80_FR_52234 80 FR 52068 - Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing of Proposed Rule Change To Adopt a Kill Switch

80 FR 52068 - Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing of Proposed Rule Change To Adopt a Kill Switch

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 166 (August 27, 2015)

Page Range52068-52070
FR Document2015-21081

Federal Register, Volume 80 Issue 166 (Thursday, August 27, 2015)
[Federal Register Volume 80, Number 166 (Thursday, August 27, 2015)]
[Notices]
[Pages 52068-52070]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-21081]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75744; File No. SR-BX-2015-050]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing of Proposed Rule Change To Adopt a Kill Switch

August 20, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 7, 2015, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Chapter VI, Section 6, entitled 
``Acceptance of Quotes and Orders,'' of the BX rules to adopt an 
optional Kill Switch protection.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxbx.cchwallstreet.com, at the principal 
office of the Exchange, 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 purpose of the filing is to adopt a new risk protection, a Kill 
Switch, applicable to all BX Participants. The Kill Switch will allow 
BX Participants to remove quotes and cancel open orders and prevent new 
order submission. This feature provides firms with a powerful risk 
management tool for immediate control of their quote and order 
activity.
    The Exchange proposes to amend Chapter VI, Section 6, entitled 
``Acceptance of Quotes and Orders,'' to add new section (d) to adopt 
the Kill Switch. The BX Options Kill Switch will be an optional tool 
that enables Participants to initiate a message(s) \3\ to the System 
to: (i) Promptly remove quotes; and/or (ii) promptly cancel orders. 
Participants may submit a request to the System to remove/cancel quotes 
and/or orders based on certain identifiers on either a user or group 
level. Participants may elect to remove quotes and cancel orders by 
Exchange account, port, and/or badge or mnemonic (``Identifier'') or by 
a group (one or more Identifier combinations),\4\ which are provided by 
such Participant to the Exchange. Participants may not remove quotes/
orders by symbol. The System will send an automated message to the 
Participant when a Kill Switch request has been processed by the 
Exchange's System.
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    \3\ BX Participants will be able to utilize an interface to send 
a message to the Exchange to initiate the Kill Switch or they may 
contact the Exchange directly.
    \4\ The type of group permissible would be within a broker-
dealer. For example, this could be including but not limited to all 
market maker accounts or all order entry ports.
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    If the Participant selects quotes to be cancelled utilizing the 
Kill Switch, the BX Participant must send a message to the Exchange to 
request the removal of all quotes requested for the certain specified 
Identifier(s).\5\ The BX Participant will be unable to enter any 
additional quotes for the affected Identifier(s) until re-entry has 
been enabled pursuant to proposed section (d)(iii).\6\
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    \5\ See note 3.
    \6\ Sweeps will also be cancelled. A sweep is a one-sided 
electronic quote submitted
    over the Specialized Quote Feed, which is the market making 
quoting interface.
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    If the Participant selects orders to be cancelled utilizing the 
Kill Switch, the BX Participant must send a message to the Exchange to 
request the cancellation of all orders requested for the certain 
specified Identifier(s).\7\ The BX Participant will be unable to enter 
additional orders for the affected Identifier(s) until re-entry has 
been enabled pursuant to section (d)(iii).
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    \7\ See note 3.
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    Proposed section (d)(iii) stipulates that after quotes and/or 
orders are removed/cancelled by the BX Participant utilizing the Kill 
Switch, the BX Participant will be unable to enter additional quotes 
and/or orders for the affected Identifier(s) until the BX Participant 
has made a request to the Exchange and Exchange staff has set a re-
entry indicator to enable re-entry.\8\ Once enabled for re-entry, the 
System will send a Re-entry Notification Message to the BX Participant. 
The applicable Clearing Participant for that BX Participant also will 
be notified of the re-entry into the System after quotes and/or orders 
are removed/cancelled as a result of the Kill Switch, provided the 
Clearing Participant has requested to receive such notification.
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    \8\ The BX Participant must directly and verbally contact the 
Exchange to request the re-set.
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    The Exchange offers many risk mitigation and management tools today 
including, but not limited to, certain rapid fire risk controls,\9\ 
15c3-5 risk controls, Order Price Protections,\10\ and cancel on 
disconnect and purge functionality for Specialized Quote Feed (SQF) and 
FIX. The Kill Switch offers Participants a means to control their 
exposure, through an interface which is not dependent on the integrity 
of the Participant's own systems, should the Participant experience a 
failure.
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    \9\ See BX Rules at Chapter VII, Section 6(f).
    \10\ See BX Rules at Chapter VI, Section 18.
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    The Exchange proposes to implement this rule within ninety (90) 
days of the implementation date. The Exchange will issue an Options 
Trader Alert in advance to inform market participants of such date.

