80 FR 34467 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Automated Improvement Mechanism Order Allocations
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 115 (June 16, 2015)
Federal Register Volume 80, Issue 115 (June 16, 2015)
| Page Range | 34467-34471 | |
| FR Document | 2015-14672 |
[Federal Register Volume 80, Number 115 (Tuesday, June 16, 2015)] [Notices] [Pages 34467-34471] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-14672] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75143; File No. SR-C2-2015-013] Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Automated Improvement Mechanism Order Allocations June 10, 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 June 3, 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. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 6.51 relating to the functionality of its Automated Improvement Mechanism (``AIM''). The text of the proposed rule change is 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 amend its AIM auction Rule 6.51 to provide that in instances where an Initiating Participant electronically submits an order that it represents as agent (``Agency Order'') into an AIM Auction (``Auction''), which the Initiating Participant is willing to automatically match (``auto-match'') as principal the price and size of all Auction responses up to an optional designated limit price and there is only one competing Participant at the final Auction price level, the Initiating Participant may be allocated up to fifty percent (50%) of the size of the order. The Exchange also proposes to add language in Rule 6.51 to more fully describe the manner in which any remaining contracts will be allocated at the conclusion of an Auction and make other non-substantive changes to Rule 6.51 to update terminology in the Rule. This is a competitive filing that is substantially and materially based on the price improvement auction rules of BOX Options Exchange, LLC (``BOX''),\3\ Nasdaq PHLX MKT (``PHLX''),\4\ and NYSE MKT LLC (``NYSE MKT'').\5\ Also, the filing is, in all material respects, substantially similar to Chicago Board Options Exchange, Incorporated (``CBOE'') filing, SR-CBOE-2015-043, which was recently filed with the Securities and Exchange Commission (the ``Commission'').\6\ --------------------------------------------------------------------------- \3\ See BOX Rule 7150(h). \4\ See PHLX Rule 1080(n). \5\ See NYSE MKT Rule 9.71.1NY(c). \6\ See Securities and Exchange Act Release No. 74864 (May 4, 2015), 80 FR 26601 (May 8, 2015) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Automated Improvement Mechanism Order Allocation) (SR-CBOE-2015-043); see also CBOE Rule 6.74A. --------------------------------------------------------------------------- Pursuant to Rule 6.51(b)(3), upon conclusion of an Auction, an Initiating Participant will retain certain priority and trade allocation privileges for both Agency Orders that the Initiating Participant seeks to cross at a single price (``single-price submissions'') and Agency Orders that the Initiating Participant \7\ is willing to automatically [[Page 34468]] match, as principal, the price and size of all Auction responses (``auto-match submissions''). Under current Rule 6.51(b)(3)(F), if the best competing Auction response price equals the Initiating Participant's single-price submission, the Initiating Participant's single-price submission shall be allocated the greater of one contract or a certain percentage of the order, which percentage will be determined by the Exchange and may not be larger than 40%. However, if only one competing Participant matches the Initiating Participant's single price submission then the Initiating Participant may be allocated up to 50% of the order. --------------------------------------------------------------------------- \7\ Rule 6.51(b)(3)(F) currently contains a typographical error in that it provides that if only one Market-Maker matches the Initiating Participant's single price submission then the Initiating Participant may be allocated up to 50% of the order. Under Rule 6.51(b)(1)(D), however, responses to RFRs may be submitted by all Participant that have subscribed to receive auction messages, not only Market-Makers. As described below, this typographical error would be changed upon the operability of the instant filing. --------------------------------------------------------------------------- Similarly, current Rule 6.51(b)(3)(G) provides that if the Initiating Participant selects the auto-match option for the Auction, the Initiating Participant shall be allocated its full size at each price point until a price point is reached where the balance of the order can be fully executed. At such price point, the Initiating Participant shall be allocated the greater of one contract or a certain percentage of the remainder of the order, which percentage will be determined by the Exchange and may not be larger than 40%. Notably, unlike the single-price submission rules in Rule 6.51(b)(3)(F), current Rule 6.51(b)(3)(G) provides that an Initiating Participant would only receive an allocation of up to 40% for orders that are matched at the final price level by only one competing Participant when the auto-match option is selected for the Agency Order. The Exchange believes this result to be inconsistent within the Rules and that Initiating Participants that price orders more aggressively using the auto-match option should receive allocations at least equal to Participants that select the single-price submission option for an Auction. Accordingly, the Exchange proposes to amend Rule 6.51(b)(3)(G) to provide that if only one competing Participant is present at the final Auction price, then the Initiating Participant may be allocated up to 50% of the remainder of the Agency Order at the final Auction price level. As discussed above, current Rule 6.51(b)(3)(G) provides that an Initiating Participant will receive an allocation of up to 40% for orders that are matched at the final price level by only one competing Participant when the auto-match option is selected by the Initiating Participant for the Auction. The Exchange believes this result to be inconsistent within the Rules and believes that Initiating Participants that price orders more aggressively using the auto-match option should receive allocations at least equal to those that select the single- price submission option. The Exchange also believes proposed rule change will more closely align the language in Rule 6.51(b)(3)(G) with the language in Rule 6.51(b)(3)(F) and will thus, provide additional internal consistency