82_FR_30078 82 FR 29953 - Self-Regulatory Organizations; OneChicago, LLC; Notice of Filing of Proposed Rule Change To Implement Four Decimal Pricing for Outright Transactions in Single Stock Futures

82 FR 29953 - Self-Regulatory Organizations; OneChicago, LLC; Notice of Filing of Proposed Rule Change To Implement Four Decimal Pricing for Outright Transactions in Single Stock Futures

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 125 (June 30, 2017)

Page Range29953-29956
FR Document2017-13707

Federal Register, Volume 82 Issue 125 (Friday, June 30, 2017)
[Federal Register Volume 82, Number 125 (Friday, June 30, 2017)]
[Notices]
[Pages 29953-29956]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-13707]



[[Page 29953]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81022; File No. SR-OC-2017-02]


Self-Regulatory Organizations; OneChicago, LLC; Notice of Filing 
of Proposed Rule Change To Implement Four Decimal Pricing for Outright 
Transactions in Single Stock Futures

June 26, 2017.
    Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 
(the ``Act'')\1\, notice is hereby given that on June 16, 2017, 
OneChicago, LLC (``OneChicago'' or the ``Exchange'') filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change described in Items I and II below, which Items 
have been prepared by the self-regulatory organization. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons. OneChicago has also filed this rule 
change with the Commodity Futures Trading Commission (``CFTC''). 
OneChicago filed a written certification with the CFTC under Section 
5c(c) of the Commodity Exchange Act (``CEA'') on June 16, 2017.
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    \1\ 15 U.S.C. 78s(b)(7).
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I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    OneChicago is proposing to amend OneChicago Rule 902 (Contract 
Specifications) to decrease the minimum price increment for outright 
Single Stock Futures (``SSFs'')\2\ quotes and trades from $0.01 to 
$0.0001 per share, which results in a minimum price fluctuation of 
$0.01 per contract. OneChicago is proposing this change to permit 
market participants to more precisely price the interest rate component 
of SSFs. Unlike their underlying securities, which are typically priced 
directly by the value of the security itself, SSF prices are derived by 
adding an interest rate component to the price of the underlying 
security. As described in more detail below, interest rates are 
commonly quoted in basis points (``bps''), and the forward value of 
SSFs must accurately reflect these interest rates. As such, OneChicago 
believes that four decimal quoting and trading may assist market 
participants in pricing SSFs with the precision necessary to reflect 
the actual value of the interest rate component of the contract.
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    \2\ An ``outright'' SSF trade is a non-block, non-EFP, non-
spread trade.
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    The minimum price fluctuation is set forth in OneChicago Rule 902, 
which provides general contract specifications for all OneChicago SSFs. 
Because the minimum price increment for blocks, EFPs, and spread 
transactions was already set at $0.0001, upon amending OneChicago Rule 
902(e), all SSF trade types, including outright trades, will quote and 
trade with minimum fluctuations of $0.0001 (i.e., one basis point per 
dollar).
    Further, as currently drafted, OneChicago Rule 902(e) provides that 
the Exchange may amend the minimum price fluctuation for SSFs without 
amending the text of the rule itself. Specifically, the clause ``or as 
otherwise stated by the Exchange'' effectively permits the Exchange to 
set a minimum price fluctuation by notice or other means. OneChicago is 
now proposing to amend OneChicago Rule 902(e) to delete this clause, 
thereby providing certainty to market participants that the minimum 
price fluctuation is stated solely in OneChicago Rule 902, and will not 
be amended other than through the rule change process.
    The text of the proposed rule change is attached as Exhibit 4 to 
the filing submitted by the Exchange but is not attached to the 
published notice of the filing.