[[Page 52069]]

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \12\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest, by enhancing the risk protections available to Exchange 
members. The proposal promotes policy goals of the Commission which has 
encouraged execution venues, exchange and non-exchange alike, to 
enhance risk protection tools and other mechanisms to decrease risk and 
increase stability.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The individual firm benefits of enhanced risk protections flow 
downstream to counter-parties both at the Exchange and at other options 
exchanges, thereby increasing systemic protections as well. 
Additionally, because the Exchange offers this risk tool to all BX 
Participants, the Exchange believes it will encourage liquidity 
generally and remove impediments to and perfect the mechanism of a free 
and open market and a national market system and protect investors and 
the public interest.
    This optional risk tool as noted above will be offered to all BX 
Participants. The Exchange further represents that its proposal will 
operate consistently with the firm quote obligations of a broker-dealer 
pursuant to Rule 602 of Regulation NMS and that the functionality is 
not mandatory. Specifically, any interest that is executable against a 
BX Participant's quotes and orders that are received \13\ by the 
Exchange prior to the time the Kill Switch is processed by the System 
will automatically execute at the price up to the BX Participant's 
size. The Kill Switch message will be accepted by the System in the 
order of receipt in the queue and will be processed in that order so 
that interest that is already accepted into the System will be 
processed prior to the Kill Switch message.
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    \13\ The time of receipt for an order or quote is the time such 
message is processed by the Exchange book.
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    A BX Market Makers' obligation to provide continuous two-sided 
quotes on a daily basis is not diminished by the removal of such quotes 
and/or orders by utilizing the Kill Switch. BX Market Makers will be 
required to provide continuous two-sided quotes on a daily basis. BX 
Market Makers that utilize the Kill Switch will not be relieved of the 
obligation to provide continuous two-sided quotes on a daily basis, nor 
will it prohibit the Exchange from taking disciplinary action against a 
BX Market Maker for failing to meet the continuous quoting obligation 
each trading day.
    With respect to providing information regarding the removal of 
quotes and/or cancellation of orders as a result of the Kill Switch to 
the Clearing Participant, each Member that transacts through a Clearing 
Member on the Exchange executes a Letter of Guarantee wherein the 
Clearing Member accepts financial responsibility for all Exchange 
transactions made by the BX Participant on whose behalf the Clearing 
Member submits the letter of guarantee. The Exchange believes that 
because Clearing Members guarantee all transactions on behalf of a 
Participant, and therefore bear the risk associated with those 
transactions, it is appropriate for Clearing Members to have knowledge 
of the utilization of the Kill Switch, should the Clearing Member 
request such notification.

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 not necessary or appropriate in 
furtherance of the purposes of the Act. The proposal does not impose an 
undue burden on inter-market competition because all BX Participants 
may avail themselves of the Kill Switch, which functionality will be 
optional. The proposed rule change is meant to protect BX Participants 
in the event the BX Participant is suffering from a systems issue or 
from the occurrence of unusual or unexpected market activity that would 
require them to withdraw from the market in order to protect investors. 
The ability to control risk at either the user or group level will 
permit the BX Participant to protect itself from inadvertent exposure 
to excessive risk at the each level. Reducing such risk will enable BX 
Participants to enter quotes and orders without any fear of inadvertent 
exposure to excessive risk, which in turn will benefit investors 
through increased liquidity for the execution of their orders. Such 
increased liquidity benefits investors because they receive better 
prices and because it lowers volatility in the options market. For 
these reasons, the Exchange does not believe this proposal imposes an 
undue burden on inter-market competition, rather, the proposed rule 
change will have no impact on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be disapproved.

