has no impact on how the Exchange imposes these requirements. The rules
of other options exchanges do not include this provision.\59\
---------------------------------------------------------------------------

    \59\ See Cboe Options Rule 24.9.
---------------------------------------------------------------------------

    The proposed minimum strike interval for RUT options (if the strike
price is less than $200) and reduced-value long-term option series is
the same as that on another options exchanges.\60\
---------------------------------------------------------------------------

    \60\ See, e.g., Cboe Options Rule 24.9, Interpretation and
Policy .01(a); and Nasdaq PHLX LLC (``Phlx'') Rule 1101A(a).
---------------------------------------------------------------------------

    The proposed strike prices for XSP options will be available to all
market participants that choose to trade XSP options on the Exchange.
Additionally, the proposed XSP strike prices and restrictions are the
same as those on another options exchange.\61\ The proposed strike
prices for DJX options will be available to all market participants
that choose to trade DJX options on the Exchange. Additionally, the
proposed DJX strike prices and restrictions are the same as those on
another options exchange.\62\
---------------------------------------------------------------------------

    \61\ See Cboe Options Rule 24.9, Interpretation and Policy .11.
    \62\ See Cboe Options Rule 24.9, Interpretation and Policy
.01(b).
---------------------------------------------------------------------------

    With respect to the proposed rule change related to the opening
process, the amended opening process will apply in the same manner to
all market participants that participate in the Exchange's Opening
Process for index options. The Exchange believes it is appropriate to
limit the proposed change to index options, because some, such as RUT,
are used to determine the settlement value for volatility index
derivatives. A similar process does not occur for equity options, and
thus, the risk of opening trading in an equity option interfering with
a settlement process on another exchange is not present. As discussed
above, the proposed rule change is the same as the opening process for
index options on C2,\63\ and similar to the opening process of another
options exchange, which also provides that opening for trading may be
dependent on whether another options exchange is open.\64\
---------------------------------------------------------------------------

    \63\ See C2 Rule 6.11(a)(2)(B).
    \64\ See BX Rule [sic] Section 8(b).
---------------------------------------------------------------------------

    The proposed rule change regarding when the Exchange may halt
trading in index options will apply to all market participants in the
same manner to the extent the Exchange halts trading pursuant to the
proposed rule. The rule provides the Exchange with additional
flexibility when determine whether to halt trading in an index option,
so it can make such a determination based on then-current circumstances
to determine what it will contribute to a fair and orderly market. The
proposed change is consistent with the rules of another options
exchange.\65\
---------------------------------------------------------------------------

    \65\ See, e.g., Cboe Options Rule 24.7(a); see also Phlx Rule
1047A(c).
---------------------------------------------------------------------------

    The proposed rule change to permit the Exchange to list additional
expiration months on option classes opened for trading on the Exchange
if such expiration months are opened for trading on at least one other
registered national securities exchange is the same as rules of other
options exchanges.\66\ This proposed rule change will allow the
Exchange to compete with other exchanges by matching the expiration
months that other exchanges list.
---------------------------------------------------------------------------

    \66\ See, e.g., Cboe Options Rule 24.9, Interpretation and
Policy .13; and NASDAQ ISE, LLC Rule 2009, Supplementary Material
.04.
---------------------------------------------------------------------------

    The proposed rule change to clarify that, for purposes of
determining whether a trade resulted from an erroneous print or quote
in the underlying, the underlying may include index values (as well as
Fund Shares and HOLDRs, which may also underlie options trading on the
Exchange pursuant to Rule 19.3(g) and (i), respectively) further
harmonizes the Exchange's rule related to the adjustment and
nullification of erroneous options transactions with those of other
options exchanges. The proposed rule change is based on the rules of
another options exchange.\67\
---------------------------------------------------------------------------

    \67\ Cboe Options Rule 6.25(g) and (h).
---------------------------------------------------------------------------

    Proposed Rule 29.15 is merely stating explicitly in the Rules that
Rule 18.12(b) does not apply to index options, which is consistent with
the current rule. The proposed rule change is based on the rules of
another options exchange.\68\
---------------------------------------------------------------------------

    \68\ Cboe Options Rule 24.10.
---------------------------------------------------------------------------