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

    In its filing with the Commission, OneChicago 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 self-regulatory organization has prepared a summary 
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
    OneChicago is proposing to amend OneChicago Rule 902 (Contract 
Specifications) to decrease the minimum fluctuation for outright SSF 
quotes and trades from $0.01 to $0.0001 per share effective July 10, 
2017.\3\ Previously, the minimum price fluctuation for each contract 
was located in the OneChicago Rule 905 supplement. In 2011, OneChicago 
amended the pricing of block and EFP transactions in OneChicago Rule 
905 to permit four decimal point trade prices.\4\ In 2015, OneChicago 
similarly amended OneChicago Rule 905 to permit quoting and trading of 
spread transactions in four decimal places as well.\5\ This expansion 
allowed these trades to be more precisely priced because, as described 
in detail below, the interest rate component of SSFs is expressed in 
basis points, and four decimal pricing would permit market participants 
to quote or trade at prices that translate to their desired basis point 
level.
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    \3\ OneChicago's outright SSFs are currently quoted and traded 
in two decimal places, and are therefore settled on a per-contract 
basis with a minimum price fluctuation of $1.00 due to the 100 share 
per-contract multiplier. The Commission notes that the proposed rule 
change has become effective on June 16, 2017 and will be implemented 
on July 10, 2017.
    \4\ See Securities Exchange Act Release No. 65053 (August 8, 
2011) (SR-OC-2011-01).
    \5\ See Securities Exchange Act Release No. 75464 (July 16, 
2015) (SR-OC-2015-02).
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    This change will harmonize the pricing of all OneChicago trade 
types to four decimal places, and permit the same level of precision in 
central limit order book (``CLOB'') outright trades as is currently 
available for block trades. This change may also remove a potential 
barrier to entry to OneChicago's competitive marketplace, and could 
encourage market participants to transition away from the block 
marketplace and to the CLOB.
    OneChicago acknowledges that sub-penny pricing is currently 
prohibited in NMS securities.\6\ Although SSFs are not NMS securities, 
OneChicago believes it is warranted to discuss why four decimal pricing 
is appropriate in the SSF market, as well as why certain concerns 
highlighted by the rule's sub-penny prohibition would not apply to the 
SSFs listed by OneChicago.\7\
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    \6\ 17 CFR 242.612.
    \7\ OneChicago notes that equity options, like SSFs, also have a 
multiplier of 100 underlying shares, but are currently only quoted 
and traded in two decimal places. OneChicago believes it is 
appropriate to distinguish SSFs from equity options with regard to 
decimal quoting and trading. In OneChicago's view, unlike equity 
options, which are primarily used for hedging or speculating, the 
primary uses of SSFs are to (1) refinance equity positions by 
replacing them with positions in SSFs at more favorable interest 
rates, (2) loan or borrow securities, or (3) loan or borrow cash 
with securities as collateral. In each case, the ability for the SSF 
trade price to precisely target the desired interest rate of the 
transaction is a necessary component. Accordingly, providing for 
four decimal quoting and trading supports the key uses of SSFs.
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Interest Rate Component of SSFs
    Unlike securities--which are assets--SSFs are contingent 
liabilities that represent the forward value of the underlying 
security. The primary

[[Page 29954]]