within the Rules by harmonizing order allocations of single-price submissions and auto-match Auction orders in instances where there is only one competing order at the final Auction price level. Furthermore, the proposed rule change will bring the Exchange's AIM rules in line with the Rules of other competitor exchanges with which the Exchange competes for order flow. The Exchange notes that the proposed rule change would not affect the priority of public customer orders under Rule 6.51(b)(3)(B). Public customer orders in the book would continue to have priority even in cases in which a public customer order is resting in the book at the final Auction price. For example, suppose that the national best bid (``NBB'') for a particular option is $1.00 and the national best offer (``NBO'') for the option is $1.20 and that the NBB is an order to buy 10 contracts resting in the book on C2. The minimum increment in the option series is $0.01. An Initiating Participant at C2 submits an auto-match Agency Order to sell 100 options contracts in the series. The Auction begins and, during the auction, one competing Participant submits an Auction response to buy 50 contracts at $1.00. The Auction then concludes. In this case, the public customer order resting in the book would have priority and be allocated 10 contracts with the remaining 90 contracts being allocated 50/50 to the responding Participant and the Initiating Participant, 45 contracts each. Similarly, a public customer order resting in the book at a final Auction price level worse than the best Auction response will also retain priority in the book. Accordingly, assume again that the national best bid (``NBB'') for a particular option is $1.00 and the national best offer (``NBO'') for the option is $1.20 and that the NBB is an order to buy 10 contracts resting in the book on C2. The minimum increment in the option series is $0.01. An Initiating Participant at C2 submits an auto-match Agency Order to sell 100 options contracts in the series. The Auction begins and during the Auction, one competing Participant (``P1'') submits an Auction response to buy 20 contracts at $1.02, a second Participant (``P2'') submits an Action response to buy 20 contracts at $1.01, and a third Participant (``P3'') submits an Auction response to buy 20 contracts at $1.00. The Auction then concludes. In this case, P1 and the Initiating Participant would each be allocated 20 contracts at $1.02 and P2 and the Initiating Participant would each be allocated 20 contracts at $1.01 since the Initiating Participant is willing to match the price and size at each improved price level. The remaining 20 contracts would be allocated 10 to the public customer order resting in the book at $1.00 because the public customer would retain priority at that price level with the remaining 10 contracts being allocated 50/50 to P3 and the Initiating Participant, 5 contracts each.\8\ --------------------------------------------------------------------------- \8\ The Exchange notes that an unrelated public customer market or marketable limit order on the opposite side of the market from the Agency Order that is received during an Auction will end the Auction and trade against the Agency Order at the midpoint of the best RFR response and the NBBO on the other side of the market from the RFR responses. See Rule 6.51(b)(3)(D). For example, assume that the NBBO is $1.00-$1.20. An Initiating Participant submits a matched Agency Order to sell 100 options contracts at in the series at $1.10. The Auction begins and during the Auction, one competing Participant submits an Auction response to buy 100 contracts at $1.15. Assume that after the first response is received, an unrelated public customer order to buy 100 contracts at $1.20 is received. This would conclude the auction early after which the public customer order would trade 100 contracts with the Agency Order at $1.17 (i.e. the midpoint between the best RFR response ($1.15) and the NBBO on the other side of the market from the RFR responses ($1.20)). --------------------------------------------------------------------------- The Exchange believes that increasing the Initiating Participant's allocation priority for auto-match submissions that only have one competing order at the final price level fairly distributes the order when there are only two counterparties to the Agency Order involved in the Auction at the final Auction price, and that doing so is reasonable because of the value that Initiating Participants provide to the market. Initiating Participants selecting the auto-match option for Agency Orders guarantee an execution at the NBBO or at a better price, and are subject to a greater market risk than single-price submissions while the order is exposed to other AIM participants. As such, the Exchange believes that the value added from Initiating Participants, guaranteeing execution of Agency Orders at a price equal to or better than the NBBO in combination with the additional market risk of initiating auto-match submissions warrants an allocation priority of at least the same percentage as Initiating Participants that submit single-price orders into AIM. The Exchange also believes that the proposed rule change, like other price improvement allocation programs currently offered by competitor exchanges, will benefit investors by attracting more order flow as well as increasing the frequency that [[Page 34469]] Participants initiate Auctions, which may result in greater opportunities for customer order price improvement. Moreover, as discussed above, the proposed rule change is consistent with the rules of other exchanges, including CBOE.\9\ --------------------------------------------------------------------------- \9\ See, e.g., BOX Rule 7150(h); NYSE MKT Rule 9.71.1NY(c)(5)(B). See also Securities and Exchange Act Release No. 74864 (May 4, 2015), 80 FR 26601 (May 8, 2015) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Automated Improvement Mechanism Order Allocation) (SR-CBOE-2015- 043); CBOE Rule 6.74A. --------------------------------------------------------------------------- The Exchange also proposes to add text to Rules 6.51(b)(3)(F) and (G) to describe the manner in which remaining contracts would be allocated at the conclusion of an Auction under the scenarios therein. Specifically, the Exchange proposes to amend paragraphs (F) and (G) to provide that (subject to public customer priority), after the Initiating Participant has received an allocation of up to 40% of the Agency Order (or 50% of the Agency Order if there is only one other RFR response), contracts shall be allocated among remaining quotes, orders, and auction responses (i.e. interests other than the Initiating Participant) at the final auction price in accordance with the matching algorithm in effect for the subject class. If all RFR Responses are filled (i.e. no other interests remain), any remaining contracts will be allocated to the Initiating Participant at the single-price submission price for single-price submissions or, for auto-match submissions, to the Initiating Participant at the auction start price as specified under Rule 6.51(b)(1)(A). The Exchange believes that this additional language would add clarity in the Rules with respect to how remaining odd-lots will be allocated at the conclusion of an Auction.