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 Comments

     Use 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-BX-2015-050 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-BX-2015-050. 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

[[Page 52070]]

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-BX-2015-050 and should be 
submitted on or before September 17, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-21081 Filed 8-26-15; 8:45 am]
 BILLING CODE 8011-01-P



                                               52068                          Federal Register / Vol. 80, No. 166 / Thursday, August 27, 2015 / Notices

                                               Subsection IWL (as applicable for the                      II. Self-Regulatory Organization’s                    the Exchange to request the removal of
                                               type of containment) by September 9,                       Statement of the Purpose of, and                      all quotes requested for the certain
                                               2001. Subsequent, NRC amendments to                        Statutory Basis for, the Proposed Rule                specified Identifier(s).5 The BX
                                               10 CFR 50.55a have incorporated by                         Change                                                Participant will be unable to enter any
                                               reference later editions of Subsection                        In its filing with the Commission, the             additional quotes for the affected
                                               IWL, with modifications and limitations                    Exchange included statements                          Identifier(s) until re-entry has been
                                               which continue to address issues                           concerning the purpose of and basis for               enabled pursuant to proposed section
                                               addressed by RG 1.35.                                      the proposed rule change and discussed                (d)(iii).6
                                                 The guidance provided in RG 1.35 has                     any comments it received on the                          If the Participant selects orders to be
                                               been incorporated into later revisions of                  proposed rule change. The text of these               cancelled utilizing the Kill Switch, the
                                               Subsection IWL, or preserved in 10 CFR                     statements may be examined at the                     BX Participant must send a message to
                                               50.55a. As a result, RG 1.35 has become                    places specified in Item IV below. The                the Exchange to request the cancellation
                                               redundant and is no longer needed.                         Exchange has prepared summaries, set                  of all orders requested for the certain
                                                  Dated at Rockville, Maryland, this 21st day             forth in sections A, B, and C below, of               specified Identifier(s).7 The BX
                                               of August, 2015.                                           the most significant aspects of such                  Participant will be unable to enter
                                                  For the Nuclear Regulatory Commission.                  statements.                                           additional orders for the affected
                                               Thomas H. Boyce,                                                                                                 Identifier(s) until re-entry has been
                                                                                                          A. Self-Regulatory Organization’s
                                               Chief, Regulatory Guidance and Generic                                                                           enabled pursuant to section (d)(iii).
                                                                                                          Statement of the Purpose of, and
                                               Issues Branch, Division of Engineering, Office                                                                      Proposed section (d)(iii) stipulates
                                                                                                          Statutory Basis for, the Proposed Rule
                                               of Nuclear Regulatory Research.                                                                                  that after quotes and/or orders are
                                                                                                          Change
                                               [FR Doc. 2015–21156 Filed 8–26–15; 8:45 am]                                                                      removed/cancelled by the BX
                                               BILLING CODE 7590–01–P                                     1. Purpose                                            Participant utilizing the Kill Switch, the
                                                                                                             The purpose of the filing is to adopt              BX Participant will be unable to enter
                                                                                                          a new risk protection, a Kill Switch,                 additional quotes and/or orders for the
                                               SECURITIES AND EXCHANGE                                    applicable to all BX Participants. The                affected Identifier(s) until the BX
                                               COMMISSION                                                 Kill Switch will allow BX Participants                Participant has made a request to the
                                               [Release No. 34–75744; File No. SR–BX–                     to remove quotes and cancel open                      Exchange and Exchange staff has set a
                                               2015–050]                                                  orders and prevent new order                          re-entry indicator to enable re-entry.8
                                                                                                          submission. This feature provides firms               Once enabled for re-entry, the System
                                               Self-Regulatory Organizations;                             with a powerful risk management tool                  will send a Re-entry Notification
                                               NASDAQ OMX BX, Inc.; Notice of Filing                      for immediate control of their quote and              Message to the BX Participant. The
