81 FR 46975 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to the Automated Improvement Mechanism
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 138 (July 19, 2016)
Federal Register Volume 81, Issue 138 (July 19, 2016)
| Page Range | 46975-46978 | |
| FR Document | 2016-16972 |
[Federal Register Volume 81, Number 138 (Tuesday, July 19, 2016)] [Notices] [Pages 46975-46978] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-16972] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78316; File No. SR-CBOE-2016-056] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to the Automated Improvement Mechanism July 13, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on July 13, 2016, Chicago Board Options Exchange, Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule [[Page 46976]] change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ``non- controversial'' proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 15 U.S.C. 78s(b)(3)(A)(iii). \4\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange seeks to extend the pilots associated with the Automated Improvement Mechanism. The text of the proposed rule change is provided below. (additions are italicized; deletions are [bracketed]) Chicago Board Options Exchange, Incorporated Rules Rule 6.74A. Automated Improvement Mechanism (``AIM'') Notwithstanding the provisions of Rule 6.74, a Trading Permit Holder that represents agency orders may electronically execute an order it represents as agent (``Agency Order'') against principal interest or a solicited order provided it submits the Agency Order for electronic execution into the AIM auction (``Auction'') pursuant to this Rule. (a)-(b) No change. . . . Interpretations and Policies: .01-.02 No change. .03 Initially, and for at least a Pilot Period expiring on [July 18, 2016] January 18, 2017, there will be no minimum size requirement for orders to be eligible for the Auction. During this Pilot Period, the Exchange will submit certain data, periodically as required by the Commission, to provide supporting evidence that, among other things, there is meaningful competition for all size orders and that there is an active and liquid market functioning on the Exchange outside of the Auction mechanism. Any raw data which is submitted to the Commission will be provided on a confidential basis. .04-.05 No change. .06 Subparagraph (b)(2)(E) of this rule will be effective for a Pilot Period until [July 18, 2016] January 18, 2017. During the Pilot Period, the Exchange will submit certain data, periodically as required by the Commission, relating to the frequency with which early termination of the Auction occurs pursuant to this provision as well as any other provision, and also the frequency with which early termination pursuant to this provision results in favorable pricing for the Agency Order. Any raw data which is submitted to the Commission will be provided on a confidential basis. .07-.08 No change. Rule 24B.5A. FLEX Automated Improvement Mechanism Notwithstanding the provisions of Rule 24B.5, a FLEX Trader that represents agency orders may electronically execute an order it represents as agent (``Agency Order'') against principal interest and/ or against solicited orders provided it submits the Agency Order for execution into the automated improvement mechanism auction (``AIM Auction'') pursuant to this Rule. (a)-(b) No change. This rule supersedes Exchange Rule 6.74A. . . . Interpretations and Policies: .01-.02 No change. .03 Initially, and for at least a Pilot Period expiring on [July 18, 2016] January 18, 2017, there will be no minimum size requirement for orders to be eligible for the AIM Auction. During this Pilot Period, the Exchange will submit certain data, periodically as required by the Commission, to provide supporting evidence that, among other things, there is meaningful competition for all size orders and that there is an active and liquid market functioning on the Exchange outside of the AIM Auction. Any raw data which is submitted to the Commission will be provided on a confidential basis. .04-.07 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 Statutory Basis for, the Proposed Rule Change 1. Purpose In February 2006, CBOE obtained approval from the Securities and Exchange Commission (the ``Commission'') to adopt the AIM auction process.\5\ AIM exposes certain orders electronically to an auction process to provide these orders with the opportunity to receive an execution at an improved price. The AIM auction is available only for orders that a Trading Permit Holder represents as agent (``Agency Order'') and for which a second order of the same size as the Agency Order (and on the opposite side of the market) is also submitted (effectively stopping the Agency Order at a given price). --------------------------------------------------------------------------- \5\ See Securities Exchange Release No. 53222 (February 3, 2006), 71 FR 7089 (February 10, 2006) (SR-CBOE-2005-60). --------------------------------------------------------------------------- The Commission approved two components of AIM on a pilot basis: (1) That there is no minimum size requirement for orders to be eligible for the auction; and (2) that the auction will conclude prematurely anytime there is a quote lock on the Exchange pursuant to Rule 6.45A(d).