80 FR 79963 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1 and 2, To List and Trade Options That Overlie a Reduced Value of the FTSE China 50 Index
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 246 (December 23, 2015)
Federal Register Volume 80, Issue 246 (December 23, 2015)
| Page Range | 79963-79966 | |
| FR Document | 2015-32190 |
[Federal Register Volume 80, Number 246 (Wednesday, December 23, 2015)] [Notices] [Pages 79963-79966] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-32190] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76676; File No. SR-CBOE-2015-099] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1 and 2, To List and Trade Options That Overlie a Reduced Value of the FTSE China 50 Index December 17, 2015. I. Introduction On October 30, 2015, the Chicago Board Options Exchange, Incorporated (``Exchange'' or ``CBOE'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to list and trade options that overlie a reduced value of the FTSE China 50 Index. The proposed rule change was published for comment in the Federal Register on November 10, 2015.\3\ The Commission received no comments on the proposed rule change. On December 14, 2015, the Exchange filed Amendment No. 1 to the proposed rule change.\4\ On December 16, 2015, the Exchange filed Amendment No. 2 to the proposed rule change.\5\ This order grants approval of the proposed rule [[Page 79964]] change, as modified by Amendment Nos. 1 and 2. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 76354 (November 4, 2015), 80 FR 69741 (``Notice''). \4\ Amendment No. 1 makes certain technical modifications to Exhibit 5, and the corresponding cross references in the Form 19b-4, due to the recent approval of another proposed rule change (See SR- CBOE-2015-100, Securities Exchange Act Release No. 76626 (December 11, 2015), 80 FR 78793 (December 17, 2015)), and to remove a reference to ``(1/100th)'' that was inadvertently included. Amendment No. 1 conforms a phrase in Exhibit 3 relating to when the official closing value of the FTSE China 50 Index is reported by FTSE International Limited (``FTSE'') to the corresponding description in Form 19b-4. As described in Form 19b-4, the official closing value, due to the time zone in Hong Kong and as explained in more detail in the rest of the filing and rule text, is on the day that the contract expires. Amendment No. 1 also revises rule text to make an additional technical edit. As the changes made by Amendment No. 1 are technical in nature and do not materially alter the substance of the proposed rule change or raise any novel regulatory issues, Amendment No. 1 is not subject to notice and comment. \5\ Amendment No. 2 corrects a typographical error in Exhibit 4 of Amendment No. 1. As the change made by Amendment No. 2 is technical in nature and does not materially alter the substance of the proposed rule change or raise any novel regulatory issues, Amendment No. 2 is not subject to notice and comment. --------------------------------------------------------------------------- II. Description of the Proposed Rule Change The Exchange proposes to list and trade A.M. cash-settled, European-style options on the FTSE China 50 Index.\6\ According to the Exchange, the FTSE China 50 Index is a free float-adjusted market capitalization index that is designed to measure the performance of 50 of the largest and most liquid Chinese stocks listed and trading on the Stock Exchange of Hong Kong (``SEHK'').\7\ The Exchange states that the index is monitored and maintained by FTSE International Limited (``FTSE'').\8\ Adjustments to the index could be made on a daily basis with respect to corporate events and dividends, and FTSE reviews the index quarterly. --------------------------------------------------------------------------- \6\ The Exchange proposes to list up to twelve near-term expiration months at any one time for the FTSE China 50 Index options. The Exchange also proposes to list up to ten expirations in Long-Term Index Option Series (LEAPS) on the reduced value of the FTSE China 50 Index Options. The Exchange proposes that options on the FTSE China 50 Index would be eligible for all other expirations permitted for other broad-based indexes (e.g., End of Week/End of Month Expirations, Short Term Option Series, and Quarterly Options Series). In addition, the Exchange proposes to designate the FTSE China 50 Index as eligible for trading as FLEX options. \7\ The Exchange states that the FTSE China 50 Index meets the definition of a broad-based index as set forth in Exchange Rule 24.1(i)(1). \8\ The Exchange proposes to designate FTSE as the reporting authority for the FTSE China 50 Index. --------------------------------------------------------------------------- According to the Exchange, the FTSE China 50 Index is calculated in Hong Kong dollars on a real-time basis during Hong Kong trading hours. The methodology used to calculate the FTSE China 50 Index is similar to the methodology used to calculate the value of other benchmark market- capitalization weighted indexes.