80 FR 16046 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving a Proposed Rule Change To Amend Rules 6.41 and 24.8

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 58 (March 26, 2015)

Page Range		16046-16047
FR Document		2015-06886
Federal Register, Volume 80 Issue 58 (Thursday, March 26, 2015)
[Federal Register Volume 80, Number 58 (Thursday, March 26, 2015)]
[Notices]
[Pages 16046-16047]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-06886]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74551; File No. SR-CBOE-2015-010]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving a Proposed Rule Change To Amend Rules 
6.41 and 24.8

March 20, 2015.
    On January 22, 2015, the Chicago Board Options Exchange, 
Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities 
and Exchange Commission (the ``Commission''), pursuant to Section 
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 
19b-4 thereunder,\2\ proposed rules to describe the process of 
establishing final leg execution prices when a broker receives from a 
customer a complex order for open-outcry handling at a total cash price 
for the order. The proposal was published for comment in the Federal 
Register on February 10, 2015.\3\ The Commission received no comments 
regarding the proposal. 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. 74200 (February 4, 
2015), 80 FR 7515 (``Notice'').
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    Currently Exchange Rules 6.41 (with respect to equities) and 24.8 
(with respect to indexes), provide that bids and offers must be 
expressed in terms of dollars per unit of the underlying security or 
index, as applicable. However, the Exchange explains that sometimes a 
customer will request an execution in a complex order at a total cash 
price for the order (rather than at a price per contract for each leg) 
and the total number of contracts of each leg.\4\ In this situation, a 
broker may represent the order to the trading crowd at the total order 
price, and Trading Permit Holders may respond to trade with the order 
at that total order price.\5\ The Exchange notes that in some 
instances, due to the complexity of the order and the price and number 
of contracts involved, the complex order may not break down into a per-
unit price for each leg based on the existing market for the leg that 
corresponds to the total order price.\6\
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    \4\ Id. at 7516.
    \5\ Id.
    \6\ Id.
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    Accordingly, the Exchange proposes to adopt Interpretation and 
Policy .01 to each of Exchange Rules 6.41 and 24.8. The Interpretations 
will impose requirements requiring how brokers must determine final leg 
execution prices when a broker receives from a customer a complex order 
for open-outcry handling at a total cash price, and the complex order 
does not break down into a per-unit price for each leg based on the 
existing market for the leg that corresponds to the total price.\7\ 
Specifically, the Interpretations will provide that when the complex 
order does not break down into a per-unit price for each leg, the 
broker must resolve any difference in a manner that provides price 
improvement to the customer (i.e. the broker must determine leg prices 
that correspond to a total purchase (sale) price that is less (greater) 
than the total order price).\8\
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    \7\ Id.
    \8\ See Notice, supra note 3, at 7516. In the notice, the 
Exchange provided examples of how this occurs. Id. at 7516-7.
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    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\9\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section

[[Page 16047]]

6(b)(5) of the Act,\10\ which requires, among other things, that the 
rules of a national securities exchange be designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. The 
Commission notes that the proposed rule change maintains the current 
allocation and priority rules for open outcry trading, including the 
complex order priority exception, and that any orders represented to 
the crowd at a customer's total order price will execute in accordance 
with the Exchange's current allocation and priority rules.\11\ Further, 
the Commission notes that orders represented to the crowd at a 
customer's order price will be executed at the applicable increment for 
the class (or the complex order minimum increment if eligible) and in 
accordance with all other pricing rules.\12\
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    \9\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ See Notice, supra note 3, at 7517.
    \12\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-06886 Filed 3-25-15; 8:45 am]
 BILLING CODE 8011-01-P
16046 Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Notices