difference in pricing between securities and the SSFs that overlay them 
is the interest rate component of the forward contract. The interest 
rate of an SSF represents the cost for an individual to hold the 
underlying equity--or in other words, the cost of carry. Interest rates 
are described in basis points, which are hundredths of one percentage 
point. For example, an interest rate of 1.25% can also be expressed as 
125 basis points. Interest rates are relative, not static, values. 
Consequently, 125 basis points can represent a different dollar value 
depending on the notional amount the interest rate is applied to. Four 
decimal pricing is a necessary step towards allowing SSFs to be priced 
in the dollar value that translates to the desired basis point 
equivalent.
    Since a trade in an SSF is not the purchase of an asset, but 
instead allows the individual to carry a position to a future time, the 
most accurate way to price the interest rate of the trade is in basis 
points. In order to trade in basis points, market participants need the 
ability to price trades to the fourth numerical decimal point.\8\ The 
decimal pricing expressed in dollars and cents can simply be viewed as 
a translation tool to permit market participants to trade at their 
desired level of basis points.
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    \8\ OneChicago notes that the greater number of numerical 
decimal places available in a trade price, the more precisely the 
basis point rate of a trade may be targeted. OneChicago believes 
that four decimal point pricing is currently sufficient to provide 
interest rate precision, while also avoiding increased complexity 
that may be associated with five or six (or greater) decimal point 
pricing. Due to the 100 share multiplier, per-share trade prices in 
four decimals would permit contract settlement in two decimal 
places.
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    OneChicago believes that two decimal pricing is not sufficient to 
translate a dollar value to an interest rate with precision. For 
example, an SSF bid-ask spread of $4.01 by $4.02 on a $4.00 underlying 
stock with sixty-four days left until expiration would represent a 
1.40% (140 bps) difference between the best bid and best ask. 
Specifically, the bid at $4.01 translates to a 1.41% (141 bps) interest 
rate, whereas the offer at $4.02 translates to a 2.81% (281 bps) 
interest rate.\9\ A market participant desiring to enter into a long 
position in the SSF at any interest rate between 140 bps and 281 bps 
would be prohibited from doing so by two decimal pricing, even if the 
seller was also willing to enter into a short position at that level.
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    \9\ As an ancillary matter, OneChicago notes that the Exchange 
trading platform does not support market orders partly to protect 
market participants from inadvertently crossing these large interest 
rate spreads and executing at an unexpected or undesired interest 
rate. Limit orders are the only order type that allow participants 
to precisely target an interest rate with their order price.
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    Although SSF trade prices are represented in dollar values, they 
also encompass interest rate and time until expiration. By using the 
trade price and time until expiration, market participants can 
determine the corresponding interest rate of the trade. Likewise, if a 
market participant is seeking a particular interest rate, that market 
participant can calculate the trade price by taking into account the 
desired interest rate and days until expiry. This is distinguished from 
trading in the underlying securities where the trade price directly 
represents the value of the asset itself. Accordingly, when market 
participants trade an SSF, they are calculating the futures trade price 
by considering not only the stock price, but also the days left to 
expiry and the prevailing interest rate.\10\
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    \10\ Interest rates are typically expressed in five decimal 
places (or alternatively, in basis points out to three decimal 
places). See e.g., ICE Libor Historical Rates, available at https://www.theice.com/marketdata/reports/170.
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Concerns Raised by Reg NMS
    OneChicago has considered whether permitting market participants to 
quote and trade SSFs in up to four decimals will impose any burdens on 
or otherwise negatively impact the SSF marketplace.\11\ OneChicago does 