\10\ --------------------------------------------------------------------------- \10\ The Exchange notes that such remaining contracts are currently allocated to the Initiating Participant in excess of the up to 40% (50% if there is only one other Market-Marker or Participant representing an Agency Order) of the order that the Initiating Participant may receive under the Exchange's existing Rules pursuant to the provision that the Initiating Participant will be allocated the greater of one contract or up to 40% (50% if there is only one other Market-Marker or Participant representing an Agency Order) at the final Auction price. --------------------------------------------------------------------------- For example, suppose that the NBBO for a particular option is $1.00-$1.20. The minimum increment for the series is $0.01 and the matching algorithm in effect for the option class is pro rata. An Initiating Participant submits a matched Agency Order to sell 5 contracts at $1.10. The Auction begins and, during the auction, one competing Participant (``P1'') submits an Auction response to buy 5 contracts at $1.10, followed by another Participant (``P2'') submitting an Auction response to buy 5 contracts at $1.10. The Auction concludes. In this case, under proposed Rule 6.51(b)(3)(F), the Initiating Participant would receive an allocation up to 40%, or, in this case, 2 contracts at $1.10. P1 and P2 would then receive 1 contract each at $1.10 according to the pro rata allocation algorithm in place for the class with P1, as the first responder, receiving the final 1 contract at the final auction price of $1.10.\11\ --------------------------------------------------------------------------- \11\ See Rules 6.12(a). --------------------------------------------------------------------------- Similarly, suppose that the NBBO for a particular option is $1.00- $1.20. The minimum increment for the series is $0.01 and the matching algorithm in effect for the option class is pro rata. An Initiating Participant submits a matched Agency Order to sell 5 contracts at $1.10. The Auction begins and, during the auction, one competing Participant (``P1'') submits an Auction response to buy 1 contract at $1.10, followed by another Participant (``P2'') submitting an Auction response to buy 1 contract at $1.10. The Auction concludes. In this case, under proposed Rule 6.51(b)(3)(F), the Initiating Participant would receive an allocation up to 40%, or, in this case, 2 contracts at $1.10. P1 and P2 would then receive 1 contract each at $1.10 according to the pro rata allocation algorithm in place for the class. With no other RFR responder interest for the Auction, however, proposed Rule 6.51(b)(3)(F) will simply make clear that if all RFR Responses are filled (i.e. no other interests remain), any remaining contracts will be allocated to the Initiating Participant at the single-price submission price. In this case, the final 1 contract would be allocated to the Initiating Participant at $1.10. Remaining odd-lots for auto-match submissions would be similarly allocated under proposed Rule 6.51(b)(3)(G), except that if all RFR Responses are filled (i.e. no other interests remain), any remaining contracts will be allocated to the Initiating Participant at the auction start price as specified under Rule 6.51(b)(1)(A). Accordingly, suppose that the NBBO for a particular option is $1.00-$1.20. The minimum increment for the series is $0.01 and the matching algorithm in effect for the option class is pro rata. An Initiating Participant submits an auto-matched Agency Order to sell 5 contracts. In this case, because no Auction stop price is specified, the Auction would begin at the NBBO, or $1.20.\12\ Assume that the Auction begins and, during the auction, one competing Participant (``P1'') submits an Auction response to buy 1 contracts at $1.18, followed by another Participant (``P2'') submitting an Auction response to buy 1 contract at $1.17. The Auction concludes. In this case, P2 and the Initiating Participant would each receive 1 contract at $1.17 and P1 and the Initiating Participant would each receive 1 contract at $1.18. Because all RFR Responses would then be filled (i.e. no other interests remain), any remaining contracts will be allocated to the Initiating Participant at the Auction start price or, in this case, 1 contract at $1.20. --------------------------------------------------------------------------- \12\ See Rule 6.51(b)(1)(A). --------------------------------------------------------------------------- The Exchange notes that the proposed amendments are based on, and consistent with, the rules of other competitor exchanges as well as a recent filing of CBOE.\13\ The Exchange believes that the value added from Initiating Participants guaranteeing execution of Agency Orders at a price equal to or better than the NBBO warrants (to the extent that the Initiating Participants is on the final Auction price), an Auction allocation priority of at least the same percentage of the order as any competing Auction responses. The Exchange also believes that the proposed rule change, like other price improvement allocation programs currently offered by competitor exchanges, will benefit investors by attracting more order flow as well as increasing the frequency that Participants initiate Auctions, which may result in greater opportunities for customer order price improvement. --------------------------------------------------------------------------- \13\ See, e.g., NYSE MKT Rule 9.71.1NY(c)(5); PHLX Rule 1080(n)(ii)(E). See also Securities and Exchange Act Release No. 74864 (May 4, 2015), 80 FR 26601 (May 8, 2015) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Automated Improvement Mechanism Order Allocation) (SR-CBOE-2015- 043); CBOE Rule 6.74A. --------------------------------------------------------------------------- Additionally, the Exchange is