80 FR 32997 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Solicitation Auction Mechanism
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 111 (June 10, 2015)
Federal Register Volume 80, Issue 111 (June 10, 2015)
| Page Range | 32997-33001 | |
| FR Document | 2015-14133 |
[Federal Register Volume 80, Number 111 (Wednesday, June 10, 2015)] [Notices] [Pages 32997-33001] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-14133] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75106; File No. SR-C2-2015-014] Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Solicitation Auction Mechanism June 4, 2015. 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 May 27, 2015, C2 Options Exchange, Incorporated (the ``Exchange'' or ``C2'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I and II 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- [[Page 32998]] I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rules 6.52 relating to the Solicitation Auction Mechanism (``SAM''). The text of the proposed rule change is provided below. (additions are italicized; deletions are [bracketed]) * * * * * C2 Options Exchange, Incorporated Rules * * * * * Rule 6.52. Solicitation Auction Mechanism A Participant that represents agency orders may electronically execute orders it represents as agent (``Agency Order'') against solicited orders provided it submits the Agency Order for electronic execution into the solicitation auction mechanism (the ``Auction'') pursuant to this Rule. (a) Auction Eligibility Requirements. A Participant (the ``Initiating Participant'') may initiate an Auction provided all of the following are met: (1) The Agency Order is in a class designated as eligible for Auctions as determined by the Exchange and within the designated Auction order eligibility size parameters as such size parameters are determined by the Exchange (however, the eligible order size may not be less than 500 standard option contracts or 5,000 mini-option contracts); (2) Each order entered into the Auction shall be designated as all- or-none and must be stopped with a solicited order priced at or within the NBBO as of the time of the initiation of the Auction (i.e. the time that the Agency Order is received in the System (the ``initial auction NBBO''); and (3) The minimum price increment for an Initiating Participant's single price submission shall be determined by the Exchange on a series basis and may not be smaller than one cent. (b) Auction Process. The Auction shall proceed as follows: (1) Auction Period and Requests for Responses. (A) To initiate the Auction, the Initiating Participant must mark the Agency Order for Auction processing, and specify a single price at which it seeks to cross the Agency Order with a solicited order priced at or within the initial auction NBBO. (B) When the Exchange receives a properly designated Agency Order for Auction processing, a Request for Responses message indicating the price, side, and size at which it seeks to cross the Agency Order with a solicited order will be sent to all Participants that have elected to receive such messages. (C)-(G) No change. (2) Auction Conclusion and Order Allocation. The Auction shall conclude at the sooner of subparagraphs (b)(2)(A) through (E) of Rule 6.51. At the conclusion of the Auction, the Agency Order will be automatically executed in full or cancelled and allocated subject to the following: (A) The Agency Order will be executed against the solicited order at the proposed execution price, provided that: (i) The execution price must be equal to or better than the initial auction NBBO. If the execution would take place outside the initial auction NBBO, the Agency Order and solicited order will be cancelled; (ii)-(iii) No change. . . . Interpretations and Policies: .01-.03 No change. * * * * * The text of the proposed rule change is also available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to make changes to its existing SAM auction rules in Rule 6.52. The Exchange believes that the proposed amendments would ensure greater consistency between the Exchange's SAM auction and order protection rules \3\ and provide additional clarity in the Rules regarding the Exchange's SAM Auction procedures. --------------------------------------------------------------------------- \3\ See Section E of C2 Rules Chapter 6 relating to Intermarket Linkage (``Intermarket Linkage Rule'') (providing that the rules contained in Section E of CBOE Chapter IV relating to the Options Order Protection and Locked/Crossed Market Plan shall apply to C2). --------------------------------------------------------------------------- Rule 6.52 permits Participants to electronically execute all-or- none (``AON'') orders for 500 or more standard options contracts or 5,000 or more mini-options contracts that they represent as agent (``Agency Order'') against solicited orders provided the Participant submits the Agency Order for electronic execution into SAM for auction (the ``Auction'') pursuant to Rule 6.52.\4\ Under Rules 6.52(a)(2) and (b)(1)(A), each order entered into SAM shall be designated AON by the Initiating Participant with the Agency Order marked for auction processing with a specific single price at which the Initiating Participant seeks to cross the Agency Order with the solicited order. Pursuant to Rule 6.52(b)(2)(A)(i), the Agency Order will be executed against the solicited order at the proposed execution price, provided that, among other things, the execution price must be equal to or better than the C2 best bid or offer (``BBO''). If the execution would take place outside the BBO, the Agency Order and solicited order will be cancelled.