                                               of Proposed Rule Change To Adopt a                         order activity.                                       applicable Clearing Participant for that
                                               Kill Switch                                                   The Exchange proposes to amend                     BX Participant also will be notified of
                                                                                                          Chapter VI, Section 6, entitled                       the re-entry into the System after quotes
                                               August 20, 2015.                                           ‘‘Acceptance of Quotes and Orders,’’ to               and/or orders are removed/cancelled as
                                                  Pursuant to Section 19(b)(1) of the                     add new section (d) to adopt the Kill                 a result of the Kill Switch, provided the
                                               Securities Exchange Act of 1934                            Switch. The BX Options Kill Switch                    Clearing Participant has requested to
                                               (‘‘Act’’),1 and Rule 19b–4 thereunder,2                    will be an optional tool that enables                 receive such notification.
                                               notice is hereby given that on August 7,                   Participants to initiate a message(s) 3 to               The Exchange offers many risk
                                               2015, NASDAQ OMX BX, Inc. (‘‘BX’’ or                       the System to: (i) Promptly remove                    mitigation and management tools today
                                               ‘‘Exchange’’) filed with the Securities                    quotes; and/or (ii) promptly cancel                   including, but not limited to, certain
                                               and Exchange Commission (‘‘SEC’’ or                        orders. Participants may submit a                     rapid fire risk controls,9 15c3–5 risk
                                               ‘‘Commission’’) the proposed rule                          request to the System to remove/cancel                controls, Order Price Protections,10 and
                                               change as described in Items I, II, and                    quotes and/or orders based on certain                 cancel on disconnect and purge
                                               III, below, which Items have been                          identifiers on either a user or group                 functionality for Specialized Quote Feed
                                               prepared by the Exchange. The                              level. Participants may elect to remove               (SQF) and FIX. The Kill Switch offers
                                               Commission is publishing this notice to                    quotes and cancel orders by Exchange                  Participants a means to control their
                                               solicit comments on the proposed rule                      account, port, and/or badge or                        exposure, through an interface which is
                                               change from interested persons.                            mnemonic (‘‘Identifier’’) or by a group               not dependent on the integrity of the
                                               I. Self-Regulatory Organization’s                          (one or more Identifier combinations),4               Participant’s own systems, should the
                                               Statement of the Terms of Substance of                     which are provided by such Participant                Participant experience a failure.
                                               the Proposed Rule Change                                   to the Exchange. Participants may not
                                                                                                          remove quotes/orders by symbol. The                      The Exchange proposes to implement
                                                  The Exchange proposes to amend                          System will send an automated message                 this rule within ninety (90) days of the
                                               Chapter VI, Section 6, entitled                            to the Participant when a Kill Switch                 implementation date. The Exchange will
                                               ‘‘Acceptance of Quotes and Orders,’’ of                    request has been processed by the                     issue an Options Trader Alert in
                                               the BX rules to adopt an optional Kill                     Exchange’s System.                                    advance to inform market participants
                                               Switch protection.                                            If the Participant selects quotes to be            of such date.
                                                  The text of the proposed rule change                    cancelled utilizing the Kill Switch, the
                                               is available on the Exchange’s Web site                    BX Participant must send a message to                   5 See note 3.
                                               at http://                                                                                                         6 Sweeps  will also be cancelled. A sweep is a one-
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                                               nasdaqomxbx.cchwallstreet.com, at the                        3 BX Participants will be able to utilize an        sided electronic quote submitted
                                                                                                                                                                  over the Specialized Quote Feed, which is the
                                               principal office of the Exchange, and at                   interface to send a message to the Exchange to
                                                                                                                                                                market making quoting interface.
                                               the Commission’s Public Reference                          initiate the Kill Switch or they may contact the
                                                                                                                                                                  7 See note 3.
                                                                                                          Exchange directly.
                                               Room.                                                        4 The type of group permissible would be within       8 The BX Participant must directly and verbally

