81 FR 31279 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Split-Price Priority

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 96 (May 18, 2016)

Page Range		31279-31283
FR Document		2016-11652
Federal Register, Volume 81 Issue 96 (Wednesday, May 18, 2016)
[Federal Register Volume 81, Number 96 (Wednesday, May 18, 2016)]
[Notices]
[Pages 31279-31283]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-11652]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77823; File No. SR-CBOE-2016-034]


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

May 12, 2016.
    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 May 6, 2016, Chicago Board Options Exchange, Incorporated (the 
``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 Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its rules related to split-price 
priority. The text of the proposed rule change is provided below.

(additions are italicized; deletions are [bracketed])
* * * * *
Chicago Board Options Exchange, Incorporated Rules
* * * * *
Rule 1.1. Definitions
    When used in these Rules, unless the context otherwise requires:
    (a)-(eee) No change.
Voluntary Professional
    (fff) The term ``Voluntary Professional'' means any person or 
entity that is not a broker or dealer in securities that elects, in 
writing, to be treated in the same manner as a broker or dealer in 
securities for purposes of Rules 6.2A, 6.2B, 6.8C, 6.9, 6.13A, 6.13B, 
6.25, 6.45, 6.45A (except for Interpretation and Policy .02), 6.45B 
(except for Interpretation and Policy .02), 6.47, 6.53C(c)(ii), 
6.53C(d)(v), subparagraphs (b) and (c) under Interpretation and Policy 
.06 to Rule 6.53C, 6.74 (except Voluntary Professional orders may be 
considered public customer orders subject to facilitation under 
paragraphs (b) and (d)), 6.74A, 6.74B, 8.13, 8.15(d), 8.87, 24.19, 
43.1, 44.4, 44.14, and for cancellation fee treatment. The Voluntary 
Professional designation is not available in Hybrid 3.0 classes.
Professional
    (ggg) The term ``Professional'' means any person or entity that (i) 
is not a broker or dealer in securities, and (ii) places more than 390 
orders in listed options per day on average during a calendar month for 
its own beneficial account(s). A Professional will be treated in the 
same manner as a broker or dealer in securities for purposes of Rules 
6.2A, 6.2B, 6.8C, 6.9, 6.13A, 6.13B, 6.25, 6.45, 6.45A (except for 
Interpretation and Policy .02), 6.45B (except for Interpretation and 
Policy .02), 6.47, 6.53C(c)(ii), 6.53C(d)(v), subparagraphs (b) and (c) 
under Interpretation and Policy .06 to Rule 6.53C, 6.74 (except 
Professional orders may be considered public customer orders subject to 
facilitation under paragraphs (b) and (d)), 6.74A, 6.74B, 8.13, 
8.15(d), 8.87, 24.19, 43.1, 44.4, 44.14. The Professional designation 
is not available in Hybrid 3.0 classes. All Professional orders shall 
be marked with the appropriate origin code as determined by the 
Exchange.

. . . Interpretations and Policies:

.01 No change.

(hhh)--(sss) No change.

. . . Interpretations and Policies:

.01--.05 No change.
* * * * *
Rule 6.47. Priority on Split-Price Transactions Occurring in Open 
Outcry
    (a) [Purchase or sale]Split-Price [p]Priority. If an order or offer 
(bid) for any number of contracts of a series is represented to the 
crowd, a Trading Permit Holder that buys [purchases] (sells) one or 
more [option ]contracts of that order or offer (bid)[a particular 
series] at one[a particular] price[ or prices, he shall, at the next 
lower (higher) price at which a Trading Permit Holder other than the 
Order Book Official is bidding (offering),] will have priority [in] 
over all other orders and quotes, except public customer orders resting 
in the book, to buy [purchasing ](sell[ing]) up to the [equivalent]same 
number of [option] contracts of those remaining from the same order or 
offer (bid)[series that he purchased (sold)] at the next lower (higher[ 
(lower]) price[ or prices, but only if his bid (offer) is made promptly 
and the purchase (sale) so effected represents the opposite side of a 
transaction with the same order or offer (bid) as the earlier purchase 
or purchases (sale or sales). This paragraph only applies to 
transactions effected in open outcry].
    (b) [Purchase or sale]Split-Price [p]Priority for O[o]rders or 
Offers (Bids) of 100 or More [c]Contracts[ or more]. If an order or 
offer (bid) of 100 or more contracts of a series is represented to the 
crowd, a Trading Permit Holder that buys[purchases] (sells) 50[fifty] 
or more of the [option ]contracts of that order or offer (bid)[a 
particular series] at one[a particular] price [or prices, he shall, at 
the next lower (higher) price]will have priority [in]over all other 
orders and quotes to buy [purchasing ](sell[ing]) up to the [equivalent 
]same number of [option ]contracts of those remaining from the same 
[series that he purchased (sold)]order or offer (bid) at the next lower 
(higher[ (lower]) price[ or prices, but only if his bid (offer) is made 
promptly and the purchase (sale) so effected represents the opposite 
side of a transaction with the same order or offer (bid) as the earlier 
purchase or purchases (sale or sales)]. The Exchange may increase the 
[``]minimum qualifying [order ]size['' above] of 100 contracts on a 
class-by-class basis[.], [Announcements regarding]which changes [to the 
minimum qualifying order size shall be made]the Exchange will announce 
via Regulatory Circular.[ This paragraph only applies to transactions 
effected in open outcry.]
    (c) Two or [m]More Trading Permit Holders [e]Entitled to 
[p]Priority. If the bids or offers of two or more Trading Permit 
Holders are both entitled to split-price priority[ in accordance with 
paragraph (a) or paragraph (b)], it [shall]will be afforded [them 
insofar as]to the extent practicable[,] on a pro-rata basis.
    (d) Conditions. Split-price priority is subject to the following:
    (i) The priority is available for open outcry transactions only and 
does not apply to complex orders.