\6\ In connection with the pilot programs, the Exchange has submitted to the Commission reports providing detailed AIM auction and order execution data. --------------------------------------------------------------------------- \6\ A quote lock occurs when a CBOE Market-Maker's quote interacts with the quote of another CBOE Market-Maker (i.e. when internal quotes lock). --------------------------------------------------------------------------- Ten one-year extensions to the pilot programs have previously become effective.\7\ The proposed rule change merely extends the duration of the pilot programs until January 18, 2017. Extending the pilots for an additional six months will allow the Commission more time to consider the impact of the pilot programs on AIM order executions. --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release Nos. 54147 (July 14, 2006), 71 FR 41487 (July 21, 2006) (SR-CBOE-2006-64); 56094 (July 18, 2007), 72 FR 40910 (July 25, 2007) (SR-CBOE-2007-80); 58196 (July 18, 2008), 73 FR 43803 (July 28, 2008) (SR-CBOE-2008-76); 60338 (July 17, 2009), 74 FR 36803 (July 24, 2009) (SR-CBOE-2009- 051); 62522 (July 16, 2010), 75 FR 43596 (July 26, 2010) (SR-CBOE- 2010-067); 64930 (July 20, 2011), 76 FR 44636 (July 26, 2011) (SR- CBOE-2011-066); 67302 (June 28, 2012), 77 FR 39779 (July 5, 2012) (SR-CBOE-2012-061); 69867 (June 27, 2013), 78 FR 40230 (July 3, 2013) (SR-CBOE-2013-066); and 72570 (July 9, 2014), 79 FR 41337 (July 15, 2014) (SR-CBOE-2014-054); and 75476 (July 16, 2015), 80 FR 43548 (July 22, 2015) (SR-CBOE-2015-068). --------------------------------------------------------------------------- Additionally, in March 2012, CBOE obtained approval from the Commission to adopt the AIM auction process for [[Page 46977]] FLEX Options.\8\ AIM for FLEX Options exposes certain FLEX Options orders electronically to an auction process to provide these orders with the opportunity to receive an execution at an improved price. The FLEX AIM auction is available only for Agency Orders and for which a second order of the same size as the Agency Order (and on the opposite side of the market) is also submitted (effectively stopping the Agency Order at a given price). --------------------------------------------------------------------------- \8\ See Securities Exchange Release No. 66702 (March 30, 2012), 77 FR 20675 (April 5, 2012) (SR-CBOE-2011-123). --------------------------------------------------------------------------- The Commission approved on a pilot basis the component of AIM for FLEX Options that there is no minimum size requirement for orders to be eligible for the auction.\9\ In connection with the pilot program, the Exchange has submitted to the Commission reports providing detailed FLEX AIM auction and order execution data. --------------------------------------------------------------------------- \9\ The pilot for the FLEX AIM auction process was modeled after the pilot for non-FLEX Options described above, and included an initial expiration date of July 18, 2012 so that the FLEX pilot would coincide with the existing non-FLEX pilot. --------------------------------------------------------------------------- Four one-year extensions to the pilot program have previously become effective.\10\ The proposed rule change merely extends the duration of the pilot program until July 18, 2017. Extending the pilot for an additional six months will allow the Commission more time to consider the impact of the pilot program on AIM order executions for FLEX Options. --------------------------------------------------------------------------- \10\ See Securities Exchange Act Release No. 67302 (June 28, 2012), 77 FR 39779 (July 5, 2012) (SR-CBOE-2012-061); 69938 (July 5, 2013), 78 FR 41481 (July 10, 2013) (SR-CBOE-2013-069); and 72570 (July 9, 2014), 79 FR 41337 (July 15, 2014) (SR-CBOE-2014-054); and 75476 (July 16, 2015), 80 FR 43548 (July 22, 2015) (SR-CBOE-2015- 068). --------------------------------------------------------------------------- The Exchange also proposes to correct an inadvertent typographical error in Rule 24B.5A. On December 23, 2011 the Exchange filed a rule change to adopt Rule 24B.5A (FLEX Automated Improvement Mechanism).\11\ As part of that filing, a spelling error was made in the sentence that begins with ``RULE 24B5A. Notwithstanding . . .'' The error incorrectly identifies an ``AIM Auction'' as an ``AIM Action.'' The Exchange is now proposing to amend this typographical error. --------------------------------------------------------------------------- \11\ See Securities Exchange Act Release No. 66702 (March 30, 2012), 77 FR 20675 (April 5, 2012) (SR-CBOE-2011-123) (Order approving Proposed Rule Change to Establish an Automated Improvement Mechanism and a Solicitation Auction Mechanism for FLEX Options). --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ``Act'') and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.