    The Exchange Rules and Cboe Options rules regarding position and
exercise limits and margin requirements are substantially the same as
each other, as the Exchange rules currently refer to the corresponding
Cboe Options rules. Therefore, Options Members must comply with these
Cboe Options rules pursuant to the Exchange Rules. Pursuant to the
proposed rule change, the Exchange will be trading index options also
authorized for trading on Cboe Options, so the position and exercise
limits and margin requirements currently applicable to these index
options that trade on Cboe Options will apply to these index options
that may be listed for trading on the Exchange. The proposed rule
regarding the listing and trading of XSP, RUT, and DJX are
substantially the same as Cboe Options rules regarding the listing and
trading of XSP, RUT, and DJX, which rules were previously approved by
the Commission and thus they are consistent with the Act. Additionally,
the rules regarding position and exercise limits and margin
requirements that will apply to XSP, RUT, and DJX options listed for
trading on the Exchange were previously approved by the Commission, and
thus they are consistent with the Act. The proposed rule change will
also result in similar regulatory treatment for similar option
products.
    The Exchange believes that the proposed rule change will relieve
any burden on, or otherwise promote, competition, as the rules are
substantially the same as those of other options exchanges, as noted
above.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents,

the Commission will: (a) By order approve or disapprove such proposed
rule change, or (b) institute proceedings to determine whether the
proposed rule change should be disapproved.

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 [email protected]. Please include
File Number SR-CboeBZX-2018-058 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-CboeBZX-2018-058. 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-CboeBZX-2018-058, and should be
submitted on or before September 11, 2018.
---------------------------------------------------------------------------

    \69\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\69\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-17957 Filed 8-20-18; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 63 (Tuesday, April 4, 2017)]
[Notices]
[Pages 16385-16386]
[FR Doc No: 2017-06606]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER17-1314-000]

Arkwright Summit Wind Farm LLC; Supplemental Notice That Initial
Market-Based Rate Filing Includes Request for Blanket Section 204
Authorization

    This is a supplemental notice in the above-referenced proceeding of
Arkwright Summit Wind Farm LLC's application for market-based rate
authority, with an accompanying rate tariff, noting that such
application includes a request for blanket authorization, under 18 CFR
part 34, of future issuances of securities and assumptions of
liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR part 34, of future issuances of securities and assumptions of
liability, is April 18, 2017.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
5 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426.
    The filings in the above-referenced proceeding are accessible in
the Commission's eLibrary system by clicking on the appropriate link in
the above list. They are also available for electronic review in the
Commission's Public Reference Room in Washington, DC. There is an
eSubscription link on the Web site that enables subscribers to receive
email notification when a document is added to a subscribed

docket(s). For assistance with any FERC Online service, please email
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For
TTY, call<PHONE_NUMBER>.

    Dated: March 29, 2017.
Kimberly D. Bose,
Secretary.
[FR Doc. 2017-06606 Filed 4-3-17; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register: April 22, 2010 (Volume 75, Number 77)]
[Notices]
[Page 20991]
[DOCID:fr22ap10-45]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 1864-003]

Upper Peninsula Power Company; Notice of Availability of
Environmental Assessment

April 15, 2010.
    In accordance with the National Environmental Policy Act of 1969
and the Federal Energy Regulatory Commission's regulations, 18 CFR part
380, Commission staff have prepared an environmental assessment (EA)
regarding Upper Peninsula Power Company's plan to replace the spillway
at the Bond Falls Development of the Bond Falls Hydroelectric Project
(FERC No. 1864). The project is located on the Ontonagon River in
Ontonagon and Gogebic Counties, Michigan, and Vilas County, Wisconsin,
partially on lands within the Ottawa National Forest. The Bond Falls
Development is located on the Middle Branch of the Ontonagon River in
Ontonagon County, Michigan, and occupies 73.5 acres of land within the
Ottawa National Forest.
    The EA contains the Commission staff's analysis of the potential
environmental effects of the planned replacement of the Bond Falls
spillway and concludes that the spillway replacement, with appropriate
environmental protective measures, would not constitute a major federal
action that would significantly affect the quality of the human
environment.
    Copies of the EA are available for review in the Public Reference
Room 2-A of the Commission's offices at 888 First Street, NE.,
Washington, DC 20426. The EA may also be viewed on the Commission's
Internet Web site (http://www.ferc.gov) using the ``eLibrary'' link.
Enter the docket number in the docket number field to access the
document. Additional information about the project is available from
the Commission's Office of External Affairs, at<PHONE_NUMBER>, or on
the Commission's Web site using the eLibrary link. For assistance with
eLibrary, contact<EMAIL_ADDRESS>or toll-free at (866) 208-
3372; for TTY contact<PHONE_NUMBER>.