proposing to add additional clarifying language to Rule 6.51. Specifically, the Exchange proposes correct a typographical error in the second sentence of Rule 6.51(b)(3)(F), deleting the term ``Market-Maker'' and replacing it with the term ``competing Participant'' to make clear that all Participants that subscribe to receive auction messages on the Exchange may respond to Auctions and thus, may be present at the final Auction price. The Exchange notes that the proposed language is consistent with the current Rule and would also be consistent with the rule text of Rule 6.51(b)(1)(D), which provides that ``[r]esponses to RFRs may be submitted by Participants.'' The Exchange also proposes to add a comma after the word submission in the second sentence of Rule 6.51(b)(3)(F) for [[Page 34470]] grammatical purposes. The Exchange strives for transparency in its Rules and believes these non-substantive changes will provide greater clarity for market participants. The Exchange believes that these changes are non-controversial as they simply clarify the Exchange's already existing AIM rules. 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.\14\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \15\ 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) \16\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b). \15\ 15 U.S.C. 78f(b)(5). \16\ Id. --------------------------------------------------------------------------- In particular, the Exchange believes the proposed rule changes protect investors by fairly distributing the allocation of the AIM order between the Initiating Participant and Participants that respond to price improvement auctions, and clarifying the Rules with respect to the distribution of AIM orders when only there are only two counterparties to an Auction and/or the number of contracts remaining at the final Auction price cannot be evenly distributed at the end of an Auction. The Exchange believes that the proposed rule changes, like other price improvement programs currently offered by competing exchanges, will benefit investors by attracting more order flow as well as increasing the frequency that Participants submit orders to Auction, which may result in greater opportunity for price improvement for customers. Moreover, the proposed rule change is consistent with the Rules of other exchanges. With respect to the proposed clarifying additions to Rule 6.51, the Exchange believes that the proposed changes will benefit market participants by adding additional transparency and clarity to the Rules. 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 proposed changes are meant to more fairly distribute the order allocation when there are only two counterparties to an Auction auto-match order. The Exchange does not believe that this change will discourage any market participants from entering into the AIM, as the auto-match option of the AIM is more aggressive in terms of risk and therefore, increasing the allocation to up to 50% of the remainder for the Initiating Participant when there is only one competing order at the final price level is a more fair and reasonable allocation mechanism and would likely only increase the number of Participants that select the auto- match option to initiate Auctions. Furthermore, the Exchange notes that the proposed rule change is a competitive response to similar provisions in the price improvement auction rules of BOX, PHLX, and NYSE MKT.\17\ The Exchange believes this proposed rule change is necessary to permit fair competition among the options exchanges and to establish more uniform price improvement auction rules on the various exchanges. The Exchange is also seeking the proposed rule change to align the allocation priorities for AIM single-price and auto-match submissions for Initiating Participants when there is only one competing order at the final price level within its rules. As mentioned earlier, auto-match submissions carry more risk than single-price submissions and as a result, should be given at least the same allocation priority as single-price submissions. The Exchange believes this proposed rule change is necessary to permit fair competition among the options exchanges and to establish more uniform price improvement auction rules on the various exchanges. --------------------------------------------------------------------------- \17\ See BOX Rule 7150; NYSE MKT Rule 971.1NY, PHLX Rule 1080. --------------------------------------------------------------------------- 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 \18\ and Rule 19b-4(f)(6) \19\ thereunder. --------------------------------------------------------------------------- \18\ 15 U.S.C. 78s(b)(3)(A). \19\ 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 rule-comments@sec.gov. Please include File Number SR-C2-2015-013 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-C2-2015-013. This file number should be included on the subject line if email is used. To help the [[Page 34471]] 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 submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-C2-2015-013 and should be submitted on or before July 7, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ --------------------------------------------------------------------------- \20\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-14672 Filed 6-15-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 115 / Tuesday, June 16, 2015 / Notices 34467
8. The estimated number of annual SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
respondents: 7.2 respondents (1 NRC COMMISSION Statement of the Purpose of, and
licensee and 6.2 Agreement State Statutory Basis for, the Proposed Rule
licensees). [Release No. 34–75143; File No. SR–C2– Change
9. The estimated number of hours 2015–013] 1. Purpose
needed annually to comply with the The Exchange proposes to amend its
information collection requirement or Self-Regulatory Organizations; C2
AIM auction Rule 6.51 to provide that
request: 9.4 hours (1.3 NRC licensee Options Exchange, Incorporated;
in instances where an Initiating
hours and 8.1 Agreement State licensee Notice of Filing and Immediate Participant electronically submits an
hours). Effectiveness of a Proposed Rule order that it represents as agent
Change Relating to Automated (‘‘Agency Order’’) into an AIM Auction
10. Abstract: Part 40 of Title 10 of the
Improvement Mechanism Order (‘‘Auction’’), which the Initiating
Code of Federal Regulations (10 CFR),
Allocations Participant is willing to automatically
establishes requirements for the receipt,
possession, use and transfer of June 10, 2015.