\12\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \13\ 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 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) \14\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78f(b). \13\ 15 U.S.C. 78f(b)(5). \14\ Id. --------------------------------------------------------------------------- In particular, the proposed rule change protects investors and the public interest by allowing for an extension of the AIM and FLEX AIM pilot programs, and thus allowing additional time for the Commission to evaluate the pilot programs. The pilot programs will continue to allow (1) smaller non-FLEX option and FLEX Option orders to receive the opportunity for price improvement pursuant to the AIM auction, and (2) with respect to non-FLEX options, Agency Orders in AIM auctions that are concluded early because of quote lock on the Exchange to receive the benefit of the lock price. The additional data provided will help the Commission determine if there is evidence of meaningful competition for all size orders, significant price improvement for orders going through the AIM and FLEX AIM and an active and liquid market functioning on the Exchange outside of the AIM and FLEX AIM auctions. B. Self-Regulatory Organization's Statement on Burden on Competition CBOE does not believe that the proposed rule changes will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe the proposed rule changes impose any burden on intramarket competition because it applies to all Trading Permit Holders. All Trading Permit Holders that submit orders into an AIM or FLEX AIM auction are still subject to the same requirements. In addition, the Exchange does not believe the proposed rule changes will impose any burden on intermarket competition, as they merely extend the duration of an existing pilot programs, which are available to all market participants through Trading Permit Holders. AIM and FLEX AIM will continue to function in the same manner as they currently function for an extended period of time. 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 Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act \15\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\16\ --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A). \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires the Exchange to give the Commission written notice of the Exchange's intent to file the proposed rule change along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requested that the Commission waive the 30-day operative delay. The Exchange noted that waiver of the 30-day operative delay will allow the Exchange to extend the pilot programs prior to their expiration on July 18, 2016. In addition, the Exchange believes that waiver of the operative delay is also consistent with the protection of investors and the public interest because it will allow for the least amount of market disruption, as the pilot programs will continue as they currently do, maintaining the status quo. --------------------------------------------------------------------------- \17\ 17 CFR 240.19b-4(f)(6). \18\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- [[Page 46978]] The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest, as it will allow the pilot programs to continue uninterrupted, thereby avoiding any potential investor confusion that could result from a temporary interruption in the pilot programs. Therefore, the Commission designates the proposed rule change to be operative on July 18, 2016.\19\ --------------------------------------------------------------------------- \19\ For purposes only of waiving the operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule 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 CommentsUse 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-CBOE-2016-056 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-2016-056. 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 the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2016-056 and should be submitted on or before August 9, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ --------------------------------------------------------------------------- \20\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Jill M. Peterson, Assistant Secretary. [FR Doc. 2016-16972 Filed 7-18-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 138 / Tuesday, July 19, 2016 / Notices 46975
order handling, routing, and related III. Date of Effectiveness of the comments more efficiently, please use
compliance processes. Proposed Rule Change and Timing for only one method. The Commission will
Commission Action post all comments on the Commission’s
2. Statutory Basis
Because the foregoing proposed rule Internet Web site (http://www.sec.gov/
The Exchange believes that the change does not: (A) Significantly affect rules/sro.shtml). Copies of the
proposed rule change is consistent with the protection of investors or the public submission, all subsequent
Section 6(b) of the Act,7 in general, and interest; (B) impose any significant amendments, all written statements
furthers the objectives of Section 6(b)(5) burden on competition; and (C) by its with respect to the proposed rule
of the Act,8 in particular, in that it is terms, become operative for 30 days change that are filed with the
designed to prevent fraudulent and from the date on which it was filed or Commission, and all written
manipulative acts and practices, to such shorter time as the Commission communications relating to the
promote just and equitable principles of may designate it has become effective proposed rule change between the