Kimberly D. Bose,
Secretary.
[FR Doc. 2010-9260 Filed 4-21-10; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 81, Number 234 (Tuesday, December 6, 2016)]
[Notices]
[Page 87993]
[FR Doc No: 2016-29296]

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SECURITIES AND EXCHANGE COMMISSION

Sunshine Act Meeting

    Notice is hereby given, pursuant to the provisions of the
Government in the Sunshine Act, Public Law 94-409, that the Securities
and Exchange Commission will hold a closed meeting on Thursday,
December 8, 2016 at 3 p.m.
    Commissioners, Counsel to the Commissioners, the Secretary to the
Commission, and recording secretaries will attend the closed meeting.
Certain staff members who have an interest in the matters also may be
present.
    The General Counsel of the Commission, or her designee, has
certified that, in her opinion, one or more of the exemptions set forth
in 5 U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) and 17 CFR
200.402(a)(3), (a)(5), (a)(7), (a)(9)(ii) and (a)(10), permit
consideration of the scheduled matter at the closed meeting.
    Commissioner Piwowar, as duty officer, voted to consider the items
listed for the closed meeting in closed session, and determined that no
earlier notice thereof was possible.
    The subject matter of the closed meeting will be: Institution and
settlement of injunctive actions; Institution and settlement of
administrative proceedings; Formal order of investigation; and Other
matters relating to enforcement proceedings.
    At times, changes in Commission priorities require alterations in
the scheduling of meeting items.
    For further information and to ascertain what, if any, matters have
been added, deleted or postponed; please contact Brent J. Fields from
the Office of the Secretary at<PHONE_NUMBER>.

    Dated: December 1, 2016.
Brent J. Fields,
Secretary.
[FR Doc. 2016-29296 Filed 12-2-16; 11:15 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 80, Number 78 (Thursday, April 23, 2015)]
[Rules and Regulations]
[Page 22645]
[FR Doc No: 2015-09476]

=======================================================================
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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 117

[Docket No. USCG-2015-0296]

Drawbridge Operation Regulation; Lake Washington Ship Canal at
Seattle, WA

AGENCY: Coast Guard, DHS.

ACTION: Notice of deviation from drawbridge regulation.

-----------------------------------------------------------------------

SUMMARY: The Coast Guard has issued a temporary deviation from the
operating schedule that governs the University Bridge, mile 4.3, across
Lake Washington Ship Canal at Seattle, WA. The deviation is necessary
to accommodate the ``Beat the Bridge'' foot race event. This deviation
allows the bridges to remain in the closed-to-navigation position to
allow for the safe movement of event participants.

DATES: This deviation is effective from 8 a.m. to 9:30 a.m. on May 17,
2015.

ADDRESSES: The docket for this deviation, [USCG-2015-0296] is available
at http://www.regulations.gov. Type the docket number in the ``SEARCH''
box and click ``SEARCH.'' Click on Open Docket Folder on the line
associated with this deviation. You may also visit the Docket
Management Facility in Room W12-140 on the ground floor of the
Department of Transportation West Building, 1200 New Jersey Avenue SE.,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays.

FOR FURTHER INFORMATION CONTACT: If you have questions on this
temporary deviation, call or email Mr. Steven Fischer, Bridge
Administrator, Thirteenth Coast Guard District; telephone<PHONE_NUMBER>,
email<EMAIL_ADDRESS>If you have questions on viewing the
docket, call Cheryl Collins, Program Manager, Docket Operations,
telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The Seattle Department of Transportation has
requested a temporary deviation from the operating schedule for the
University Bridge, mile 4.3, across the Lake Washington Ship Canal at
Seattle, WA, to facilitate safe passage of participants in the ``Beat
the Bridge'' foot race. The University Bridge, mile 4.3, provides a
vertical clearance of 30 feet in the closed position; clearances are
referenced to the mean water elevation of Lake Washington. The current
operating schedule for the bridge is set out in 33 CFR 117.1051. The
normal operating schedule for the University Bridge states that the
bridge need not open from 7 a.m. to 9 a.m. and from 4 p.m. to 6 p.m.
Monday through Friday, except Federal holidays but Columbus Day for
vessels less than 1000 tons. The normal operating schedule for the
bridge also requires one hour advance notification for bridge openings
between 11 p.m. and 7 a.m. Waterway usage on the Lake Washington Ship
Canal ranges from commercial tug and barge to small pleasure craft.
    Vessels able to pass through the bridge in the closed positions may
do so at any time. The bridge will be able to open for emergencies and
there is no immediate alternate route for vessels to pass. The Coast
Guard will also inform the users of the waterways through our Local and
Broadcast Notices to Mariners of the change in operating schedule for
the bridge so that vessels can arrange their transits to minimize any
impact caused by the temporary deviation.
    In accordance with 33 CFR 117.35(e), the drawbridge must return to
its regular operating schedule immediately at the end of the designated
time period. This deviation from the operating regulations is
authorized under 33 CFR 117.35.

    Dated: April 14, 2015.
Steven M. Fischer,
Bridge Administrator, Thirteenth Coast Guard District.
[FR Doc. 2015-09476 Filed 4-22-15; 8:45 am]
 BILLING CODE 9110-04-P