[[Page 31280]]

    (ii) The Trading Permit Holder must make its bid (offer) at the 
next lower (higher) price for the second (or later) transaction at the 
same time as the first bid (offer) or promptly following execution of 
the first (or earlier) transaction.
    (iii) The second (or later) purchase (sale) must represent the 
opposite side of a transaction with the same order or offer (bid) as 
the first (or earlier) purchase (sale).
    (e) Minimum Increment Width with Public Customer Orders Resting in 
the Book. If the width of the quote for a series is the minimum 
increment for that series, and both the bid and offer represent public 
customer orders resting in the book, split-price priority pursuant to 
this rule is not available to Trading Permit Holders until the public 
customer order(s) resting in the book on either side of the market 
trades.

. . . Interpretations and Policies:
.01-.02 No change.
* * * * *
    The text of the proposed rule change is also available on the 
Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    Rule 6.47 establishes priority principles for split-price 
transactions occurring in open outcry. Generally, a Trading Permit 
Holder that purchases (sells) one or more contracts of a series at a 
particular price will have priority over other Trading Permit Holders, 
other than those representing orders in the limit order book, in 
purchasing (selling) up to an equivalent number of contracts of the 
same order at the next lower (higher) price. For orders of 100 or more 
contracts, Trading Permit Holders that trade 50 or more contracts of 
such orders at a particular price will have this priority over all 
other Trading Permit Holders at the next best price, including those 
representing orders in the limit order book. This priority is awarded 
for split-price transactions that occur in open outcry only.
Minimum Increment Width Series
    The Exchange proposes to add Rule 6.47(e) to codify an exception to 
the availability of split-price priority when the width of a series' 
quote is at the minimum increment width. If the width of the quote for 
a series is the minimum increment for that series (e.g., $1.00-$1.05 
for a series with a minimum increment of $0.05, $1.00-$1.01 for a 
series with a minimum increment of $0.01), and both the bid and offer 
represent public customer orders resting in the book, split-price 
priority pursuant to this rule is not available to Trading Permit 
Holders until the public customer order(s) resting in the book on 
either side of the market trades.\3\ This exception is consistent with 
the Exchange's allocation and priority rules, which provide for public 
customer orders to have first priority at the best price in open outcry 
(subject to applicable exceptions).\4\
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    \3\ This exception is currently set forth in Regulatory Circular 
RG07-076.
    \4\ See Rules 6.45A(b)(i)(A) and 6.45B(b)(i)(A).
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    For example, assume the market for a series with a minimum 
increment of $0.05 is $1.00-$1.05 (with the $1.00 bid and $1.05 offer 
each representing a customer order for 25 contracts), and a Floor 
Broker receives an order from a customer that would like to buy 100 
contracts at a price or prices no higher than $1.05. The Floor Broker 
attempts to execute the order in open outcry at a price better than the 
displayed offer of $1.05. Assume a Market-Maker is willing to sell 50 
contracts at $1.00 and 50 contracts at $1.05. The ``first transaction'' 
of this split-price transaction would be 50 contracts at $1.00. 
However, there is customer interest resting at $1.00, which would have 
time priority to trade at $1.00.\5\ Therefore, in this situation, if 
the Market-Maker wants to receive split-price priority at $1.05, the 
Market-Maker would not be able to execute the first part of a split-
price transaction with the order being represented by the Floor Broker 
until after the resting customer order at $1.00 trades.
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    \5\ See id.
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    The proposed rule change provides that ``either side of the 
market'' must trade for split-price priority to become available. The 
rule provides that a Trading Permit Holder is eligible to receive 
split-price priority, which could include the Trading Permit Holder 
representing the order or offer (quote). Thus, the proposed rule change 
allows for the Trading Permit Holder on either side of a transaction to 
be eligible for split-price priority. Assume the market for a series 
with a minimum increment of $0.05 is $1.00-$1.05 (with the $1.00 bid 
and $1.05 offer each representing a customer order for 25 contracts), 
and a Floor Broker receives an order from a customer that would like to 
buy 100 contracts at a price or prices no higher than $1.05. After 
receiving no interest from the crowd to sell 100 contracts at $1.00, 
the Floor Broker represents to the crowd that it would like to buy 50 
contracts at $1.00 and 50 contracts at $1.05. Assume a Market-Maker is 
willing to sell 50 contracts at $1.00 and 50 contracts at $1.05. In a 
separate transaction, the public customer order at $1.05 trades against 
an order of another market participant. The ``first transaction'' of 
this split-price transaction would be 50 contracts at $1.05 (at which 
price there is no more resting public customer offer) and the ``second 
transaction'' of this split-price transaction would be 50 contracts at 
$1.00, the next best price for the Floor Broker. In this situation, the 
Floor Broker is eligible to receive split-price priority at $1.00 over 
the resting customer interest at $1.00 and achieve a better net price 
execution of $1.025 for its customer order.
    Other than the limited exception to customer priority afforded in 
Rule 6.47(b) (and as elsewhere set forth in the rules),\6\ public 
customer orders continue to have first priority and other allocation 
and priority rules remain unchanged. The Exchange believes that 
specifying the unavailability of split-price priority in this specific 
situation will further clarify the applicability of the priority in the 
rules.
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    \6\ For example, the rules provide for a complex order priority 
exception (see Rules 6.45(e), 6.45A(b)(ii) and 6.45B(b)(ii).
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Multiple Prices
    Rule 6.47(a) and (b) currently provides that split-price priority 
may apply to executions of an order at multiple prices. The proposed 
rule change removes the references to multiple prices from those 
paragraphs. The Exchange believes the priority should only apply at the 
next price level rather than multiple price levels.

[[Page 31281]]

Nonsubstantive Changes
    The Exchange proposes to make the following nonsubstantive changes 
to Rule 6.47(a), (b) and (c):
     The proposed rule change amends the headings of and adds 
introductory language to paragraphs (a) and (b).
     The proposed rule change revises the language in 
paragraphs (a) and (b) to simplify the description of when the split-
price priority applies to improve readability. The priority will still 
apply in the same manner--a Trading Permit Holder may buy (sell) one or 
more contracts for one series of an order or offer (bid) (the ``first 
transaction'') \7\ and receive priority over all other orders and 
quotes (except public customer orders resting in the book with respect 
to orders or offers (bids) of fewer than 100 contracts or orders or 
offers (bids) with which Trading Permit Holders do not purchase (sell) 
at least 50 contracts at the better price) to buy (sell) up to the same 
number of contracts of those remaining from the same order or offer 
(bid) at the next best price (the ``second transaction''). This second 
transaction must still occur with the same order or offer (quote) as 
the first transaction. For example, assume the market is $1.00-$1.20 
with size of 300 contracts, and a Floor Broker receives an order from a 
customer that would like to buy 500 contracts at a price or prices no 
higher than $1.20. The Floor Broker attempts to execute the order in 
open outcry at a price better than the displayed offer of $1.20. Now 
assume a Market-Maker in the crowd is willing to sell 250 contracts at 
$1.15 and 250 contracts at $1.20. The Market-Maker could offer $1.15 
for 250 contracts and then, by virtue of the split-price priority rule, 
have priority for the 250 contract balance over other crowd members at 
$1.20. The resulting net execution price for the customer would be 
$1.175, which is better than the displayed market of $1.20 and thus a 
better fill for the customer.\8\
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    \7\ The Exchange notes that the current rule contemplates that 
an order or quote can represent the series with which a Trading 
Permit Holder may transact to receive split-price priority. The 
current rule uses the phrase ``contracts of a particular series,'' 
which includes both orders and quotes, and indicates that the 
purchase (sale) effected represents the opposite side of a 
transaction with the ``same order or offer (bid)'' as the earlier 
purchase (sale), which again contemplates multiple transactions with 
a single originating order or quote. The proposed rule change makes 
clear throughout that an order or quote can comprise the originating 
contracts with which the crowd can trade to obtain split-price 
priority.
    \8\ While the net price result will be $1.175, two separate 
trades at $1.15 and $1.20 would be reported.
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     Paragraph (a) currently provides that the Trading Permit 
Holder must yield to the Order Book Official. The proposed rule change 
amends the term Order Book Official to public customer. Other priority 
rules refer to ``public customer'' priority,\9\ and Rule 6.47(a) 
provides priority in the circumstances described except over public 
customer orders.\10\ Order Book Officials only present to the crowd 
public customer orders that rest in the book, so the priority afforded 
pursuant to paragraph (a) must still yield to the same public customer 
orders in the same manner. This change is merely an update to 
terminology, as public customer orders may be presented to the floor 
other than by Order Book Officials.\11\ The Exchange believes it is 
appropriate to use the same terminology that is used in other priority 
rules to ensure consistency throughout the Exchange's rules and ensure 
that all public customer orders receive priority when applicable.
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    \9\ See, e.g., Rules 6.45A(b)(i)(A) and 6.45B(b)(i)(A).
    \10\ The proposed rule change amends Rule 1.1(fff) and (ggg) to 
add Rule 6.47 to the list of rules for which Voluntary Professionals 
and Professionals, respectively, will be treated in the same manner 
as a broker or dealer. Professionals and Voluntary Professionals do 
not receive priority as public customers do pursuant to CBOE's 
allocation rules, including Rules 6.45A(b) and 6.45B(b) regarding 
open outcry trading. Under those rules, Professionals and Voluntary 
Professionals would not receive priority, including if public 
customer orders must be cleared prior to a Trading Permit Holder 
availing itself of split-price priority. The proposed rule change 
explicitly states this in the Professional and Voluntary 
Professional definitions.
    \11\ Additionally, the Exchange no longer has Order Book 
Officials.
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     Paragraphs (a) and (b) currently state that a Trading 
Permit Holder's bid (offer) at the next best price must be made 
promptly following the purchase (sale) at the initial price. The 
proposed rule change deletes that language from those paragraphs and 
adds it to new paragraph (d) to include with other conditions to which 
split-price priority is subject. In addition, the proposed rule change 
adds that the second bid (offer) may also be made at the same time as 
the first bid (offer). If a Trading Permit Holder makes the first bid 
(offer) with the intent of taking advantage of the split-price 
priority, then it may be more efficient for the Trading Permit Holder 
to announce both bids (offers) at the same time than to wait for the 
first execution.\12\ The Trading Permit Holder is still not guaranteed 
execution at the second price; another Trading Permit Holder may still 
bid (offer) to trade with part of the order or offer (quote) at the 
better first price.
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    \12\ For example, a Floor Broker may represent an order to sell 
at ``$1.15 and $1.20 splits,'' indicating a desire to buy half of 
the order at $1.15 and the other half at $1.20 with priority at 
$1.20.
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     Paragraphs (a) and (b) currently state that they apply 
only to open outcry transactions. The proposed rule change deletes that 
language from those paragraphs and adds it to new paragraph (d) to 
include with other conditions to which split-price priority is subject. 
Paragraphs (a) and (b) also state that split-price priority applies to 
transactions in a particular series (i.e. simple orders, but not 
complex orders). The proposed rule change explicitly states the 
priority does not apply to complex orders in new paragraph (d).
     Paragraphs (a) and (b) currently state that the Trading 
Permit Holder eligible for split-price priority must make its bid 
(offer) promptly and the purchase (sale) represents the opposite side 
of a transaction with the same order or offer (bid). The proposed rule 
change uses this phrase throughout the rule for consistency. The 
proposed rule change also deletes the provision that requires the 
subsequent transaction must be with the same order or offer (bid) from 
paragraphs (a) and (b) and adds it to new paragraph (d).
     The proposed rule change makes other administrative and 
clerical changes to paragraphs (a), (b) and (c) (e.g., capitalizing 
words in headings, changing the word purchase to buy, deletion of word 
option before contract since only option contracts execute on the 
Exchange). The Exchange believes these changes have no impact on the 
split-price priority afforded by the rule.
     The proposed rule change refers to the priority afforded 
by Rule 6.47(a) and (b) as ``split-price priority'' to further simplify 
the rule text.
    The Exchange believes these nonsubstantive changes more clearly 
describe the applicability of the split-price priority and better 
reflect the use of split-price priority on the trading floor.
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.\13\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \14\ requirements that the rules 
of an exchange be designed to prevent fraudulent and manipulative acts 
and practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to

[[Page 31282]]

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) \15\ requirement that the rules 
of an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ Id.
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    In particular, the Exchange believes the proposed rule change is 
consistent with the purpose of the existing split-price priority, which 
is to induce Trading Permit Holders to bid (offer) at better prices for 
an order or offer (bid) that may require execution at multiple prices 
(such as larger orders), which will result in a better average price 
for the originating Trading Permit Holder (or its customer).
    The proposed rule change to codify the split-price priority 
exception when the width of a series' quote is the minimum increment 
for that series and each side of the quote represents public customer 
interest will benefit investors by including all information regarding 
when split-price priority is available in a single rule. This proposed 
rule change is consistent with the Exchange's priority and allocation 
rules. The Exchange believes the proposed rule change to codify this 
exception, as well as the proposed rule change to eliminate split-price 
priority at multiple price levels, balances the availability of split-
price priority, which benefits investors by providing opportunities for 
price improvement, with customer priority, which promotes just and 
equitable principles of trade by providing public customers access to 
CBOE's market.
    The proposed rule change to amend the definitions of Voluntary 
Professional and Professional clarify that, for purposes of Rule 6.47, 
as is the case for all other allocation rules, those participants will 
be treated as broker-dealers rather than public customers for 
allocation purposes. The same result occurs under current allocation 
rules, as those rules provide with respect to open outcry priority that 
public customers in the book receive priority (and the definitions of 
Voluntary Professional and Professional provide that those participants 
are treated as broker-dealers for purposes of those rules); this merely 
clarifies it in the Rules.
    The Exchange believes the nonsubstantive changes to Rule 6.47 will 
benefit investors by describing the applicability of split-price 
priority more simply and clearly. The revised language is also more 
consistent with other Exchange rules regarding priority.

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

    CBOE does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The priority afforded by Rules 
6.47(a) and (b) continues to be available to all Trading Permit Holders 
who trade open outcry, of which all Trading Permit Holders that engage 
in open outcry trading may avail themselves. Rules often apply to open 
outcry trading only because of the different nature of the open outcry 
market versus the electronic market (such as allocation rules). The 
proposed rule change may result in better pricing for customer orders 
submitted to the trading floor, particularly those that may require 
execution at multiple prices, and market participants may submit orders 
to CBOE to take advantage of these better prices. CBOE believes that 
the proposed rule change will continue to encourage Trading Permit 
Holders on CBOE's trading floor to bid or offer better prices, thus 
creating more opportunities for price improvement, which ultimately 
enhances competition. The nonsubstantive changes and codification of 
the applicability of split-price priority in a minimum width market do 
not impact the manner in which split-price priority applies and thus 
have no effect on competition.

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

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

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \16\ and Rule 19b-4(f)(6) thereunder.\17\ 
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 prior to 
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 and Rule 19b-
4(f)(6)(iii) thereunder.
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    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its 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 Exchange has satisfied this requirement.
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    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. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2016-034 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2016-034. 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.,

[[Page 31283]]

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-2016-034, and should be 
submitted on or before June 8, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-11652 Filed 5-17-16; 8:45 am]
 BILLING CODE 8011-01-P
31280 Federal Register / Vol. 81, No. 96 / Wednesday, May 18, 2016 / Notices

(ii) The Trading Permit Holder must or more contracts, Trading Permit available. The rule provides that a
make its bid (offer) at the next lower Holders that trade 50 or more contracts Trading Permit Holder is eligible to
(higher) price for the second (or later) of such orders at a particular price will receive split-price priority, which could
transaction at the same time as the first have this priority over all other Trading include the Trading Permit Holder
bid (offer) or promptly following Permit Holders at the next best price, representing the order or offer (quote).
execution of the first (or earlier) including those representing orders in Thus, the proposed rule change allows
transaction. the limit order book. This priority is for the Trading Permit Holder on either
(iii) The second (or later) purchase awarded for split-price transactions that side of a transaction to be eligible for
(sale) must represent the opposite side occur in open outcry only. split-price priority. Assume the market
of a transaction with the same order or for a series with a minimum increment
offer (bid) as the first (or earlier) Minimum Increment Width Series
The Exchange proposes to add Rule of $0.05 is $1.00–$1.05 (with the $1.00
purchase (sale).
(e) Minimum Increment Width with 6.47(e) to codify an exception to the bid and $1.05 offer each representing a
Public Customer Orders Resting in the availability of split-price priority when customer order for 25 contracts), and a
Book. If the width of the quote for a the width of a series’ quote is at the Floor Broker receives an order from a
series is the minimum increment for minimum increment width. If the width customer that would like to buy 100
that series, and both the bid and offer of the quote for a series is the minimum contracts at a price or prices no higher
represent public customer orders resting increment for that series (e.g., $1.00– than $1.05. After receiving no interest
in the book, split-price priority pursuant $1.05 for a series with a minimum from the crowd to sell 100 contracts at
to this rule is not available to Trading increment of $0.05, $1.00–$1.01 for a $1.00, the Floor Broker represents to the
Permit Holders until the public series with a minimum increment of crowd that it would like to buy 50
customer order(s) resting in the book on $0.01), and both the bid and offer contracts at $1.00 and 50 contracts at
either side of the market trades. represent public customer orders resting $1.05. Assume a Market-Maker is
. . . Interpretations and Policies: in the book, split-price priority pursuant willing to sell 50 contracts at $1.00 and
.01–.02 No change. to this rule is not available to Trading 50 contracts at $1.05. In a separate
* * * * * Permit Holders until the public transaction, the public customer order at
The text of the proposed rule change customer order(s) resting in the book on $1.05 trades against an order of another
is also available on the Exchange’s Web either side of the market trades.3 This market participant. The ‘‘first
site (http://www.cboe.com/AboutCBOE/ exception is consistent with the transaction’’ of this split-price
CBOELegalRegulatoryHome.aspx), at Exchange’s allocation and priority rules, transaction would be 50 contracts at
the Exchange’s Office of the Secretary, which provide for public customer $1.05 (at which price there is no more
and at the Commission’s Public orders to have first priority at the best resting public customer offer) and the
Reference Room. price in open outcry (subject to ‘‘second transaction’’ of this split-price
applicable exceptions).4 transaction would be 50 contracts at
II. Self-Regulatory Organization’s For example, assume the market for a
Statement of the Purpose of, and $1.00, the next best price for the Floor
series with a minimum increment of
Statutory Basis for, the Proposed Rule Broker. In this situation, the Floor
$0.05 is $1.00–$1.05 (with the $1.00 bid
Change Broker is eligible to receive split-price
and $1.05 offer each representing a
priority at $1.00 over the resting
In its filing with the Commission, the customer order for 25 contracts), and a
customer interest at $1.00 and achieve
Exchange included statements Floor Broker receives an order from a
customer that would like to buy 100 a better net price execution of $1.025 for
concerning the purpose of and basis for
contracts at a price or prices no higher its customer order.
the proposed rule change and discussed
any comments it received on the than $1.05. The Floor Broker attempts to Other than the limited exception to
proposed rule change. The text of these execute the order in open outcry at a customer priority afforded in Rule
statements may be examined at the price better than the displayed offer of 6.47(b) (and as elsewhere set forth in the
places specified in Item IV below. The $1.05. Assume a Market-Maker is rules),6 public customer orders continue
Exchange has prepared summaries, set willing to sell 50 contracts at $1.00 and to have first priority and other
forth in sections A, B, and C below, of 50 contracts at $1.05. The ‘‘first allocation and priority rules remain
the most significant aspects of such transaction’’ of this split-price unchanged. The Exchange believes that
statements. transaction would be 50 contracts at specifying the unavailability of split-
$1.00. However, there is customer price priority in this specific situation
A. Self-Regulatory Organization’s interest resting at $1.00, which would
Statement of the Purpose of, and the will further clarify the applicability of
have time priority to trade at $1.00.5 the priority in the rules.
Statutory Basis for, the Proposed Rule Therefore, in this situation, if the
Change Market-Maker wants to receive split- Multiple Prices
1. Purpose price priority at $1.05, the Market-
Rule 6.47(a) and (b) currently
Maker would not be able to execute the
Rule 6.47 establishes priority provides that split-price priority may
first part of a split-price transaction with
principles for split-price transactions apply to executions of an order at
the order being represented by the Floor
occurring in open outcry. Generally, a multiple prices. The proposed rule
Broker until after the resting customer
Trading Permit Holder that purchases change removes the references to
order at $1.00 trades.
(sells) one or more contracts of a series
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The proposed rule change provides multiple prices from those paragraphs.
at a particular price will have priority The Exchange believes the priority
that ‘‘either side of the market’’ must
over other Trading Permit Holders, should only apply at the next price level
trade for split-price priority to become
other than those representing orders in rather than multiple price levels.
the limit order book, in purchasing 3 This exception is currently set forth in
(selling) up to an equivalent number of Regulatory Circular RG07–076. 6 For example, the rules provide for a complex
contracts of the same order at the next 4 See Rules 6.45A(b)(i)(A) and 6.45B(b)(i)(A).
order priority exception (see Rules 6.45(e),
lower (higher) price. For orders of 100 5 See id. 6.45A(b)(ii) and 6.45B(b)(ii).

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Federal Register / Vol. 81, No. 96 / Wednesday, May 18, 2016 / Notices 31281

Nonsubstantive Changes proposed rule change amends the term transactions. The proposed rule change
The Exchange proposes to make the Order Book Official to public customer. deletes that language from those
following nonsubstantive changes to Other priority rules refer to ‘‘public paragraphs and adds it to new
Rule 6.47(a), (b) and (c): customer’’ priority,9 and Rule 6.47(a) paragraph (d) to include with other
• The proposed rule change amends provides priority in the circumstances conditions to which split-price priority
the headings of and adds introductory described except over public customer is subject. Paragraphs (a) and (b) also
language to paragraphs (a) and (b). orders.10 Order Book Officials only state that split-price priority applies to
• The proposed rule change revises present to the crowd public customer transactions in a particular series (i.e.
the language in paragraphs (a) and (b) to orders that rest in the book, so the simple orders, but not complex orders).
simplify the description of when the priority afforded pursuant to paragraph The proposed rule change explicitly
split-price priority applies to improve (a) must still yield to the same public states the priority does not apply to
readability. The priority will still apply customer orders in the same manner. complex orders in new paragraph (d).
in the same manner—a Trading Permit This change is merely an update to • Paragraphs (a) and (b) currently
Holder may buy (sell) one or more terminology, as public customer orders state that the Trading Permit Holder
contracts for one series of an order or may be presented to the floor other than eligible for split-price priority must
offer (bid) (the ‘‘first transaction’’) 7 and by Order Book Officials.11 The make its bid (offer) promptly and the
receive priority over all other orders and Exchange believes it is appropriate to purchase (sale) represents the opposite
quotes (except public customer orders use the same terminology that is used in side of a transaction with the same order
resting in the book with respect to other priority rules to ensure or offer (bid). The proposed rule change
orders or offers (bids) of fewer than 100 consistency throughout the Exchange’s uses this phrase throughout the rule for
contracts or orders or offers (bids) with rules and ensure that all public consistency. The proposed rule change
which Trading Permit Holders do not customer orders receive priority when also deletes the provision that requires
purchase (sell) at least 50 contracts at applicable. the subsequent transaction must be with
the better price) to buy (sell) up to the • Paragraphs (a) and (b) currently the same order or offer (bid) from
same number of contracts of those state that a Trading Permit Holder’s bid paragraphs (a) and (b) and adds it to
remaining from the same order or offer (offer) at the next best price must be new paragraph (d).
(bid) at the next best price (the ‘‘second made promptly following the purchase • The proposed rule change makes
transaction’’). This second transaction (sale) at the initial price. The proposed other administrative and clerical
must still occur with the same order or rule change deletes that language from changes to paragraphs (a), (b) and (c)
offer (quote) as the first transaction. For those paragraphs and adds it to new (e.g., capitalizing words in headings,
example, assume the market is $1.00– paragraph (d) to include with other changing the word purchase to buy,
$1.20 with size of 300 contracts, and a conditions to which split-price priority deletion of word option before contract
Floor Broker receives an order from a is subject. In addition, the proposed rule since only option contracts execute on
customer that would like to buy 500 change adds that the second bid (offer) the Exchange). The Exchange believes
contracts at a price or prices no higher may also be made at the same time as these changes have no impact on the
than $1.20. The Floor Broker attempts to the first bid (offer). If a Trading Permit split-price priority afforded by the rule.
execute the order in open outcry at a Holder makes the first bid (offer) with • The proposed rule change refers to
price better than the displayed offer of the intent of taking advantage of the the priority afforded by Rule 6.47(a) and
$1.20. Now assume a Market-Maker in split-price priority, then it may be more (b) as ‘‘split-price priority’’ to further
the crowd is willing to sell 250 contracts efficient for the Trading Permit Holder simplify the rule text.
at $1.15 and 250 contracts at $1.20. The to announce both bids (offers) at the The Exchange believes these
Market-Maker could offer $1.15 for 250 same time than to wait for the first nonsubstantive changes more clearly
contracts and then, by virtue of the execution.12 The Trading Permit Holder describe the applicability of the split-
split-price priority rule, have priority for is still not guaranteed execution at the price priority and better reflect the use
the 250 contract balance over other second price; another Trading Permit of split-price priority on the trading
crowd members at $1.20. The resulting Holder may still bid (offer) to trade with floor.
net execution price for the customer part of the order or offer (quote) at the
better first price. 2. Statutory Basis
would be $1.175, which is better than
the displayed market of $1.20 and thus • Paragraphs (a) and (b) currently The Exchange believes the proposed
a better fill for the customer.8 state that they apply only to open outcry rule change is consistent with the Act
• Paragraph (a) currently provides and the rules and regulations
that the Trading Permit Holder must
9 See, e.g., Rules 6.45A(b)(i)(A) and 6.45B(b)(i)(A). thereunder applicable to the Exchange
10 The proposed rule change amends Rule 1.1(fff)
yield to the Order Book Official. The and, in particular, the requirements of
and (ggg) to add Rule 6.47 to the list of rules for
which Voluntary Professionals and Professionals,
Section 6(b) of the Act.13 Specifically,
7 The Exchange notes that the current rule respectively, will be treated in the same manner as the Exchange believes the proposed rule
contemplates that an order or quote can represent a broker or dealer. Professionals and Voluntary change is consistent with the Section
the series with which a Trading Permit Holder may Professionals do not receive priority as public 6(b)(5) 14 requirements that the rules of
transact to receive split-price priority. The current customers do pursuant to CBOE’s allocation rules,
rule uses the phrase ‘‘contracts of a particular including Rules 6.45A(b) and 6.45B(b) regarding
an exchange be designed to prevent
series,’’ which includes both orders and quotes, and open outcry trading. Under those rules, fraudulent and manipulative acts and
indicates that the purchase (sale) effected represents Professionals and Voluntary Professionals would practices, to promote just and equitable
the opposite side of a transaction with the ‘‘same not receive priority, including if public customer principles of trade, to foster cooperation
order or offer (bid)’’ as the earlier purchase (sale), orders must be cleared prior to a Trading Permit
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which again contemplates multiple transactions Holder availing itself of split-price priority. The and coordination with persons engaged
with a single originating order or quote. The proposed rule change explicitly states this in the in regulating, clearing, settling,
proposed rule change makes clear throughout that Professional and Voluntary Professional definitions. processing information with respect to,
an order or quote can comprise the originating 11 Additionally, the Exchange no longer has Order
and facilitating transactions in
contracts with which the crowd can trade to obtain Book Officials.
split-price priority. 12 For example, a Floor Broker may represent an
securities, to remove impediments to
8 While the net price result will be $1.175, two order to sell at ‘‘$1.15 and $1.20 splits,’’ indicating
13 15 U.S.C. 78f(b).
separate trades at $1.15 and $1.20 would be a desire to buy half of the order at $1.15 and the
reported. other half at $1.20 with priority at $1.20. 14 15 U.S.C. 78f(b)(5).

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31282 Federal Register / Vol. 81, No. 96 / Wednesday, May 18, 2016 / Notices

and perfect the mechanism of a free and B. Self-Regulatory Organization’s Commission may designate, if
open market and a national market Statement on Burden on Competition consistent with the protection of
system, and, in general, to protect CBOE does not believe that the investors and the public interest, the
investors and the public interest. proposed rule change will impose any proposed rule change has become
Additionally, the Exchange believes the burden on competition that is not effective pursuant to Section 19(b)(3)(A)
proposed rule change is consistent with necessary or appropriate in furtherance of the Act and Rule 19b–4(f)(6)(iii)
the Section 6(b)(5) 15 requirement that of the purposes of the Act. The priority thereunder.
the rules of an exchange not be designed At any time within 60 days of the
afforded by Rules 6.47(a) and (b)
to permit unfair discrimination between filing of the proposed rule change, the
continues to be available to all Trading
customers, issuers, brokers, or dealers. Commission summarily may
Permit Holders who trade open outcry,
In particular, the Exchange believes temporarily suspend such rule change if
of which all Trading Permit Holders that
the proposed rule change is consistent it appears to the Commission that such
engage in open outcry trading may avail
with the purpose of the existing split- action is necessary or appropriate in the
themselves. Rules often apply to open
price priority, which is to induce public interest, for the protection of
outcry trading only because of the
Trading Permit Holders to bid (offer) at investors, or otherwise in furtherance of
different nature of the open outcry
better prices for an order or offer (bid) the purposes of the Act. If the
market versus the electronic market
that may require execution at multiple Commission takes such action, the
prices (such as larger orders), which (such as allocation rules). The proposed Commission will institute proceedings
will result in a better average price for rule change may result in better pricing to determine whether the proposed rule
the originating Trading Permit Holder for customer orders submitted to the change should be approved or
(or its customer). trading floor, particularly those that may disapproved.
The proposed rule change to codify require execution at multiple prices,
the split-price priority exception when and market participants may submit IV. Solicitation of Comments
the width of a series’ quote is the orders to CBOE to take advantage of Interested persons are invited to
minimum increment for that series and these better prices. CBOE believes that submit written data, views, and
each side of the quote represents public the proposed rule change will continue arguments concerning the foregoing,
customer interest will benefit investors to encourage Trading Permit Holders on including whether the proposed rule
by including all information regarding CBOE’s trading floor to bid or offer change is consistent with the Act.
when split-price priority is available in better prices, thus creating more Comments may be submitted by any of
a single rule. This proposed rule change opportunities for price improvement, the following methods:
is consistent with the Exchange’s which ultimately enhances competition.
The nonsubstantive changes and Electronic Comments
priority and allocation rules. The
Exchange believes the proposed rule codification of the applicability of split- • Use the Commission’s Internet
change to codify this exception, as well price priority in a minimum width comment form (http://www.sec.gov/
as the proposed rule change to eliminate market do not impact the manner in rules/sro.shtml); or
split-price priority at multiple price which split-price priority applies and • Send an email to rule-
levels, balances the availability of split- thus have no effect on competition. comments@sec.gov. Please include File
price priority, which benefits investors Number SR–CBOE–2016–034 on the
C. Self-Regulatory Organization’s
by providing opportunities for price subject line.
Statement on Comments on the
improvement, with customer priority, Proposed Rule Change Received From Paper Comments
which promotes just and equitable Members, Participants, or Others
principles of trade by providing public • Send paper comments in triplicate
customers access to CBOE’s market. The Exchange neither solicited nor to Brent J. Fields, Secretary, Securities
The proposed rule change to amend received comments on the proposed and Exchange Commission, 100 F Street
the definitions of Voluntary Professional rule change. NE., Washington, DC 20549–1090.
and Professional clarify that, for III. Date of Effectiveness of the All submissions should refer to File
purposes of Rule 6.47, as is the case for Proposed Rule Change and Timing for Number SR–CBOE–2016–034. This file
all other allocation rules, those Commission Action number should be included on the
participants will be treated as broker- subject line if email is used. To help the
dealers rather than public customers for The Exchange has filed the proposed Commission process and review your
allocation purposes. The same result rule change pursuant to Section comments more efficiently, please use
occurs under current allocation rules, as 19(b)(3)(A)(iii) of the Act 16 and Rule only one method. The Commission will
those rules provide with respect to open 19b–4(f)(6) thereunder.17 Because the post all comments on the Commission’s
outcry priority that public customers in proposed rule change does not: (i) Internet Web site (http://www.sec.gov/
the book receive priority (and the Significantly affect the protection of rules/sro.shtml). Copies of the
definitions of Voluntary Professional investors or the public interest; (ii) submission, all subsequent
and Professional provide that those impose any significant burden on amendments, all written statements
participants are treated as broker-dealers competition; and (iii) become operative with respect to the proposed rule
for purposes of those rules); this merely prior to 30 days from the date on which change that are filed with the
clarifies it in the Rules. it was filed, or such shorter time as the Commission, and all written
The Exchange believes the communications relating to the
16 15 U.S.C. 78s(b)(3)(A)(iii).
nonsubstantive changes to Rule 6.47 proposed rule change between the
sradovich on DSK3TPTVN1PROD with NOTICES

17 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
will benefit investors by describing the 4(f)(6)(iii) requires a self-regulatory organization to
Commission and any person, other than
applicability of split-price priority more give the Commission written notice of its intent to those that may be withheld from the
simply and clearly. The revised file the proposed rule change, along with a brief public in accordance with the
language is also more consistent with description and text of the proposed rule change, provisions of 5 U.S.C. 552, will be
at least five business days prior to the date of filing
other Exchange rules regarding priority. of the proposed rule change, or such shorter time
available for Web site viewing and
as designated by the Commission. The Exchange printing in the Commission’s Public
15 Id. has satisfied this requirement. Reference Room, 100 F Street NE.,

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Federal Register / Vol. 81, No. 96 / Wednesday, May 18, 2016 / Notices 31283

Washington, DC 20549 on official filed by approximately 6 respondents pursuant to Section 19(b)(3)(A) of the
business days between the hours of annually for a total reporting burden of Act 3 and Rule 19b–4(f)(6)(iii)
10:00 a.m. and 3:00 p.m. Copies of such 12 hours (2 hours per response × 6 thereunder,4 which renders it effective
filing also will be available for responses). upon filing with the Commission. The
inspection and copying at the principal An agency may not conduct or Commission is publishing this notice to
office of the Exchange. All comments sponsor, and a person is not required to solicit comments on the proposed rule
received will be posted without change; respond to, a collection of information change from interested persons.
the Commission does not edit personal unless it displays a currently valid
identifying information from I. Self-Regulatory Organization’s
control number.
submissions. You should submit only Statement of the Terms of Substance of
The public may view the background
information that you wish to make the Proposed Rule Change
documentation for this information
available publicly. All submissions collection at the following Web site, The Exchange filed a proposal to add
should refer to File Number SR–CBOE– www.reginfo.gov. Comments should be subparagraph (5) to Rule 21.1(h)
2016–034, and should be submitted on directed to: (i) Desk Officer for the modifying the operation of orders
or before June 8, 2016. Securities and Exchange Commission, subject to the display price sliding
For the Commission, by the Division of Office of Information and Regulatory process when a contra-side Post Only
Trading and Markets, pursuant to delegated Affairs, Office of Management and Order 5 is received by the Exchange’s
authority.18 Budget, Room 10102, New Executive options platform (‘‘BZX Options’’).
Robert W. Errett, Office Building, Washington, DC 20503, The text of the proposed rule change
Deputy Secretary. or by sending an email to: Shagufta_ is available at the Exchange’s Web site
[FR Doc. 2016–11652 Filed 5–17–16; 8:45 am] Ahmed@omb.eop.gov; and (ii) Pamela at www.batstrading.com, at the
BILLING CODE 8011–01–P Dyson, Director/Chief Information principal office of the Exchange, and at
Officer, Securities and Exchange the Commission’s Public Reference
Commission, c/o Remi Pavlik-Simon, Room.
SECURITIES AND EXCHANGE 100 F Street NE., Washington, DC 20549 II. Self-Regulatory Organization’s
COMMISSION or send an email to: PRA_Mailbox@ Statement of the Purpose of, and
sec.gov. Comments must be submitted to Statutory Basis for, the Proposed Rule
Submission for OMB Review; OMB within 30 days of this notice. Change
Comment Request
Dated: May 12, 2016. In its filing with the Commission, the
Upon Written Request Copies Available Robert W. Errett, Exchange included statements
From: Securities and Exchange Deputy Secretary. concerning the purpose of and basis for
Commission, Office of FOIA Services, [FR Doc. 2016–11640 Filed 5–17–16; 8:45 am] the proposed rule change and discussed
100 F Street NE., Washington, DC BILLING CODE 8011–01–P any comments it received on the
20549–2736 proposed rule change. The text of these
Extension: Schedule 14D–9F statements may be examined at the
SEC File No. 270–339, OMB Control No. SECURITIES AND EXCHANGE places specified in Item IV below. The
3235–0382 COMMISSION Exchange has prepared summaries, set
Notice is hereby given that, pursuant forth in Sections A, B, and C below, of
[Release No. 34–77818; File No. SR–
to the Paperwork Reduction Act of 1995 BatsBZX–2016–16] the most significant parts of such
(44 U.S.C. 3501 et seq.), the Securities statements.
and Exchange Commission Self-Regulatory Organizations; Bats
(‘‘Commission’’) has submitted to the (A) Self-Regulatory Organization’s
BZX Exchange, Inc.; Notice of Filing
Office of Management and Budget this Statement of the Purpose of, and
and Immediate Effectiveness of a
request for extension of the previously Statutory Basis for, the Proposed Rule
Proposed Rule Change To Add
approved collection of information Change
Subparagraph (5) to Rule 21.1(h)
discussed below. Modifying the Operation of Orders 1. Purpose
Schedule 14D–9F (17 CFR 240.14d– Subject to the Display Price Sliding
103) under the Securities Exchange Act The Exchange is proposing to add
Process When a Contra-Side Post Only subparagraph (5) to Rule 21.1(h)
of 1934 (15 U.S.C. 78 et seq.) is used by Order Is Received by the Bats BZX
any foreign private issuer incorporated modifying the operation of orders
Exchange Options Platform subject to the display price sliding
or organized under the laws of Canada
or by any director or officer of such May 12, 2016. process when a contra-side Post Only
issuer, where the issuer is the subject of Pursuant to Section 19(b)(1) of the Order is received by BZX Options.
a cash tender or exchange offer for a Securities Exchange Act of 1934 (the Under current Exchange Rule 21.1(h),
class of securities filed on Schedule ‘‘Act’’),1 and Rule 19b–4 thereunder,2 an order subject to the display price
14D–1F. The information required to be notice is hereby given that on May 3, sliding process that, at the time of entry,
filed with the Commission is intended 2016, Bats BZX Exchange, Inc. (the would lock or cross a Protected
to permit verification of compliance ‘‘Exchange’’ or ‘‘BZX’’) filed with the Quotation of another options exchange
with the securities law requirements Securities and Exchange Commission will be ranked at the locking price in the
and assures the public availability of (‘‘Commission’’) the proposed rule BZX Options Book 6 and displayed by
such information. The information the System at one minimum price
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change as described in Items I and II
provided is mandatory and all below, which Items have been prepared variation below the current National
information is made available to the by the Exchange. The Exchange has 3 15 U.S.C. 78s(b)(3)(A).
public upon request. We estimate that designated this proposal as a ‘‘non- 4 17 CFR 240.19b–4(f)(6)(iii).
Schedule 14D–9F takes approximately 2 controversial’’ proposed rule change 5 See Exchange Rule 21.1(d)(8).
hours per response to prepare and is 6 ‘‘BZX Options Book’’ is defined as ‘‘the
1 15 U.S.C. 78s(b)(1). electronic book of options orders maintained by the
18 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. Trading System.’’ See Exchange Rule 16.1(a)(9).

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Document Created: 2016-05-18 00:06:42
Document Modified: 2016-05-18 00:06:42
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		81 FR 31279