trade, to foster cooperation and pursuant to Section 19(b)(3)(A) of the Commission and any person, other than
coordination with persons engaged in Act 9 and paragraph (f)(6) of Rule 19b– those that may be withheld from the
regulating, clearing, settling, processing 4 thereunder,10 the Exchange has public in accordance with the
information with respect to, and designated this rule filing as non- provisions of 5 U.S.C. 552, will be
facilitating transactions in securities, to controversial. The Exchange has given available for Web site viewing and
remove impediments to and perfect the the Commission written notice of its printing in the Commission’s Public
mechanism of a free and open market intent to file the proposed rule change, Reference Room, 100 F Street NE.,
and a national market system, and, in along with a brief description and text Washington, DC 20549, on official
general, to protect investors and the of the proposed rule change at least five business days between the hours of
public interest. business days prior to the date of filing 10:00 a.m. and 3:00 p.m. Copies of such
The Exchange believes that its of the proposed rule change, or such filing will also be available for
proposal to update Exchange Rule shorter time as designated by the inspection and copying at the principal
13.4(a) to include IEX will ensure that Commission. office of the Exchange. All comments
the rule correctly identifies and publicly At any time within 60 days of the received will be posted without change;
states on a market-by-market basis all of filing of the proposed rule change, the the Commission does not edit personal
the specific network processor and Commission summarily may identifying information from
proprietary data feeds that the Exchange temporarily suspend such rule change if submissions. You should submit only
it appears to the Commission that such information that you wish to make
utilizes for the handling, routing, and
action is: (1) Necessary or appropriate in available publicly. All submissions
execution of orders, and for performing
the public interest; (2) for the protection should refer to File Number SR-
the regulatory compliance checks
of investors; or (3) otherwise in BatsEDGX–2016–30 and should be
related to each of those functions. The
furtherance of the purposes of the Act. submitted on or before August 9, 2016.
proposed rule change also removes
impediments to and perfects the If the Commission takes such action, the For the Commission, by the Division of
mechanism of a free and open market Commission shall institute proceedings Trading and Markets, pursuant to delegated
to determine whether the proposed rule authority.11
and protects investors and the public
interest because it provides additional should be approved or disapproved. Jill M. Peterson,
specificity, clarity and transparency. Assistant Secretary.
IV. Solicitation of Comments
[FR Doc. 2016–16975 Filed 7–18–16; 8:45 am]
B. Self-Regulatory Organization’s Interested persons are invited to BILLING CODE 8011–01–P
Statement on Burden on Competition submit written data, views, and
arguments concerning the foregoing,
The Exchange believes its proposed
including whether the proposed rule SECURITIES AND EXCHANGE
rule change would not impose any
change is consistent with the Act. COMMISSION
burden on competition that is not
Comments may be submitted by any of
necessary or appropriate in furtherance [Release No. 34–78316; File No. SR–CBOE–
the following methods:
of the purposes of the Act. To the 2016–056]
contrary, the Exchange believes the Electronic Comments
proposal would enhance competition Self-Regulatory Organizations;
• Use the Commission’s Internet Chicago Board Options Exchange,
because including all of the exchanges comment form (http://www.sec.gov/
enhances transparency and enables Incorporated; Notice of Filing and
rules/sro.shtml); or Immediate Effectiveness of a Proposed
investors to better assess the quality of • Send an email to rule-comments@
the Exchange’s execution and routing Rule Change Related to the Automated
sec.gov. Please include File Number SR–
services. Improvement Mechanism
BatsEDGX–2016–30 on the subject line.
C. Self-Regulatory Organization’s July 13, 2016.
Paper Comments
Statement on Comments on the Pursuant to Section 19(b)(1) of the
Proposed Rule Change Received From • Send paper comments in triplicate Securities Exchange Act of 1934 (the
Members, Participants or Others to Secretary, Securities and Exchange ‘‘Act’’),1 and Rule 19b–4 thereunder,2
Commission, 100 F Street NE., notice is hereby given that on July 13,
The Exchange has not solicited, and Washington, DC 20549–1090. 2016, Chicago Board Options Exchange,
does not intend to solicit, comments on
mstockstill on DSK3G9T082PROD with NOTICES
All submissions should refer to File Incorporated (the ‘‘Exchange’’ or
this proposed rule change. The Number SR–BatsEDGX–2016–30. This ‘‘CBOE’’) filed with the Securities and
Exchange has not received any file number should be included on the Exchange Commission (the
unsolicited written comments from subject line if email is used. To help the ‘‘Commission’’) the proposed rule
Members or other interested parties. Commission process and review your
11 17 CFR 200.30–3(a)(12).
7 15 U.S.C. 78f. 9 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1).
8 15 U.S.C. 78f(b)(5). 10 17 CFR 240.19b–4. 2 17 CFR 240.19b–4.
