80 FR 48365 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Amend Its Rules Related to Equipment and Communication on the Exchange's Trading Floor
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 155 (August 12, 2015)
Federal Register Volume 80, Issue 155 (August 12, 2015)
| Page Range | 48365-48369 | |
| FR Document | 2015-19756 |
[Federal Register Volume 80, Number 155 (Wednesday, August 12, 2015)] [Notices] [Pages 48365-48369] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-19756] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75623; File No. SR-CBOE-2015-061] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Amend Its Rules Related to Equipment and Communication on the Exchange's Trading Floor August 6, 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 July 23, 2015, Chicago Board Options Exchange, Incorporated (the ``Exchange'' or ``CBOE'') 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 Exchange filed the proposal as a ``non-controversial'' proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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. \3\ 15 U.S.C. 78s(b)(3)(A)(iii). \4\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange seeks to amend its rules related to equipment and communication on the Exchange's trading floor. The text of the proposed rule change is provided below. (additions are italicized; deletions are [bracketed]) * * * * * Chicago Board Options Exchange, Incorporated Rules * * * * * Rule 6.23. [Trading Permit Holder Wires From Floor] Equipment and Communications on the Trading Floor (a) Subject to the requirements of this Rule Trading Permit Holders may use any communication device (e.g., any hardware or software related to a phone, system or other device, including an instant messaging system, email system or similar device) on the floor of the Exchange and in any trading crowd of the Exchange. Prior to using a communications device for business purposes on the floor of the Exchange, Trading Permit Holders must register the communications device by identifying (in a form and manner prescribed by the Exchange) the hardware (i.e., headset; cellular telephone; tablet; or other similar hardware). The Exchange reserves the right to designate certain portions of this rule (except for the registration requirement of paragraph (a) or paragraphs (f) and (g)) as not applicable to certain classes on a class by class basis. (b) The Exchange may deny, limit or revoke the use of any communication device whenever it determines that use of such communication device: (1) Interferes with the normal operation of the Exchange's own systems or facilities or with the Exchange's regulatory duties, (2) is inconsistent with the public interest, the protection of investors or just and equitable principles of trade, or (3) interferes with the obligations of a Trading Permit Holder to fulfill its duties under, or is used to facilitate any violation of, the Securities Exchange Act or rules thereunder, or Exchange rules. (c) Any communication device may be used on the floor of the Exchange and in any trading crowd of the Exchange to receive orders, provided that audit trail and record retention requirements of the Exchange are met; however, no person in a trading crowd or on the floor of the Exchange may use any communication device for the purpose of recording activities in the trading crowd or maintaining an open line of continuous communication whereby a non-associated person not located in the trading crowd may continuously monitor the activities in the trading crowd. This prohibition covers digital recorders, intercoms, walkie-talkies and any similar devices. (d) After providing notice to an affected Trading Permit Holder and complying with applicable laws, the Exchange may provide for the recording of any telephone line on the floor of the Exchange or may require Trading Permit Holders at any time to provide for the recording of a fixed phone line on the floor of the Exchange. Trading Permit Holders, and their clerks, using the telephones consent to the Exchange recording any telephone or line. (e) Trading Permit Holders may not use communication devices to disseminate quotes and/or last sale reports originating on the floor of the Exchange in any manner that would serve to provide a continuous or running state of the market for any particular series or class of options over any period of time; provided, however, that an associated person of a Trading Permit Holder on the floor of the Exchange may use a communication device to communicate quotes that have been disseminated pursuant to Rule 6.43 and/or last sale reports to other associated persons of the same Trading Permit Holder business unit. An associated person of a Trading Permit Holder may also use a communications device to communicate an occasional, specific quote that has been disseminated pursuant to Rule 6.43 or last sale report to a person who is not an associated person of the same Trading Permit Holder. (f) Use of any communications device for order routing or handling must comply with all applicable laws, rules, policies and procedures of the Securities and Exchange Commission and the Exchange including related to record retention and audit trail requirements. Orders must be systemized using Exchange systems or proprietary systems approved by the Exchange in accordance with Rule 6.24. (g) Trading Permit Holders must maintain records of the use of communication devices, including, but not limited to, logs of calls placed; emails; and chats, for a period of not less than three years, the first two years in an easily accessible place. The Exchange reserves the right to inspect such records pursuant to Rule 17.2. (h) The Exchange may designate, via circular, specific communication devices that will not be permitted on the floor of the Exchange or Exchange trading crowds. In addition, the Exchange may designate other operational requirements regarding the installation of any communication devices via circular. [(a) No Trading Permit Holder shall establish or maintain any telephone or other wire communications between his or its office and the Exchange without prior approval by the Exchange. The Exchange may direct discontinuance of any communication facility terminating on the floor of the Exchange. (b) Equity Option Telephone Policy. Persons in the equity option trading [[Page 48366]] crowds (including DPM crowds which trade equity options) may have access to outside telephone lines and may receive telephone orders directly at equity options posts from locations outside the Exchange, subject to certain requirements. The Exchange will review and may approve any applications to install or to use telephones in the equity option crowds. (1) Requirements and conditions that apply to the use of telephone services at the equity option posts shall include the following: (A) Only those quotations that have been publicly disseminated pursuant to Rule 6.43 may be provided over telephones at the post. (B) Trading Permit Holders may give their clerks their PIN access code. Although both Trading Permit Holders and clerks may use telephones, Trading Permit Holders will have priority. Each Trading Permit Holder will be responsible for all calls made using that Trading Permit Holder's PIN access code. (C) Clerks will not be permitted to establish a base of operation utilizing general use telephones at the equity option posts. This means, for example, that a clerk may not monopolize the use of a telephone receiver on a telephone that has multiple lines if all of those lines are not dedicated to the Trading Permit Holder for whom the clerk works. (D) The Exchange may provide for the taping of any telephone line into the equity option posts or may require Trading Permit Holders to provide for the tape recording of a dedicated line at the equity option posts at any time. Trading Permit Holders and their clerks using the telephones consent to the Exchange tape recording any telephone or line. (E) The telephones may be used for voice service only, unless they have been specifically approved for other uses. (F) The Exchange may prohibit the use of any telephone technology that interferes with the normal operation of the Exchange's own systems or facilities or that the Exchange determines interferes with its regulatory duties. (G) Orders transmitted by registered Exchange market-makers may be entered over the outside telephone lines directly to the equity option posts. All other orders may be entered over the outside telephone lines to the equity option posts only during outgoing telephone calls that are initiated at the equity option posts. (H) Only those individuals that are properly qualified in accordance with Chapter IX of the Rules of the Exchange, and all other applicable rules and regulations, may accept orders from public customers pursuant to this Rule. . . . Interpretations and Policies .01 A Trading Permit Holder or TPH organization which has been granted approval of any means of communication under this rule shall be responsible for assuring compliance with all Exchange rules and requirements in connection with any business conducted by means of such electronic or telephonic communication.] * * * * * 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to amend its rules regarding equipment and communication on the Exchange trading floor. More specifically, the Exchange is proposing to delete the current rule on the topic, Exchange Rule 6.23, and introduce more relevant rules governing the use of communication devices \5\ on the Exchange trading floor.