not believe that permitting quoting and trading SSFs in up to four 
decimals will cause market participants to step ahead of each other's 
limit orders for nominal amounts, and thereby cause resting limit 
orders to lose their execution priority in the CLOB. Since $0.0001 in 
an SSF trade price may represent varying notional amounts depending on 
the trade price, quantity, and days left until expiry, OneChicago does 
not believe it is appropriate to prohibit four decimal pricing based on 
such a concern.\12\ This is especially true in a low interest rate 
environment where market participants need to tailor their SSF trade 
prices with accuracy such that the resulting interest rate is in line 
with their expectations.
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    \11\ Rule 612 of Regulation NMS, 17 CFR 242.612, prohibits 
national securities exchanges from accepting or ranking orders in 
any NMS security priced greater than $1.00 per share in an increment 
smaller than $0.01. By prohibiting sub-penny pricing, Regulation NMS 
sought to prevent market participants from stepping ahead of each 
other for a nominal or infinitesimally small amount, thereby 
discouraging the use of limit orders, and also to prevent 
overburdening market participants' systems due to increased 
messaging traffic resulting from sub penny orders. Although SSFs are 
not NMS securities, OneChicago has considered the prohibition on 
sub-penny pricing in NMS securities, and has concluded that the 
concerns raised by sub-penny pricing are not applicable to SSFs and 
unnecessary to impose on the SSF market.
    \12\ The average trade quantity on the CLOB is 5 contracts. 
Accordingly, the fourth decimal place would represent, on average, a 
$0.05 difference in trade value, which may translate to a meaningful 
interest rate, depending on the trade price and time until 
expiration. On a typical CLOB trade, the fourth decimal place may 
represent 0.1 to 3 bps in interest. By way of example, a 5 contract 
trade at a futures trade price of $13.9835 results in a notional 
value of $6991.75. Without the third and fourth decimal places (a 
futures trade price of $13.98), the notional value would be 
$6990.00, a difference of $1.75.
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    Additionally, unlike the equity markets in which hundreds of trades 
occur every second, OneChicago's markets are strictly governed to limit 
order frequency. The overwhelming majority of volume executed on the 
exchange occurs through the use of manual front-end systems, whereby 
the individual trader fills out each order ticket with the relevant 
order parameters. Further, even market participants trading 
programmatically (and who are not market-makers) are limited to a 
maximum of ten orders per second across all products, which minimizes 
the potential that any one market participant would repeatedly enter 
and modify orders in one particular product.
    Accordingly, OneChicago believes that it is unlikely that limit 
orders will be frequently stepped ahead of due to the low messaging 
quantity threshold permitted by the Exchange. OneChicago notes on this 
topic that if a limit order loses execution priority to another limit 
order priced exactly $0.0001 above (in the case of a buy order) or 
$0.0001 below (in the case of a sell order) the resting order, this 
loss of priority typically would not have occurred for a nominal 
amount.\13\ As described above, the fourth decimal place of an SSF 
trade can represent a different dollar value depending on the price of 
the underlying security and the days left until expiry of the futures 
contract. Accordingly, the Exchange believes that in most instances, 
the new limit order would have provided actual interest rate 
improvement over the resting order. In fact, the Exchange predicts that 
this rule change will encourage the entry of more competitive orders 
due to increased participation by both retail investors and market 
makers.\14\
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    \13\ As described in footnote 12, $0.05 may represent a spectrum 
of interest rates, depending on the futures trade price and days 
remaining until expiry.
    \14\ OneChicago notes that its spread marketplace has been 
trading on a centralized order book in four decimal places since 
July 20, 2015. Since that time, OneChicago has not observed any 
instance in which a limit order for a spread transaction was stepped 
ahead of.
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    Furthermore, OneChicago does not anticipate any capacity burden 
generated as a result of permitting four