encourages market participants to Commission, and all written proposal. This order approves the
provide liquidity and to send order flow communications relating to the proposed rule change.
to the Exchange. proposed rule change between the Currently Exchange Rules 6.41 (with
Commission and any person, other than respect to equities) and 24.8 (with
C. Self-Regulatory Organization’s respect to indexes), provide that bids
those that may be withheld from the
Statement on Comments on the public in accordance with the and offers must be expressed in terms of
Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be dollars per unit of the underlying
Members, Participants, or Others available for Web site viewing and security or index, as applicable.
Written comments were neither printing in the Commission’s Public However, the Exchange explains that
solicited nor received. Reference Room, 100 F Street NE., sometimes a customer will request an
III. Date of Effectiveness of the Washington, DC 20549 on official execution in a complex order at a total
Proposed Rule Change and Timing for business days between the hours of cash price for the order (rather than at
10:00 a.m. and 3:00 p.m. Copies of such a price per contract for each leg) and the
Commission Action
filing also will be available for total number of contracts of each leg.4 In
The foregoing rule change has become inspection and copying at the principal this situation, a broker may represent
effective pursuant to Section offices of the Exchange. All comments the order to the trading crowd at the
19(b)(3)(A)(ii) of the Act.11 At any time received will be posted without change; total order price, and Trading Permit
within 60 days of the filing of the the Commission does not edit personal Holders may respond to trade with the
proposed rule change, the Commission identifying information from order at that total order price.5 The
summarily may temporarily suspend submissions. You should submit only Exchange notes that in some instances,
such rule change if it appears to the information that you wish to make due to the complexity of the order and
Commission that such action is available publicly. All submissions the price and number of contracts
necessary or appropriate in the public should refer to File Number SR–MIAX– involved, the complex order may not
interest, for the protection of investors, 2015–20, and should be submitted on or break down into a per-unit price for
or otherwise in furtherance of the before April 16, 2015. each leg based on the existing market for
purposes of the Act. If the Commission the leg that corresponds to the total
For the Commission, by the Division of
takes such action, the Commission shall Trading and Markets, pursuant to delegated order price.6
institute proceedings to determine authority.12 Accordingly, the Exchange proposes
whether the proposed rule should be Brent J. Fields, to adopt Interpretation and Policy .01 to
approved or disapproved. Secretary. each of Exchange Rules 6.41 and 24.8.
IV. Solicitation of Comments [FR Doc. 2015–06889 Filed 3–25–15; 8:45 am] The Interpretations will impose
BILLING CODE 8011–01–P
requirements requiring how brokers
Interested persons are invited to must determine final leg execution
submit written data, views, and prices when a broker receives from a
arguments concerning the foregoing, customer a complex order for open-
including whether the proposed rule SECURITIES AND EXCHANGE
COMMISSION outcry handling at a total cash price,
change is consistent with the Act. and the complex order does not break
Comments may be submitted by any of [Release No. 34–74551; File No. SR–CBOE– down into a per-unit price for each leg
the following methods: 2015–010]
based on the existing market for the leg
Electronic Comments Self-Regulatory Organizations; that corresponds to the total price.7
Specifically, the Interpretations will
• Use the Commission’s Internet Chicago Board Options Exchange,
Incorporated; Order Approving a provide that when the complex order
comment form (http://www.sec.gov/
Proposed Rule Change To Amend does not break down into a per-unit
rules/sro.shtml); or
• Send an email to rule-comments@ Rules 6.41 and 24.8 price for each leg, the broker must
sec.gov. Please include File Number SR– resolve any difference in a manner that
March 20, 2015. provides price improvement to the
MIAX–2015–20 on the subject line.
On January 22, 2015, the Chicago customer (i.e. the broker must determine
Paper Comments Board Options Exchange, Incorporated leg prices that correspond to a total
• Send paper comments in triplicate (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with purchase (sale) price that is less (greater)
to Secretary, Securities and Exchange the Securities and Exchange than the total order price).8
Commission, 100 F Street NE., Commission (the ‘‘Commission’’), After careful review, the Commission
Washington, DC 20549–1090. pursuant to Section 19(b)(1) of the finds that the proposed rule change is
Securities Exchange Act of 1934 consistent with the requirements of the
All submissions should refer to File
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 Act and the rules and regulations
Number SR–MIAX–2015–20. This file
proposed rules to describe the process thereunder applicable to a national
number should be included on the
of establishing final leg execution prices securities exchange.9 In particular, the
subject line if email is used. To help the
when a broker receives from a customer Commission finds that the proposed
Commission process and review your
a complex order for open-outcry rule change is consistent with Section
comments more efficiently, please use
handling at a total cash price for the
only one method. The Commission will
order. The proposal was published for 4 Id. at 7516.
post all comments on the Commission’s 5 Id.
comment in the Federal Register on
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Internet Web site (http://www.sec.gov/ 6 Id.
February 10, 2015.3 The Commission
rules/sro.shtml). Copies of the 7 Id.
received no comments regarding the
submission, all subsequent 8 See Notice, supra note 3, at 7516. In the notice,