\5\ --------------------------------------------------------------------------- \4\ SAM functionality is currently inactive on the Exchange. \5\ See Rule 6.52(b)(2)(A)(i). --------------------------------------------------------------------------- Although Participants are subject to the Exchange's order protection rules and thus, prevented from trading through the displayed national best bid and offer (``NBBO''), including within the context of SAM auctions,\6\ current Rule 6.52 does not specifically require Initiating Participants to stop Agency Orders at or within the NBBO or expressly prohibit Agency Orders from being executed against solicited orders at prices outside the NBBO.\7\ In addition, current Rule 6.52 does not specify whether the Agency Order may be executed against a solicited order priced at or within the BBO as of the time that the Agency Order is received in the System,\8\ as of the time of the beginning of the auction (i.e. the time when requests for responses (``RFRs'') [[Page 32999]] are sent), or as of the time of execution.\9\ Accordingly, the Exchange is proposing to make several clarifying amendments to Rule 6.52 to require that Agency Orders be stopped and executed at or within the NBBO and to define when the NBBO will be looked at for purposes of order protection during the SAM auction process.\10\ --------------------------------------------------------------------------- \6\ See section E of C2 Rules Chapter 6 relating to Intermarket Linkage (``Intermarket Linkage Rule'') (providing that the rules contained in section E of CBOE Chapter IV relating to the Options Order Protection and Locked/Crossed Market Plan shall apply to C2). \7\ Notably, the Exchange's other auction rules expressly provide that Initiating Participants must stop Agency Orders at or within the NBBO and prohibit Agency Orders from being executed against solicited orders at prices outside the NBBO. See Rule 6.51(b) (Automated Improvement Mechanism (``AIM'')). \8\ See Rule 1.1 (System) (defining the term ``System'' to mean ``the automated trading system used by the Exchange for the trading of options contracts''). \9\ SAM auction functionality is not active on C2. \10\ Any future activation of SAM will be announced via Regulatory Circular prior to activation. --------------------------------------------------------------------------- Specifically, the Exchange is proposing to amend Rules 6.52(a)(2), 6.52(b)(1)(A), and 6.52(b)(2)(A)(i) to provide that Agency Orders submitted into SAM must be stopped with a solicited order priced at or within the national best bid or offer (``NBBO'') as of the time of the initiation of the Auction (i.e. the time that the Agency Order is received for SAM auction processing in the System) (the ``initial auction NBBO'') and that Agency Orders that are submitted for electronic execution into SAM must be executed at a price at or better than the initial auction NBBO.\11\ Agency Orders paired against solicited orders priced outside of the NBBO that are submitted for electronic execution into SAM would be rejected by the System and cancelled by the Exchange. --------------------------------------------------------------------------- \11\ The Exchange believes that its proposal to consider the NBBO as of the time that the Agency Order is received in the System for purposes of the entire auction period (i.e. 1 second) is consistent with order protection principles. --------------------------------------------------------------------------- The Exchange believes that requiring SAM orders to be stopped and executed at a price equal to, or better than, the NBBO as of the time of receipt of the Agency Order in the OHS is consistent with the Exchange's Intermarket Linkage Rule. As proposed, the range of permissible crossing prices and executions would be defined based on a snapshot of the market at the time when the Agency Order is received.\12\ This proposed rule change would thus, make clear that although the NBBO may update during the SAM auction response time (currently SAM auctions last one second),\13\ the initial auction NBBO would be considered the NBBO for SAM auction execution purposes. Accordingly, a SAM order execution outside of the NBBO would not violate the order protection rules if the execution price were within the NBBO that existed when the Agency Order was received in the System. The Exchange believes that the proposed rule changes would promote consistency within the Rules and across the Exchange's various auction procedures.\14\ The Exchange also believes that the proposed rule changes would further the interests of investors and market participants by helping to ensure best executions and protection of bids and offers across multiple exchanges. --------------------------------------------------------------------------- \12\ See Id. \13\ See Rule 6.52(b)(1)(C). \14\ The Exchange also notes that the proposed order protection rule changes are consistent with similar electronic price improvement auction rules of other exchanges. See, e.g., BOX Rule 7270(b)(2)(i) (Block Trades). --------------------------------------------------------------------------- The following example demonstrates how the Exchange's proposal would provide order protection within the context of the SAM auction rules. Assume that the NBBO for a particular option is $1.00-$1.20 with quotes on both sides for 100 contracts each. The C2 BBO is $0.95-$1.25. The minimum increment in the class is $0.01. An Initiating Participant submits an Agency Order to buy 500 contracts against a solicited order to sell 500 contracts into SAM priced at $1.21. An RFR is transmitted to Participants that have elected to receive auction messages without any response. In this case, under current Rule 6.52(b)(2)(A), the Agency Order would be executable against the solicited order because the execution price of $1.21 improves the C2 best offer price of $1.25. Such execution, however, would be in violation