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![46976 Federal Register / Vol. 81, No. 138 / Tuesday, July 19, 2016 / Notices
change as described in Items I and II with which early termination pursuant A. Self-Regulatory Organization’s
below, which Items have been prepared to this provision results in favorable Statement of the Purpose of, and
by the Exchange. The Exchange filed the pricing for the Agency Order. Any raw Statutory Basis for, the Proposed Rule
proposal as a ‘‘non-controversial’’ data which is submitted to the Change
proposed rule change pursuant to Commission will be provided on a
1. Purpose
Section 19(b)(3)(A)(iii) of the Act 3 and confidential basis.
Rule 19b–4(f)(6) thereunder.4 The .07–.08 No change. In February 2006, CBOE obtained
Commission is publishing this notice to Rule 24B.5A. FLEX Automated approval from the Securities and
solicit comments on the proposed rule Improvement Mechanism Exchange Commission (the
change from interested persons. ‘‘Commission’’) to adopt the AIM
Notwithstanding the provisions of auction process.5 AIM exposes certain
I. Self-Regulatory Organization’s Rule 24B.5, a FLEX Trader that orders electronically to an auction
Statement of the Terms of Substance of represents agency orders may process to provide these orders with the
the Proposed Rule Change electronically execute an order it opportunity to receive an execution at
The Exchange seeks to extend the represents as agent (‘‘Agency Order’’) an improved price. The AIM auction is
pilots associated with the Automated against principal interest and/or against available only for orders that a Trading
Improvement Mechanism. The text of solicited orders provided it submits the Permit Holder represents as agent
the proposed rule change is provided Agency Order for execution into the (‘‘Agency Order’’) and for which a
below. automated improvement mechanism second order of the same size as the
(additions are italicized; deletions are auction (‘‘AIM Auction’’) pursuant to Agency Order (and on the opposite side
[bracketed]) this Rule. of the market) is also submitted
(a)–(b) No change. (effectively stopping the Agency Order
Chicago Board Options Exchange, This rule supersedes Exchange Rule at a given price).
Incorporated Rules 6.74A. The Commission approved two
Rule 6.74A. Automated Improvement . . . Interpretations and Policies: components of AIM on a pilot basis: (1)
Mechanism (‘‘AIM’’) .01–.02 No change. That there is no minimum size
Notwithstanding the provisions of requirement for orders to be eligible for
Rule 6.74, a Trading Permit Holder that .03 Initially, and for at least a Pilot
Period expiring on [July 18, 2016] the auction; and (2) that the auction will
represents agency orders may conclude prematurely anytime there is a
electronically execute an order it January 18, 2017, there will be no
minimum size requirement for orders to quote lock on the Exchange pursuant to
represents as agent (‘‘Agency Order’’) Rule 6.45A(d).6 In connection with the
against principal interest or a solicited be eligible for the AIM Auction. During
this Pilot Period, the Exchange will pilot programs, the Exchange has
order provided it submits the Agency submitted to the Commission reports
Order for electronic execution into the submit certain data, periodically as
required by the Commission, to provide providing detailed AIM auction and
AIM auction (‘‘Auction’’) pursuant to order execution data.
this Rule. supporting evidence that, among other
things, there is meaningful competition Ten one-year extensions to the pilot
(a)–(b) No change.
for all size orders and that there is an programs have previously become
. . . Interpretations and Policies:
.01–.02 No change. active and liquid market functioning on effective.7 The proposed rule change
.03 Initially, and for at least a Pilot the Exchange outside of the AIM merely extends the duration of the pilot
Period expiring on [July 18, 2016] Auction. Any raw data which is programs until January 18, 2017.
January 18, 2017, there will be no submitted to the Commission will be Extending the pilots for an additional
minimum size requirement for orders to provided on a confidential basis. six months will allow the Commission
be eligible for the Auction. During this more time to consider the impact of the
.04–.07 No change.
Pilot Period, the Exchange will submit pilot programs on AIM order
certain data, periodically as required by The text of the proposed rule change executions.
the Commission, to provide supporting is also available on the Exchange’s Web Additionally, in March 2012, CBOE
evidence that, among other things, there site (http://www.cboe.com/AboutCBOE/ obtained approval from the Commission
is meaningful competition for all size CBOELegalRegulatoryHome.aspx), at to adopt the AIM auction process for
orders and that there is an active and the Exchange’s Office of the Secretary,
liquid market functioning on the and at the Commission’s Public 5 See Securities Exchange Release No. 53222
Exchange outside of the Auction Reference Room. (February 3, 2006), 71 FR 7089 (February 10, 2006)
(SR–CBOE–2005–60).
mechanism. Any raw data which is II. Self-Regulatory Organization’s 6 A quote lock occurs when a CBOE Market-
submitted to the Commission will be Statement of the Purpose of, and Maker’s quote interacts with the quote of another
provided on a confidential basis. Statutory Basis for, the Proposed Rule CBOE Market-Maker (i.e. when internal quotes
.04–.05 No change. Change lock).