amendments, all written statements the Exchange provided examples of how this
12 17 CFR 200.30–3(a)(12). occurs. Id. at 7516–7.
with respect to the proposed rule 1 15 U.S.C. 78s(b)(1). 9 In approving this proposal, the Commission has
change that are filed with the 2 17 CFR 240.19b–4.
considered the proposed rule’s impact on
3 See Securities Exchange Act Release No. 74200 efficiency, competition, and capital formation. See
11 15 U.S.C. 78s(b)(3)(A)(ii). (February 4, 2015), 80 FR 7515 (‘‘Notice’’). 15 U.S.C. 78c(f).

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Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Notices 16047

6(b)(5) of the Act,10 which requires, Global Managed Volatility ETF Section 19(b)(2) of the Act 10 provides
among other things, that the rules of a (‘‘Fund’’) under NYSE Arca Equities that, after initiating disapproval
national securities exchange be Rule 8.600. The proposed rule change proceedings, the Commission shall issue
designed to prevent fraudulent and was published for comment in the an order approving or disapproving the
manipulative acts and practices, to Federal Register on September 24, proposed rule change not later than 180
promote just and equitable principles of 2014.3 On November 4, 2014, pursuant days after the date of publication of
trade, to remove impediments to and to Section 19(b)(2) of the Act,4 the notice of the filing of the proposed rule
perfect the mechanism of a free and Commission designated a longer period change. The Commission may, however,
open market and a national market within which to approve the proposed extend the period for issuing an order
system, and, in general, to protect rule change, disapprove the proposed
approving or disapproving the proposed
investors and the public interest. The rule change, or institute proceedings to
rule change by not more than 60 days
Commission notes that the proposed determine whether to disapprove the
rule change maintains the current if the Commission determines that a
proposed rule change.5 On December
allocation and priority rules for open 22, 2014, the Commission instituted longer period is appropriate and
outcry trading, including the complex proceedings under Section 19(b)(2)(B) of publishes the reasons for such
order priority exception, and that any the Act 6 to determine whether to determination. The proposed rule
orders represented to the crowd at a approve or disapprove the proposed change was published for notice and
customer’s total order price will execute rule change.7 In the Order Instituting comment in the Federal Register on
in accordance with the Exchange’s Proceedings, the Commission solicited September 24, 2014.11 The 180th day
current allocation and priority rules.11 responses to specified matters related to after publication of the notice of the
Further, the Commission notes that the proposal.8 The Commission received filing of the proposed rule change in the
orders represented to the crowd at a no comment letters on the proposed rule Federal Register is March 23, 2015.
customer’s order price will be executed change. The Exchange subsequently The Commission finds that it is
at the applicable increment for the class filed Amendment No. 1 to the proposed appropriate to designate a longer period
(or the complex order minimum rule change.9 within which to issue an order
increment if eligible) and in accordance approving or disapproving the proposed
with all other pricing rules.12 3 See Securities Exchange Act Release No. 73141
rule change so that it has sufficient time
(Sept. 18, 2014), 79 FR 57161 (‘‘Notice’’).
For the Commission, by the Division of 4 15 U.S.C. 78s(b)(2). to consider the proposed rule change, as
Trading and Markets, pursuant to delegated 5 See Securities Exchange Act Release No. 73515, modified by Amendment No. 1 thereto.
authority.13 79 FR 66758 (Nov. 10, 2014). The Commission
Brent J. Fields, designated a longer period within which to take Accordingly, the Commission,
Secretary. action on the proposed rule change and designated pursuant to Section 19(b)(2) of the
December 23, 2014 as the date by which it should Act,12 designates May 7, 2015, as the
[FR Doc. 2015–06886 Filed 3–25–15; 8:45 am] approve, disapprove, or institute proceedings to
BILLING CODE 8011–01–P determine whether to disapprove the proposed rule
date by which the Commission shall
change. either approve or disapprove the
6 15 U.S.C. 78s(b)(2)(B). proposed rule change, as modified by
SECURITIES AND EXCHANGE 7 See Securities Exchange Act Release No. 73914,
Amendment No. 1 thereto (File No. SR–
79 FR 78524 (Dec. 30, 2014) (‘‘Order Instituting
COMMISSION Proceedings’’). Specifically, the Commission
NYSEArca–2014–100).
[Release No. 34–74559; File No. SR– instituted proceedings to allow for additional For the Commission, by the Division of
analysis of the proposed rule change’s consistency Trading and Markets, pursuant to delegated
NYSEArca–2014–100]
with Section 6(b)(5) of the Act, which requires,
among other things, that the rules of a national authority.13
Self-Regulatory Organizations; NYSE securities exchange be ‘‘designed to prevent Brent J. Fields,
Arca, Inc.; Notice of Designation of a fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade,’’ and Secretary.
Longer Period for Commission Action
‘‘to protect investors and the public interest.’’ See [FR Doc. 2015–06892 Filed 3–25–15; 8:45 am]
on Proceedings To Determine Whether id., 79 FR at 78530.
To Approve or Disapprove a Proposed 8 See id. (specifically soliciting comment on the
BILLING CODE 8011–01–P

Rule Change, as Modified by statements of the Exchange contained in the Notice,
Amendment No. 1 Thereto, Relating To including the statements made in connection with
Listing and Trading of Shares of the information sharing procedures with respect to
certain non-U.S. equity security holdings and the
SPDR SSgA Global Managed Volatility Exchange’s arguments regarding the applicability of
ETF Under NYSE Arca Equities Rule the definition of ‘‘Actively-Traded Securities’’
8.600 under Regulation M (‘‘Reg M’’)).
9 See Letter from Martha Redding, Senior Counsel

March 20, 2015. and Assistant Secretary, New York Stock Exchange,
On September 5, 2014, NYSE Arca, to Kevin M. O’Neill, Deputy Secretary, Commission
(dated Jan. 22, 2015). Amendment No. 1 replaces
Inc. (‘‘Exchange’’) filed with the and supersedes SR–NYSEArca–2014–100 in its
Securities and Exchange Commission entirety as originally filed. In Amendment No. 1, to the ‘‘generic’’ listing criteria in NYSE Arca
(‘‘Commission’’), pursuant to Section the Exchange: (a) Deletes the statement in the Equities Rule 5.2(j)(3), Commentary .01(a)(B),
19(b)(1) of the Securities Exchange Act original filing that the exchange-listed and traded
relating to an index or portfolio of U.S. and non-
equity securities in which the Fund’s portfolio
of 1934 (‘‘Act’’) 1 and Rule 19b–4 would be permitted to invest would be limited to: U.S. stocks underlying a series of Investment
thereunder,2 a proposed rule change to (1) Equity securities that trade in markets that are Company Units; and (c) deletes discussion relating
mstockstill on DSK4VPTVN1PROD with NOTICES

list and trade shares of the SPDR SSgA members of the Intermarket Surveillance Group to information sharing procedures in the absence of
(‘‘ISG’’) or are parties to a comprehensive CSSAs with, or ISG membership of, markets on
10 15 U.S.C. 78f(b)(5). surveillance sharing agreement (‘‘CSSA’’) with the which ‘‘Actively-Traded Securities’’ are listed or
11 See Exchange, or (2) ‘‘Actively-Traded Securities’’ as traded.
Notice, supra note 3, at 7517.
12 Id.
defined in Reg M under the Act that are traded on 10 15 U.S.C. 78s(b)(2).
U.S. and non-U.S. exchanges with last sale 11 See supra note 3 and accompanying text.
13 17 CFR 200.30–3(a)(12). reporting; (b) represents that the Fund’s non-U.S.
1 15 12 15 U.S.C. 78s(b)(2).
U.S.C. 78s(b)(1). equity securities holdings will be subject
2 17 CFR 240.19b–4. quantitative criteria that are substantially identical 13 17 CFR 200.30–3(a)(57).

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Document Created: 2015-12-18 11:46:46
Document Modified: 2015-12-18 11:46:46
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 16046