\9\ Real-time data is distributed at least every 15 seconds while the index is being calculated using FTSE's real-time calculation engine to Bloomberg L.P. (``Bloomberg''), Thomson Reuters (``Reuters'') and other major vendors. End of day data is distributed daily to clients through FTSE as well as through major quotation vendors, including Bloomberg and Reuters. --------------------------------------------------------------------------- \9\ Specifically, the FTSE China 50 Index is governed by the FTSE Ground Rules for the FTSE China 50 Index. The level of the FTSE China 50 Index reflects the free float-adjusted market value of the component stocks relative to a particular base date and is computed by dividing the total market value of the companies in the FTSE China 50 Index by the index divisor. Further detail regarding this methodology can be found in the Notice, supra note 3, at n.7 and accompanying text. --------------------------------------------------------------------------- The Exchange proposes that trading hours for FTSE China 50 Index options would be from 8:30 a.m. (Chicago time) to 3:15 p.m. (Chicago time). The Exchange proposes that FTSE China 50 Index options would expire on the third Friday of the expiration month.\10\ The exercise settlement value would be one-hundredth (1/100th) of the official closing value of the FTSE China 50 Index as reported by FTSE on the last trading day of the expiring contract, which occurs between approximately 3:00 a.m. and 4:00 a.m. (Chicago time). The exercise settlement amount would be equal to the difference between the exercise-settlement value and the exercise price of the option, multiplied by the contract multiplier ($100).\11\ Exercise would result in delivery of cash on the business day following expiration. --------------------------------------------------------------------------- \10\ According to the Exchange, when the last trading day/ expiration date is moved because of an Exchange holiday or closure, the last trading day/expiration date for expiring options would be the immediately preceding business day. \11\ According to the Exchange, if the exercise settlement value is not available or the normal settlement procedure cannot be utilized due to a trading disruption or other unusual circumstance, the settlement value would be determined in accordance with the rules and bylaws of The Options Clearing Corporation. --------------------------------------------------------------------------- The Exchange proposes to create specific initial and maintenance listing criteria for options on the reduced value of the FTSE China 50 Index. Specifically, the Exchange proposes to add new Interpretation and Policy .03(a) to Rule 24.2 to provide that the Exchange may trade FTSE China 50 Index options if each of the following conditions is satisfied: (1) the index is broad-based, as defined in Rule 24.1(i)(1); (2) options on the index are designated as A.M.-settled index options; (3) the index is capitalization-weighted, price-weighted, modified capitalization-weighted or equal dollar-weighted; (4) the index consists of 45 or more component securities; (5) each of the component securities of the index will have a market capitalization of greater than $100 million; (6) no single component security accounts for more than fifteen percent (15%) of the weight of the index, and the five highest weighted component securities in the index do not, in the aggregate, account for more than fifty percent (50%) of the weight of the index; (7) non-U.S. component securities (stocks or ADRs) that are not subject to comprehensive surveillance agreements do not, in the aggregate, represent more than twenty percent (20%) of the weight of the index; (8) the Exchange may continue to trade FTSE China 50 Index options after trading in all component securities has closed for the day and the index level is no longer widely disseminated at least once every fifteen (15) seconds by one or more major market data vendors, provided that FTSE China 50 futures contracts are trading and prices for those contracts may be used as a proxy for the current index value; (9) the Exchange reasonably believes it has adequate system capacity to support the trading of options on the index, based on a calculation of the Exchange's current Independent System Capacity Advisor allocation and the number of new messages per second expected to be generated by options on such index; and (10) the Exchange has written surveillance procedures in place with respect to surveillance of trading of options on the index. Additionally, the Exchange proposes to add new Interpretation and Policy .03(b) to Rule 24.2 to set forth the following maintenance listing standards for options on the FTSE China 50 Index: (1) the conditions set forth in subparagraphs .03(a) (1), (2), (3), (4), (7), (8), (9) and (10) must continue to be satisfied, the conditions set forth in subparagraphs .03(a)(5) and (6) must be satisfied only as of the first day of January and July in each year; and (2) the total number of component securities in the index may not increase or decrease by more than ten percent (10%) from the number of component securities in the index at the time of its initial listing. In the event a class of index options listed on the Exchange pursuant to Interpretation and Policy .03(b) fails to satisfy these maintenance listing standards, the Exchange shall not open for trading any additional series of options of that class unless the continued listing of that class of index options has been approved by the Commission under Section 19(b)(2) of the Act. The contract multiplier for the FTSE China 50 Index options would be $100. The FTSE China 50 Index options would be quoted in index points and one point would equal $100. The Exchange proposes that the minimum tick size for series trading below $3 would be 0.05 ($5.00), and at or above $3 would be 0.10 ($10.00). The Exchange also proposes that the strike price interval for FTSE China 50 Index options would be no less than $5, except that the strike price interval would be no less than $2.50 if the strike price is less than $200. The Exchange proposes to apply the default position limits for broad-based index options of 25,000 contracts on the same side of the market (and 15,000 contracts near-term limit) to FTSE China 50 Index options. All position limit hedge exemptions would apply. The exercise limits for FTSE China 50 Index options would be equivalent to the position limits for those options. In [[Page 79965]] addition, the Exchange proposes that the position limits for FLEX options on the FTSE China 50 Index would be equal to the position limits for non-FLEX options on the FTSE China 50 Index. The exercise limits for FLEX options on the FTSE China 50 Index would be equivalent to the position limits for those options. The Exchange states that, except as modified by the proposal, Exchange Rules in Chapters I through XIX, XXIV, XXIVA, and XXIVB would equally apply to FTSE China 50 Index options. The Exchange also states that FTSE China 50 Index options would be subject to the same rules that currently govern other CBOE index options, including sales practice rules, margin requirements,\12\ and trading rules.\13\ --------------------------------------------------------------------------- \12\ The Exchange states that FTSE China 50 Index options would be margined as broad-based index options. \13\ See, e.g., Exchange Rule Chapters IX (Doing Business with the Public), XII (Margins), IV (Business Conduct), VI (Doing Business on the Exchange Floor), VIII (Market-Makers, Trading Crowds and Modified Trading Systems), and XXIV (Index Options). --------------------------------------------------------------------------- The Exchange represents that it has an adequate surveillance program in place for FTSE China 50 Index options and intends to use the same surveillance procedures currently utilized for each of the Exchange's other index options to monitor trading in the proposed options. The Exchange also states that it is a member of the Intermarket Surveillance Group, is an affiliate member of the International Organization of Securities Commissions, and has entered into various comprehensive surveillance agreements and/or Memoranda of Understanding with various stock exchanges, including SEHK. Finally, the Exchange represents that it believes it and the Options Price Reporting Authority (``OPRA'') have the necessary systems capacity to handle the additional traffic associated with the listing of new series that would result from the introduction of FTSE China 50 Index options.\14\ --------------------------------------------------------------------------- \14\ For a complete description of the Exchange's proposal, please see the Notice, supra note 3. --------------------------------------------------------------------------- III. Discussion and Commission Findings The Commission finds that the proposed rule change, as modified by Amendment Nos. 1 and 2, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\15\ Specifically, the Commission finds that the proposed rule change, as modified by Amendment Nos. 1 and 2, is consistent with Section 6(b)(5) of the Act,\16\ which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, 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. --------------------------------------------------------------------------- \15\ In approving this proposed rule change, as modified by Amendments Nos. 1 and 2, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \16\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Commission believes that the listing and trading of FTSE China 50 Index options will broaden trading and hedging opportunities for investors by providing an options instrument based on an index designed to measure the performance of 50 of the largest and most liquid Chinese stocks listed and trading on SEHK. Moreover, the Exchange states that FTSE China 50 ETFs, such as the iShares China Large-Cap exchange traded fund (``FXI''), are actively-traded products. The Exchange also lists actively-traded options overlying those ETFs and states that those options are actively traded as well. Because the FTSE China 50 Index is a broad-based index composed of actively-traded, well-capitalized stocks, the trading of options on the index does not raise unique regulatory concerns. The Commission believes that the listing standards, which are created specifically and exclusively for the index, are consistent with the Act, for the reasons discussed below. The Commission notes that proposed Interpretation and Policy .03 to Exchange Rule 24.2 would require that the FTSE China 50 Index consist of 45 or more component securities. Further, for options on the FTSE China 50 Index to trade, each of the minimum of 45 component securities would need to have a market capitalization of greater than $100 million. The Commission notes that the proposed listing standards for options on the FTSE China 50 Index would not permit any single component security to account for more than 15% of the weight of the index, and would not permit the five highest weighted component securities to account for more than 50% of the weight of the index in the aggregate. The Commission believes that, in view of the requirement on the number of securities in the index and on each security's market capitalization, this concentration standard is consistent with the Act. As noted above, the Exchange represents that it has an adequate surveillance program in place for FTSE China 50 Index options and intends to use the same surveillance procedures currently utilized for each of the Exchange's other index options to monitor trading in the proposed options. The Commission notes that, consistent with the Exchange's generic listing standards for broad-based index options, non-U.S. component securities of the FTSE China 50 Index that are not subject to comprehensive surveillance agreements will not, in the aggregate, represent more than 20% of the weight of the index. The Exchange states that, because trading in the components of the FTSE China 50 Index starts at approximately 8:30 p.m. (Chicago time) (prior day) and ends at approximately 3:00 a.m. (Chicago time) (next day), there will not be a current FTSE China 50 Index level calculated and disseminated while FTSE China 50 Index options would be traded (from approximately 8:30 a.m. (Chicago time) to 3:15 p.m. (Chicago time)). However, the listing standards state that the Exchange may continue to trade FTSE China 50 Index options after trading in all component securities has closed for the day and the index level is no longer widely disseminated at least once every 15 seconds by one or more major market data vendors, provided that FTSE China 50 futures contracts are trading and prices for those contracts may be used as a proxy for the current index value. The Exchange states that during time that the options would be trading on the exchange, E-Mini FTSE China 50 Index futures contracts will be trading and that the futures prices would be a proxy for the current FTSE China 50 Index level during this time period.\17\ --------------------------------------------------------------------------- \17\ The Exchange states that E-Mini FTSE China 50 Index futures contracts are listed for trading on the Chicago Mercantile Exchange Inc. --------------------------------------------------------------------------- In addition, the proposed listing standards require the Exchange to reasonably believe that it has adequate system capacity to support the trading of options on the FTSE China 50 Index. As noted above, the Exchange represents that it believes it and the OPRA have the necessary systems capacity to handle the additional traffic associated with the listing of new series that would result from the introduction of FTSE China 50 Index options. As a national securities exchange, the Exchange is required, under Section 6(b)(1) of the Act,\18\ to enforce compliance by its members, and persons associated with its members, with the provisions of the Act, Commission rules and regulations thereunder, and its own [[Page 79966]] rules. As noted above, the Exchange states that, except as modified by the proposal, Exchange Rules in Chapters I through XIX, XXIV, XXIVA, and XXIVB would equally apply to FTSE China 50 Index options. The Exchange also states that FTSE China 50 Index options would be subject to the same rules that currently govern other CBOE index options, including sales practice rules, margin requirements, and trading rules. --------------------------------------------------------------------------- \18\ 15 U.S.C. 78f(b)(1). --------------------------------------------------------------------------- The Commission further believes that the Exchange's proposed position and exercise limits, trading hours, margin, strike price intervals, minimum tick size, series openings, and other aspects of the proposed rule change, as modified by Amendment Nos. 1 and 2, are appropriate and consistent with the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\19\ that the proposed rule change (SR-CBOE-2015-099), as modified by Amendment Nos. 1 and 2, be, and hereby is, approved. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ --------------------------------------------------------------------------- \20\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-32190 Filed 12-22-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 246 / Wednesday, December 23, 2015 / Notices 79963
the captioned dockets are consistent market. The proposed rule change was SECURITIES AND EXCHANGE
with the policies of 39 U.S.C. 3632, published for comment in the Federal COMMISSION
3633, or 3642, 39 CFR part 3015, and 39 Register on November 18, 2015.4 The
CFR part 3020, subpart B. Comments are Commission has received two comment [Release No. 34–76676; File No. SR–CBOE–
due no later than January 7, 2016. The letters on the proposal.5 2015–099]
public portions of these filings can be
Section 19(b)(2) of the Act 6 provides
accessed via the Commission’s Web site Self-Regulatory Organizations;
that within 45 days of the publication of
(http://www.prc.gov). Chicago Board Options Exchange,
The Commission appoints Curtis E. notice of the filing of a proposed rule Incorporated; Order Granting Approval
Kidd to serve as Public Representative change, or within such longer period up of a Proposed Rule Change, as
in these dockets. to 90 days as the Commission may Modified by Amendment Nos. 1 and 2,
designate if it finds such longer period To List and Trade Options That Overlie
III. Ordering Paragraphs to be appropriate and publishes its a Reduced Value of the FTSE China 50
It is ordered: reasons for so finding, or as to which the Index
1. The Commission establishes Docket self-regulatory organization consents,
Nos. MC2016–41 and CP2016–50 to the Commission shall either approve the December 17, 2015.
consider the matters raised in each proposed rule change, disapprove the I. Introduction
docket. proposed rule change, or institute
2. Pursuant to 39 U.S.C. 505, Curtis E. On October 30, 2015, the Chicago
proceedings to determine whether the
Kidd is appointed to serve as an officer Board Options Exchange, Incorporated
proposed rule change should be
of the Commission to represent the (‘‘Exchange’’ or ‘‘CBOE’’) filed with the
disapproved. The 45th day after
interests of the general public in these Securities and Exchange Commission
publication of the notice for this (‘‘Commission’’), pursuant to Section
proceedings (Public Representative). proposed rule change is January 2, 2016.
3. Comments are due no later than 19(b)(1) of the Securities Exchange Act
The Commission is extending this 45- of 1934 (‘‘Act’’) 1 and Rule 19b–4
January 7, 2016. day time period.
4. The Secretary shall arrange for thereunder,2 a proposed rule change to
publication of this order in the Federal The Commission finds it appropriate list and trade options that overlie a
Register. to designate a longer period within reduced value of the FTSE China 50
which to take action on the proposed Index. The proposed rule change was
By the Commission. published for comment in the Federal
rule change so that it has sufficient time
Stacy L. Ruble, to consider this proposed rule change Register on November 10, 2015.3 The
Secretary. and the comments received. Commission received no comments on
[FR Doc. 2015–32236 Filed 12–22–15; 8:45 am] Accordingly, the Commission, pursuant the proposed rule change. On December
BILLING CODE 7710–FW–P to Section 19(b)(2) of the Act,7 14, 2015, the Exchange filed
designates February 16, 2016, as the Amendment No. 1 to the proposed rule
date by which the Commission shall change.4 On December 16, 2015, the
SECURITIES AND EXCHANGE either approve or disapprove, or Exchange filed Amendment No. 2 to the
COMMISSION proposed rule change.5 This order
institute proceedings to determine
grants approval of the proposed rule
[Release No. 34–76673; File No. SR– whether to disapprove, the proposed
NYSEArca–2015–104] rule change (File No. SR–NYSEArca– 1 15 U.S.C. 78s(b)(1).
2015–104) 2 17 CFR 240.19b–4.
Self-Regulatory Organizations; NYSE
For the Commission, by the Division of 3 See Securities Exchange Act Release No. 76354
Arca, Inc.; Notice of Designation of a (November 4, 2015), 80 FR 69741 (‘‘Notice’’).
Trading and Markets, pursuant to delegated
Longer Period for Commission Action 4 Amendment No. 1 makes certain technical
authority.8
on Proposed Rule Change To Adopt a modifications to Exhibit 5, and the corresponding
New Policy Relating to Trade Reports Robert W. Errett, cross references in the Form 19b–4, due to the
Deputy Secretary. recent approval of another proposed rule change
for Exchange Traded Products (See SR–CBOE–2015–100, Securities Exchange Act
[FR Doc. 2015–32187 Filed 12–22–15; 8:45 am] Release No. 76626 (December 11, 2015), 80 FR
December 17, 2015. 78793 (December 17, 2015)), and to remove a
BILLING CODE 8011–01–P
On October 28, 2015, NYSE Arca, Inc. reference to ‘‘(1/100th)’’ that was inadvertently
(‘‘Exchange’’) filed with the Securities included. Amendment No. 1 conforms a phrase in
Exhibit 3 relating to when the official closing value
and Exchange Commission of the FTSE China 50 Index is reported by FTSE
(‘‘Commission’’), pursuant to Section International Limited (‘‘FTSE’’) to the
19(b)(1) of the Securities Exchange Act corresponding description in Form 19b–4. As
of 1934 (‘‘Act’’) 1 and Rule 19b–4 described in Form 19b–4, the official closing value,
due to the time zone in Hong Kong and as
thereunder,2 a rule change proposing a explained in more detail in the rest of the filing and
new policy related to the Exchange’s 4 See rule text, is on the day that the contract expires.
Notice, supra note 3.
treatment of trade reports for ‘‘Exchange 5 See
Amendment No. 1 also revises rule text to make an
Letter from Gary Gastineau, ETF additional technical edit. As the changes made by
Traded Products’’ 3 that it determines to Consultants.com, Inc., to the Commission (Nov. 27, Amendment No. 1 are technical in nature and do
be inconsistent with the prevailing 2015); Letter from James J. Angel, Associate not materially alter the substance of the proposed
Professor, Georgetown University, to the rule change or raise any novel regulatory issues,
1 15 U.S.C. 78s(b)(1). Commission (Dec. 5, 2015). All comments on the Amendment No. 1 is not subject to notice and
tkelley on DSK3SPTVN1PROD with NOTICES
2 17 CFR 240.19b–4. comment.
proposed rule change are available on the
3 For purposes of this proposed rule change, 5 Amendment No. 2 corrects a typographical error
Commission’s Web site at: http://www.sec.gov/
‘‘Exchange Traded Products’’ include exchange- comments/sr-nysearca-2015-104/ in Exhibit 4 of Amendment No. 1. As the change
traded funds, exchange-traded notes, and exchange- nysearca2015104.shtml. made by Amendment No. 2 is technical in nature
traded vehicles. See Securities Exchange Act 6 15 U.S.C. 78s(b)(2).
and does not materially alter the substance of the
Release No. 76431 (Nov. 12, 2015), 80 FR 72126, n.4 proposed rule change or raise any novel regulatory
7 Id.
(Nov. 18, 2015) (SR–NYSEArca–2015–104) issues, Amendment No. 2 is not subject to notice
(‘‘Notice’’). 8 17 CFR 200.30–3(a)(31). and comment.
VerDate Sep<11>2014 18:05 Dec 22, 2015 Jkt 238001 PO 00000 Frm 00147 Fmt 4703 Sfmt 4703 E:\FR\FM\23DEN1.SGM 23DEN1](https://thefederalregister.org/doc/80_FR_80209/page/1.svg)
![79966 Federal Register / Vol. 80, No. 246 / Wednesday, December 23, 2015 / Notices
rules. As noted above, the Exchange change under paragraph (f)(6) of Rule ‘‘Party to a transaction’’ means an
states that, except as modified by the 19b–4 under the Act,3 which renders introducing broker-dealer, if any, an
proposal, Exchange Rules in Chapters I the proposal effective upon receipt of executing broker-dealer or a customer.5
through XIX, XXIV, XXIVA, and XXIVB this filing by the Commission. The Thus, in transactions in a TRACE-
would equally apply to FTSE China 50 Commission is publishing this notice to Eligible Security between members,
Index options. The Exchange also states solicit comments on the proposed rule each member is a party to the
that FTSE China 50 Index options change from interested persons. transaction and is required to report the
would be subject to the same rules that transaction. An ATS is a party to a
currently govern other CBOE index I. Self-Regulatory Organization’s
Statement of the Terms of the Substance transaction in a TRACE-Eligible
options, including sales practice rules, Security occurring through its system
margin requirements, and trading rules. of the Proposed Rule Change
and has a TRACE transaction reporting
The Commission further believes that FINRA is proposing to adopt new obligation, unless an exception or
the Exchange’s proposed position and FINRA Rule 6732 to provide FINRA exemption applies.6
exercise limits, trading hours, margin, with authority to exempt certain
transactions by a member alternative On February 28, 2012, FINRA adopted
strike price intervals, minimum tick
trading system (‘‘ATS’’) that meet Rule 6731 (Exemption from Trade
size, series openings, and other aspects
specified criteria from the transaction Reporting Obligation for Certain
of the proposed rule change, as
reporting obligations under FINRA Rule Alternative Trading Systems) to provide
modified by Amendment Nos. 1 and 2,
6730. In addition, FINRA is proposing a FINRA with authority to exempt ATSs
are appropriate and consistent with the
conforming change to FINRA Rule 9610 from TRACE trade reporting obligations
Act.
to specify that FINRA has exemptive under certain circumstances;
IV. Conclusion specifically, where the ATS
authority under proposed Rule 6732.
It is therefore ordered, pursuant to The text of the proposed rule change demonstrates that: member subscribers
Section 19(b)(2) of the Act,19 that the is available on FINRA’s Web site at are fully disclosed to one another at all
proposed rule change (SR–CBOE–2015– http://www.finra.org, at the principal times on the ATS; the system does not
099), as modified by Amendment Nos. office of FINRA and at the permit automatic execution (and a
1 and 2, be, and hereby is, approved. Commission’s Public Reference Room. member subscriber must take
affirmative steps beyond the submission
For the Commission, by the Division of II. Self-Regulatory Organization’s
Trading and Markets, pursuant to delegated
of an order to agree to a trade with
authority.20
Statement of the Purpose of, and another member subscriber); the trade
Statutory Basis for, the Proposed Rule does not pass through any ATS account
Robert W. Errett,
Change (and the ATS does not in any way hold
Deputy Secretary.
In its filing with the Commission, itself out to be a party to the trade); and
[FR Doc. 2015–32190 Filed 12–22–15; 8:45 am]
FINRA included statements concerning the ATS does not exchange TRACE-
BILLING CODE 8011–01–P
the purpose of and basis for the Eligible Securities or funds on behalf of
proposed rule change and discussed any the member subscribers or take either
comments it received on the proposed side of the trade for clearing or
SECURITIES AND EXCHANGE
rule change. The text of these statements settlement purposes (including, but not
COMMISSION
may be examined at the places specified limited to, at DTC or otherwise), or in
[Release No. 34–76677; File No. SR–FINRA– in Item IV below. FINRA has prepared any other way insert itself into the
2015–055] trade.7 In addition, trades on the ATS
summaries, set forth in sections A, B,
and C below, of the most significant must be between subscribers that are
Self-Regulatory Organizations; both FINRA members. Where a Rule
Financial Industry Regulatory aspects of such statements.
6731 exemption is granted, the ATS is
Authority, Inc.; Notice of Filing and A. Self-Regulatory Organization’s not deemed a party to the transactions
Immediate Effectiveness of a Proposed Statement of the Purpose of, and occurring through its system for
Rule Change To Provide FINRA with Statutory Basis for, the Proposed Rule purposes of trade reporting
Authority To Grant Exemptions from Change requirements.8
TRACE Reporting Requirements for
Certain ATS Transactions 1. Purpose
5 ‘‘Customer’’ includes a broker-dealer that is not
Rule 6730 (Transaction Reporting) a FINRA member.
December 17, 2015.
generally requires that each FINRA 6 See Regulatory Notice 14–53 (November 2014)
Pursuant to Section 19(b)(1) of the member that is a party to a transaction (FINRA Reminds ATSs and ATS Subscribers of
Securities Exchange Act of 1934 in a TRACE-Eligible Security 4 report Their Trade Reporting Obligations in TRACE-
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 the transaction to TRACE within the Eligible Securities).
notice is hereby given that on December period of time prescribed in the rule.
7 See Securities Exchange Act Release No. 66513
8, 2015, Financial Industry Regulatory (March 5, 2012), 77 FR 14454 (March 9, 2012)
(Notice of Filing and Immediate Effectiveness of
Authority, Inc. (‘‘FINRA’’) filed with the 3 17 CFR 240.19b–4(f)(6). File No. SR–FINRA–2012–016) (‘‘Rule 6731
Securities and Exchange Commission 4 Rule 6710(a) provides that a ‘‘TRACE-Eligible Proposal’’).
(‘‘SEC’’ or ‘‘Commission’’) the proposed Security’’ is a debt security that is United States 8 FINRA stated in the Rule 6731 Proposal that an
rule change as described in Items I and dollar-denominated and issued by a U.S. or foreign ATS that satisfies all the conditions of the proposal
private issuer, and, if a ‘‘restricted security’’ as has a more limited involvement in the trade
II below, which Items have been defined in Securities Act Rule 144(a)(3), sold execution than the member subscribers and,
prepared by FINRA. FINRA has pursuant to Securities Act Rule 144A; or is a debt therefore, the exemption from trade reporting is
tkelley on DSK3SPTVN1PROD with NOTICES
designated the proposed rule change as security that is U.S. dollar-denominated and issued appropriate. As a condition to the proposed [sic]
constituting a ‘‘non-controversial’’ rule or guaranteed by an Agency as defined in paragraph Rule 6731 exemption, the ATS and its member
(k) or a Government-Sponsored Enterprise as subscribers must acknowledge and agree in writing
19 15
defined in paragraph (n). ‘‘TRACE-Eligible that the ATS is not deemed a party to the trade for
U.S.C. 78s(b)(2). Security’’ does not include a debt security that is: purposes of trade reporting, and that trades shall be
20 17 CFR 200.30–3(a)(12). issued by a foreign sovereign, a U.S. Treasury reported to FINRA in accordance with Rule 6730 by
1 15 U.S.C. 78s(b)(1).
Security as defined in paragraph (p), or a Money each member subscriber that satisfies the definition
2 17 CFR 240.19b–4. Market Instrument as defined in paragraph (o). of ‘‘party to a transaction,’’ as defined in Rule 6710.
VerDate Sep<11>2014 18:05 Dec 22, 2015 Jkt 238001 PO 00000 Frm 00150 Fmt 4703 Sfmt 4703 E:\FR\FM\23DEN1.SGM 23DEN1](https://thefederalregister.org/doc/80_FR_80209/page/4.svg)
Document Created: 2018-03-02 09:21:38
Document Modified: 2018-03-02 09:21:38
| 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 79963 |
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