7 See Securities Exchange Act Release Nos. 54147
.06 Subparagraph (b)(2)(E) of this
In its filing with the Commission, the (July 14, 2006), 71 FR 41487 (July 21, 2006) (SR–
rule will be effective for a Pilot Period CBOE–2006–64); 56094 (July 18, 2007), 72 FR
until [July 18, 2016] January 18, 2017. Exchange included statements 40910 (July 25, 2007) (SR–CBOE–2007–80); 58196
During the Pilot Period, the Exchange concerning the purpose of and basis for (July 18, 2008), 73 FR 43803 (July 28, 2008) (SR–
will submit certain data, periodically as the proposed rule change and discussed CBOE–2008–76); 60338 (July 17, 2009), 74 FR
any comments it received on the 36803 (July 24, 2009) (SR–CBOE–2009–051); 62522
mstockstill on DSK3G9T082PROD with NOTICES
required by the Commission, relating to (July 16, 2010), 75 FR 43596 (July 26, 2010) (SR–
the frequency with which early proposed rule change. The text of these CBOE–2010–067); 64930 (July 20, 2011), 76 FR
termination of the Auction occurs statements may be examined at the 44636 (July 26, 2011) (SR–CBOE–2011–066); 67302
pursuant to this provision as well as any places specified in Item IV below. The (June 28, 2012), 77 FR 39779 (July 5, 2012) (SR–
Exchange has prepared summaries, set CBOE–2012–061); 69867 (June 27, 2013), 78 FR
other provision, and also the frequency 40230 (July 3, 2013) (SR–CBOE–2013–066); and
forth in sections A, B, and C below, of 72570 (July 9, 2014), 79 FR 41337 (July 15, 2014)
3 15 U.S.C. 78s(b)(3)(A)(iii). the most significant aspects of such (SR–CBOE–2014–054); and 75476 (July 16, 2015),
4 17 CFR 240.19b–4(f)(6). statements. 80 FR 43548 (July 22, 2015) (SR–CBOE–2015–068).
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![46978 Federal Register / Vol. 81, No. 138 / Tuesday, July 19, 2016 / Notices
The Commission believes that proposed rule change between the the Commission adopted Rule 17a–5 (17
waiving the 30-day operative delay is Commission and any person, other than CFR 240.17a–5), which is one of the
consistent with the protection of those that may be withheld from the primary financial and operational
investors and the public interest, as it public in accordance with the reporting rules for broker-dealers.1
will allow the pilot programs to provisions of 5 U.S.C. 552, will be Paragraph (a)(5) of Rule 17–5 requires
continue uninterrupted, thereby available for Web site viewing and every broker-dealer registered with the
avoiding any potential investor printing in the Commission’s Public Commission to file Form Custody (17
confusion that could result from a Reference Room, 100 F Street NE., CFR 249.639) with its designated
temporary interruption in the pilot Washington, DC 20549 on official examining authority (‘‘DEA’’) within 17
programs. Therefore, the Commission business days between the hours of business days after the end of each
designates the proposed rule change to 10:00 a.m. and 3:00 p.m. Copies of the calendar quarter and within 17 business
be operative on July 18, 2016.19 filing also will be available for days after the date selected for the
At any time within 60 days of the inspection and copying at the principal broker-dealer’s annual report if that date
filing of the proposed rule change, the office of the Exchange. All comments is not the end of a calendar quarter.
Commission summarily may received will be posted without change; Form Custody is designed to elicit
temporarily suspend such rule change if the Commission does not edit personal information about whether a broker-
it appears to the Commission that such identifying information from dealer maintains custody of customer
action is necessary or appropriate in the submissions. You should submit only and non-customer assets, and, if so, how
public interest, for the protection of information that you wish to make such assets are maintained.
investors, or otherwise in furtherance of available publicly. All submissions There are approximately 4,113 broker-
the purposes of the Act. If the should refer to File Number SR–CBOE– dealers registered with the Commission.