\6\ Exchange and Trading Permit Holder (``TPH'') systems have become much more electronic since the adoption of CBOE Rule 6.23; however, the rule has not been updated to reflect the electronic environment. The Exchange believes it is in the interest of TPHs to allow electronic communications to and from the Exchange trading floor and that these amendments will eliminate confusion that may arise from outdated Exchange rules. As such, the Exchange believes that eliminating the current rule in its entirety and promulgating language that contemplates modern rules is appropriate.\7\ First, Rule 6.23 is currently applicable to ``telephone or other wire communications.'' \8\ Proposed Rule 6.23(a) expands the applicability of Rule 6.23 and provides that TPHs may use any communication device \9\ on the Exchange trading floor and in any Exchange trading crowd subject to the restrictions in proposed Rule 6.23. The Exchange is also proposing to apply certain restrictions on a class by class basis; however, the registration requirement of paragraph (a), and paragraphs (f) and (g) in their entirety, will always be applicable. The Exchange believes the discretion afforded in paragraph (a) is appropriate as different classes of options on the trading floor behave differently, and, as such, different means of communication might be more appropriate in one options class but not in another. The Exchange is also instituting a registration provision that will require TPHs, prior to using a communications device for business purposes on the floor of the Exchange, to register the communications device by identifying (in a form and manner prescribed by the Exchange) the hardware (i.e., headset; cellular telephone; tablet; or other similar hardware).\10\ --------------------------------------------------------------------------- \5\ As proposed, ``communication device'' will include ``e.g., any hardware or software related to a phone, system or other device, including an instant messaging system, email system or similar device[.]'' \6\ Although the Exchange seeks to replace Rule 6.23 in its entirety, portions of the current rule are included in proposed Rule 6.23. The relevant holdover language is identified where applicable. \7\ Many of the provisions of proposed Rule 6.23 are modeled after NYSE Amex LLC (``Amex'') Rule 902NY(i)--Telephones on the Trading Floor and NYSE Arca, Inc. (``Arca'') Rule 6.2(h)--Telephones on the Options Floor. \8\ See CBOE Rule 6.23(a). \9\ See supra note 1 [sic]. \10\ The registration requirement of proposed Rule 6.23(a) is similar to Arca Rule 6.2(h)(1). --------------------------------------------------------------------------- Next, proposed Rule 6.23(b) specifically states that the Exchange will retain the authority to deny, limit or revoke the use of any communication device.\11\ Under the proposed rule, the Exchange may take such actions whenever it determines that use of such communication device: (1) Interferes with the normal operation of the Exchange's own systems or facilities or with the Exchange's regulatory duties,\12\ (2) is inconsistent with the public interest, the protection of investors or just and equitable principles of trade, or (3) interferes with the obligations of a [[Page 48367]] TPH to fulfill its duties under, or is used to facilitate any violation of, the Securities Exchange Act of 1934 (``the Act'') or rules thereunder, or the Exchange rules. This authorization will allow the Exchange to regulate the equipment and communications on the Exchange trading floor and in the Exchange trading crowds to ensure they are not disruptive to the operation of the Exchange or in violation of the Act. The Exchange believes this will allow the Exchange to better protect investors and the integrity of the market. The Exchange notes, however, that current Rule 6.23(a) requires TPHs to receive prior approval from the Exchange before establishing or maintaining a telephone or other wire communications.\13\ In addition, the Exchange recognizes that Amex and Arca rules require the registration of all new telephones \14\ and approval prior to the use of a communication device other than a telephone. The Exchange believes the combination of the record retention requirements of proposed Rule 6.23(g) and the power to revoke the use of a communication device pursuant to proposed Rule 6.23(b) negates the necessity for prior approval and registration. If an issue with a particular device is discovered, the Exchange will work with TPHs to ensure the devices are no longer utilized. --------------------------------------------------------------------------- \11\ Proposed Rule 6.23(c) is similar to Amex Rule 902NY(i)(6) and Arca Rule 6.2(h)(6). \12\ This language remains from the current CBOE Rule 6.23. See CBOE Rule 6.23(b)(1)(F). \13\ See CBOE Rule 6.23(a). \14\ See Amex Rule 902NY(i)(1) and Arca Rule 6.2(h)(1). --------------------------------------------------------------------------- Next, proposed Rule 6.23(c) codifies the current policy that allows any communication device to be utilized to receive orders in and out of the trading crowd, provided that audit trail and record retention requirements of the Exchange are met.\15\ Formerly, CBOE Regulatory Circular RG10-20 prohibited TPH's from receiving orders in the trading crowd via instant messaging or email; \16\ however, TPHs were not restricted from receiving orders via instant messaging and email while not in a trading crowd. The Exchange believes the difference caused inequity between TPHs because TPHs near the edge of the trading crowd can more quickly correspond with their clerks and trading desks that are outside of the trading crowd. The Exchange believes that removing the restriction on receiving orders via IM and email levels the playing field in the trading crowds and reflects the electronic nature of the current marketplace. In addition, proposed Rule 6.23(c) specifically prohibits the use of any communication device to record activities in the trading crowd or to maintain an open line of continuous communication that would allow a non-associated person off of the Exchange floor to continuously monitor the activities in the trading crowd. As proposed, this prohibition covers digital recorders, intercoms, walkie-talkies and any similar devices. The addition of this text will preserve the integrity of the Exchange trading floor while monitoring TPHs to ensure they have the required authorization to operate on the Exchange trading floor should that be their intent.\17\ --------------------------------------------------------------------------- \15\ See CBOE Regulatory Circular RG14-162 (November 19, 2014). \16\ See CBOE Regulatory Circular RG10-20 (January 29, 2010). \17\ Proposed Rule 6.23(c) is similar to Amex Rule 902NY(i)(2) and Arca Rule 6.2(h)(2). --------------------------------------------------------------------------- Further, proposed Rule 6.23(d) specifies that, after providing notice to an affected Trading Permit Holder and complying with the applicable laws, the Exchange may provide for the recording of any telephone line on the floor of the Exchange or require TPHs to provide for the recording of a fixed phone line on the floor of the Exchange, and that TPHs utilizing telephones consent to the Exchange recording any telephone or line.