of the Exchange's order protection rules because the Agency Order would have been executed outside of the NBBO of $1.00-$1.20. The Exchange proposes to remedy this inconsistency in the Rules by changing references to the BBO to NBBO and defining the term ``initial auction NBBO'' to mean priced at or within the NBBO as of the time of the initiation of the Auction (i.e., the time that the Agency Order is received in the System). Under the Exchange's proposal, the Agency Order would be rejected by the System and cancelled by the Exchange because, at the time when the Agency Order to buy 500 contracts priced at $1.21 was received in the System, the solicited order would have been outside of the NBBO of $1.00-$1.20. The Exchange's proposal would not, however, change the priority of public customer orders resting in the book. Assume again that the NBBO for a particular option is $1.00-$1.20 with quotes on both sides for 100 contracts each. Assume this time, however, that there is also a public customer order to sell 50 contracts resting in the book at $1.20. The C2 BBO is $0.95-$1.20. An Initiating Participant submits an Agency Order to buy 500 contracts against a solicited order to sell 500 contracts into SAM priced at $1.20. An RFR is transmitted to Participants that have elected to receive auction messages with a single response to sell 150 contracts also at $1.20. In this case, under both current Rule 6.52(b)(2)(A) and the Exchange's proposed rule change, both the Agency Order and solicited order would be cancelled because there is a public customer order resting in the book on the opposite side of the Agency Order at the proposed price without sufficient size (considering all resting orders (i.e. 50), electronic quotes (i.e. 100), and responses (i.e. 150) (50 + 100 + 150 = 300)).\15\ --------------------------------------------------------------------------- \15\ See Rule 6.52(b)(2)(A). Note, however, that in this example, under both the current and proposed rules, had the resting order in the book to sell 50 contracts at $1.20 been a Market-Maker quote or order rather than a public customer order, the Agency Order to buy 500 contracts would trade against the solicited order at $1.20 because there would not have been a public customer order in the book on the opposite side of the Agency Order and there would have been insufficient size to execute the Agency Order at a price equal to, or better than, the initial auction NBBO. See Rules 6.52(b)(2)(A)(ii)-(iii). --------------------------------------------------------------------------- The Exchange also proposes to amend Rules 6.52(b)(1)(B) to further make clear that upon receiving a properly designated Agency Order for SAM Auction processing, the Exchange's RFR message would indicate the price, side, and size of the Agency Order that the Initiating Participant is seeking to cross. Rule 6.52(b)(1)(B) currently provides that the Exchange will send an RFR message to all Participants that have elected to receive such messages, indicating the price and size of the Agency Order that the Initiating Participant is seeking to cross, but does not currently specify that the RFR will also indicate the side (i.e. buy v. sell) of the Agency Order that the Initiating Participant is seeking to cross.\16\ In order to add additional clarity to the Rules and in an effort to minimize confusion among market participants, the Exchange proposes to add the ``side'' indication requirement to the SAM auction rules. The Exchange believes that the proposed changes will provide additional clarity regarding the Exchange's SAM auction processes and reduce the potential for confusion in the Rules. --------------------------------------------------------------------------- \16\ The Exchange's other auction rules require the side of the Agency Order to be indicated in the RFR. See, e.g., Rule 6.51(b)(1)(B), Automated Improvement Mechanism, which provides that the Initiating Participant must expressly disclose the side of the Agency Order that it seeks to cross. (``When the Exchange receives a properly designated Agency Order for Auction processing, a Request for Responses (``RFR'') detailing the side and size of the order will be sent to all Participants that have elected to receive RFRs.'' Emphasis added.) --------------------------------------------------------------------------- [[Page 33000]] 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of section 6(b) of the Act.\17\ Specifically, the Exchange believes the proposed rule change is consistent with the section 6(b)(5) \18\ 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) \19\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78f(b). \18\ 15 U.S.C. 78f(b)(5). \19\ Id. --------------------------------------------------------------------------- In particular, the Exchange believes that the proposed changes would ensure further consistency within the Exchange's Rules. The Exchange also believes that the proposed rule changes would further the objectives of the Act to protect investors by promoting the intermarket price protection goals of the Exchange's order protection rules and the Options Order Protection and Locked/Crossed Market Plan.\20\ The Exchange believes its proposal would help ensure intermarket competition across all exchanges, aid in preventing intermarket trade- throughs, and facilitate compliance with best execution practices. The Exchange believes that these objectives are consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of section 11A of the Act. In addition, the Exchange believes that the proposed rule changes will clarify the manner in which orders are submitted into the SAM auction process and reduce the potential for confusion in the Rules. The Exchange believes that providing additional clarity to its Rules furthers the goal of promoting transparency in markets, which is in the best interests of market participants and the general public and consistent with the Act. --------------------------------------------------------------------------- \20\ See generally File No. 4-546: Proposed Options Order Protection and Locked/Crossed Market Plan by BSE, CBOE, ISE, Nasdaq, NYSE Arca, NYSEALTR, and Phlx; File No. 4-546: Amendment No. 1 to Proposed Options Order Protection and Locked/Crossed Market Plan by CBOE (Nov. 21, 2008); see also Securities and Exchange Act Release No. 34-43086 (July 28, 2000), 65 FR 48023 (August 4, 2000) (Order Approving Options Intermarket Linkage Plan) (File No. 4-429). --------------------------------------------------------------------------- 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. Rather, the Exchange believes that the proposed rule would bolster intermarket competition by promoting fair competition among individual markets, while at the same time assuring that market participants receive the benefits of markets that are linked together, through facilities and rules, in a unified system, which promotes interaction among the orders of buyers and sellers. The Exchange believes its proposal would help ensure intermarket competition across all exchanges, aid in preventing intermarket trade-throughs, and facilitate compliance with best execution practices. In addition, the Exchange believes that the proposed rule change would help promote fair and orderly markets by helping to ensure compliance with the order protection rules. Thus, the Exchange does not believe the proposal creates any significant impact on competition. 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 written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to section 19(b)(3)(A) of the Act \21\ and Rule 19b-4(f)(6) \22\ thereunder. --------------------------------------------------------------------------- \21\ 15 U.S.C. 78s(b)(3)(A). \22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such short time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 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 commentsUse 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-C2-2015-014 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-C2-2015-014. 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 Web site (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 Web site 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; the Commission does not edit personal identifying information from [[Page 33001]] submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-C2- 2015-014 and should be submitted on or before July 1, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-14133 Filed 6-9-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 111 / Wednesday, June 10, 2015 / Notices 32997
the Exchange offering a service similar represents that BATS Connect does not communications relating to the
to those offered by the CHX and provide any advantage to subscribers for proposed rule change between the
NYSE.16 Thus, the Exchange believes connecting to the Exchange’s affiliates Commission and any person, other than
this proposed rule change is necessary as compared to other methods of those that may be withheld from the
to permit fair competition among connectivity available to subscribers.18 public in accordance with the
national securities exchanges. In Based on the foregoing, the Commission provisions of 5 U.S.C. 552, will be
addition, the proposed rule change is believes the waiver of the operative available for Web site viewing and
designed to provide Members with an delay is consistent with the protection printing in the Commission’s Public
alternative means to access other market of investors and the public interest.19 Reference Room, 100 F Street NE.,
centers if they chose or in the event of The Commission hereby grants the Washington, DC 20549, on official
a market disruption where other waiver and designates the proposal
business days between the hours of
alternative connection methods become operative upon filing.
unavailable. Therefore, the Exchange At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of the
does not believe the proposed rule filing of the proposed rule change, the filing will also be available for
change will have any effect on Commission summarily may inspection and copying at the principal
competition. temporarily suspend such rule change if office of the Exchange. All comments
it appears to the Commission that such received will be posted without change;
(C) Self-Regulatory Organization’s action is necessary or appropriate in the the Commission does not edit personal
Statement on Comments on the public interest, for the protection of identifying information from
Proposed Rule Change Received From investors, or otherwise in furtherance of submissions. You should submit only
Members, Participants or Others the purposes of the Act. If the information that you wish to make
The Exchange has neither solicited Commission takes such action, the available publicly. All submissions
nor received written comments on the Commission shall institute proceedings should refer to File Number SR–BYX–
proposed rule change. to determine whether the proposed rule 2015–26 and should be submitted on or
III. Date of Effectiveness of the should be approved or disapproved. before July 1, 2015.
Proposed Rule Change and Timing for IV. Solicitation of Comments For the Commission, by the Division of
Commission Action Interested persons are invited to Trading and Markets, pursuant to delegated
Because the proposed rule change submit written data, views, and authority.20
does not (i) significantly affect the arguments concerning the foregoing, Robert W. Errett,
protection of investors or the public including whether the proposed rule Deputy Secretary.
interest; (ii) impose any significant change is consistent with the Act. [FR Doc. 2015–14135 Filed 6–9–15; 8:45 am]
burden on competition; and (iii) become Comments may be submitted by any of BILLING CODE 8011–01–P
operative for 30 days from the date on the following methods:
which it was filed, or such shorter time
as the Commission may designate, the Electronic Comments
SECURITIES AND EXCHANGE
proposed rule change has become • Use the Commission’s Internet
COMMISSION
effective pursuant to section 19(b)(3)(A) comment form (http://www.sec.gov/
of the Act and Rule 19b–4(f)(6) rules/sro.shtml); or
thereunder.17 • Send an email to rule-comments@ [Release No. 34–75106; File No. SR–C2–
A proposed rule change filed sec.gov. Please include File Number SR– 2015–014]
pursuant to Rule 19b–4(f)(6) under the BYX–2015–26 on the subject line.
Act normally does not become operative Self-Regulatory Organizations; C2
Paper Comments Options Exchange, Incorporated;
for 30 days after the date of its filing.
However, Rule 19b–4(f)(6)(iii) permits • Send paper comments in triplicate Notice of Filing and Immediate
the Commission to designate a shorter to Brent J. Fields, Secretary, Securities Effectiveness of a Proposed Rule
time if such action is consistent with the and Exchange Commission, 100 F Street Change Relating to the Solicitation
protection of investors and the public NE., Washington, DC 20549–1090. Auction Mechanism
interest. The Exchange has asked the All submissions should refer to File
Number SR–BYX–2015–26. This file June 4, 2015.
Commission to waive the 30-day
operative delay so that the proposal may number should be included on the Pursuant to section 19(b)(1) of the
become operative immediately upon subject line if email is used. To help the Securities Exchange Act of 1934 (the
filing. Waiver of the 30-day operative Commission process and review your ‘‘Act’’),1 and Rule 19b–4 thereunder,2
delay would permit the Exchange to comments more efficiently, please use notice is hereby given that on May 27,
provide Members with an alternative only one method. The Commission will 2015, C2 Options Exchange,
means to access other market centers, post all comments on the Commission’s Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)
particularly in the event of a market Internet Web site (http://www.sec.gov/ filed with the Securities and Exchange
disruption. In addition, the Exchange rules/sro.shtml). Copies of the Commission (the ‘‘Commission’’) the
submission, all subsequent proposed rule change as described in
16 See NYSE’s SFTI Americas Product and Service amendments, all written statements
Items I and II below, which Items have
List available at http://www.nyxdata.com/docs/ with respect to the proposed rule
asabaliauskas on DSK5VPTVN1PROD with NOTICES
connectivity. See supra note 15. been prepared by the Exchange. The
change that are filed with the
17 In addition, Rule 19b–4(f)(6)(iii) requires the Commission is publishing this notice to
Commission, and all written
Exchange to give the Commission written notice of solicit comments on the proposed rule
the Exchange’s intent to file the proposed rule
change, along with a brief description and text of 18 See supra note 8. change from interested persons.
the proposed rule change, at least five business days 19 For purposes only of waiving the 30-day
prior to the date of filing of the proposed rule operative delay, the Commission has also 20 17 CFR 200.30–3(a)(12).
change, or such shorter time as designated by the considered the proposed rule’s impact on
1 15 U.S.C. 78s(b)(1).
Commission. The Exchange has satisfied this efficiency, competition, and capital formation. See
requirement. 15 U.S.C. 78c(f). 2 17 CFR 240.19b–4.
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![32998 Federal Register / Vol. 80, No. 111 / Wednesday, June 10, 2015 / Notices
I. Self-Regulatory Organization’s the Agency Order with a solicited order additional clarity in the Rules regarding
Statement of the Terms of Substance of will be sent to all Participants that have the Exchange’s SAM Auction
the Proposed Rule Change elected to receive such messages. procedures.
The Exchange proposes to amend (C)–(G) No change. Rule 6.52 permits Participants to
(2) Auction Conclusion and Order electronically execute all-or-none
Rules 6.52 relating to the Solicitation
Allocation. The Auction shall conclude (‘‘AON’’) orders for 500 or more
Auction Mechanism (‘‘SAM’’). The text
at the sooner of subparagraphs (b)(2)(A) standard options contracts or 5,000 or
of the proposed rule change is provided through (E) of Rule 6.51. At the more mini-options contracts that they
below. (additions are italicized; conclusion of the Auction, the Agency represent as agent (‘‘Agency Order’’)
deletions are [bracketed]) Order will be automatically executed in against solicited orders provided the
* * * * * full or cancelled and allocated subject to Participant submits the Agency Order
C2 Options Exchange, Incorporated the following: for electronic execution into SAM for
(A) The Agency Order will be auction (the ‘‘Auction’’) pursuant to
Rules executed against the solicited order at Rule 6.52.4 Under Rules 6.52(a)(2) and
* * * * * the proposed execution price, provided (b)(1)(A), each order entered into SAM
that: shall be designated AON by the
Rule 6.52. Solicitation Auction (i) The execution price must be equal Initiating Participant with the Agency
Mechanism to or better than the initial auction Order marked for auction processing
A Participant that represents agency NBBO. If the execution would take with a specific single price at which the
orders may electronically execute orders place outside the initial auction NBBO, Initiating Participant seeks to cross the
it represents as agent (‘‘Agency Order’’) the Agency Order and solicited order Agency Order with the solicited order.
against solicited orders provided it will be cancelled; Pursuant to Rule 6.52(b)(2)(A)(i), the
submits the Agency Order for electronic (ii)–(iii) No change. Agency Order will be executed against
execution into the solicitation auction . . . Interpretations and Policies: the solicited order at the proposed
mechanism (the ‘‘Auction’’) pursuant to .01–.03 No change.
execution price, provided that, among
this Rule. * * * * * other things, the execution price must
(a) Auction Eligibility Requirements. The text of the proposed rule change be equal to or better than the C2 best bid
A Participant (the ‘‘Initiating is also available on the Exchange’s Web or offer (‘‘BBO’’). If the execution would
Participant’’) may initiate an Auction site (http://www.cboe.com/AboutCBOE/ take place outside the BBO, the Agency
provided all of the following are met: CBOELegalRegulatoryHome.aspx), at Order and solicited order will be
(1) The Agency Order is in a class the Exchange’s Office of the Secretary, cancelled.5
designated as eligible for Auctions as and at the Commission’s Public Although Participants are subject to
determined by the Exchange and within Reference Room. the Exchange’s order protection rules
the designated Auction order eligibility II. Self-Regulatory Organization’s and thus, prevented from trading
size parameters as such size parameters Statement of the Purpose of, and through the displayed national best bid
are determined by the Exchange Statutory Basis for, the Proposed Rule and offer (‘‘NBBO’’), including within
(however, the eligible order size may Change the context of SAM auctions,6 current
not be less than 500 standard option Rule 6.52 does not specifically require
In its filing with the Commission, the
contracts or 5,000 mini-option Initiating Participants to stop Agency
Exchange included statements
contracts); Orders at or within the NBBO or
(2) Each order entered into the concerning the purpose of and basis for
the proposed rule change and discussed expressly prohibit Agency Orders from
Auction shall be designated as all-or- being executed against solicited orders
any comments it received on the
none and must be stopped with a at prices outside the NBBO.7 In
proposed rule change. The text of these
solicited order priced at or within the addition, current Rule 6.52 does not
statements may be examined at the
NBBO as of the time of the initiation of specify whether the Agency Order may
places specified in Item IV below. The
the Auction (i.e. the time that the be executed against a solicited order
Exchange has prepared summaries, set
Agency Order is received in the System priced at or within the BBO as of the
forth in sections A, B, and C below, of
(the ‘‘initial auction NBBO’’); and time that the Agency Order is received
the most significant aspects of such
(3) The minimum price increment for in the System,8 as of the time of the
statements.
an Initiating Participant’s single price beginning of the auction (i.e. the time
submission shall be determined by the A. Self-Regulatory Organization’s when requests for responses (‘‘RFRs’’)
Exchange on a series basis and may not Statement of the Purpose of, and
be smaller than one cent. Statutory Basis for, the Proposed Rule 4 SAM functionality is currently inactive on the
(b) Auction Process. The Auction Change Exchange.
shall proceed as follows: 5 See Rule 6.52(b)(2)(A)(i).
(1) Auction Period and Requests for 1. Purpose 6 See section E of C2 Rules Chapter 6 relating to
Responses. The Exchange proposes to make Intermarket Linkage (‘‘Intermarket Linkage Rule’’)
(providing that the rules contained in section E of
(A) To initiate the Auction, the changes to its existing SAM auction CBOE Chapter IV relating to the Options Order
Initiating Participant must mark the rules in Rule 6.52. The Exchange Protection and Locked/Crossed Market Plan shall
Agency Order for Auction processing, believes that the proposed amendments apply to C2).
and specify a single price at which it would ensure greater consistency 7 Notably, the Exchange’s other auction rules
asabaliauskas on DSK5VPTVN1PROD with NOTICES
between the Exchange’s SAM auction expressly provide that Initiating Participants must
seeks to cross the Agency Order with a stop Agency Orders at or within the NBBO and
solicited order priced at or within the and order protection rules 3 and provide prohibit Agency Orders from being executed against
initial auction NBBO. solicited orders at prices outside the NBBO. See
(B) When the Exchange receives a 3 See Section E of C2 Rules Chapter 6 relating to Rule 6.51(b) (Automated Improvement Mechanism
properly designated Agency Order for Intermarket Linkage (‘‘Intermarket Linkage Rule’’) (‘‘AIM’’)).
(providing that the rules contained in Section E of 8 See Rule 1.1 (System) (defining the term
Auction processing, a Request for CBOE Chapter IV relating to the Options Order ‘‘System’’ to mean ‘‘the automated trading system
Responses message indicating the price, Protection and Locked/Crossed Market Plan shall used by the Exchange for the trading of options
side, and size at which it seeks to cross apply to C2). contracts’’).
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![Federal Register / Vol. 80, No. 111 / Wednesday, June 10, 2015 / Notices 33001
submissions. You should submit only disapprove the proposed rule change.6 SECURITIES AND EXCHANGE
information that you wish to make On May 13, 2015, the Commission COMMISSION
available publicly. All submissions received a letter from the Exchange
[Release No. 34–75107; File No. SR–BATS–
should refer to File Number SR–C2– responding to the Order Instituting 2015–40]
2015–014 and should be submitted on Proceedings.7 The Commission received
or before July 1, 2015. one other comment letter on the Self-Regulatory Organizations; BATS
For the Commission, by the Division of proposed rule change.8 Exchange, Inc.; Notice of Filing and
Trading and Markets, pursuant to delegated Section 19(b)(2) of the Act provides Immediate Effectiveness of a Proposed
authority.23 that proceedings to determine whether Rule Change To Adopt Rule 13.8
Robert W. Errett, to disapprove a proposed rule change Describing a Communication and
Deputy Secretary. must be concluded within 180 days of Routing Service Known as BATS
Connect
[FR Doc. 2015–14133 Filed 6–9–15; 8:45 am] the date of publication of notice of the
BILLING CODE 8011–01–P filing of the proposed rule change.9 The June 4, 2015.
time for conclusion of the proceedings Pursuant to section 19(b)(1) of the
may be extended for up to 60 days if the Securities Exchange Act of 1934 (the
SECURITIES AND EXCHANGE Commission determines that a longer ‘‘Act’’),1 and Rule 19b–4 thereunder,2
COMMISSION period is appropriate and publishes the notice is hereby given that on May 27,
reasons for such determination.10 The 2015, BATS Exchange, Inc. (the
[Release No. 34–75104; File No. SR–ISE– 180th day for this filing is June 8, 2015. ‘‘Exchange’’ or ‘‘BATS’’) filed with the
2014–24] Securities and Exchange Commission
The Commission is extending the
(‘‘Commission’’) the proposed rule
time period for Commission action on
Self-Regulatory Organizations; change as described in Items I and II
the proposed rule change. The
International Securities Exchange, below, which Items have been prepared
Commission finds that it is appropriate by the Exchange. The Exchange has
LLC; Notice of Designation of Longer
Period for Commission Action on to designate a longer period within designated this proposal as a ‘‘non-
Proceedings To Determine Whether To which to take action on the proposed controversial’’ proposed rule change
Approve or Disapprove a Proposed rule change so that it has sufficient time pursuant to section 19(b)(3)(A) of the
Rule Change To Modify the Opening to consider the comment letters and take Act 3 and Rule 19b–4(f)(6)(iii)
Process action on the Exchange’s proposed rule thereunder,4 which renders it effective
change. upon filing with the Commission. The
June 4, 2015. Commission is publishing this notice to
Accordingly, pursuant to section
On November 19, 2014, International 19(b)(2)(B)(ii)(II) of the Act 11 and for the solicit comments on the proposed rule
Securities Exchange, LLC (‘‘Exchange’’) reasons stated above, the Commission change from interested persons.
filed with the Securities and Exchange designates August 7, 2015, as the date I. Self-Regulatory Organization’s
Commission (‘‘Commission’’), pursuant by which the Commission should either Statement of the Terms of Substance of
to section 19(b)(1) of the Securities approve or disapprove the proposed the Proposed Rule Change
Exchange Act of 1934 (‘‘Act’’) 1 and Rule rule change(File No. SR–ISE–2014–24).
19b–4 thereunder,2 a proposed rule The Exchange is proposing to adopt
change to modify the manner in which For the Commission, by the Division of Rule 13.8 to describe a communication
the Exchange’s trading system opens Trading and Markets, pursuant to delegated and routing service known as BATS
authority.12 Connect. The proposed rule change is
trading at the beginning of the day and
after trading halts and to codify certain Robert W. Errett, based on an identical service offered by
existing functionality within the trading Deputy Secretary. the Exchange’s affiliate, EDGX
system regarding opening and reopening [FR Doc. 2015–14131 Filed 6–9–15; 8:45 am]
Exchange, Inc. (‘‘EDGX’’).5
of options classes traded on the The text of the proposed rule change
BILLING CODE 8011–01–P
Exchange. The proposed rule change is available at the Exchange’s Web site
was published for comment in the at www.batstrading.com, at the
Federal Register on December 10, principal office of the Exchange, and at
2014.3 On January 23, 2015, the the Commission’s Public Reference
Commission extended the time period Room.
within which to approve the proposed II. Self-Regulatory Organization’s
rule change, disapprove the proposed Statement of the Purpose of, and
rule change, or institute proceedings to Statutory Basis for, the Proposed Rule
determine whether to disapprove the Change
proposed rule change, to March 10, 6 See Securities Exchange Act Release No. 74465
In its filing with the Commission, the
2015.4 On March 10, 2015, the (March 10, 2015), 80 FR 13660 (March 16, 2015)
Exchange included statements
Commission instituted proceedings (‘‘Order Instituting Proceedings’’).
concerning the purpose of and basis for
under section 19(b)(2)(B) of the Act 5 to 7 See Letter to Brent J. Fields, Secretary,
the proposed rule change and discussed
determine whether to approve or Commission, from Mike Simon, Secretary and
asabaliauskas on DSK5VPTVN1PROD with NOTICES
General Counsel, dated May 13, 2015 (‘‘ISE Letter’’).
1 15 U.S.C. 78s(b)(1).
8 See Letter to Brent J. Fields, Secretary,
23 17 CFR 200.30–3(a)(12). 2 17
Commission, from Benjamin Londergan, Head of CFR 240.19b–4.
1 15 U.S.C. 78s(b)(1). 3 15 U.S.C. 78s(b)(3)(A).
2 17 CFR 240.19b–4.
Options Trading and Technology, Convergex
4 17 CFR 240.19b–4(f)(6)(iii).
3 See Securities Exchange Act Release No. 73736
Execution Solutions LLC, dated June 1, 2015.
5 See EDGX Rule 13.9. See also Securities
9 15 U.S.C. 78s(b)(2)(B)(ii)(I).
(December 4, 2014), 79 FR 73354. Exchange Act Release Nos. 73780 (December 8,
10 15 U.S.C. 78s(b)(2)(B)(ii)(II).
4 See Securities Exchange Act Release No. 74126
2014), 79 FR 73942 (December 12, 2014) (SR–
11 15 U.S.C. 78s(b)(2)(B)(ii)(II).
(January 23, 2015), 80 FR 4953 (January 29, 2015). EDGX–2014–28); and 74935 (May 12, 2015), 80 FR
5 15 U.S.C. 78s(b)(2)(B). 12 17 CFR 200.30–3(a)(57). 28335 (May 18, 2015) (SR–EDGX–2015–19).
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Document Created: 2015-12-15 15:17:26
Document Modified: 2015-12-15 15:17:26
| 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 32997 |
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