[[Page 29955]]

decimal quoting and trading, as OneChicago does not expect its 
messaging traffic to increase as a result of this change. Therefore, 
the Exchange does not believe quote submission or market data receipt 
will be impacted in any anyway. Moreover, four decimal pricing is 
currently commonplace in the futures industry outside of SSFs.\15\
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    \15\ Many futures products tied to interest rates trade in 
greater than two decimals. Although the per-contract notional value 
in these products are usually larger than the typical outright SSF 
notional value, OneChicago believes the need for interest rate 
precision is consistent across all of these products.
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Impact on Retail Investors
    OneChicago believes that the primary beneficiaries of this rule 
change will be retail investors. OneChicago's SSFs offer retail 
investors an alternative to financing their equity securities positions 
via margin loan from their brokers, and offer these investors the 
ability to acquire synthetic exposure to equity securities at 
competitive financing rates. OneChicago believes the lack of four 
decimal pricing for outright trades has hampered the ability of the 
Exchange's market makers to make competitive markets which would allow 
retail investors to transact at competitive financing rates. With four 
decimal pricing in the CLOB for outright trades, OneChicago anticipates 
that new market makers will enter the marketplace and make more 
competitive markets, increasing trading activity on the CLOB.
    Further, as stated above, this rule change will encourage market 
participants to transact in OneChicago's CLOB, rather than in the block 
marketplace, thereby increasing competition in trading and quoting 
these products. Currently, block trades, which are privately negotiated 
transactions available only to eligible contract participants, as that 
term is defined in section 1a(18) of the CEA,\16\ are already priced in 
four decimals. This change will place retail investors, who may not 
access the block marketplace, on equal footing with these more 
sophisticated participants by permitting them to price their SSF trades 
in up to four decimals. As a result of this bifurcated structure in 
which sophisticated parties can transact blocks in four decimals, but 
retail investors may not, retail investors are at a disadvantage as 
they receive less competitive interest rates on their CLOB trades.\17\ 
In addition to permitting retail investors to trade in four decimals, 
OneChicago anticipates this rule change will cause sophisticated 
participants who can already transact in four decimal places in the 
block marketplace to begin to transition their activity to the CLOB. By 
aggregating and concentrating more SSF activity in the CLOB, OneChicago 
expects that all market participants will transact at more competitive 
levels than those present today.
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    \16\ 7 U.S.C. 1a(18).
    \17\ Although block trades typically have greater trade 
quantities than outright trades, block trades may trade in minimum 
quantities as low as five contracts for OneChicago's NoDivRisk 
products. Currently, participants in the block marketplace receive 
more favorable interest rates than those in the outright CLOB 
marketplace due to (1) the ability to pre-hedge block trades, and 
(2) four decimal pricing, which is currently available in blocks but 
not for outright trades.
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Monitoring of Four Decimal Trading
    As stated above, OneChicago does not anticipate that the transition 
of outright SSF trading to four decimals will harm or disadvantage any 
market participant. Nonetheless, in order to address any concerns 
related to stepping ahead, the Exchange plans to monitor its trading 
activity to determine whether permitting outright SSFs to trade in up 
to four decimal places has caused any harm to investors or 
deterioration in market quality. OneChicago plans to monitor this in 
two ways. First, the Exchange plans to monitor its trading directly for 
any incidence of stepping ahead. To do so, the Exchange will implement 
surveillance procedures that identify instances in which a market 
participant uses the third or fourth decimal place to step ahead of 
limit orders on the CLOB. OneChicago will review such activity and 
determine whether there is a pattern or practice of conduct not in line 
with just and equitable principles of trade. Second, OneChicago will, 
on a periodic basis, assess its market quality by looking to various 
factors such as spreads, market depth, and number and diversity of 
market participants. Using this two-pronged approached, the Exchange 
can determine whether permitting quoting and trading of SSFs in up to 
four decimals has promoted market quality, while ensuring market 
integrity. If OneChicago makes the determination that four decimal 
pricing has harmed either market quality or integrity, the Exchange 
will amend OneChicago Rule 902 to return to two decimal pricing. In 
order to provide its market participants with sufficient notice 
regarding this this [sic] change, OneChicago plans to distribute a 
Notice to Members before implementing the change to permit its market 
participants to make any necessary technology or operational changes, 
which OneChicago anticipates will be minimal.
2. Statutory Basis
    OneChicago believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\18\ in general, and furthers the 
objectives of Section 6(b)(5) \19\ in particular. The proposed rule 
change furthers the objectives of Section 6(b)(5) because it is 
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; and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is equitable 
and not unfairly discriminatory because it would apply equally to all 
market participants. The ability to trade outright transactions in up 
to four decimal places will not be limited to any class of market 
participant, and all market participants are eligible to trade on 
OneChicago's CLOB. The requirements to trade on the CLOB are no more 
restrictive than the requirements to trade block, EFP, or spread 
transactions. Permitting outright transactions to trade in up to four 
decimal allows all OneChicago participants to trade in the same way, 
thereby promoting just and equitable principles of trade.
    OneChicago has considered whether permitting SSFs to quote and 
trade in up to four decimal places could permit manipulation or other 
violative activity in either the underlying equity or SSF, and has 
determined that no such concern exists. Four decimal pricing for SSFs 
would not present any new methods for market participants to engage in 
behavior that may be violative of Exchange Rules or any applicable law.
    Further, as currently drafted, OneChicago Rule 902(e) provides that 
the Exchange may amend the minimum price fluctuation for SSFs without 
amending the text of the rule itself. Specifically, the clause ``or as 
otherwise stated by the Exchange'' effectively permits the Exchange to 
set a minimum price fluctuation by notice or other means. OneChicago is 
now proposing to amend OneChicago Rule 902(e) to delete