\18\ This added provision will not require but allow the Exchange to record any communications via telephone connections to the trading floor if a situation were to arise where this may be necessary. In addition, this proposed provision would allow the Exchange to provide necessary equipment for the recording of communications on the Exchange trading floor.\19\ --------------------------------------------------------------------------- \18\ This language remains from the current CBOE Rule 6.23. See CBOE Rule 6.23 (b)(1)(D). \19\ Proposed Rule 6.23(d) is similar to Amex Rule 902NY(i)(3)(C) and Arca Rule 6.2(h)(3)(C). --------------------------------------------------------------------------- Next, proposed Rule 6.23(e) prohibits the use of communication devices to disseminate quotes and/or last sale reports originating on the Exchange trading floor in any manner that would serve to provide a continuous or running state of the market; however, the proposed rule specifically states that, ``an associated person of a TPH may use a communications device to communicate quotes that have been disseminated pursuant to Rule 6.43 and/or last sale reports to other associated persons of the same TPH business unit.'' Further, as proposed, an associated person of a TPH may use a communications device to communicate an ``occasional, specific, quote that has been disseminated pursuant to Rule 6.43 \20\ or last sale report or quote to a person who is not an associated person of the same TPH.'' The Exchange believes this proposed addition is necessary to allow the use of instant messaging or email as the industry has grown to become more and more reliant upon technology. The Exchange, however, also thinks it is important that any communications made within TPH organizations should be within the same business unit so that TPHs are not abusing the privilege and allowing for communication of the activity on the Exchange trading floor to be disseminated to unrelated areas of the TPH. --------------------------------------------------------------------------- \20\ Proposed Rule 6.23(e) referring to quotes disseminated pursuant to Rule 6.43 is similar to Amex Rule 902NY(i)(3)(A) and Arca Rule 6.2(h)(3)(A). See CBOE Rule 6.43--Manner of Bidding and Offering. --------------------------------------------------------------------------- Next, proposed Rule 6.23(f) requires that any use of any communications device on the trading floor shall comply with applicable laws, rules, policies, and procedures of the Commission and Exchange including all record retention and audit trail requirements. Proposed Rule 6.23(f) would also require that orders are systemized using Exchange systems or proprietary systems approved by the Exchange in accordance with Exchange Rule 6.24.\21\ This proposed addition would ensure that any communications device on the Exchange's trading floor or in the Exchange trading crowds will follow any and all other applicable statues including the Act along with ensure that orders are properly systematized. In addition, proposed Rule 6.23(f) will allow misconduct to be investigated if regulatory issues arise after the adoption of a new communication device. --------------------------------------------------------------------------- \21\ Orders must be systematized in accordance with Rule 6.24 (Required Order Information). Generally, subject to certain exceptions, each order, cancellation of, or change to an order transmitted to the Exchange must be ``systematized,'' in a format approved by the Exchange, either before it is sent to the Exchange or upon receipt on the floor of the Exchange. An order is systematized if: (i) The order is sent electronically to the Exchange; or (ii) the order that is sent to the Exchange non- electronically (e.g., telephone orders) is input electronically into the Exchange's systems contemporaneously upon receipt on the Exchange, and prior to representation of the order. --------------------------------------------------------------------------- Next, proposed Rule 6.23(g) requires TPHs to maintain records related to the ``use of communication devices, including, but not limited to, logs of calls placed; emails; and chats, for a period of not less than three years, the first two years in an easily accessible place.'' Although similar to Amex and Arca Rules on the subject,\22\ the Exchange added language referring to emails and chats to reflect the current electronic environment. In addition, proposed rule 6.23(g) states that ``[t]he Exchange reserves the right to inspect such records pursuant to Rule 17.2.'' \23\ [[Page 48368]] As previously noted, the proposed Rule will allow misconduct to be investigated if regulatory issues arise after the adoption of a new communication device. This requirement is consistent with the retention period of Securities and Exchange Commission Rule 17a-4.\24\ --------------------------------------------------------------------------- \22\ Proposed Rule 6.23(g) is similar to Amex Rule 902NY(i)(5) and Arca NYSE Arca Rule 6.2(h)(5). \23\ CBOE Rule 17.2 (b)--Requirements to Furnish Information. Rule 17.2(b) requires TPHs and persons associated with TPHs to, among other things, ``furnish documentary materials and other information requested by the Exchange in connection with (i) an investigation initiated pursuant to paragraph (a) of this Rule[.]'' \24\ 17 CFR 240.17a-4. --------------------------------------------------------------------------- Finally, proposed Rule 6.23(h) authorizes the Exchange to designate more specific communication devices that will not be permitted on the Exchange trading floor or other operational requirements via circular. Given the propensity for technology to continue to evolve, the Exchange believes this proposed text will allow the Exchange to change the exact requirements from time to time as needed while continuing to provide TPHs specifications on the allowed technology and communication mechanism. The Exchange will announce the implementation date of the proposed rule change in a Regulatory Circular to be published no later than 30 days following the effective date of this filing. The implementation date will be no later than 60 days following the effective date of the proposed changes. 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.\25\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \26\ 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) \27\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \25\ 15 U.S.C. 78f(b). \26\ 15 U.S.C. 78f(b)(5). \27\ Id. --------------------------------------------------------------------------- In particular, the Exchange does not believe the proposed changes are unfairly discriminatory as they are applied to all TPHs trading on the Exchange trading floor, a similarly situated group, equally. In addition, the Exchange believes the proposed changes designed to prevent fraudulent and manipulative acts and practices because they are more appropriately designed to monitor the equipment and communications on a modern trading floor. Without the proposed changes, the current Exchange rules do not adequately address the relevant communication tools. Finally, the Exchange believes that the proposed rules intend to foster cooperation and coordination by introducing new means of communication to the Exchange trading floor. Finally, the Exchange believes that the proposed changes protect investors and the public interest by ensuring that all equipment and communication on the Exchange trading floor will adhere to all other applicable statutes and the Act. B. Self-Regulatory Organization's Statement on Burden on Competition CBOE 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. More specifically, the Exchange does not believe that the proposed rule changes will impose any intramarket competition because it will be applicable to all TPHs trading on the Exchange trading floor. In addition, the Exchange does not believe the proposed changes will impose any intermarket burden because the Exchange trading floor will operate in a similar manner only with more relevant equipment and communication requirements. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the 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, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \28\ and Rule 19b-4(f)(6) thereunder.