match (‘‘auto-match’’) as principal the
radioactive source and byproduct price and size of all Auction responses
Pursuant to Section 19(b)(1) of the up to an optional designated limit price
materials. Section 40.25 established a
Securities Exchange Act of 1934 (the and there is only one competing
general license authorizing the use of
‘‘Act’’),1 and Rule 19b–4 thereunder,2 Participant at the final Auction price
depleted uranium contained in
notice is hereby given that on June 3, level, the Initiating Participant may be
industrial products or devices for the
2015, C2 Options Exchange, allocated up to fifty percent (50%) of the
purpose of providing a concentrated size of the order. The Exchange also
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)
mass in a small volume of the product proposes to add language in Rule 6.51
filed with the Securities and Exchange
or device. The NRC Form 244 is used to to more fully describe the manner in
Commission (the ‘‘Commission’’) the
report the receipt and transfer of which any remaining contracts will be
proposed rule change as described in
depleted uranium, as required by allocated at the conclusion of an
Items I and II below, which Items have
§ 40.25. The registration information Auction and make other non-
been prepared by the Exchange. The
required by the NRC Form 244 enables substantive changes to Rule 6.51 to
Commission is publishing this notice to
the NRC to make a determination on update terminology in the Rule. This is
solicit comments on the proposed rule
whether the possession, use, or transfer a competitive filing that is substantially
change from interested persons.
of depleted uranium source and and materially based on the price
byproduct material is in conformance I. Self-Regulatory Organization’s improvement auction rules of BOX
with the NRC’s regulations for the Statement of the Terms of Substance of Options Exchange, LLC (‘‘BOX’’),3
protection of public health and safety. the Proposed Rule Change Nasdaq PHLX MKT (‘‘PHLX’’),4 and
NYSE MKT LLC (‘‘NYSE MKT’’).5 Also,
III. Specific Requests for Comments The Exchange proposes to amend the filing is, in all material respects,
Rule 6.51 relating to the functionality of substantially similar to Chicago Board
The NRC is seeking comments that
its Automated Improvement Mechanism Options Exchange, Incorporated
address the following questions:
(‘‘AIM’’). The text of the proposed rule (‘‘CBOE’’) filing, SR–CBOE–2015–043,
1. Is the proposed collection of change is available on the Exchange’s which was recently filed with the
information necessary for the NRC to Web site (http://www.cboe.com/ Securities and Exchange Commission
properly perform its functions? Does the AboutCBOE/ (the ‘‘Commission’’).6
information have practical utility? CBOELegalRegulatoryHome.aspx), at Pursuant to Rule 6.51(b)(3), upon
2. Is the estimate of the burden of the the Exchange’s Office of the Secretary, conclusion of an Auction, an Initiating
information collection accurate? and at the Commission’s Public Participant will retain certain priority
Reference Room. and trade allocation privileges for both
3. Is there a way to enhance the Agency Orders that the Initiating
quality, utility, and clarity of the II. Self-Regulatory Organization’s Participant seeks to cross at a single
information to be collected? Statement of the Purpose of, and price (‘‘single-price submissions’’) and
4. How can the burden of the Statutory Basis for, the Proposed Rule Agency Orders that the Initiating
information collection on respondents Change Participant 7 is willing to automatically
be minimized, including the use of
In its filing with the Commission, the 3 See BOX Rule 7150(h).
automated collection techniques or
Exchange included statements 4 See PHLX Rule 1080(n).
other forms of information technology?
concerning the purpose of and basis for 5 See NYSE MKT Rule 9.71.1NY(c).
Dated at Rockville, Maryland, this 11th day the proposed rule change and discussed 6 See Securities and Exchange Act Release No.
of June, 2015. 74864 (May 4, 2015), 80 FR 26601 (May 8, 2015)
any comments it received on the (Notice of Filing and Immediate Effectiveness of a
For the Nuclear Regulatory Commission. proposed rule change. The text of these Proposed Rule Change Relating to Automated
Tremaine Donnell, statements may be examined at the Improvement Mechanism Order Allocation) (SR–
places specified in Item IV below. The CBOE–2015–043); see also CBOE Rule 6.74A.
NRC Clearance Officer, Office of Information
asabaliauskas on DSK5VPTVN1PROD with NOTICES
7 Rule 6.51(b)(3)(F) currently contains a
Services. Exchange has prepared summaries, set typographical error in that it provides that if only
[FR Doc. 2015–14717 Filed 6–15–15; 8:45 am] forth in sections A, B, and C below, of one Market-Maker matches the Initiating
BILLING CODE 7590–01–P the most significant aspects of such Participant’s single price submission then the
Initiating Participant may be allocated up to 50%
statements. of the order. Under Rule 6.51(b)(1)(D), however,
responses to RFRs may be submitted by all
Participant that have subscribed to receive auction
messages, not only Market-Makers. As described
1 15 U.S.C. 78s(b)(1). below, this typographical error would be changed
2 17 CFR 240.19b–4. upon the operability of the instant filing.
VerDate Sep<11>2014 17:18 Jun 15, 2015 Jkt 235001 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 E:\FR\FM\16JNN1.SGM 16JNN1](https://thefederalregister.org/doc/80_FR_34582/page/1.svg)
![Federal Register / Vol. 80, No. 115 / Tuesday, June 16, 2015 / Notices 34469
Participants initiate Auctions, which another Participant (‘‘P2’’) submitting an response to buy 1 contracts at $1.18,
may result in greater opportunities for Auction response to buy 5 contracts at followed by another Participant (‘‘P2’’)
customer order price improvement. $1.10. The Auction concludes. In this submitting an Auction response to buy
Moreover, as discussed above, the case, under proposed Rule 6.51(b)(3)(F), 1 contract at $1.17. The Auction
proposed rule change is consistent with the Initiating Participant would receive concludes. In this case, P2 and the
the rules of other exchanges, including an allocation up to 40%, or, in this case, Initiating Participant would each
CBOE.9 2 contracts at $1.10. P1 and P2 would receive 1 contract at $1.17 and P1 and
The Exchange also proposes to add then receive 1 contract each at $1.10 the Initiating Participant would each
text to Rules 6.51(b)(3)(F) and (G) to according to the pro rata allocation receive 1 contract at $1.18. Because all
describe the manner in which remaining algorithm in place for the class with P1, RFR Responses would then be filled (i.e.
contracts would be allocated at the as the first responder, receiving the final no other interests remain), any
conclusion of an Auction under the 1 contract at the final auction price of remaining contracts will be allocated to
scenarios therein. Specifically, the $1.10.11 the Initiating Participant at the Auction
Exchange proposes to amend paragraphs Similarly, suppose that the NBBO for start price or, in this case, 1 contract at
(F) and (G) to provide that (subject to a particular option is $1.00–$1.20. The $1.20.
public customer priority), after the minimum increment for the series is The Exchange notes that the proposed
Initiating Participant has received an $0.01 and the matching algorithm in amendments are based on, and
allocation of up to 40% of the Agency effect for the option class is pro rata. An consistent with, the rules of other
Order (or 50% of the Agency Order if Initiating Participant submits a matched competitor exchanges as well as a recent
there is only one other RFR response), Agency Order to sell 5 contracts at filing of CBOE.13 The Exchange believes
contracts shall be allocated among $1.10. The Auction begins and, during that the value added from Initiating
remaining quotes, orders, and auction the auction, one competing Participant Participants guaranteeing execution of
responses (i.e. interests other than the (‘‘P1’’) submits an Auction response to Agency Orders at a price equal to or
Initiating Participant) at the final buy 1 contract at $1.10, followed by better than the NBBO warrants (to the
auction price in accordance with the another Participant (‘‘P2’’) submitting an extent that the Initiating Participants is
matching algorithm in effect for the Auction response to buy 1 contract at on the final Auction price), an Auction
subject class. If all RFR Responses are $1.10. The Auction concludes. In this allocation priority of at least the same
filled (i.e. no other interests remain), case, under proposed Rule 6.51(b)(3)(F), percentage of the order as any
any remaining contracts will be the Initiating Participant would receive competing Auction responses. The
allocated to the Initiating Participant at an allocation up to 40%, or, in this case, Exchange also believes that the
the single-price submission price for 2 contracts at $1.10. P1 and P2 would proposed rule change, like other price
single-price submissions or, for auto- then receive 1 contract each at $1.10 improvement allocation programs
match submissions, to the Initiating according to the pro rata allocation currently offered by competitor
Participant at the auction start price as algorithm in place for the class. With no exchanges, will benefit investors by
specified under Rule 6.51(b)(1)(A). The other RFR responder interest for the attracting more order flow as well as
Exchange believes that this additional Auction, however, proposed Rule increasing the frequency that
language would add clarity in the Rules 6.51(b)(3)(F) will simply make clear that Participants initiate Auctions, which
with respect to how remaining odd-lots if all RFR Responses are filled (i.e. no may result in greater opportunities for
will be allocated at the conclusion of an other interests remain), any remaining customer order price improvement.
contracts will be allocated to the Additionally, the Exchange is
Auction.10
Initiating Participant at the single-price proposing to add additional clarifying
For example, suppose that the NBBO
submission price. In this case, the final language to Rule 6.51. Specifically, the
for a particular option is $1.00–$1.20.
1 contract would be allocated to the Exchange proposes correct a
The minimum increment for the series
Initiating Participant at $1.10. typographical error in the second
is $0.01 and the matching algorithm in Remaining odd-lots for auto-match
effect for the option class is pro rata. An sentence of Rule 6.51(b)(3)(F), deleting
submissions would be similarly the term ‘‘Market-Maker’’ and replacing
Initiating Participant submits a matched allocated under proposed Rule
Agency Order to sell 5 contracts at it with the term ‘‘competing
6.51(b)(3)(G), except that if all RFR Participant’’ to make clear that all
$1.10. The Auction begins and, during Responses are filled (i.e. no other
the auction, one competing Participant Participants that subscribe to receive
interests remain), any remaining auction messages on the Exchange may
(‘‘P1’’) submits an Auction response to contracts will be allocated to the
buy 5 contracts at $1.10, followed by respond to Auctions and thus, may be
Initiating Participant at the auction start present at the final Auction price. The
9 See, e.g., BOX Rule 7150(h); NYSE MKT Rule
price as specified under Rule Exchange notes that the proposed
9.71.1NY(c)(5)(B). See also Securities and Exchange 6.51(b)(1)(A). Accordingly, suppose that language is consistent with the current
Act Release No. 74864 (May 4, 2015), 80 FR 26601 the NBBO for a particular option is Rule and would also be consistent with
(May 8, 2015) (Notice of Filing and Immediate $1.00–$1.20. The minimum increment the rule text of Rule 6.51(b)(1)(D), which
Effectiveness of a Proposed Rule Change Relating to for the series is $0.01 and the matching
Automated Improvement Mechanism Order provides that ‘‘[r]esponses to RFRs may
Allocation) (SR–CBOE–2015–043); CBOE Rule algorithm in effect for the option class be submitted by Participants.’’ The
6.74A. is pro rata. An Initiating Participant Exchange also proposes to add a comma
10 The Exchange notes that such remaining submits an auto-matched Agency Order after the word submission in the second
asabaliauskas on DSK5VPTVN1PROD with NOTICES
contracts are currently allocated to the Initiating to sell 5 contracts. In this case, because
Participant in excess of the up to 40% (50% if there sentence of Rule 6.51(b)(3)(F) for
is only one other Market-Marker or Participant
no Auction stop price is specified, the
representing an Agency Order) of the order that the Auction would begin at the NBBO, or 13 See, e.g., NYSE MKT Rule 9.71.1NY(c)(5);
Initiating Participant may receive under the $1.20.12 Assume that the Auction begins PHLX Rule 1080(n)(ii)(E). See also Securities and
Exchange’s existing Rules pursuant to the provision and, during the auction, one competing Exchange Act Release No. 74864 (May 4, 2015), 80
that the Initiating Participant will be allocated the FR 26601 (May 8, 2015) (Notice of Filing and
greater of one contract or up to 40% (50% if there
Participant (‘‘P1’’) submits an Auction Immediate Effectiveness of a Proposed Rule Change
is only one other Market-Marker or Participant Relating to Automated Improvement Mechanism
11 See Rules 6.12(a).
representing an Agency Order) at the final Auction Order Allocation) (SR–CBOE–2015–043); CBOE
price. 12 See Rule 6.51(b)(1)(A). Rule 6.74A.
VerDate Sep<11>2014 17:18 Jun 15, 2015 Jkt 235001 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 E:\FR\FM\16JNN1.SGM 16JNN1](https://thefederalregister.org/doc/80_FR_34582/page/3.svg)
![Federal Register / Vol. 80, No. 115 / Tuesday, June 16, 2015 / Notices 34471
Commission process and review your rule change as described in Items I and (ii) If the [NBBO] Reference BBO on
comments more efficiently, please use II below, which Items have been the contra-side of an incoming order is
only one method. The Commission will prepared by the Exchange. The less than or equal to $1.00, orders with
post all comments on the Commission’s Commission is publishing this notice to a limit more than 100% through such
Internet Web site (http://www.sec.gov/ solicit comments on the proposed rule contra-side [NBBO] Reference BBO will
rules/sro.shtml). Copies of the change from interested persons. be rejected by the System upon receipt.
submission, all subsequent For example, if the [NBBO] Reference
amendments, all written statements I. Self-Regulatory Organization’s
BBO on the offer side is $1.00, an order
with respect to the proposed rule Statement of the Terms of Substance of
to buy options for more than $2.00
change that are filed with the the Proposed Rule Change
would be rejected. However, if the
Commission, and all written The Exchange proposes to amend [NBBO] Reference BBO of the bid side
communications relating to the Chapter VI, Section 18 of the Exchange’s of an incoming order to sell is less than
proposed rule change between the options rules. or equal to $1.00, the OPP limits set
Commission and any person, other than The text of the proposed rule change forth above will result in all incoming
those that may be withheld from the is below; proposed new language is sell orders being accepted regardless of
public in accordance with the italicized; proposed deletions are in their limit.