[[Page 29956]]

this clause, thereby providing certainty to market participants that 
the minimum price fluctuation is stated solely in OneChicago Rule 902, 
and will not be amended other than through the rule change process. 
OneChicago believes that its existing surveillance systems and capacity 
is sufficient to monitor and review trading activity for any violative 
trading in the SSF market.

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

    OneChicago does not believe that the 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 simply allows an 
additional type of transaction to be priced in up to four decimal 
places. This change will allow all market participants to more 
precisely price the interest rate component of their outright 
transactions. By pricing futures trades more precisely, market 
participants will be able to submit more competitive bids and offers on 
the Exchange. Further, as described above, OneChicago believes this 
rule change will increase competition in that it will allow all market 
participants to transact at four decimal places, and not just 
sophisticated parties who qualify as eligible contract 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 has become effective on June 16, 2017 and 
will be implemented on July 10, 2017.
    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.\20\
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    \20\ 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 rule-comments@sec.gov. Please include 
File Number SR-OC-2017-02 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-OC-2017-02. 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 publicly available. All 
submissions should refer to File Number SR-OC-2017-02 and should be 
submitted on or before July 21, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-13707 Filed 6-29-17; 8:45 am]
BILLING CODE 8011-01-P



                                                                                   Federal Register / Vol. 82, No. 125 / Friday, June 30, 2017 / Notices                                                       29953

                                                  SECURITIES AND EXCHANGE                                   reflect the actual value of the interest               Previously, the minimum price
                                                  COMMISSION                                                rate component of the contract.                        fluctuation for each contract was located
                                                                                                               The minimum price fluctuation is set                in the OneChicago Rule 905
                                                  [Release No. 34–81022; File No. SR–OC–
                                                                                                            forth in OneChicago Rule 902, which                    supplement. In 2011, OneChicago
                                                  2017–02]                                                  provides general contract specifications               amended the pricing of block and EFP
                                                                                                            for all OneChicago SSFs. Because the                   transactions in OneChicago Rule 905 to
                                                  Self-Regulatory Organizations;                            minimum price increment for blocks,                    permit four decimal point trade prices.4
                                                  OneChicago, LLC; Notice of Filing of                      EFPs, and spread transactions was                      In 2015, OneChicago similarly amended
                                                  Proposed Rule Change To Implement                         already set at $0.0001, upon amending                  OneChicago Rule 905 to permit quoting
                                                  Four Decimal Pricing for Outright                         OneChicago Rule 902(e), all SSF trade                  and trading of spread transactions in
                                                  Transactions in Single Stock Futures                      types, including outright trades, will                 four decimal places as well.5 This
                                                                                                            quote and trade with minimum                           expansion allowed these trades to be
                                                  June 26, 2017.                                            fluctuations of $0.0001 (i.e., one basis               more precisely priced because, as
                                                     Pursuant to Section 19(b)(7) of the                    point per dollar).                                     described in detail below, the interest
                                                  Securities Exchange Act of 1934 (the                         Further, as currently drafted,                      rate component of SSFs is expressed in
                                                  ‘‘Act’’)1, notice is hereby given that on                 OneChicago Rule 902(e) provides that                   basis points, and four decimal pricing
                                                  June 16, 2017, OneChicago, LLC                            the Exchange may amend the minimum                     would permit market participants to
                                                  (‘‘OneChicago’’ or the ‘‘Exchange’’) filed                price fluctuation for SSFs without                     quote or trade at prices that translate to
                                                  with the Securities and Exchange                          amending the text of the rule itself.                  their desired basis point level.
                                                  Commission (‘‘SEC’’ or ‘‘Commission’’)                    Specifically, the clause ‘‘or as otherwise                This change will harmonize the
                                                  the proposed rule change described in                     stated by the Exchange’’ effectively                   pricing of all OneChicago trade types to
                                                  Items I and II below, which Items have                    permits the Exchange to set a minimum                  four decimal places, and permit the
                                                  been prepared by the self-regulatory                      price fluctuation by notice or other                   same level of precision in central limit
                                                  organization. The Commission is                           means. OneChicago is now proposing to                  order book (‘‘CLOB’’) outright trades as
                                                  publishing this notice to solicit                         amend OneChicago Rule 902(e) to delete                 is currently available for block trades.
                                                  comments on the proposed rule change                      this clause, thereby providing certainty               This change may also remove a
                                                  from interested persons. OneChicago                       to market participants that the                        potential barrier to entry to
                                                  has also filed this rule change with the                  minimum price fluctuation is stated                    OneChicago’s competitive marketplace,
                                                  Commodity Futures Trading                                 solely in OneChicago Rule 902, and will                and could encourage market
                                                  Commission (‘‘CFTC’’). OneChicago                         not be amended other than through the                  participants to transition away from the
                                                  filed a written certification with the                    rule change process.                                   block marketplace and to the CLOB.
                                                  CFTC under Section 5c(c) of the                              The text of the proposed rule change                   OneChicago acknowledges that sub-
                                                  Commodity Exchange Act (‘‘CEA’’) on                       is attached as Exhibit 4 to the filing                 penny pricing is currently prohibited in
                                                  June 16, 2017.                                            submitted by the Exchange but is not                   NMS securities.6 Although SSFs are not
                                                                                                            attached to the published notice of the                NMS securities, OneChicago believes it
                                                  I. Self-Regulatory Organization’s                         filing.                                                is warranted to discuss why four
                                                  Description of the Proposed Rule                                                                                 decimal pricing is appropriate in the
                                                  Change                                                    II. Self-Regulatory Organization’s
                                                                                                            Statement of the Purpose of, and                       SSF market, as well as why certain
                                                                                                            Statutory Basis for, the Proposed Rule                 concerns highlighted by the rule’s sub-
                                                     OneChicago is proposing to amend                                                                              penny prohibition would not apply to
                                                  OneChicago Rule 902 (Contract                             Change
                                                                                                                                                                   the SSFs listed by OneChicago.7
                                                  Specifications) to decrease the                              In its filing with the Commission,
                                                  minimum price increment for outright                      OneChicago included statements                         Interest Rate Component of SSFs
                                                  Single Stock Futures (‘‘SSFs’’)2 quotes                   concerning the purpose of and basis for                  Unlike securities—which are assets—
                                                  and trades from $0.01 to $0.0001 per                      the proposed rule change and discussed                 SSFs are contingent liabilities that
                                                  share, which results in a minimum price                   any comments it received on the                        represent the forward value of the
                                                  fluctuation of $0.01 per contract.                        proposed rule change. The text of these                underlying security. The primary
                                                  OneChicago is proposing this change to                    statements may be examined at the
                                                  permit market participants to more                        places specified in Item IV below. The                 contract multiplier. The Commission notes that the
                                                  precisely price the interest rate                         self-regulatory organization has                       proposed rule change has become effective on June
                                                  component of SSFs. Unlike their                                                                                  16, 2017 and will be implemented on July 10, 2017.
                                                                                                            prepared a summary of the most                            4 See Securities Exchange Act Release No. 65053
                                                  underlying securities, which are                          significant aspects of such statements.                (August 8, 2011) (SR–OC–2011–01).
                                                  typically priced directly by the value of                                                                           5 See Securities Exchange Act Release No. 75464
                                                  the security itself, SSF prices are                       A. Self-Regulatory Organization’s
                                                                                                                                                                   (July 16, 2015) (SR–OC–2015–02).
                                                  derived by adding an interest rate                        Statement of the Purpose of, and                          6 17 CFR 242.612.

                                                  component to the price of the                             Statutory Basis for, the Proposed Rule                    7 OneChicago notes that equity options, like SSFs,

                                                  underlying security. As described in                      Change                                                 also have a multiplier of 100 underlying shares, but
                                                                                                                                                                   are currently only quoted and traded in two
                                                  more detail below, interest rates are                     1. Purpose                                             decimal places. OneChicago believes it is
                                                  commonly quoted in basis points                                                                                  appropriate to distinguish SSFs from equity options
                                                                                                               OneChicago is proposing to amend
                                                  (‘‘bps’’), and the forward value of SSFs                                                                         with regard to decimal quoting and trading. In
                                                                                                            OneChicago Rule 902 (Contract                          OneChicago’s view, unlike equity options, which
                                                  must accurately reflect these interest
                                                                                                            Specifications) to decrease the                        are primarily used for hedging or speculating, the
                                                  rates. As such, OneChicago believes that
mstockstill on DSK30JT082PROD with NOTICES




                                                                                                            minimum fluctuation for outright SSF                   primary uses of SSFs are to (1) refinance equity
                                                  four decimal quoting and trading may                                                                             positions by replacing them with positions in SSFs
                                                                                                            quotes and trades from $0.01 to $0.0001
                                                  assist market participants in pricing                                                                            at more favorable interest rates, (2) loan or borrow
                                                                                                            per share effective July 10, 2017.3                    securities, or (3) loan or borrow cash with securities
                                                  SSFs with the precision necessary to
                                                                                                                                                                   as collateral. In each case, the ability for the SSF
                                                                                                              3 OneChicago’s outright SSFs are currently quoted    trade price to precisely target the desired interest
                                                    1 15U.S.C. 78s(b)(7).                                   and traded in two decimal places, and are therefore    rate of the transaction is a necessary component.
                                                    2 An ‘‘outright’’ SSF trade is a non-block, non-        settled on a per-contract basis with a minimum         Accordingly, providing for four decimal quoting
                                                  EFP, non-spread trade.                                    price fluctuation of $1.00 due to the 100 share per-   and trading supports the key uses of SSFs.



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                                                  29954                            Federal Register / Vol. 82, No. 125 / Friday, June 30, 2017 / Notices

                                                  difference in pricing between securities                 even if the seller was also willing to                  is especially true in a low interest rate
                                                  and the SSFs that overlay them is the                    enter into a short position at that level.              environment where market participants
                                                  interest rate component of the forward                      Although SSF trade prices are                        need to tailor their SSF trade prices
                                                  contract. The interest rate of an SSF                    represented in dollar values, they also                 with accuracy such that the resulting
                                                  represents the cost for an individual to                 encompass interest rate and time until                  interest rate is in line with their
                                                  hold the underlying equity—or in other                   expiration. By using the trade price and                expectations.
                                                  words, the cost of carry. Interest rates                 time until expiration, market                              Additionally, unlike the equity
                                                  are described in basis points, which are                 participants can determine the                          markets in which hundreds of trades
                                                  hundredths of one percentage point. For                  corresponding interest rate of the trade.               occur every second, OneChicago’s
                                                  example, an interest rate of 1.25% can                   Likewise, if a market participant is                    markets are strictly governed to limit
                                                  also be expressed as 125 basis points.                   seeking a particular interest rate, that                order frequency. The overwhelming
                                                  Interest rates are relative, not static,                 market participant can calculate the                    majority of volume executed on the
                                                  values. Consequently, 125 basis points                   trade price by taking into account the                  exchange occurs through the use of
                                                  can represent a different dollar value                   desired interest rate and days until                    manual front-end systems, whereby the
                                                  depending on the notional amount the                     expiry. This is distinguished from                      individual trader fills out each order
                                                  interest rate is applied to. Four decimal                trading in the underlying securities                    ticket with the relevant order
                                                  pricing is a necessary step towards                      where the trade price directly represents               parameters. