Proposed Rule Change to Allow for Trading of Multi-Listed Equity Options during Global Trading Hours

Summary

SIFMA provided comments to the U.S. Securities and Exchange Commission (SEC) in response to the proposal by Cboe Exchange, Inc. to amend Rule 5.1(c) to allow for trading of multi-listed equity options that meet certain eligibility criteria during Global Trading Hours and to establish GTH sessions for designated multi-listed equity options at 7:30 a.m. ET to 9:25 a.m. ET and 4:00 p.m. ET to 4:15 p.m. ET or as permitted as a GTH session on another exchange.

Excerpt

Cboe is the first options exchange to propose expanding trading of single stock equity options outside of regular hours. We appreciate that Cboe is taking a measured approach in this initial step to expand trading of these securities, as well as their diligence in working with SIFMA to identify open questions that need to be resolved. We appreciate that this proposal would only expand trading by a few hours. For the reasons we detail below, we request that prior to approving this Cboe proposal, or other exchange applications to expand options trading hours, the Commission should undertake a broader market-wide review of the possible benefits and risks expanding equity options trading outside of regular hours would introduce, with an eye on maintaining market integrity and resiliency and analyzing potential impacts on investors.

Part one of this letter discusses areas where we seek further clarity on the Proposal from Cboe, regulators, and third-party participants, including:

• Whether the 4:00 to 4:15 session will be considered GTH or RTH (as discussed in
  Cboe’s FAQ);
• Regulatory obligations in the new sessions; and
• Corporate actions.

While we acknowledge that this proposal does not include a full move into the overnight session, we would be remiss if we did not flag for the Commission our residual questions and concerns directed at not only this proposal but also future proposals – either from Cboe or other exchanges – as options exchanges may eventually expand trading further into overnight hours.