                                                                                                          a broker-dealer. For example, this could be           contact the Exchange to request the re-set.
                                                 1 15   U.S.C. 78s(b)(1).                                                                                         9 See BX Rules at Chapter VII, Section 6(f).
                                                                                                          including but not limited to all market maker
                                                 2 17   CFR 240.19b–4.                                    accounts or all order entry ports.                      10 See BX Rules at Chapter VI, Section 18.




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                                                                            Federal Register / Vol. 80, No. 166 / Thursday, August 27, 2015 / Notices                                           52069

                                               2. Statutory Basis                                       basis. BX Market Makers that utilize the              C. Self-Regulatory Organization’s
                                                  The Exchange believes that its                        Kill Switch will not be relieved of the               Statement on Comments on the
                                               proposal is consistent with Section 6(b)                 obligation to provide continuous two-                 Proposed Rule Change Received From
                                               of the Act 11 in general, and furthers the               sided quotes on a daily basis, nor will               Members, Participants, or Others
                                               objectives of Section 6(b)(5) of the Act 12              it prohibit the Exchange from taking                    No written comments were either
                                               in particular, in that it is designed to                 disciplinary action against a BX Market               solicited or received.
                                               promote just and equitable principles of                 Maker for failing to meet the continuous
                                               trade, to remove impediments to and                      quoting obligation each trading day.                  III. Date of Effectiveness of the
                                               perfect the mechanism of a free and                         With respect to providing information              Proposed Rule Change and Timing for
                                               open market and a national market                        regarding the removal of quotes and/or                Commission Action
                                               system, and, in general to protect                       cancellation of orders as a result of the                Within 45 days of the date of
                                               investors and the public interest, by                    Kill Switch to the Clearing Participant,              publication of this notice in the Federal
                                               enhancing the risk protections available                 each Member that transacts through a                  Register or within such longer period (i)
                                               to Exchange members. The proposal                        Clearing Member on the Exchange                       as the Commission may designate up to
                                               promotes policy goals of the                             executes a Letter of Guarantee wherein                90 days of such date if it finds such
                                               Commission which has encouraged                          the Clearing Member accepts financial                 longer period to be appropriate and
                                               execution venues, exchange and non-                      responsibility for all Exchange                       publishes its reasons for so finding or
                                               exchange alike, to enhance risk                          transactions made by the BX Participant               (ii) as to which the Exchange consents,
                                               protection tools and other mechanisms                    on whose behalf the Clearing Member                   the Commission shall: (a) By order
                                               to decrease risk and increase stability.                 submits the letter of guarantee. The                  approve or disapprove such proposed
                                                  The individual firm benefits of                       Exchange believes that because Clearing               rule change, or (b) institute proceedings
                                               enhanced risk protections flow                           Members guarantee all transactions on                 to determine whether the proposed rule
                                               downstream to counter-parties both at                    behalf of a Participant, and therefore                change should be disapproved.
                                               the Exchange and at other options                        bear the risk associated with those
                                               exchanges, thereby increasing systemic                   transactions, it is appropriate for                   IV. Solicitation of Comments
                                               protections as well. Additionally,                       Clearing Members to have knowledge of                   Interested persons are invited to
                                               because the Exchange offers this risk                    the utilization of the Kill Switch, should            submit written data, views, and
                                               tool to all BX Participants, the Exchange                the Clearing Member request such                      arguments concerning the foregoing,
                                               believes it will encourage liquidity                     notification.                                         including whether the proposed rule
                                               generally and remove impediments to                                                                            change is consistent with the Act.
                                               and perfect the mechanism of a free and                  B. Self-Regulatory Organization’s
                                                                                                                                                              Comments may be submitted by any of
                                               open market and a national market                        Statement on Burden on Competition
                                                                                                                                                              the following methods:
                                               system and protect investors and the                        The Exchange does not believe that
