80 FR 65258 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Disaster Recovery

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 206 (October 26, 2015)

Page Range		65258-65263
FR Document		2015-27086
Federal Register, Volume 80 Issue 206 (Monday, October 26, 2015)
[Federal Register Volume 80, Number 206 (Monday, October 26, 2015)]
[Notices]
[Pages 65258-65263]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-27086]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76203; File No. SR-CBOE-2015-088]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to Disaster Recovery

October 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 October 8, 2015, Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``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.
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    \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).
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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 Rule 6.18 relating to disaster 
recovery. The text of the proposed rule change is available on the 
Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 6.18 relating to disaster 
recovery. Specifically, the Exchange proposes to update Rule 6.18 to 
further describe the Exchange's back-up systems, the circumstances 
under which they may be used, and the testing that the Exchange may 
conduct to ensure the availability, functionality and performance of 
such systems. Additionally, the Exchange proposes certain updates to 
Rule 6.18 in response to new disaster recovery regulations and business 
resumption standards recently adopted by the Securities and Exchange 
Commission (``SEC'' or ``Commission'') as promulgated in Regulation 
Systems Compliance and Integrity (``Regulation SCI'') under the Act.\5\
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    \5\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR 72252 (December 5, 2014) (Regulation Systems Compliance 
and Integrity) (File No. S7-01-13).
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Background
    The Exchange adopted Rule 6.18 in 2006 for the limited purpose of 
providing alternative means of operation in the event of a physical 
disaster. In particular, Rule 6.18, as originally adopted, was intended 
to deal with trading floor closures, providing for the operation of a 
``Disaster Recovery Facility'' (``DRF'') in the event that a disaster 
or other unusual circumstance rendered the trading floor inoperable.\6\

[[Page 65259]]

Under original Rule 6.18, if the Exchange were forced to halt trading 
due to a disaster or other physical impairment of its trading floor, 
the Exchange and its members \7\ could operate remotely in a screen-
based only environment from the DRF while the trading floor was 
unavailable. While operating from the DRF, open outcry trading would be 
suspended.
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    \6\ See Securities Exchange Act Release No. 54171 (July 19, 
2006), 71 FR 42427 (July 26, 2006) (Order Approving Proposed Rule 
Change and Amendment No. 1 Thereto Regarding a Disaster Recovery 
Facility) (SR-CBOE-2006-001[sic]).
    \7\ Prior to its demutualization in 2010, the Exchange was a 
member-owned organization. See Securities Exchange Act Release No. 
62382 (June 25, 2010), 75 FR 38164 (July 1, 2010) (Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to 
Conforming Changes in Connection With Demutualization) (SR-CBOE-
2010-058).
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    In 2012, Rule 6.18 was amended in connection with the Exchange's 
relocation of its primary data center to the East Coast and the 
consequent conversion of its former primary data center to a back-up 
data center in Chicago.\8\ Specifically, Rule 6.18 was amended to deal 
with newly possible situations in which the primary data center could 
continue to operate despite the trading floor being rendered inoperable 
or in which the back-up data center might be used despite the trading 
floor being operational. Specifically, as amended, Rule 6.18 provided 
that in the event that the Exchange were forced to switch operations to 
the back-up data center, the Exchange's trading floor could still be 
used and that in the event that the trading floor were inoperable, the 
Exchange could still operate using a floorless configuration or screen-
based only environment on the Exchange's primary data center. 
References to the DRF and other irrelevant portions of the original 
rule were eliminated or replaced with references to [sic] Exchange's 
primary and back-up data centers as appropriate.
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    \8\ See Securities Exchange Act Release No. 68301 (November 27, 
2012), 77 FR 71650 (December 3, 2012) (Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change To Amend CBOE 
Rule 6.18 Concerning the Exchange's Disaster Recovery Facility) (SR-
CBOE-2012-111).
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    In addition to adding greater detail to the Exchange's disaster 
recovery rules in Rule 6.18, the Exchange proposes to make updates to 
Rule 6.18 to harmonize its disaster recovery rules with the newly 
implemented disaster recovery-related regulatory imperatives of 
Regulation SCI. Regulation SCI supersedes and replaces the SEC's 
voluntary Automation Review Policy (``ARP''), established by the 
Commission's two policy statements each titled ``Automated Systems of 
Self-Regulatory Organizations,'' issued in 1989 and 1991, expanding 
existing practices and making them mandatory.\9\ As part of Regulation 
SCI, the Exchange is required to maintain back-up and recovery 
capabilities with sufficient resiliency and geographical diversity and 
that are reasonably designed to achieve next business-day resumption of 
trading and two-hour resumption of critical systems following a wide-
scale disruption.\10\ The Exchange must also participate in at least 
annual testing of its business continuity and disaster recovery plans 
and, to that end, develop and adopt standards to designate which of its 
TPHs must participate in testing in order to reasonably ensure the 
maintenance of a fair and orderly market if the Exchange's disaster 
recovery plan must be activated.\11\ Although the Exchange's current 
Rules provide the Exchange sufficient authority to meet its disaster 
recovery-related obligations under Regulation SCI, the Exchange 
believes that certain clarifying updates to the Rules are warranted in 
light of Regulation SCI.
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    \9\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR at 72252 (December 5, 2014) (Regulation Systems 
Compliance and Integrity) (File No. S7-01-13).
    \10\ 17 CFR 242.1001(a)(2)(v).
    \11\ Id. at 242.1004.
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Proposed Rule Changes
    The Exchange proposes to make changes to Rule 6.18 to provide 
additional details regarding the Exchange's back-up trading systems and 
business continuity and disaster recovery plans activation and testing. 
As discussed above, the Exchange also seeks to update its disaster 
recovery rules to ensure consistency with Regulation SCI.
    Current Rule 6.18 is divided into five sections, (a) through (e). 
Rule 6.18(a) authorizes the Exchange to maintain a back-up data center 
to preserve the Exchange's ability to trade options in the event the 
Exchange's primary data center becomes inoperable or otherwise 
unavailable for use. Rule 6.18(a) also authorizes the Exchange to 
operate in a screen-based only environment using a floorless 
configuration in the event that the trading floor becomes inoperable. 
Rule 6.18(b) describes the notice that must be given prior to 
commencing trading on back-up data center systems. Rule 6.18(c) 
describes the rules that would be in effect if the Exchange were to 
switch its trading operations to the back-up data center and the rules 
that would be suspended if the Exchange were to operate in a screen-
based only environment using a floorless configuration in the event 
that the trading floor becomes inoperable. Rule 6.18(d), prescribes 
that TPHs are required to take appropriate actions as instructed by the 
Exchange to accommodate the Exchange's ability to trade options via the 
back-up data center. Finally, current Rule 6.18(e) provides that 
nothing in 6.18 precludes the Exchange from entering into agreements to 
trade options elsewhere in accordance with Rule 6.16 (Back-up Trading 
Arrangements) in the event that the Exchange's trading floor is 
rendered inoperable.
    The Exchange proposes to make rule changes to Rule 6.18 that would 
leave the current rule largely intact, but reorganized with detail 
added to each section of the current rule. Under proposed Rule 6.18(a) 
(General), rather than explaining the Exchange's back-up data center 
and alternative disaster-related trading configurations in the 
introductory section, the Exchange would adopt a general statement 
regarding the purpose of its disaster recovery rules, providing that 
the Exchange maintains business continuity and disaster recovery plans 
that may be effected in the interests of the continued operation of 
fair and orderly markets in the event of a systems failure, disaster, 
or other unusual circumstances that might threaten the ability to 
conduct business on the Exchange. The content of current Rule 6.18(a) 
would be moved from the general section of Rule 6.18(a) to proposed 
Rule 6.18(b) regarding the Exchange's back-up data center.
    Proposed Rule 6.18(b) (Back-up Data Center), would mirror current 
Rule 6.18(a), but would include a definitive statement that the 
Exchange maintains a back-up data center in order to preserve the 
Exchange's ability to conduct business in the event the Exchange's 
primary data center becomes inoperable or otherwise unavailable for 
use, rather than providing that the Exchange may maintain such back-up 
facilities. The Exchange also proposes to change the text of current 
Rule 6.18(a) in proposed Rule 6.18(b) to provide that the Exchange 
maintains a back-up data center in order to preserve the Exchange's 
ability to conduct business in the event the Exchange's primary data 
center becomes inoperable or otherwise unavailable for use, rather than 
to preserve only the Exchange's ability to trade options. This proposed 
rule change reflects the fact that the Exchange is engaged in business 
activities other than just the trading of options, including, but not 
limited to providing market data services and conducting regulatory 
functions.
    Whereas the Exchange's current rules provide that the Exchange may 
determine to switch operations from the primary data center to the 
back-up data

[[Page 65260]]

center due to a disaster or other unusual circumstances, proposed Rule 
6.18(b) would add the scenario of a significant systems failure to the 
list of causes that may trigger an operational switch to the Exchange's 
back-up data center. The proposed addition of significant systems 
failures to the list of scenarios that may trigger an operational 
switch to the Exchange's back-up data center is intended to more 
acutely reflect the realities of electronic trading environments and 
contemporary threats posed to the operation of fair and orderly 
markets. The statements in current Rule 6.18(a) regarding contingent 
alternative plans in the event that the Exchange's trading floor 
becomes inoperable would be removed from the section and relocated to 
proposed Rule 6.18(c) (Loss of Trading Floor), which would be dedicated 
to the details of the Exchange's authority in the event that the 
Exchange trading floor becomes inoperable. In addition to the 
reformulation of the description of the Exchange's back-up data center 
in proposed Rule 6.18(b), proposed Rule 6.18(b) would also contain 
subsections setting forth the notice, applicable rules, and Trading 
Permit Holder (``TPH'') preparations provisions currently contained in 
Rules 6.18(b) through (d).
    Proposed Rule 6.18(b)(i) (Back-up Data Center Functionality), would 
make clear the functional and performance standards that the back-up 
data center must be reasonably designed to achieve. Specifically, 
proposed Rule 6.18(b)(i) would provide that the Exchange maintains a 
back-up data center that the Exchange has determined is reasonably 
designed to achieve prompt resumption of systems in [sic] manner 
consistent with the Exchange's obligations under Regulation SCI.\12\ 
Proposed Rule 6.18(b)(i) would also provide that nothing in the 
provisions of proposed Rule 6.18(b) shall be interpreted to require the 
Exchange to develop or maintain a back-up data center designed to fully 
replicate the capacity, latency, and other features of the primary data 
center. This statement attempts to make clear that in order to preserve 
the Exchange's ability to conduct business in the event the Exchange's 
primary data center becomes inoperable or otherwise unavailable for 
use, the Exchange must maintain a back-up data center that is 
reasonably designed achieve resumption of systems in a manner 
consistent with Regulation SCI during a significant systems failure, 
disaster or other unusual circumstances, rather than replicate the 
Exchange's primary data center systems. The Exchange believes that the 
standards set forth in proposed Rule 6.18(b)(i) are reasonable to help 
ensure the maintenance of fair and orderly markets in the event of a 
significant systems failure, disaster or other unusual circumstances 
and are consistent with provisions in the release language of 
Regulation SCI.\13\
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    \12\ Among other things, Regulation SCI requires that the 
Exchange ``establish, maintain, and enforce written policies and 
procedures reasonably designed to ensure that its SCI systems . . . 
have levels of capacity, integrity, resiliency, availability, and 
security, adequate to maintain . . . [sic] [the Exchange's] 
operational capability and promote the maintenance of fair and 
orderly markets.'' See 17 CFR 242.1001(a)(1). With respect to 
business continuity and disaster recovery plans, such standards mean 
that, at a minimum, the Exchange shall maintain ``backup and 
recovery capabilities sufficiently resilient and geographically 
diverse [sic] that they [sic] are reasonably designed to achieve 
next business day resumption of trading and two-hour resumption of 
critical SCI systems following a wide-scale disruption.'' See id. at 
Sec.  242.1001(a)(2)(v).
    \13\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR at 72353 (December 5, 2014) (Regulation Systems 
Compliance and Integrity) (File No. S7-01-13).
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    Proposed Rule 6.18(b)(ii) (Notice), would be the same as current 
Rule 6.18(b) and provide that prior to commencing trading on the back-
up data center, the Exchange shall announce publicly the classes that 
will be available for trading. Proposed Rule 6.18(b)(iii) (Applicable 
Rules) would be the same as current Rule 6.18(c) and provide that the 
same rules that apply to trading using primary data center systems 
would be applicable to trading on back-up data center systems. The 
applicable rule exceptions with respect to the suspension of open 
outcry trading on the floor, however, would be removed from proposed 
Rule 6.18(b)(iii) and relocated to proposed Rule 6.18(c) (Loss of 
Trading Floor). Accordingly, proposed Rule 6.18(b)(iii) would provide 
that in the event the primary data center becomes inoperable, trading 
will continue using the back-up data center and all trading rules will 
remain in effect. Consistent with current Rule 6.18(c), the proposed 
rule would also contain the provisions that only conduct permissible 
pursuant to trading rules that are in force shall be allowed via the 
back-up data center and that all non-trading rules of the Exchange 
shall continue to apply.
    Proposed Rule 6.18(b)(iv) (Trading Permit Holder Participation) 
regarding testing of the Exchange's back-up data center would contain 
provisions similar to current Rule 6.18(d) (Trading Permit Holder 
Preparations), but add subparagraphs to more clearly articulate the 
Exchange's authority to conduct testing of its back-up data center 
systems. Thus, similar to current Rule 6.18(d), proposed Rule 
6.18(b)(iv) would provide that TPHs are required to take appropriate 
actions as instructed by the Exchange to accommodate the Exchange's 
ability to trade options via the back-up data center. Similar to the 
proposed changes to the text of current Rule 6.18(a) with respect to 
the purpose for which the Exchange maintains a back-up data center, for 
the reasons discussed above, the Exchange also proposes changing the 
rule text in proposed Rule 6.18(b)(iv) to provide that TPHs are 
required to take appropriate actions as instructed by the Exchange to 
accommodate the Exchange's ability to conduct business via the back-up 
data center, rather than solely to accommodate the Exchange's ability 
to conduct business [sic]. Under the proposed rule change, the title of 
current Rule 6.18(d) (Trading Permit Holder Preparations) would also be 
changed in proposed Rule 6.18(b)(iv) (Trading Permit Holder 
Participation) to better describe the purpose of the rule provisions.
    Subsections (A) through (C) of proposed Rule 6.18(b)(iv) are 
designed to harmonize the Exchange's back-up data center testing rules 
with certain provisions of Regulation SCI. Under proposed Rule 
6.18(b)(iv)(A) (Designated BCP/DR Participants), the Exchange shall 
designate those Trading Permit Holders that the Exchange determines 
are, as a whole, necessary for the maintenance of fair and orderly 
markets in the event of the activation of the Exchange's business 
continuity and disaster recovery plans (``Designated BCP/DR 
Participants''). Under proposed Rule 6.18(b)(iv)(A)(1), Designated BCP/
DR Participants will be identified based on criteria determined by the 
Exchange and announced via Regulatory Circular, which may include 
whether the Trading Permit Holder (``TPH'') is an appointed Designated 
Primary Market-Maker (``DPM''), Lead Market-Maker (``LMM'') or Market-
Maker in a class and the quality of markets provided by the DPM, LMM, 
or Market-Maker,\14\ the amount of volume transacted by the market 
participant in a class or on the Exchange in general, operational 
capacity, trading experience, and historical contribution to fair and 
orderly markets on the Exchange. Under proposed Rule 6.18(b)(iv)(A)(2), 
Designated BCP/DR Participants shall include, at a minimum, all Market-
Makers in option

[[Page 65261]]

classes exclusively listed on the Exchange that stream quotes in such 
classes and all DPMs in multiply listed option classes. Although under 
the proposed rule, Designated BCP/DR Participants would definitively 
include all Market-Makers in option classes exclusively listed on the 
Exchange that stream quotes in such classes and all DPMs in multiply 
listed option classes, the proposed rule would leave open the 
possibility that other market participants might be designated by the 
Exchange as Designated BCP/DR Participants based on certain of the 
criteria listed in proposed Rule 6.18(b)(iv)(A)(1) and announced via 
Regulatory Circular. Any changes to the standards by which a market 
participant might be determined to be a Designated BCP/DR Participant 
would be applied prospectively with reasonable advance notice as 
announced via Regulatory Circular. The Exchange would first announce 
the criteria by which market participants would be determined to be 
Designated BCP/DR Participants by November 1, 2015.
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    \14\ Among other things, quality of markets provided refers to 
the average size quoted in a class, percentage quoting on NBBO, how 
many series are quoted in a class, and how many calendar months out 
from present day a participant normally quotes.
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    The Exchange has attempted to model the provisions of proposed Rule 
6.18(b)(iv)(A) based on provisions of Regulation SCI, which require the 
Exchange to establish standards for the designation of those members or 
participants that the Exchange reasonably determines are, taken as a 
whole, the minimum number of members or participants necessary for the 
maintenance of fair and orderly markets in the event of the activation 
of its business continuity and disaster recovery plans.\15\ Also 
consistent with Regulation SCI, proposed Rule 6.18(b)(iv)(B) (Fair and 
Orderly Market Conditions) would make clear that nothing in proposed 
Rule 6.18(b) would require the Exchange to assume that average levels 
of liquidity, depth, or other characteristics of a usual trading 
session must be present in order to achieve a fair and orderly market 
in the event of the activation of the Exchange's business continuity 
and disaster recovery plans.\16\
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    \15\ See 17 CFR 242.1004(a)-(b).
    \16\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR at 72353 (December 5, 2014) (Regulation Systems 
Compliance and Integrity) (File No. S7-01-13).
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    Proposed Rule 6.18(b)(iv)(C) (Business Continuity and Disaster 
Recovery Plans Testing), would provide that The [sic] Exchange shall 
require Designated BCP/DR Participants and may require other market 
participants to participate in scheduled business continuity and 
disaster recovery plans tests in the manner and frequency prescribed by 
the Exchange. Proposed Rule 6.18(b)(iv)(C) would set forth the 
Exchange's authority to conduct testing of business continuity and 
disaster recovery plans and obtain assistance from Designated BCP/DR 
Participants and other market participants in conducting such tests. 
The Exchange notes that the provisions of proposed Rule 6.18(b)(iv)(C) 
are consistent with the Exchange's current rules \17\ as well as 
provisions of Regulation SCI pertaining to business continuity and 
disaster recovery plan testing.\18\ Proposed Rule 6.18(b)(iv)(C)(1) 
(Documentation and Reports), would provide that the Exchange may 
require Designated BCP/DR Participants and/or other market participants 
to provide documentation and reports regarding tests conducted pursuant 
to Rule 6.18, including related data and information, as may be 
requested by the Exchange, and in the manner and frequency prescribed 
by the Exchange. Proposed Rule 6.18(b)(iv)(C)(2) (Notice), would 
provide that the Exchange will provide reasonable prior notice of 
scheduled business continuity and disaster recovery plans tests to 
Trading Permit Holders, which notice shall describe the general nature 
of the test(s) and identify the Trading Permit Holders required to 
participate and shall be announced via Regulatory Circular.
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    \17\ See Rules 6.23A (Trading Permit Holder Connectivity); 
6.18(d) (Trading Permit Holder Preparations).
    \18\ See 17 CFR 242.1004(a)-(b).
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    Proposed Rule 6.18(c) (Loss of Trading Floor), would be 
substantially similar to provisions in current Rule 6.18(a) (General), 
regarding loss of the trading floor, which would be removed from 
proposed Rule 6.18(b) (Back-up Data Center) and more appropriately 
placed in a separate section regarding the Exchange's trading floor 
facilities. Under proposed Rule 6.18(c), if the Exchange trading floor 
were to become inoperable, the Exchange would have the authority to 
continue to operate in a screen-based only environment using a 
floorless configuration of the Hybrid Trading System located in the 
primary data center that is operational while the trading floor is 
inoperable. The Exchange would operate using this configuration only 
until the Exchange's trading floor facility is operational and open 
outcry trading would not be available in the event the trading floor 
becomes inoperable, except in accordance with Rule 6.16 (Back-up 
Trading Arrangements), as applicable.
    Proposed Rule 6.18(c)(i) (Applicable Rules), would mirror current 
Rule 6.18(c) (Applicable Rules), except that the current rule would be 
updated in proposed Rule 6.18(c)(i) to include additional rules 
pertaining to open outcry trading, including, but not limited to Rule 
6.12A (Public Automated Routing System (PAR)) and Rule 7.12 (PAR 
Official). Thus, under proposed Rule 6.18(c)(i), in the event that the 
trading floor becomes inoperable, trading would be conducted pursuant 
to all applicable Hybrid System rules, except that open-outcry rules 
would not be in force. In these circumstances, a non-exclusive list of 
open outcry trading rules that would not apply would include either 
all, or some portion of, Rules 6.2, 6.2A, 6.8, 6.8B, 6.9, 6.12; 6.12A, 
6.13A, 6.20, 6.22, 6.23, 6.45, 6.47, 6.54, 6.74, 7.12, 8.15, and 
8.17.\19\ Proposed Rule 6.18(c)(ii) (Other Back-up Trading 
Arrangements), would be similar to current Rule 6.18(e), making clear 
that proposed Rule 6.18 would not preclude the Exchange from conducting 
business on the floor of another exchange pursuant to Rule 6.16 (Back-
up Trading Arrangements), in the event the trading floor is rendered 
inoperable.
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    \19\ In an effort to shorten and simply [sic] the Exchange's 
disaster recovery rule, the Exchange proposes to eliminate redundant 
parenthetical information referencing the titles of each of the 
rules cited in Rule 6.18. The rules and respective titles of the 
rules cited in proposed Rule 6.18(c)(i) include the following: 6.2 
(Trading Rotations); 6.2A (Rapid Opening System); 6.8 (RAES 
Operations); 6.8B (Automatic ORS Order Execution Against Booked 
Orders); 6.9 (Solicited Transactions); 6.12 (CBOE Hybrid Order 
Handling System); 6.12A (Public Automated Routing System (PAR)); 
6.13A (Simple Auction Liaison (SAL)); 6.20 (Admission to and Conduct 
on the Trading Floor; Trading Permit Holder Education); 6.22 
(Trading by Trading Permit Holders on the Floor); 6.23 (Trading 
Permit Holder Wires from Floor [sic]); 6.45 (Priority of Bids and 
Offers--Allocation of Trades); 6.47 (Priority on Split-Price 
Transactions Occurring in Open Outcry); 6.54 (Accommodation 
Liquidations (Cabinet Trades)); 6.74 (Crossing Orders); 7.12 (PAR 
Official); 8.15 (Lead Market-Makers and Supplemental Market-Makers 
in Hybrid 3.0 Classes); and 8.17 (Stopping of Option Orders).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of section 6(b) of the 
Act \20\ and Regulation SCI.\21\ Specifically, the Exchange believes 
the proposed rule change is consistent with the section 6(b)(5) \22\ 
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

[[Page 65262]]

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) \23\ requirement that the rules 
of an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \20\ 15 U.S.C. 78f(b).
    \21\ See 17 CFR 242.1001(a) and 1004.
    \22\ 15 U.S.C. 78f(b)(5).
    \23\ Id.
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    In particular, the proposed rule change is designed to promote the 
Exchange's ability to ensure the continued operation of a fair and 
orderly market in the event of a systems failure, disaster, or other 
unusual circumstances that might threaten the ability to conduct 
business on the Exchange. The Exchange recognizes that switching 
operations to the back-up data center may occur in times of uncertainty 
or great volatility in the markets. It is at these times that the 
investors may have the greatest need for viable, trustworthy 
marketplaces. The proposed rule changes seek to ensure that such a 
marketplace will exist when most needed. Accordingly, the Exchange 
believes that the proposed rule protects investors in the most 
fundamental sense by helping to ensure that a fair and orderly market 
will exist at a time when such a market may be most needed.
    The Exchange also believes that the proposed rule change promotes 
just and equitable principles of trade by adding detail and clarity to 
the Rules. The proposed rule change seeks to provide additional clarity 
to the Exchange's disaster recovery rules, putting all market 
participants on notice as to how the Exchange will function in case of 
significant systems disruption or other disaster situation. The 
Exchange is continuously updating the Rules to provide additional 
detail, clarity, and transparency regarding its operations and trading 
systems and regulatory authority. The Exchange believes that the 
adoption of detailed, clear, and transparent rules reduces burdens on 
competition and promotes just and equitable principles of trade. The 
Exchange also believes that adding greater detail to the Rules 
regarding the Exchange's ability to ensure the continuous operation of 
the market and preserve the ability to conduct business on the Exchange 
will increase confidence in the markets and encourage wider 
participation in the markets and greater investment. Finally, the 
Exchange notes that proposed Rule 6.18 is designed to harmonize the 
Exchange's disaster recovery rules with Regulation SCI under the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Rather, the proposed rule 
change will help ensure that competitive markets remain operative in 
the event of a systems failure or other disaster event. The Exchange 
notes that the proposed rule change is designed to clarify the 
Exchange's authority to require market participants to participate in, 
and provide necessary liquidity to ensure fair and orderly markets. The 
Exchange further notes that the proposed rule change is designed to 
ensure competitive markets in that it is designed around the mandates 
of Regulation SCI, which each of the national securities exchanges is 
required to satisfy.

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

    The Exchange neither solicited nor received written comments on the 
proposed rule change.

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

    Because the 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 if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to section 19(b)(3)(A) of the Act \24\ and Rule 19b-4(f)(6) 
thereunder.\25\
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78s(b)(3)(A).
    \25\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and 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 
Commission deems this requirement to have been met.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \26\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii) \27\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
---------------------------------------------------------------------------

    \26\ 17 CFR 240.19b-4(f)(6).
    \27\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. According to the Exchange, the proposed rule change does not 
present any novel or controversial issues. Rather, the Exchange is 
merely reorganizing its existing rule, updating cross-references to 
incorporate previously adopted rules, or adding provisions that are 
consistent with or required by Regulation SCI. In addition, the 
Exchange has represented that much of the proposed rule change is 
already permitted under the Exchange's existing rule. Accordingly, the 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest as 
it will allow the Exchange to incorporate changes required under 
Regulation SCI, such as establishing standards for designating BCP/DR 
Participants, prior to the November 3, 2015 compliance date. Therefore, 
the Commission designates the proposed rule change to be operative upon 
filing.\28\
---------------------------------------------------------------------------

    \28\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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 the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2015-088 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities

[[Page 65263]]

and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2015-088. 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 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-CBOE-2015-088, and should be 
submitted on or before November 16, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
---------------------------------------------------------------------------

    \29\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-27086 Filed 10-23-15; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 80, No. 206 / Monday, October 26, 2015 / Notices 65259

Under original Rule 6.18, if the practices and making them mandatory.9 required to take appropriate actions as
Exchange were forced to halt trading As part of Regulation SCI, the Exchange instructed by the Exchange to
due to a disaster or other physical is required to maintain back-up and accommodate the Exchange’s ability to
impairment of its trading floor, the recovery capabilities with sufficient trade options via the back-up data
Exchange and its members 7 could resiliency and geographical diversity center. Finally, current Rule 6.18(e)
operate remotely in a screen-based only and that are reasonably designed to provides that nothing in 6.18 precludes
environment from the DRF while the achieve next business-day resumption the Exchange from entering into
trading floor was unavailable. While of trading and two-hour resumption of agreements to trade options elsewhere
operating from the DRF, open outcry critical systems following a wide-scale in accordance with Rule 6.16 (Back-up
trading would be suspended. disruption.10 The Exchange must also Trading Arrangements) in the event that
In 2012, Rule 6.18 was amended in participate in at least annual testing of the Exchange’s trading floor is rendered
connection with the Exchange’s its business continuity and disaster inoperable.
relocation of its primary data center to recovery plans and, to that end, develop The Exchange proposes to make rule
the East Coast and the consequent and adopt standards to designate which changes to Rule 6.18 that would leave
conversion of its former primary data of its TPHs must participate in testing the current rule largely intact, but
center to a back-up data center in in order to reasonably ensure the reorganized with detail added to each
Chicago.8 Specifically, Rule 6.18 was maintenance of a fair and orderly section of the current rule. Under
amended to deal with newly possible market if the Exchange’s disaster proposed Rule 6.18(a) (General), rather
situations in which the primary data recovery plan must be activated.11 than explaining the Exchange’s back-up
center could continue to operate despite Although the Exchange’s current Rules data center and alternative disaster-
the trading floor being rendered provide the Exchange sufficient related trading configurations in the
inoperable or in which the back-up data authority to meet its disaster recovery- introductory section, the Exchange
center might be used despite the trading related obligations under Regulation would adopt a general statement
floor being operational. Specifically, as SCI, the Exchange believes that certain regarding the purpose of its disaster
amended, Rule 6.18 provided that in the clarifying updates to the Rules are recovery rules, providing that the
event that the Exchange were forced to warranted in light of Regulation SCI. Exchange maintains business continuity
switch operations to the back-up data and disaster recovery plans that may be
Proposed Rule Changes effected in the interests of the continued
center, the Exchange’s trading floor
could still be used and that in the event The Exchange proposes to make operation of fair and orderly markets in
changes to Rule 6.18 to provide the event of a systems failure, disaster,
that the trading floor were inoperable,
additional details regarding the or other unusual circumstances that
the Exchange could still operate using a
Exchange’s back-up trading systems and might threaten the ability to conduct
floorless configuration or screen-based
business continuity and disaster business on the Exchange. The content
only environment on the Exchange’s
recovery plans activation and testing. As of current Rule 6.18(a) would be moved
primary data center. References to the
discussed above, the Exchange also from the general section of Rule 6.18(a)
DRF and other irrelevant portions of the
seeks to update its disaster recovery to proposed Rule 6.18(b) regarding the
original rule were eliminated or
rules to ensure consistency with Exchange’s back-up data center.
replaced with references to [sic]
Regulation SCI. Proposed Rule 6.18(b) (Back-up Data
Exchange’s primary and back-up data Current Rule 6.18 is divided into five Center), would mirror current Rule
centers as appropriate. sections, (a) through (e). Rule 6.18(a) 6.18(a), but would include a definitive
In addition to adding greater detail to authorizes the Exchange to maintain a statement that the Exchange maintains a
the Exchange’s disaster recovery rules in back-up data center to preserve the back-up data center in order to preserve
Rule 6.18, the Exchange proposes to Exchange’s ability to trade options in the Exchange’s ability to conduct
make updates to Rule 6.18 to harmonize the event the Exchange’s primary data business in the event the Exchange’s
its disaster recovery rules with the center becomes inoperable or otherwise primary data center becomes inoperable
newly implemented disaster recovery- unavailable for use. Rule 6.18(a) also or otherwise unavailable for use, rather
related regulatory imperatives of authorizes the Exchange to operate in a than providing that the Exchange may
Regulation SCI. Regulation SCI screen-based only environment using a maintain such back-up facilities. The
supersedes and replaces the SEC’s floorless configuration in the event that Exchange also proposes to change the
voluntary Automation Review Policy the trading floor becomes inoperable. text of current Rule 6.18(a) in proposed
(‘‘ARP’’), established by the Rule 6.18(b) describes the notice that Rule 6.18(b) to provide that the
Commission’s two policy statements must be given prior to commencing Exchange maintains a back-up data
each titled ‘‘Automated Systems of Self- trading on back-up data center systems. center in order to preserve the
Regulatory Organizations,’’ issued in Rule 6.18(c) describes the rules that Exchange’s ability to conduct business
1989 and 1991, expanding existing would be in effect if the Exchange were in the event the Exchange’s primary
to switch its trading operations to the data center becomes inoperable or
No. 1 Thereto Regarding a Disaster Recovery back-up data center and the rules that otherwise unavailable for use, rather
Facility) (SR–CBOE–2006–001[sic]).
7 Prior to its demutualization in 2010, the
would be suspended if the Exchange than to preserve only the Exchange’s
Exchange was a member-owned organization. See were to operate in a screen-based only ability to trade options. This proposed
Securities Exchange Act Release No. 62382 (June environment using a floorless rule change reflects the fact that the
25, 2010), 75 FR 38164 (July 1, 2010) (Notice of configuration in the event that the Exchange is engaged in business
asabaliauskas on DSK5VPTVN1PROD with NOTICES

Filing and Immediate Effectiveness of Proposed trading floor becomes inoperable. Rule
Rule Change Relating to Conforming Changes in
activities other than just the trading of
Connection With Demutualization) (SR–CBOE–
6.18(d), prescribes that TPHs are options, including, but not limited to
2010–058). providing market data services and
9 See Securities Exchange Act Release No. 73639
8 See Securities Exchange Act Release No. 68301
conducting regulatory functions.
(November 27, 2012), 77 FR 71650 (December 3, (November 19, 2014), 79 FR at 72252 (December 5, Whereas the Exchange’s current rules
2012) (Notice of Filing and Order Granting 2014) (Regulation Systems Compliance and
Accelerated Approval of Proposed Rule Change To Integrity) (File No. S7–01–13). provide that the Exchange may
Amend CBOE Rule 6.18 Concerning the Exchange’s 10 17 CFR 242.1001(a)(2)(v). determine to switch operations from the
Disaster Recovery Facility) (SR–CBOE–2012–111). 11 Id. at 242.1004. primary data center to the back-up data

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Federal Register / Vol. 80, No. 206 / Monday, October 26, 2015 / Notices 65261

classes exclusively listed on the Exchange. Proposed Rule 6.18(b)(iv)(C) the current rule would be updated in
Exchange that stream quotes in such would set forth the Exchange’s authority proposed Rule 6.18(c)(i) to include
classes and all DPMs in multiply listed to conduct testing of business continuity additional rules pertaining to open
option classes. Although under the and disaster recovery plans and obtain outcry trading, including, but not
proposed rule, Designated BCP/DR assistance from Designated BCP/DR limited to Rule 6.12A (Public
Participants would definitively include Participants and other market Automated Routing System (PAR)) and
all Market-Makers in option classes participants in conducting such tests. Rule 7.12 (PAR Official). Thus, under
exclusively listed on the Exchange that The Exchange notes that the provisions proposed Rule 6.18(c)(i), in the event
stream quotes in such classes and all of proposed Rule 6.18(b)(iv)(C) are that the trading floor becomes
DPMs in multiply listed option classes, consistent with the Exchange’s current inoperable, trading would be conducted
the proposed rule would leave open the rules 17 as well as provisions of pursuant to all applicable Hybrid
possibility that other market Regulation SCI pertaining to business System rules, except that open-outcry
participants might be designated by the continuity and disaster recovery plan rules would not be in force. In these
Exchange as Designated BCP/DR testing.18 Proposed Rule circumstances, a non-exclusive list of
Participants based on certain of the 6.18(b)(iv)(C)(1) (Documentation and open outcry trading rules that would not
criteria listed in proposed Rule Reports), would provide that the apply would include either all, or some
6.18(b)(iv)(A)(1) and announced via Exchange may require Designated BCP/ portion of, Rules 6.2, 6.2A, 6.8, 6.8B,
Regulatory Circular. Any changes to the DR Participants and/or other market 6.9, 6.12; 6.12A, 6.13A, 6.20, 6.22, 6.23,
standards by which a market participant participants to provide documentation 6.45, 6.47, 6.54, 6.74, 7.12, 8.15, and
might be determined to be a Designated and reports regarding tests conducted 8.17.19 Proposed Rule 6.18(c)(ii) (Other
BCP/DR Participant would be applied pursuant to Rule 6.18, including related Back-up Trading Arrangements), would
prospectively with reasonable advance data and information, as may be be similar to current Rule 6.18(e),
notice as announced via Regulatory requested by the Exchange, and in the making clear that proposed Rule 6.18
Circular. The Exchange would first manner and frequency prescribed by the would not preclude the Exchange from
announce the criteria by which market Exchange. Proposed Rule conducting business on the floor of
participants would be determined to be 6.18(b)(iv)(C)(2) (Notice), would provide another exchange pursuant to Rule 6.16
Designated BCP/DR Participants by that the Exchange will provide (Back-up Trading Arrangements), in the
November 1, 2015. reasonable prior notice of scheduled event the trading floor is rendered
The Exchange has attempted to model business continuity and disaster inoperable.
the provisions of proposed Rule recovery plans tests to Trading Permit 2. Statutory Basis
6.18(b)(iv)(A) based on provisions of Holders, which notice shall describe the
general nature of the test(s) and identify The Exchange believes the proposed
Regulation SCI, which require the
the Trading Permit Holders required to rule change is consistent with the Act
Exchange to establish standards for the
participate and shall be announced via and the rules and regulations
designation of those members or
Regulatory Circular. thereunder applicable to the Exchange
participants that the Exchange
Proposed Rule 6.18(c) (Loss of and, in particular, the requirements of
reasonably determines are, taken as a
Trading Floor), would be substantially section 6(b) of the Act 20 and Regulation
whole, the minimum number of
similar to provisions in current Rule SCI.21 Specifically, the Exchange
members or participants necessary for
6.18(a) (General), regarding loss of the believes the proposed rule change is
the maintenance of fair and orderly consistent with the section 6(b)(5) 22
markets in the event of the activation of trading floor, which would be removed
from proposed Rule 6.18(b) (Back-up requirements that the rules of an
its business continuity and disaster exchange be designed to prevent
recovery plans.15 Also consistent with Data Center) and more appropriately
placed in a separate section regarding fraudulent and manipulative acts and
Regulation SCI, proposed Rule practices, to promote just and equitable
6.18(b)(iv)(B) (Fair and Orderly Market the Exchange’s trading floor facilities.
Under proposed Rule 6.18(c), if the principles of trade, to foster cooperation
Conditions) would make clear that and coordination with persons engaged
nothing in proposed Rule 6.18(b) would Exchange trading floor were to become
require the Exchange to assume that inoperable, the Exchange would have 19 In an effort to shorten and simply [sic] the
average levels of liquidity, depth, or the authority to continue to operate in Exchange’s disaster recovery rule, the Exchange
other characteristics of a usual trading a screen-based only environment using proposes to eliminate redundant parenthetical
session must be present in order to a floorless configuration of the Hybrid information referencing the titles of each of the
Trading System located in the primary rules cited in Rule 6.18. The rules and respective
achieve a fair and orderly market in the titles of the rules cited in proposed Rule 6.18(c)(i)
event of the activation of the Exchange’s data center that is operational while the include the following: 6.2 (Trading Rotations); 6.2A
business continuity and disaster trading floor is inoperable. The (Rapid Opening System); 6.8 (RAES Operations);
Exchange would operate using this 6.8B (Automatic ORS Order Execution Against
recovery plans.16 Booked Orders); 6.9 (Solicited Transactions); 6.12
Proposed Rule 6.18(b)(iv)(C) (Business configuration only until the Exchange’s (CBOE Hybrid Order Handling System); 6.12A
Continuity and Disaster Recovery Plans trading floor facility is operational and (Public Automated Routing System (PAR)); 6.13A
Testing), would provide that The [sic] open outcry trading would not be (Simple Auction Liaison (SAL)); 6.20 (Admission to
available in the event the trading floor and Conduct on the Trading Floor; Trading Permit
Exchange shall require Designated BCP/ Holder Education); 6.22 (Trading by Trading Permit
DR Participants and may require other becomes inoperable, except in Holders on the Floor); 6.23 (Trading Permit Holder
market participants to participate in accordance with Rule 6.16 (Back-up Wires from Floor [sic]); 6.45 (Priority of Bids and
asabaliauskas on DSK5VPTVN1PROD with NOTICES

scheduled business continuity and Trading Arrangements), as applicable. Offers—Allocation of Trades); 6.47 (Priority on
Proposed Rule 6.18(c)(i) (Applicable Split-Price Transactions Occurring in Open Outcry);
disaster recovery plans tests in the 6.54 (Accommodation Liquidations (Cabinet
manner and frequency prescribed by the Rules), would mirror current Rule Trades)); 6.74 (Crossing Orders); 7.12 (PAR
6.18(c) (Applicable Rules), except that Official); 8.15 (Lead Market-Makers and
15 See 17 CFR 242.1004(a)–(b). Supplemental Market-Makers in Hybrid 3.0
16 See Securities Exchange Act Release No. 73639 17 See Rules 6.23A (Trading Permit Holder Classes); and 8.17 (Stopping of Option Orders).
20 15 U.S.C. 78f(b).
(November 19, 2014), 79 FR at 72353 (December 5, Connectivity); 6.18(d) (Trading Permit Holder
2014) (Regulation Systems Compliance and Preparations). 21 See 17 CFR 242.1001(a) and 1004.

Integrity) (File No. S7–01–13). 18 See 17 CFR 242.1004(a)–(b). 22 15 U.S.C. 78f(b)(5).

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65262 Federal Register / Vol. 80, No. 206 / Monday, October 26, 2015 / Notices

in regulating, clearing, settling, 6.18 is designed to harmonize the Rule 19b–4(f)(6)(iii) 27 the Commission
processing information with respect to, Exchange’s disaster recovery rules with may designate a shorter time if such
and facilitating transactions in Regulation SCI under the Act. action is consistent with the protection
securities, to remove impediments to of investors and the public interest.
B. Self-Regulatory Organization’s The Exchange has asked the
and perfect the mechanism of a free and
Statement on Burden on Competition Commission to waive the 30-day
open market and a national market
system, and, in general, to protect The Exchange does not believe that operative delay so that the proposal may
investors and the public interest. the proposed rule change will impose become operative immediately upon
Additionally, the Exchange believes the any burden on competition that is not filing. According to the Exchange, the
proposed rule change is consistent with necessary or appropriate in furtherance proposed rule change does not present
the section 6(b)(5) 23 requirement that of the purposes of the Act. Rather, the any novel or controversial issues.
the rules of an exchange not be designed proposed rule change will help ensure Rather, the Exchange is merely
to permit unfair discrimination between that competitive markets remain reorganizing its existing rule, updating
customers, issuers, brokers, or dealers. operative in the event of a systems cross-references to incorporate
In particular, the proposed rule failure or other disaster event. The previously adopted rules, or adding
change is designed to promote the Exchange notes that the proposed rule provisions that are consistent with or
Exchange’s ability to ensure the change is designed to clarify the required by Regulation SCI. In addition,
continued operation of a fair and Exchange’s authority to require market the Exchange has represented that much
orderly market in the event of a systems participants to participate in, and of the proposed rule change is already
failure, disaster, or other unusual provide necessary liquidity to ensure permitted under the Exchange’s existing
circumstances that might threaten the fair and orderly markets. The Exchange rule. Accordingly, the Commission
ability to conduct business on the further notes that the proposed rule believes that waiving the 30-day
Exchange. The Exchange recognizes that change is designed to ensure operative delay is consistent with the
switching operations to the back-up data competitive markets in that it is protection of investors and the public
center may occur in times of uncertainty designed around the mandates of interest as it will allow the Exchange to
or great volatility in the markets. It is at Regulation SCI, which each of the incorporate changes required under
these times that the investors may have national securities exchanges is required Regulation SCI, such as establishing
the greatest need for viable, trustworthy to satisfy. standards for designating BCP/DR
marketplaces. The proposed rule Participants, prior to the November 3,
changes seek to ensure that such a C. Self-Regulatory Organization’s
2015 compliance date. Therefore, the
marketplace will exist when most Statement on Comments on the
Commission designates the proposed
needed. Accordingly, the Exchange Proposed Rule Change Received From
rule change to be operative upon
believes that the proposed rule protects Members, Participants, or Others
filing.28
investors in the most fundamental sense The Exchange neither solicited nor At any time within 60 days of the
by helping to ensure that a fair and received written comments on the filing of the proposed rule change, the
orderly market will exist at a time when proposed rule change. Commission summarily may
such a market may be most needed. temporarily suspend such rule change if
The Exchange also believes that the III. Date of Effectiveness of the it appears to the Commission that such
proposed rule change promotes just and Proposed Rule Change and Timing for action is necessary or appropriate in the
equitable principles of trade by adding Commission Action public interest, for the protection of
detail and clarity to the Rules. The Because the proposed rule change investors, or otherwise in furtherance of
proposed rule change seeks to provide does not (i) significantly affect the the purposes of the Act.
additional clarity to the Exchange’s protection of investors or the public
disaster recovery rules, putting all IV. Solicitation of Comments
interest; (ii) impose any significant
market participants on notice as to how burden on competition; and (iii) become Interested persons are invited to
the Exchange will function in case of operative for 30 days from the date on submit written data, views, and
significant systems disruption or other which it was filed, or such shorter time arguments concerning the foregoing,
disaster situation. The Exchange is including whether the proposed rule
as the Commission may designate if
continuously updating the Rules to change is consistent with the Act.
consistent with the protection of
provide additional detail, clarity, and Comments may be submitted by any of
investors and the public interest, the
transparency regarding its operations the following methods:
proposed rule change has become
and trading systems and regulatory
effective pursuant to section 19(b)(3)(A) Electronic Comments
authority. The Exchange believes that
of the Act 24 and Rule 19b–4(f)(6)
the adoption of detailed, clear, and
thereunder.25 • Use the Commission’s Internet
transparent rules reduces burdens on comment form (http://www.sec.gov/
competition and promotes just and A proposed rule change filed under
rules/sro.shtml); or
equitable principles of trade. The Rule 19b–4(f)(6) 26 normally does not • Send an email to rule-comments@
Exchange also believes that adding become operative for 30 days after the sec.gov. Please include File Number SR–
greater detail to the Rules regarding the date of filing. However, pursuant to CBOE–2015–088 on the subject line.
Exchange’s ability to ensure the
continuous operation of the market and
24 15 U.S.C. 78s(b)(3)(A). Paper Comments
asabaliauskas on DSK5VPTVN1PROD with NOTICES

preserve the ability to conduct business
25 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– • Send paper comments in triplicate
4(f)(6)(iii) requires the Exchange to give the
on the Exchange will increase Commission written notice of the Exchange’s intent to Brent J. Fields, Secretary, Securities
confidence in the markets and to file the proposed rule change, along with a brief
encourage wider participation in the description and text of the proposed rule change, 27 17 CFR 240.19b–4(f)(6)(iii).
at least five business days prior to the date of filing 28 For purposes only of waiving the 30-day
markets and greater investment. Finally, of the proposed rule change, or such shorter time operative delay, the Commission has also
the Exchange notes that proposed Rule as designated by the Commission. The Commission considered the proposed rule’s impact on
deems this requirement to have been met. efficiency, competition, and capital formation. See
23 Id. 26 17 CFR 240.19b–4(f)(6). 15 U.S.C. 78c(f).

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Federal Register / Vol. 80, No. 206 / Monday, October 26, 2015 / Notices 65263

and Exchange Commission, 100 F Street ‘‘Act’’),1 and Rule 19b–4 thereunder,2 list options overlying ETFs that are
NE., Washington, DC 20549–1090. notice is hereby given that on October listed pursuant to generic listing
All submissions should refer to File 9, 2015, EDGX Exchange, Inc. (the standards on equities exchanges for
Number SR–CBOE–2015–088. This file ‘‘Exchange’’ or ‘‘EDGX’’) filed with the series of ETFs based on international or
number should be included on the Securities and Exchange Commission global indexes under which a
subject line if email is used. To help the (‘‘Commission’’) the proposed rule comprehensive surveillance sharing
Commission process and review your change as described in Items I and II agreement (‘‘CSSA’’) is not required.5
comments more efficiently, please use below, which Items have been prepared This proposal will enable the Exchange
only one method. The Commission will by the Exchange. The Exchange has to list and trade options on ETFs
post all comments on the Commission’s designated this proposal as a ‘‘non- without a CSSA provided that the ETF
Internet Web site (http://www.sec.gov/ controversial’’ proposed rule change is listed on an equities exchange
rules/sro.shtml). Copies of the pursuant to section 19(b)(3)(A) of the pursuant to the generic listing standards
submission, all subsequent Act 3 and Rule 19b–4(f)(6)(iii) that do not require a CSSA pursuant to
amendments, all written statements thereunder,4 which renders it effective Rule 19b–4(e) of the Exchange Act.6
with respect to the proposed rule upon filing with the Commission. The Rule 19b–4(e) provides that the listing
change that are filed with the Commission is publishing this notice to and trading of a new derivative
Commission, and all written solicit comments on the proposed rule securities product by a self-regulatory
communications relating to the change from interested persons. organization (‘‘SRO’’) shall not be
proposed rule change between the deemed a proposed rule change,
I. Self-Regulatory Organization’s
Commission and any person, other than pursuant to paragraph (c)(1) of Rule
Statement of the Terms of the Substance
those that may be withheld from the 19b–4, if the Commission has approved,
of the Proposed Rule Change
public in accordance with the pursuant to section 19(b) of the
The Exchange filed a proposal to Exchange Act, the SRO’s trading rules,
provisions of 5 U.S.C. 552, will be allow the listing of options overlying
available for Web site viewing and procedures, and listing standards for the
portfolio depositary receipts and index product class that would include the
printing in the Commission’s Public fund shares (collectively, ‘‘ETFs’’) that
Reference Room, 100 F Street NE., new derivatives securities product and
are listed pursuant to generic listing the SRO has a surveillance program for
Washington, DC 20549 on official standards on equities exchanges for the product class.7 In other words, the
business days between the hours of series of ETFs based on international or proposal will amend the listing
10:00 a.m. and 3:00 p.m. Copies of such global indexes under which a standards to allow the Exchange to list
filing also will be available for comprehensive surveillance sharing and trade options on ETFs based on
inspection and copying at the principal agreement is not required. international or global indexes to a
office of the Exchange. All comments The text of the proposed rule change similar degree that they are allowed to
received will be posted without change; is available at the Exchange’s Web site be listed on several equities exchanges.8
the Commission does not edit personal at www.batstrading.com, at the Currently, EDGX Options rules allow
identifying information from principal office of the Exchange, and at for the listing and trading of options on
submissions. You should submit only the Commission’s Public Reference Fund Shares. Rule 19.3(i)(1)–(3) provide
information that you wish to make Room. the listings standards for options on
available publicly. All submissions Fund Shares with non-U.S. component
should refer to File Number SR–CBOE– II. Self-Regulatory Organization’s
Statement of the Purpose of, and stocks, such as Fund Shares based on
2015–088, and should be submitted on international or global indexes. Rule
or before November 16, 2015. Statutory Basis for, the Proposed Rule
Change 19.3(i)(1) requires that any non-U.S.
For the Commission, by the Division of component stocks of an index or
Trading and Markets, pursuant to delegated In its filing with the Commission, the portfolio of stocks on which the Fund
authority.29 Exchange included statements Shares are based that are not subject to
Brent J. Fields, concerning the purpose of and basis for a CSSA do not in the aggregate represent
Secretary. the proposed rule change and discussed more than 50% of the weight of the
[FR Doc. 2015–27086 Filed 10–23–15; 8:45 am] any comments it received on the index or portfolio. Rule 19.3(i)(2)
BILLING CODE 8011–01–P
proposed rule change. The text of these requires stocks for which the primary
statements may be examined at the market is in any one country that is not
places specified in Item IV below. The
SECURITIES AND EXCHANGE Exchange has prepared summaries, set 5 See, e.g., EDGX Rule 14.2(b)(3); BATS Exchange

COMMISSION forth in Sections A, B, and C below, of Rule 14.11(b)(3)(A)(ii); NYSE MKT Rule 1000
the most significant parts of such Commentary .03(a)(B); NYSE Arca Equities Rule
5.2(j)(3) Commentary .01 (a)(B); and NASDAQ Rule
[Release No. 34–76200; File No. SR–EDGX–
statements. 5705(a)(3)(A)(ii).
6 17 CFR 240.19b–4(e).
2015–48] A. Self-Regulatory Organization’s 7 When relying on Rule 19b–4(e), the SRO must
Statement of the Purpose of, and submit Form 19b–4(e) to the Commission within
Self-Regulatory Organizations; EDGX Statutory Basis for, the Proposed Rule five business days after the SRO begins trading the
Exchange, Inc.; Notice of Filing and Change new derivative securities products. See Exchange
Immediate Effectiveness of a Proposed Act Release No. 40761 (December 8, 1998), 63 FR
1. Purpose
asabaliauskas on DSK5VPTVN1PROD with NOTICES

Rule Change To Amend Rule 19.3 To 70952 (December 22, 1998).
8 See EDGX Rule 14.2(b)(3); BATS Rules
Allow the Listing of Certain Options The Exchange is proposing to amend 14.11(b)(3)(A)(ii); NYSE MKT Rule 1000
Based on International Indexes Rule 19.3(i) to allow the Exchange’s Commentary .03(a)(B); NYSE Arca Equities Rule
options platform (‘‘EDGX Options’’) to 5.2(j)(3) Commentary .01 (a)(B); and NASDAQ Rule
October 20, 2015. 5705(a)(3)(A)(ii). See also Securities Exchange Act
Pursuant to section 19(b)(1) of the 1 15 U.S.C. 78s(b)(1).
Release Nos. 54739 (November 9, 2006), 71 FR
Securities Exchange Act of 1934 (the 66993 (SR–Amex–2006–78); 55269 (February 9,
2 17 CFR 240.19b–4. 2007), 72 FR 7490 (February 15, 2007) (SR–
3 15 U.S.C. 78s(b)(3)(A).
NASDAQ–2006–050); 55621 (April 12, 2007), 72 FR
29 17 CFR 200.30–3(a)(12). 4 17 CFR 240.19b–4(f)(6)(iii). 19571 (April 18, 2007) (SR–NYSEArca–2006–86)

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Document Created: 2018-02-27 08:55:55
Document Modified: 2018-02-27 08:55:55
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 65258