\29\ --------------------------------------------------------------------------- \28\ 15 U.S.C. 78s(b)(3)(A). \29\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b- 4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. --------------------------------------------------------------------------- The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiver of the operative delay is consistent with the protection of investors and the public interest. Waiver of the operative delay will provide TPHs guidance regarding the use of equipment and communications on the Exchange floor that is more relevant to the current electronic marketplace than that provided by the current rule and thereby prevent confusion by TPHs and investors. Moreover, the proposed rule requires TPHs to register a communication device before using it for business purposes on the Exchange floor, and prohibits the Exchange from designating the registration requirement as not applicable to any TPHs. The Commission believes that the proposed rule's registration requirement will enable the Exchange to track the use of communication devices on the Exchange floor and to more effectively identify any communication device records to inspect pursuant to CBOE Rule 17.2. The Commission notes that the proposal is patterned after several provisions of the proposed rule after Amex Rule 902NY(i)--Telephones on the Trading Floor and Arca Rule 6.2(h)-- Telephones on the Options Floor, and that the substance of this proposal was published in a prior proposed rule change which was published for the entire 21 day comment period.\30\ Therefore, the Commission designates the proposed rule change to be operative upon filing.\31\ --------------------------------------------------------------------------- \30\ See Securities Exchange Act Release No. 74438 (March 4, 2015), 80 FR 12671 (March 10, 2015). The Commission received no comments on the prior proposal. The Exchange withdrew that prior proposal on May 26, 2015. See Securities Exchange Act Release No. 75073 (May 29, 2015), 80 FR 31943 (June 4, 2015). \31\ For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if [[Page 48369]] 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. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) \32\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \32\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- 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-CBOE-2015-061 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2015-061. 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 such filing will also 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-CBOE-2015-061 and should be submitted on or before September 2, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\33\ --------------------------------------------------------------------------- \33\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-19756 Filed 8-11-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices 48365
For the Commission, pursuant to delegated Rule 6.23. [Trading Permit Holder recording of a fixed phone line on the
authority.124 Wires From Floor] Equipment and floor of the Exchange. Trading Permit
Robert W. Errett, Communications on the Trading Holders, and their clerks, using the
Deputy Secretary. Floor telephones consent to the Exchange
[FR Doc. 2015–19758 Filed 8–11–15; 8:45 am] (a) Subject to the requirements of this recording any telephone or line.
(e) Trading Permit Holders may not
BILLING CODE 8011–01–P Rule Trading Permit Holders may use
use communication devices to
any communication device (e.g., any
disseminate quotes and/or last sale
hardware or software related to a phone,
reports originating on the floor of the
SECURITIES AND EXCHANGE system or other device, including an
Exchange in any manner that would
COMMISSION instant messaging system, email system
serve to provide a continuous or
or similar device) on the floor of the
running state of the market for any
[Release No. 34–75623; File No. SR–CBOE– Exchange and in any trading crowd of
particular series or class of options over
2015–061] the Exchange. Prior to using a any period of time; provided, however,
communications device for business that an associated person of a Trading
Self-Regulatory Organizations; purposes on the floor of the Exchange, Permit Holder on the floor of the
Chicago Board Options Exchange, Trading Permit Holders must register Exchange may use a communication
Incorporated; Notice of Filing and the communications device by device to communicate quotes that have
Immediate Effectiveness of a Proposed identifying (in a form and manner been disseminated pursuant to Rule
Rule Change Relating To Amend Its prescribed by the Exchange) the 6.43 and/or last sale reports to other
Rules Related to Equipment and hardware (i.e., headset; cellular associated persons of the same Trading
telephone; tablet; or other similar Permit Holder business unit. An
Communication on the Exchange’s
hardware). The Exchange reserves the associated person of a Trading Permit
Trading Floor
right to designate certain portions of this Holder may also use a communications
August 6, 2015. rule (except for the registration device to communicate an occasional,
requirement of paragraph (a) or specific quote that has been
Pursuant to Section 19(b)(1) of the paragraphs (f) and (g)) as not applicable
Securities Exchange Act of 1934 (the disseminated pursuant to Rule 6.43 or
to certain classes on a class by class last sale report to a person who is not
‘‘Act’’),1 and Rule 19b–4 thereunder,2 basis.
notice is hereby given that on July 23, an associated person of the same
(b) The Exchange may deny, limit or Trading Permit Holder.
2015, Chicago Board Options Exchange, revoke the use of any communication (f) Use of any communications device
Incorporated (the ‘‘Exchange’’ or device whenever it determines that use for order routing or handling must
‘‘CBOE’’) filed with the Securities and of such communication device: (1) comply with all applicable laws, rules,
Exchange Commission (the Interferes with the normal operation of policies and procedures of the Securities
‘‘Commission’’) the proposed rule the Exchange’s own systems or facilities and Exchange Commission and the
change as described in Items I and II or with the Exchange’s regulatory Exchange including related to record
below, which Items have been prepared duties, (2) is inconsistent with the public retention and audit trail requirements.
by the Exchange. The Exchange filed the interest, the protection of investors or Orders must be systemized using
proposal as a ‘‘non-controversial’’ just and equitable principles of trade, or Exchange systems or proprietary
proposed rule change pursuant to (3) interferes with the obligations of a systems approved by the Exchange in
Section 19(b)(3)(A)(iii) of the Act 3 and Trading Permit Holder to fulfill its accordance with Rule 6.24.
Rule 19b–4(f)(6) thereunder.4 The duties under, or is used to facilitate any (g) Trading Permit Holders must
Commission is publishing this notice to violation of, the Securities Exchange Act maintain records of the use of
solicit comments on the proposed rule or rules thereunder, or Exchange rules. communication devices, including, but
change from interested persons. (c) Any communication device may be not limited to, logs of calls placed;
used on the floor of the Exchange and emails; and chats, for a period of not
I. Self-Regulatory Organization’s in any trading crowd of the Exchange to less than three years, the first two years
Statement of the Terms of Substance of receive orders, provided that audit trail in an easily accessible place. The
the Proposed Rule Change and record retention requirements of the Exchange reserves the right to inspect
Exchange are met; however, no person such records pursuant to Rule 17.2.
The Exchange seeks to amend its rules in a trading crowd or on the floor of the (h) The Exchange may designate, via
related to equipment and Exchange may use any communication circular, specific communication
communication on the Exchange’s device for the purpose of recording devices that will not be permitted on the
trading floor. The text of the proposed activities in the trading crowd or floor of the Exchange or Exchange
rule change is provided below. maintaining an open line of continuous trading crowds. In addition, the
communication whereby a non- Exchange may designate other
(additions are italicized; deletions are
associated person not located in the operational requirements regarding the
[bracketed])
trading crowd may continuously installation of any communication
* * * * * monitor the activities in the trading devices via circular.
Chicago Board Options Exchange, crowd. This prohibition covers digital [(a) No Trading Permit Holder shall
Incorporated Rules recorders, intercoms, walkie-talkies and establish or maintain any telephone or
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any similar devices. other wire communications between his
* * * * * (d) After providing notice to an or its office and the Exchange without
affected Trading Permit Holder and prior approval by the Exchange. The
124 17CFR 200.30–3(a)(12). complying with applicable laws, the Exchange may direct discontinuance of
1 15 U.S.C. 78s(b)(1). Exchange may provide for the recording any communication facility terminating
2 17 CFR 240.19b–4. of any telephone line on the floor of the on the floor of the Exchange.
3 15 U.S.C. 78s(b)(3)(A)(iii). Exchange or may require Trading Permit (b) Equity Option Telephone Policy.
4 17 CFR 240.19b–4(f)(6). Holders at any time to provide for the Persons in the equity option trading
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![48366 Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices
crowds (including DPM crowds which and all other applicable rules and environment. The Exchange believes it
trade equity options) may have access to regulations, may accept orders from is in the interest of TPHs to allow
outside telephone lines and may receive public customers pursuant to this Rule. electronic communications to and from
telephone orders directly at equity the Exchange trading floor and that
. . . Interpretations and Policies
options posts from locations outside the these amendments will eliminate
Exchange, subject to certain .01 A Trading Permit Holder or TPH confusion that may arise from outdated
requirements. The Exchange will review organization which has been granted Exchange rules. As such, the Exchange
and may approve any applications to approval of any means of believes that eliminating the current
install or to use telephones in the equity communication under this rule shall be rule in its entirety and promulgating
option crowds. responsible for assuring compliance language that contemplates modern
(1) Requirements and conditions that with all Exchange rules and rules is appropriate.7 First, Rule 6.23 is
apply to the use of telephone services at requirements in connection with any currently applicable to ‘‘telephone or
the equity option posts shall include the business conducted by means of such other wire communications.’’ 8 Proposed
following: electronic or telephonic Rule 6.23(a) expands the applicability of
(A) Only those quotations that have communication.] Rule 6.23 and provides that TPHs may
been publicly disseminated pursuant to * * * * * use any communication device 9 on the
Rule 6.43 may be provided over The text of the proposed rule change Exchange trading floor and in any
telephones at the post. is also available on the Exchange’s Web Exchange trading crowd subject to the
(B) Trading Permit Holders may give site (http://www.cboe.com/AboutCBOE/ restrictions in proposed Rule 6.23. The
their clerks their PIN access code. CBOELegalRegulatoryHome.aspx), at Exchange is also proposing to apply
Although both Trading Permit Holders the Exchange’s Office of the Secretary, certain restrictions on a class by class
and clerks may use telephones, Trading and at the Commission’s Public basis; however, the registration
Permit Holders will have priority. Each Reference Room. requirement of paragraph (a), and
Trading Permit Holder will be paragraphs (f) and (g) in their entirety,
II. Self-Regulatory Organization’s
responsible for all calls made using that will always be applicable. The Exchange
Statement of the Purpose of, and
Trading Permit Holder’s PIN access believes the discretion afforded in
Statutory Basis for, the Proposed Rule
code. paragraph (a) is appropriate as different
(C) Clerks will not be permitted to Change
classes of options on the trading floor
establish a base of operation utilizing In its filing with the Commission, the behave differently, and, as such,
general use telephones at the equity Exchange included statements different means of communication
option posts. This means, for example, concerning the purpose of and basis for might be more appropriate in one
that a clerk may not monopolize the use the proposed rule change and discussed options class but not in another. The
of a telephone receiver on a telephone any comments it received on the Exchange is also instituting a
that has multiple lines if all of those proposed rule change. The text of these registration provision that will require
lines are not dedicated to the Trading statements may be examined at the TPHs, prior to using a communications
Permit Holder for whom the clerk places specified in Item IV below. The device for business purposes on the
works. Exchange has prepared summaries, set floor of the Exchange, to register the
(D) The Exchange may provide for the forth in sections A, B, and C below, of communications device by identifying
taping of any telephone line into the the most significant aspects of such (in a form and manner prescribed by the
equity option posts or may require statements. Exchange) the hardware (i.e., headset;
Trading Permit Holders to provide for A. Self-Regulatory Organization’s cellular telephone; tablet; or other
the tape recording of a dedicated line at Statement of the Purpose of, and the similar hardware).10
the equity option posts at any time. Statutory Basis for, the Proposed Rule Next, proposed Rule 6.23(b)
Trading Permit Holders and their clerks Change specifically states that the Exchange will
using the telephones consent to the retain the authority to deny, limit or
Exchange tape recording any telephone 1. Purpose revoke the use of any communication
or line. The Exchange is proposing to amend device.11 Under the proposed rule, the
(E) The telephones may be used for its rules regarding equipment and Exchange may take such actions
voice service only, unless they have communication on the Exchange trading whenever it determines that use of such
been specifically approved for other floor. More specifically, the Exchange is communication device: (1) Interferes
uses. proposing to delete the current rule on with the normal operation of the
(F) The Exchange may prohibit the the topic, Exchange Rule 6.23, and Exchange’s own systems or facilities or
use of any telephone technology that introduce more relevant rules governing with the Exchange’s regulatory duties,12
interferes with the normal operation of the use of communication devices 5 on (2) is inconsistent with the public
the Exchange’s own systems or facilities the Exchange trading floor.6 Exchange interest, the protection of investors or
or that the Exchange determines and Trading Permit Holder (‘‘TPH’’) just and equitable principles of trade, or
interferes with its regulatory duties. systems have become much more (3) interferes with the obligations of a
(G) Orders transmitted by registered
electronic since the adoption of CBOE
Exchange market-makers may be 7 Many of the provisions of proposed Rule 6.23
Rule 6.23; however, the rule has not are modeled after NYSE Amex LLC (‘‘Amex’’) Rule
entered over the outside telephone lines
been updated to reflect the electronic 902NY(i)—Telephones on the Trading Floor and
directly to the equity option posts. All NYSE Arca, Inc. (‘‘Arca’’) Rule 6.2(h)—Telephones
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other orders may be entered over the 5 As proposed, ‘‘communication device’’ will on the Options Floor.
outside telephone lines to the equity include ‘‘e.g., any hardware or software related to
8 See CBOE Rule 6.23(a).
option posts only during outgoing a phone, system or other device, including an 9 See supra note 1 [sic].
instant messaging system, email system or similar 10 The registration requirement of proposed Rule
telephone calls that are initiated at the
device[.]’’ 6.23(a) is similar to Arca Rule 6.2(h)(1).
equity option posts. 6 Although the Exchange seeks to replace Rule 11 Proposed Rule 6.23(c) is similar to Amex Rule
(H) Only those individuals that are 6.23 in its entirety, portions of the current rule are 902NY(i)(6) and Arca Rule 6.2(h)(6).
properly qualified in accordance with included in proposed Rule 6.23. The relevant 12 This language remains from the current CBOE
Chapter IX of the Rules of the Exchange, holdover language is identified where applicable. Rule 6.23. See CBOE Rule 6.23(b)(1)(F).