Commission takes such action, the 2016–056 and should be submitted on Based on staff experience, the
Commission shall institute proceedings or before August 9, 2016. Commission estimates that, on average,
to determine whether the proposed rule For the Commission, by the Division of it would take a broker-dealer
should be approved or disapproved. Trading and Markets, pursuant to delegated approximately 12 hours to complete and
authority.20 file Form Custody, for an annual
IV. Solicitation of Comments Jill M. Peterson, industry-wide reporting burden of
Interested persons are invited to Assistant Secretary. approximately 197,424 hours.2
submit written data, views, and [FR Doc. 2016–16972 Filed 7–18–16; 8:45 am] Assuming an average cost per hour of
arguments concerning the foregoing, BILLING CODE 8011–01–P approximately $291for a compliance
including whether the proposed rule manager, the total internal cost of
change is consistent with the Act. compliance for the respondents is
Comments may be submitted by any of SECURITIES AND EXCHANGE approximately $57,450,384 per year.3
the following methods: COMMISSION Written comments are invited on: (a)
Electronic Comments Whether the collection of information is
Proposed Collection; Comment necessary for the proper performance of
• Use the Commission’s Internet Request the functions of the agency, including
comment form (http://www.sec.gov/ whether the information shall have
Upon Written Request, Copies Available
rules/sro.shtml); or From: Securities and Exchange practical utility; (b) the accuracy of the
• Send an email to rule-comments@ Commission, Office of FOIA Services, Commission’s estimate of the burden of
sec.gov. Please include File Number SR– 100 F Street NE., Washington, DC the collection of information; (c) ways to
CBOE–2016–056 on the subject line. 20549–2736. enhance the quality, utility, and clarity
Paper Comments Extension:
of the information to be collected; and
Form Custody, SEC File No. 270–643, OMB (d) ways to minimize the burden of the
• Send paper comments in triplicate collection of information on
Control No. 3235–0691.
to Brent J. Fields, Secretary, Securities respondents, including through the use
and Exchange Commission, 100 F Street Notice is hereby given that pursuant
of automated collection techniques or
NE., Washington, DC 20549–1090. to the Paperwork Reduction Act of 1995
other forms of information technology.
All submissions should refer to File (44 U.S.C. 3501 et seq.) (‘‘PRA’’), the
Consideration will be given to
Number SR–CBOE–2016–056. This file Securities and Exchange Commission
comments and suggestions submitted in
number should be included on the (‘‘Commission’’) is soliciting comments
writing within 60 days of this
subject line if email is used. To help the on the existing collection of information
provided for in Form Custody (17 CFR publication.
Commission process and review your An agency may not conduct or
comments more efficiently, please use 249.639) under the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.) sponsor, and a person is not required to
only one method. The Commission will respond to, a collection of information
post all comments on the Commission’s (‘‘Exchange Act’’). The Commission
plans to submit this existing collection under the PRA unless it displays a
Internet Web site (http://www.sec.gov/ currently valid OMB control number.
rules/sro.shtml). Copies of the of information to the Office of
submission, all subsequent Management and Budget (‘‘OMB’’) for
1 Rule 17a–5 is subject to a separate PRA filing
extension and approval.
amendments, all written statements (OMB Control Number 3235–0123).
Section 17(a)(1) of the Exchange Act 2 4,113 brokers-dealers × 4 times per year × 12
with respect to the proposed rule
mstockstill on DSK3G9T082PROD with NOTICES
provides that broker-dealers registered hours = 197,424 hours.
change that are filed with the with the Commission must make and 3 197,424 hours times $291 per hour =
Commission, and all written keep records, furnish copies of the 57,450,384. $291 per hour for a compliance
communications relating to the records, and make and disseminate manager is from SIFMA’s Management &
reports as the Commission, by rule, Professional Earnings in the Securities Industry
19 For purposes only of waiving the operative 2013, modified by Commission staff for an 1800-
delay, the Commission has considered the proposed prescribes. Pursuant to this authority, hour work-year, multiplied by 5.35 to account for
rule’s impact on efficiency, competition, and capital bonuses, firm size, employee benefits, and
formation. See 15 U.S.C. 78c(f). 20 17 CFR 200.30–3(a)(12). overhead, and adjusted for inflation.
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Document Created: 2016-07-19 01:10:49
Document Modified: 2016-07-19 01:10:49
| 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 46975 |
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