provisions of 5 U.S.C. 552, will be brackets. * * * * *
available for Web site viewing and * * * * *
printing in the Commission’s Public II. Self-Regulatory Organization’s
Reference Room, 100 F Street NE., NASDAQ Stock Market Rules Statement of the Purpose of, and
Washington, DC 20549 on official Statutory Basis for, the Proposed Rule
* * * * *
business days between the hours of Change
10:00 a.m. and 3:00 p.m. Copies of the Options Rules In its filing with the Commission, the
filing also will be available for * * * * * Exchange included statements
inspection and copying at the principal concerning the purpose of and basis for
office of the Exchange. All comments Chapter VI Trading Systems the proposed rule change and discussed
received will be posted without change; * * * * * any comments it received on the
the Commission does not edit personal proposed rule change. The text of these
identifying information from Sec. 18 Order Price Protection
statements may be examined at the
submissions. You should submit only Order Price Protection (‘‘OPP’’) is a places specified in Item IV below. The
information that you wish to make feature of the System that prevents Exchange has prepared summaries, set
available publicly. All submissions certain day limit, good til cancelled, and forth in sections A, B, and C below, of
should refer to File Number SR–C2– immediate or cancel orders at prices the most significant aspects of such
2015–013 and should be submitted on outside of pre-set standard limits from statements.
or before July 7, 2015. being accepted by the System. OPP
A. Self-Regulatory Organization’s
For the Commission, by the Division of applies to all options but does not apply
Trading and Markets, pursuant to delegated Statement of the Purpose of, and
to market orders or Intermarket Sweep
authority.20 Statutory Basis for, the Proposed Rule
Orders.
Robert W. Errett, Change
(a) OPP is operational each trading
Deputy Secretary. day after the opening until the close of 1. Purpose
[FR Doc. 2015–14672 Filed 6–15–15; 8:45 am] trading, except during trading halts. The purpose of the proposed rule
BILLING CODE 8011–01–P [The Exchange may also temporarily change is to amend and correct Chapter
deactivate OPP from time to time on an VI, Section 18 of the NOM Rulebook
intraday basis at its discretion if it which describes Order Price Protection
SECURITIES AND EXCHANGE determines that volatility warrants (‘‘OPP’’), a feature of the NOM trading
COMMISSION deactivation. Participants will be system that prevents certain day limit,
[Release No. 34–75141; File No. SR– notified of intraday OPP deactivation good till cancelled, and immediate or
NASDAQ–2015–060] due to volatility and any subsequent cancel orders at prices outside of pre-set
intraday reactivation by the Exchange standard limits from being accepted by
Self-Regulatory Organizations; The through the issuance of system status the System. The amendments also
NASDAQ Stock Market LLC; Notice of messages.] remove language providing for the
Filing and Immediate Effectiveness of (b) OPP will reject incoming orders temporary deactivation of OPP from
Proposed Rule Change To Amend that exceed certain parameters time to time on an intraday basis at the
Chapter VI, Section 18 of the according to the following algorithm: Exchange’s discretion if the Exchange
Exchange’s Options Rules (i) If the better of the NBBO or the determines that volatility warrants
June 10, 2015. internal market BBO (the ‘‘Reference deactivation.
Pursuant to Section 19(b)(1) of the BBO’’) on the contra-side of an incoming OPP applies to all options but does
Securities Exchange Act of 1934 order is greater than $1.00, orders with not apply to market orders or
(‘‘Act’’) 1, and Rule 19b–4 2 thereunder, a limit more than 50% through such Intermarket Sweep Orders. OPP is
contra-side [NBBO] Reference BBO will operational each trading day after the
asabaliauskas on DSK5VPTVN1PROD with NOTICES
notice is hereby given that, on June 4,
2015, The NASDAQ Stock Market LLC be rejected by the System upon receipt. opening until the close of trading,
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the For example, if the [NBBO] Reference except during trading halts. Chapter VI,
Securities and Exchange Commission BBO on the offer side is $1.10, an order Section 18 also currently provides that
(‘‘SEC’’ or ‘‘Commission’’) the proposed to buy options for more than $1.65 the Exchange may temporarily
would be rejected. Similarly, if the deactivate OPP from time to time on an
20 17 CFR 200.30–3(a)(12). [NBBO] Reference BBO on the bid side intraday basis at its discretion if it
1 15 U.S.C. 78s(b)(1). is $1.10, an order to sell options for less determines that volatility warrants
2 17 CFR 240.19b–4. than $0.55 will be rejected. deactivation. Participants are notified of
VerDate Sep<11>2014 17:18 Jun 15, 2015 Jkt 235001 PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 E:\FR\FM\16JNN1.SGM 16JNN1](https://thefederalregister.org/doc/80_FR_34582/page/5.svg)
Document Created: 2018-02-22 10:23:15
Document Modified: 2018-02-22 10:23:15
| 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 34467 |
2024 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR