81 FR 45326 - Self-Regulatory Organizations; CBOE Futures Exchange, LLC; Notice of Proposed Rule Change Regarding Account and Order Ticket Information

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 134 (July 13, 2016)

[Federal Register Volume 81, Number 134 (Wednesday, July 13, 2016)]
[Notices]
[Pages 45326-45328]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-16490]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78248; File No. SR-CFE-2016-003]


Self-Regulatory Organizations; CBOE Futures Exchange, LLC; Notice 
of Proposed Rule Change Regarding Account and Order Ticket Information

July 7, 2016.
    Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 10, 2016 CBOE Futures 
Exchange, LLC (``CFE'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``SEC'' or ``Commission'') the proposed rule 
change described in Items I, II, and III below, which Items have been 
prepared by CFE. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons. CFE also 
has filed this proposed rule change with the Commodity Futures Trading 
Commission (``CFTC''). CFE filed a written certification with the CFTC 
under Section 5c(c) of the Commodity Exchange Act (``CEA'') \2\ on June 
23, 2016.
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    \1\ 15 U.S.C. 78s(b)(7).
    \2\ 7 U.S.C. 7a-2(c).

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[[Page 45327]]

I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    The Exchange proposes to amend its rules related to account and 
order ticket information. The scope of this filing is limited solely to 
the application of the rule amendments to security futures that may be 
traded on CFE. The text of the proposed rule change is attached as 
Exhibit 4 to the filing but is not attached to the publication of this 
notice.

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

    In its filing with the Commission, CFE 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. CFE has prepared summaries, set forth in Sections A, B, 
and C below, of the most significant aspects of such statements.

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

1. Purpose
    The purpose of the proposed CFE rule amendments included as part of 
this rule change is to amend CFE Rules 403 (Order Entry), 414 (Exchange 
of Contract for Related Position) (``ECRP''), and 415 (Block Trading) 
to clarify information that must be included as part of an order. The 
rule amendments included as part of this rule change are to apply to 
all products traded on CFE, including both non-security futures and 
security futures.
    CFE Rule 403(a) currently provides that Trading Privilege Holders 
(``TPHs'') are required to include certain information when entering an 
order into CFE's trading system. Pursuant to CFE Rule 403(a), each 
order currently must contain the following information: (i) Whether the 
order is a buy or sell order; (ii) order type; (iii) commodity; (iv) 
contract expiration; (v) price; (vi) quantity; (vii) account type; 
(viii) account designation (the number assigned by a TPH to each of its 
accounts); (ix) in the case of orders for options, strike price, type 
of option (put or call) and expiration month; and (x) such additional 
information as may be prescribed from time to time by the Exchange.
    CFE Rule 414(f) currently provides that TPHs must identify and mark 
an ECRP order as an ECRP.
    CFE Rule 415(e) currently provides that TPHs are required to 
include specified information on the order ticket for a Block Trade. 
Pursuant to CFE Rule 415(e), each TPH that is a party to a Block Trade 
currently must record the following information on the order ticket: 
The contract (including the expiration) to which the Block Trade 
relates; the number of contracts traded; the price of execution or 
premium; the time of execution (i.e., the time the parties agreed to 
the Block Trade); the identity of the counterparty; that the 
transaction is a Block Trade; and, if applicable, the account number of 
the customer for which the Block Trade was executed, the underlying 
commodity, whether the transaction involved a put or a call and the 
strike price.
    The proposed amendments provide additional detail regarding certain 
order information that must be provided under these Rules in the 
following manner:
    First, the proposed amendments specify that, under CFE Rule 403(a), 
the account designation that must be included in any order submitted to 
CFE's trading system is the account number of the account of the party 
for which the order was placed (except that a different account 
designation may be included in the case of a bunched order or in the 
case of an order for which there will be a post-trade allocation of the 
resulting trade(s) to a different clearing member).
    A bunched order is an order that is entered on behalf of multiple 
customer accounts and then allocated to the individual customer 
accounts in accordance with applicable regulatory requirements.\3\ 
Because bunched orders are on behalf of multiple customer accounts, 
individual customer account numbers are not required to be included 
with bunched orders and instead the proposed amendments to Rule 403(a) 
reference the requirement under CFE Rule 406(e) that a designation 
specific to the allocation group and account controller be included in 
the order rather the individual account numbers. Additionally, when a 
TPH submits an order on behalf of a customer for which there is going 
to be a post-trade allocation of the resulting trade(s) to a different 
clearing member, the TPH may not know the account number of the 
customer at that clearing member. Accordingly, the account designation 
that the TPH is required to provide in those situations is not required 
to be the account number of the account of the party for which the 
order was placed and could be a suspense account number.
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    \3\ CFE Rule 406(e) provides that, subject to compliance with 
CFE Rule 605 (Sales Practice Rules) and the sales practice rules 
referred to therein, each TPH may enter, or permit its Related 
Parties to enter (as applicable), a bunched order for more than one 
discretionary customer account into CFE's trading system by using a 
designation specific to the allocation group and account controller 
rather than including each of the individual account numbers in the 
order, provided that the TPH has filed or is filing an allocation 
scheme for the order in accordance with CFTC regulations.
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    Second, the proposed amendments specify that, under CFE Rule 
414(f), each TPH that acts as agent for an ECRP transaction must 
include on the order ticket for the ECRP specified information provided 
for in this proposed rule change. Specifically, CFE Rule 414(f) is 
proposed to be revised to make clear that each TPH that acts as agent 
for an ECRP must record the following details with respect to the 
contract leg of the ECRP on its order ticket: The contract (including 
the expiration); the number of contracts traded; the price of execution 
or premium; the time of execution (i.e., the time the parties agreed to 
the ECRP); the identity of the counterparty; that the transaction is an 
ECRP; the account number of the customer for which the ECRP was 
executed; and if applicable, the underlying commodity, whether the 
transactions involved a put or a call and the strike price.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\4\ in general, and furthers the 
objectives of Sections 6(b)(5) \5\ and 6(b)(7) \6\ in particular in 
that it is designed:
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78f(b)(7).
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     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 facilitating transactions in securities, and
     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.
    The Exchange believes that the proposed rule change would 
strengthen its ability to carry out its responsibilities as a self-
regulatory organization by providing further clarity and guidance 
regarding the type of information that must be included as part of an 
order. First, the proposed rule change will provide market participants 
with greater clarity regarding the information that

[[Page 45328]]

must be provided when an order, ECRP transaction, or Block Trade is 
submitted to CFE's system. Second, the proposed rule change would 
contribute to enhancing the effectiveness of CFE's audit trail program 
by helping to assure that required information is included as part of 
each order.

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

    CFE does not believe that the proposed rule change will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act, in that the rule change will enhance CFE's 
ability to carry out its responsibilities as a self-regulatory 
organization. The Exchange believes that the proposed rule change is 
equitable and not unfairly discriminatory because the amendments 
regarding account and order ticket information apply equally to all 
market participants.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    The proposed rule change will become effective on June 23, 2016. At 
any time within 60 days of the date of effectiveness of the proposed 
rule change, the Commission, after consultation with the CFTC, may 
summarily abrogate the proposed rule change and require that the 
proposed rule change be refiled in accordance with the provisions of 
Section 19(b)(1) of the Act.\7\
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    \7\ 15 U.S.C. 78s(b)(1).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CFE-2016-003 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CFE-2016-003. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CFE-2016-003, and should be 
submitted on or before August 3, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(73).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-16490 Filed 7-12-16; 8:45 am]
 BILLING CODE 8011-01-P