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![Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices 48367
TPH to fulfill its duties under, or is used device to record activities in the trading believes this proposed addition is
to facilitate any violation of, the crowd or to maintain an open line of necessary to allow the use of instant
Securities Exchange Act of 1934 (‘‘the continuous communication that would messaging or email as the industry has
Act’’) or rules thereunder, or the allow a non-associated person off of the grown to become more and more reliant
Exchange rules. This authorization will Exchange floor to continuously monitor upon technology. The Exchange,
allow the Exchange to regulate the the activities in the trading crowd. As however, also thinks it is important that
equipment and communications on the proposed, this prohibition covers digital any communications made within TPH
Exchange trading floor and in the recorders, intercoms, walkie-talkies and organizations should be within the same
Exchange trading crowds to ensure they any similar devices. The addition of this business unit so that TPHs are not
are not disruptive to the operation of the text will preserve the integrity of the abusing the privilege and allowing for
Exchange or in violation of the Act. The Exchange trading floor while monitoring communication of the activity on the
Exchange believes this will allow the TPHs to ensure they have the required Exchange trading floor to be
Exchange to better protect investors and authorization to operate on the disseminated to unrelated areas of the
the integrity of the market. The Exchange trading floor should that be TPH.
Exchange notes, however, that current their intent.17 Next, proposed Rule 6.23(f) requires
Rule 6.23(a) requires TPHs to receive Further, proposed Rule 6.23(d) that any use of any communications
prior approval from the Exchange before specifies that, after providing notice to device on the trading floor shall comply
establishing or maintaining a telephone an affected Trading Permit Holder and with applicable laws, rules, policies,
or other wire communications.13 In complying with the applicable laws, the and procedures of the Commission and
addition, the Exchange recognizes that Exchange may provide for the recording Exchange including all record retention
Amex and Arca rules require the of any telephone line on the floor of the and audit trail requirements. Proposed
registration of all new telephones 14 and Exchange or require TPHs to provide for Rule 6.23(f) would also require that
approval prior to the use of a the recording of a fixed phone line on orders are systemized using Exchange
communication device other than a the floor of the Exchange, and that TPHs systems or proprietary systems
telephone. The Exchange believes the utilizing telephones consent to the approved by the Exchange in
combination of the record retention Exchange recording any telephone or accordance with Exchange Rule 6.24.21
requirements of proposed Rule 6.23(g) line.18 This added provision will not This proposed addition would ensure
and the power to revoke the use of a require but allow the Exchange to record that any communications device on the
communication device pursuant to any communications via telephone Exchange’s trading floor or in the
proposed Rule 6.23(b) negates the connections to the trading floor if a Exchange trading crowds will follow
necessity for prior approval and situation were to arise where this may any and all other applicable statues
registration. If an issue with a particular be necessary. In addition, this proposed including the Act along with ensure that
device is discovered, the Exchange will provision would allow the Exchange to orders are properly systematized. In
work with TPHs to ensure the devices provide necessary equipment for the addition, proposed Rule 6.23(f) will
are no longer utilized. recording of communications on the allow misconduct to be investigated if
Next, proposed Rule 6.23(c) codifies Exchange trading floor.19 regulatory issues arise after the adoption
the current policy that allows any Next, proposed Rule 6.23(e) prohibits of a new communication device.
communication device to be utilized to the use of communication devices to Next, proposed Rule 6.23(g) requires
receive orders in and out of the trading disseminate quotes and/or last sale TPHs to maintain records related to the
crowd, provided that audit trail and ‘‘use of communication devices,
reports originating on the Exchange
record retention requirements of the including, but not limited to, logs of
trading floor in any manner that would
Exchange are met.15 Formerly, CBOE calls placed; emails; and chats, for a
serve to provide a continuous or
Regulatory Circular RG10–20 prohibited period of not less than three years, the
running state of the market; however,
TPH’s from receiving orders in the first two years in an easily accessible
the proposed rule specifically states
trading crowd via instant messaging or place.’’ Although similar to Amex and
that, ‘‘an associated person of a TPH
email; 16 however, TPHs were not Arca Rules on the subject,22 the
may use a communications device to
restricted from receiving orders via Exchange added language referring to
communicate quotes that have been
instant messaging and email while not emails and chats to reflect the current
disseminated pursuant to Rule 6.43 and/
in a trading crowd. The Exchange electronic environment. In addition,
believes the difference caused inequity or last sale reports to other associated
persons of the same TPH business unit.’’ proposed rule 6.23(g) states that ‘‘[t]he
between TPHs because TPHs near the Exchange reserves the right to inspect
edge of the trading crowd can more Further, as proposed, an associated
person of a TPH may use a such records pursuant to Rule 17.2.’’ 23
quickly correspond with their clerks
and trading desks that are outside of the communications device to communicate 21 Orders must be systematized in accordance
trading crowd. The Exchange believes an ‘‘occasional, specific, quote that has with Rule 6.24 (Required Order Information).
that removing the restriction on been disseminated pursuant to Rule Generally, subject to certain exceptions, each order,
receiving orders via IM and email levels 6.43 20 or last sale report or quote to a cancellation of, or change to an order transmitted
person who is not an associated person to the Exchange must be ‘‘systematized,’’ in a
the playing field in the trading crowds format approved by the Exchange, either before it
and reflects the electronic nature of the of the same TPH.’’ The Exchange is sent to the Exchange or upon receipt on the floor
current marketplace. In addition, 17 Proposed Rule 6.23(c) is similar to Amex Rule
of the Exchange. An order is systematized if: (i) The
proposed Rule 6.23(c) specifically order is sent electronically to the Exchange; or (ii)
902NY(i)(2) and Arca Rule 6.2(h)(2). the order that is sent to the Exchange non-
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prohibits the use of any communication 18 This language remains from the current CBOE electronically (e.g., telephone orders) is input
Rule 6.23. See CBOE Rule 6.23 (b)(1)(D). electronically into the Exchange’s systems
13 See CBOE Rule 6.23(a). 19 Proposed Rule 6.23(d) is similar to Amex Rule contemporaneously upon receipt on the Exchange,
14 See Amex Rule 902NY(i)(1) and Arca Rule 902NY(i)(3)(C) and Arca Rule 6.2(h)(3)(C). and prior to representation of the order.
6.2(h)(1). 20 Proposed Rule 6.23(e) referring to quotes 22 Proposed Rule 6.23(g) is similar to Amex Rule
15 See CBOE Regulatory Circular RG14–162 disseminated pursuant to Rule 6.43 is similar to 902NY(i)(5) and Arca NYSE Arca Rule 6.2(h)(5).
(November 19, 2014). Amex Rule 902NY(i)(3)(A) and Arca Rule 23 CBOE Rule 17.2 (b)—Requirements to Furnish
16 See CBOE Regulatory Circular RG10–20 6.2(h)(3)(A). See CBOE Rule 6.43—Manner of Information. Rule 17.2(b) requires TPHs and
(January 29, 2010). Bidding and Offering. Continued
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![48368 Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices
As previously noted, the proposed Rule to permit unfair discrimination between proposed rule change has become
will allow misconduct to be investigated customers, issuers, brokers, or dealers. effective pursuant to Section 19(b)(3)(A)
if regulatory issues arise after the In particular, the Exchange does not of the Act 28 and Rule 19b–4(f)(6)
adoption of a new communication believe the proposed changes are thereunder.29
device. This requirement is consistent unfairly discriminatory as they are The Exchange has asked the
with the retention period of Securities applied to all TPHs trading on the Commission to waive the 30-day
and Exchange Commission Rule 17a– Exchange trading floor, a similarly operative delay so that the proposal may
4.24 situated group, equally. In addition, the become operative immediately upon
Finally, proposed Rule 6.23(h) Exchange believes the proposed changes filing. The Commission believes that
authorizes the Exchange to designate designed to prevent fraudulent and waiver of the operative delay is
more specific communication devices manipulative acts and practices because consistent with the protection of
that will not be permitted on the they are more appropriately designed to investors and the public interest. Waiver
Exchange trading floor or other monitor the equipment and of the operative delay will provide TPHs
operational requirements via circular. communications on a modern trading guidance regarding the use of
Given the propensity for technology to floor. Without the proposed changes, equipment and communications on the
continue to evolve, the Exchange the current Exchange rules do not Exchange floor that is more relevant to
believes this proposed text will allow adequately address the relevant the current electronic marketplace than
the Exchange to change the exact communication tools. Finally, the that provided by the current rule and
requirements from time to time as Exchange believes that the proposed thereby prevent confusion by TPHs and
needed while continuing to provide rules intend to foster cooperation and investors. Moreover, the proposed rule
TPHs specifications on the allowed coordination by introducing new means requires TPHs to register a
technology and communication of communication to the Exchange communication device before using it
mechanism. trading floor. Finally, the Exchange for business purposes on the Exchange
The Exchange will announce the believes that the proposed changes floor, and prohibits the Exchange from
implementation date of the proposed protect investors and the public interest designating the registration requirement
rule change in a Regulatory Circular to by ensuring that all equipment and as not applicable to any TPHs. The
be published no later than 30 days communication on the Exchange trading Commission believes that the proposed
following the effective date of this filing. floor will adhere to all other applicable rule’s registration requirement will
The implementation date will be no statutes and the Act. enable the Exchange to track the use of
later than 60 days following the communication devices on the
effective date of the proposed changes. B. Self-Regulatory Organization’s
Exchange floor and to more effectively
Statement on Burden on Competition
2. Statutory Basis identify any communication device
CBOE does not believe that the records to inspect pursuant to CBOE
The Exchange believes the proposed proposed rule change will impose any Rule 17.2. The Commission notes that
rule change is consistent with the burden on competition that is not the proposal is patterned after several
Securities Exchange Act of 1934 (the necessary or appropriate in furtherance provisions of the proposed rule after
‘‘Act’’) and the rules and regulations of the purposes of the Act. More Amex Rule 902NY(i)—Telephones on
thereunder applicable to the Exchange specifically, the Exchange does not the Trading Floor and Arca Rule
and, in particular, the requirements of believe that the proposed rule changes 6.2(h)—Telephones on the Options
Section 6(b) of the Act.25 Specifically, will impose any intramarket Floor, and that the substance of this
the Exchange believes the proposed rule competition because it will be proposal was published in a prior
change is consistent with the Section applicable to all TPHs trading on the proposed rule change which was
6(b)(5) 26 requirements that the rules of Exchange trading floor. In addition, the published for the entire 21 day
an exchange be designed to prevent Exchange does not believe the proposed comment period.30 Therefore, the
fraudulent and manipulative acts and changes will impose any intermarket Commission designates the proposed
practices, to promote just and equitable burden because the Exchange trading rule change to be operative upon
principles of trade, to foster cooperation floor will operate in a similar manner filing.31
and coordination with persons engaged only with more relevant equipment and At any time within 60 days of the
in regulating, clearing, settling, communication requirements. filing of such proposed rule change, the
processing information with respect to, Commission summarily may
and facilitating transactions in C. Self-Regulatory Organization’s
Statement on Comments on the temporarily suspend such rule change if
securities, to remove impediments to
and perfect the mechanism of a free and Proposed Rule Change Received From 28 15 U.S.C. 78s(b)(3)(A).
open market and a national market Members, Participants, or Others 29 17 CFR 240.19b–4(f)(6). As required under Rule
system, and, in general, to protect The Exchange neither solicited nor 19b–4(f)(6)(iii), the Exchange provided the
investors and the public interest. received comments on the proposed Commission with written notice of its intent to file
the proposed rule change, along with a brief
Additionally, the Exchange believes the rule change. description and the text of the proposed rule
proposed rule change is consistent with III. Date of Effectiveness of the change, at least five business days prior to the date
the Section 6(b)(5) 27 requirement that Proposed Rule Change and Timing for
of filing of the proposed rule change, or such
the rules of an exchange not be designed shorter time as designated by the Commission.
Commission Action 30 See Securities Exchange Act Release No. 74438
(March 4, 2015), 80 FR 12671 (March 10, 2015). The
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persons associated with TPHs to, among other Because the proposed rule change
Commission received no comments on the prior
things, ‘‘furnish documentary materials and other does not (i) significantly affect the proposal. The Exchange withdrew that prior
information requested by the Exchange in protection of investors or the public proposal on May 26, 2015. See Securities Exchange
connection with (i) an investigation initiated
pursuant to paragraph (a) of this Rule[.]’’
interest; (ii) impose any significant Act Release No. 75073 (May 29, 2015), 80 FR 31943
burden on competition; and (iii) become (June 4, 2015).
24 17 CFR 240.17a–4.
31 For purposes only of waiving the 30-day
25 15 U.S.C. 78f(b). operative for 30 days from the date on operative delay, the Commission has considered the
26 15 U.S.C. 78f(b)(5). which it was filed, or such shorter time proposed rule’s impact on efficiency, competition,
27 Id. as the Commission may designate, the and capital formation. See 15 U.S.C. 78c(f).
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![Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices 48369
it appears to the Commission that such submissions. You should submit only and C below, of the most significant
action is necessary or appropriate in the information that you wish to make aspects of such statements.
public interest, for the protection of available publicly. All submissions
A. Self-Regulatory Organization’s
investors, or otherwise in furtherance of should refer to File Number SR–CBOE–
Statement of the Purpose of, and
the purposes of the Act. If the 2015–061 and should be submitted on
Statutory Basis for, the Proposed Rule
Commission takes such action, the or before September 2, 2015.
Commission shall institute proceedings Change
For the Commission, by the Division of
under Section 19(b)(2)(B) 32 of the Act to Trading and Markets, pursuant to delegated 1. Purpose
determine whether the proposed rule authority.33 ICE Clear Europe proposes to amend
change should be approved or Robert W. Errett, its CDS End-of-Day Price Discovery
disapproved. Deputy Secretary. Policy (the ‘‘EOD Price Discovery
IV. Solicitation of Comments [FR Doc. 2015–19756 Filed 8–11–15; 8:45 am] Policy’’) to make certain enhancements
Interested persons are invited to BILLING CODE 8011–01–P to the end-of-day submission and firm
submit written data, views, and trade process for CDS contracts. ICE
arguments concerning the foregoing, Clear Europe also proposes to adopt a
including whether the proposed rule SECURITIES AND EXCHANGE new Price Submission Disciplinary
change is consistent with the Act. COMMISSION Framework (the ‘‘Disciplinary
Comments may be submitted by any of Framework’’) that addresses missed
[Release No. 34–75624; File No. SR–ICEEU– price submissions by Clearing Members
the following methods: 2015–013] for CDS contracts. ICE Clear Europe
Electronic Comments does not otherwise propose to change its
Self-Regulatory Organizations; ICE
• Use the Commission’s Internet Clear Europe Limited; Notice of Filing
Clearing Rules or Procedures in
comment form (http://www.sec.gov/ connection with these amendments.
of Proposed Rule Change Relating to
rules/sro.shtml); or Under the EOD Price Discovery
CDS End-of-Day Price Discovery
• Send an email to rule-comments@ Policy, ICE Clear Europe currently
Policy
sec.gov. Please include File Number SR– utilizes a ‘‘cross and lock’’ algorithm as
CBOE–2015–061 on the subject line. August 6, 2015. part of its CDS price discovery process.
Pursuant to Section 19(b)(1) of the Under this algorithm, standardized bids
Paper Comments
Securities Exchange Act of 1934 and offers derived from Clearing
• Send paper comments in triplicate (‘‘Act’’) 1 and Rule 19b–4 thereunder 2 Member submissions are matched by
to Brent J. Fields, Secretary, Securities notice is hereby given that on July 24, sorting them from highest to lowest and
and Exchange Commission, 100 F Street 2015, ICE Clear Europe Limited (‘‘ICE lowest to highest levels, respectively.
NE., Washington, DC 20549–1090. Clear Europe’’ or ‘‘Clearing House’’) This sorting process pairs the Clearing
All submissions should refer to File filed with the Securities and Exchange Member submitting the highest bid
Number SR–CBOE–2015–061. This file Commission (‘‘Commission’’) the price with the Clearing Member
number should be included on the proposed rule change as described in submitting the lowest offer price, the
subject line if email is used. To help the Items I, II, and III below, which Items Clearing Member submitting the second
Commission process and review your have been primarily prepared by ICE highest bid price with the Clearing
comments more efficiently, please use Clear Europe. The Commission is Member submitting the second-lowest
only one method. The Commission will publishing this notice to solicit offer price, and so on. The algorithm
post all comments on the Commission’s comments on the proposed rule change then identifies crossed and/or locked
Internet Web site (http://www.sec.gov/ from interested persons. markets. Crossed markets are the
rules/sro.shtml). Copies of the Clearing Member pairs generated by the
submission, all subsequent I. Self-Regulatory Organization’s sorting and ranking process for which
amendments, all written statements Statement of the Terms of Substance of the bid price of one Clearing Member is
with respect to the proposed rule the Proposed Rule Change above the offer price of the matched
change that are filed with the ICE Clear Europe proposes to amend Clearing Member. The algorithm
Commission, and all written its end-of-day price discovery policies identifies locked markets, where the bid
communications relating to the and procedures for credit default swap and the offer are equal, in a similar
proposed rule change between the (‘‘CDS’’) contracts to incorporate certain fashion.
Commission and any person, other than enhancements. Whenever there are crossed and/or
those that may be withheld from the locked matched markets, the algorithm
public in accordance with the II. Self-Regulatory Organization’s applies a set of rules designed to
provisions of 5 U.S.C. 552, will be Statement of the Purpose of, and identify standardized submissions that
available for Web site viewing and Statutory Basis for, the Proposed Rule are ‘‘obvious errors.’’ The algorithm sets
printing in the Commission’s Public Change a high bid threshold equal to the
Reference Room, 100 F Street NE., In its filing with the Commission, ICE preliminary end-of-day (‘‘EOD’’) level
Washington, DC 20549, on official Clear Europe included statements plus one bid-offer width (‘‘BOW’’), and
business days between the hours of concerning the purpose of and basis for a low offer threshold equal to the
10:00 a.m. and 3:00 p.m. Copies of such the proposed rule change. The text of preliminary EOD level minus one BOW.
mstockstill on DSK4VPTVN1PROD with NOTICES
filing will also be available for these statements may be examined at The algorithm considers a Clearing
inspection and copying at the principal the places specified in Item IV below. Member’s standardized submission to
office of the Exchange. All comments ICE Clear Europe has prepared be an ‘‘obvious error’’ if the bid is higher
received will be posted without change; summaries, set forth in sections A, B, than the high bid threshold, or the offer
the Commission does not edit personal is lower than the low offer threshold.
identifying information from 33 17 CFR 200.30–3(a)(12). Clearing Member pairs identified by
1 15 U.S.C. 78s(b)(1). the algorithm as crossed or locked
32 15 U.S.C. 78s(b)(2)(B). 2 17 CFR 240.19b–4. markets may be required from time to
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Document Created: 2016-09-27 22:26:35
Document Modified: 2016-09-27 22:26:35
| 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 48365 |
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