                                               public interest.                                                                                               Electronic Comments
                                                                                                        the proposed rule change will impose
                                                  This optional risk tool as noted above                any burden on competition not                           • Use the Commission’s Internet
                                               will be offered to all BX Participants.                  necessary or appropriate in furtherance               comment form (http://www.sec.gov/
                                               The Exchange further represents that its                 of the purposes of the Act. The proposal              rules/sro.shtml); or
                                               proposal will operate consistently with                  does not impose an undue burden on                      • Send an email to rule-comments@
                                               the firm quote obligations of a broker-                  inter-market competition because all BX               sec.gov. Please include File Number SR–
                                               dealer pursuant to Rule 602 of                           Participants may avail themselves of the              BX–2015–050 on the subject line.
                                               Regulation NMS and that the                              Kill Switch, which functionality will be
                                               functionality is not mandatory.                                                                                Paper Comments
                                                                                                        optional. The proposed rule change is
                                               Specifically, any interest that is                       meant to protect BX Participants in the                 • Send paper comments in triplicate
                                               executable against a BX Participant’s                    event the BX Participant is suffering                 to Secretary, Securities and Exchange
                                               quotes and orders that are received 13 by                from a systems issue or from the                      Commission, 100 F Street NE.,
                                               the Exchange prior to the time the Kill                  occurrence of unusual or unexpected                   Washington, DC 20549–1090.
                                               Switch is processed by the System will                   market activity that would require them               All submissions should refer to File
                                               automatically execute at the price up to                 to withdraw from the market in order to               Number SR–BX–2015–050. This file
                                               the BX Participant’s size. The Kill                      protect investors. The ability to control             number should be included on the
                                               Switch message will be accepted by the                   risk at either the user or group level will           subject line if email is used. To help the
                                               System in the order of receipt in the                    permit the BX Participant to protect                  Commission process and review your
                                               queue and will be processed in that                      itself from inadvertent exposure to                   comments more efficiently, please use
                                               order so that interest that is already                   excessive risk at the each level.                     only one method. The Commission will
                                               accepted into the System will be                         Reducing such risk will enable BX                     post all comments on the Commission’s
                                               processed prior to the Kill Switch                       Participants to enter quotes and orders               Internet Web site (http://www.sec.gov/
                                               message.                                                 without any fear of inadvertent                       rules/sro.shtml). Copies of the
                                                  A BX Market Makers’ obligation to                     exposure to excessive risk, which in                  submission, all subsequent
                                               provide continuous two-sided quotes on                   turn will benefit investors through                   amendments, all written statements
                                               a daily basis is not diminished by the                   increased liquidity for the execution of              with respect to the proposed rule
                                               removal of such quotes and/or orders by                  their orders. Such increased liquidity                change that are filed with the
                                               utilizing the Kill Switch. BX Market                     benefits investors because they receive               Commission, and all written
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                                               Makers will be required to provide                       better prices and because it lowers                   communications relating to the
                                               continuous two-sided quotes on a daily                   volatility in the options market. For                 proposed rule change between the
                                                 11 15
                                                                                                        these reasons, the Exchange does not                  Commission and any person, other than
                                                      U.S.C. 78f(b).
                                                 12 15
                                                                                                        believe this proposal imposes an undue                those that may be withheld from the
                                                      U.S.C. 78f(b)(5).
                                                 13 The time of receipt for an order or quote is the    burden on inter-market competition,                   public in accordance with the
                                               time such message is processed by the Exchange           rather, the proposed rule change will                 provisions of 5 U.S.C. 552, will be
                                               book.                                                    have no impact on competition.                        available for Web site viewing and


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                                               52070                          Federal Register / Vol. 80, No. 166 / Thursday, August 27, 2015 / Notices

                                               printing in the Commission’s Public                     positions and ownership and control                   CFTC under the OCR Rule. In addition,
                                               Reference Room, 100 F Street NE.,                       reports. The scope of this filing is                  CFE–2015–003 amended Rule 412B to
                                               Washington, DC 20549, on official                       limited solely to the application of the              require each TPH that is not a Clearing
                                               business days between the hours of                      rule amendments to security futures                   Member to report to the Exchange the
                                               10:00 a.m. and 3:00 p.m. Copies of the                  traded on CFE. The only security futures              same information regarding the
                                               filing also will be available for                       that have been traded on CFE were                     identification and reporting of special
                                               inspection and copying at the principal                 traded under Chapter 16 of CFE’s                      accounts relating to CFE contracts that
                                               office of the Exchange. All comments                    Rulebook which is applicable to                       the OCR Rule requires each TPH that is
                                               received will be posted without change;                 Individual Stock Based and Exchange-                  a Clearing Member to report to the
                                               the Commission does not edit personal                   Traded Fund Based Volatility Index                    CFTC. CFE–2015–003 provided that
                                               identifying information from                            security futures. CFE does not currently              these changes would become effective
                                               submissions. You should submit only                     list any security futures for trading. The            on or after February 11, 2015, on a date
                                               information that you wish to make                       text of the proposed rule change is                   to be announced by the Exchange
                                               available publicly. All submissions                     attached as Exhibit 4 to the filing but is            through the issuance of a circular. The
                                               should refer to File Number SR–BX–                      not attached to the publication of this               Exchange has not yet made these
                                               2015–050 and should be submitted on                     notice.                                               changes effective and intends to do so
                                               or before September 17, 2015.                                                                                 consistent with the compliance dates
                                                                                                       II. Self-Regulatory Organization’s
                                                 For the Commission, by the Division of                Statement of the Purpose of, and                      under the OCR Rule as provided for by
                                               Trading and Markets, pursuant to delegated              Statutory Basis for, the Proposed Rule                the CFTC.5
                                               authority.14
                                                                                                       Change                                                   The purpose of the proposed rule
                                               Robert W. Errett,                                                                                             change is to make some clarifying
                                               Deputy Secretary.                                          In its filing with the Commission, CFE             changes with respect to the rule
                                                                                                       included statements concerning the                    amendments included in the Prior
                                               [FR Doc. 2015–21081 Filed 8–26–15; 8:45 am]
                                                                                                       purpose of and basis for the proposed                 Filings.
                                               BILLING CODE 8011–01–P
                                                                                                       rule change and discussed any                            First, CFE proposes to further amend
                                                                                                       comments it received on the proposed                  Rule 412B to make clear that TPHs and
                                               SECURITIES AND EXCHANGE                                 rule change. The text of these statements             non-TPHs will continue to be required
                                               COMMISSION                                              may be examined at the places specified               to concurrently report to the Exchange
                                                                                                       in Item IV below. CFE has prepared                    reportable positions relating to
                                               [Release No. 34–75748; File No. SR–CFE–                 summaries, set forth in Sections A, B,
                                               2015–006]
                                                                                                                                                             Exchange contracts that they are
                                                                                                       and C below, of the most significant                  required to report to the CFTC pursuant
                                                                                                       aspects of such statements.                           to CFTC regulations. This is required
                                               Self-Regulatory Organizations; CBOE
                                               Futures Exchange, LLC; Notice of                        A. Self-Regulatory Organization’s                     under current Rule 412B, and the
                                               Proposed Rule Change Regarding                          Statement of the Purpose of, and                      Exchange believes that it continues to be
                                               Reportable Position and Ownership                       Statutory Basis for, the Proposed Rule                required by Rule 412B as amended by
                                               and Control Reporting Clarifications                    Change                                                the Prior Filings. However, in order to
                                                                                                                                                             eliminate any potential ambiguity in
                                               August 21, 2015.                                        1. Purpose                                            this regard, CFE is further amending
                                                  Pursuant to Section 19(b)(7) of the                     CFE submitted CFE Rule Certification               Rule 412B as amended by the Prior
                                               Securities Exchange Act of 1934                         Submission Number CFE–2015–003                        Filings to make this explicit and is
                                               (‘‘Act’’),1 notice is hereby given that on              (‘‘CFE–2015–003’’) to the CFTC and CFE                changing the title of Rule 412B to
                                               August 14, 2015 CBOE Futures                            Rule Filing Number SR–CFE–2015–001                    specifically reference reportable
                                               Exchange, LLC (‘‘CFE’’ or ‘‘Exchange’’)                 (‘‘SR–CFE–2015–001’’) 3 to the                        positions.
                                               filed with the Securities and Exchange                  Commission on January 28, 2015                           Second, CFE proposes to amend CFE
                                               Commission (‘‘SEC’’ or ‘‘Commission’’)                  (collectively, the ‘‘Prior Filings’’) to              Rule 714 (Imposition of Fines for Minor
                                               the proposed rule change described in                   amend CFE Rule 412B (Ownership and                    Rule Violations) to make new paragraph
                                               Items I, II, and III below, which Items                 Control Reports) to require CFE Trading               (c) of Rule 412B added by the Prior
                                               have been prepared by CFE. The                          Privilege Holders (‘‘TPHs’’) and non-                 Filings subject to the same summary
                                               Commission is publishing this notice to                 TPHs to concurrently file with the                    fine schedule under Rule 714(f)(vii) that
                                               solicit comments on the proposed rule                   Exchange submissions relating to CFE                  already applies with respect to
                                               change from interested persons. CFE                     contracts that are required to be filed               violations of paragraphs (a) and (b) of
                                               also has filed this proposed rule change                with the CFTC pursuant to the Final                   Rule 412B. Rule 412B(c) is the provision
                                               with the Commodity Futures Trading                      Rule adopted by the CFTC under the                    of Rule 412B that requires each TPH
                                               Commission (‘‘CFTC’’). CFE filed a                      caption Ownership and Control Reports                 that is not a Clearing Member to report
                                               written certification with the CFTC                     (‘‘OCR Rule’’).4 In particular, the Prior             to the Exchange the same information
                                               under Section 5c(c) of the Commodity                    Filings amended Rule 412B to require                  regarding the identification and
                                               Exchange Act (‘‘CEA’’) 2 on August 14,                  each TPH and non-TPH to file                          reporting of special accounts relating to
                                               2015.                                                   concurrently with the Exchange the new                CFE contracts that the OCR Rule
                                               I. Self-Regulatory Organization’s                       CFTC Forms 102A, 102B, and 71                         requires each TPH that is a Clearing
                                               Description of the Proposed Rule                        (including any attachments, related                   Member to report to the CFTC. The
                                               Change                                                  submissions, or related information)                  summary fine schedule under Rule
rmajette on DSK2VPTVN1PROD with NOTICES




                                                                                                       relating to CFE contracts that each TPH               714(f)(vii) is a Letter of Caution for a
                                                  The Exchange proposes to amend CFE                                                                         first offense, a $7,500 fine for a second
                                                                                                       or non-TPH is required to report to the
                                               rules to clarify the application of CFE                                                                       offense, a $15,000 fine for a third
                                               requirements relating to reportable                       3 See Securities Exchange Act Release No. 74204

                                                                                                       (February 4, 2015), 80 FR 7518 (February 10, 2015).     5 See CFTC No-Action Letter No. 15–03 (February
                                                 14 17 CFR 200.30–3(a)(12).                              4 See CFTC RIN 3038–AD31, Ownership and             10, 2015) (which provided conditional time-limited
                                                 1 15 U.S.C. 78s(b)(7).
                                                                                                       Control Reports, Forms 102/102S, 40/40S, and 71,      no-action relief to extend certain compliance dates
                                                 2 7 U.S.C. 7a–2(c).                                   Final Rule, 78 FR 69178 (November 18, 2013).          under the OCR Rule).



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Document Created: 2015-12-15 10:53:26
Document Modified: 2015-12-15 10:53:26
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 52068 

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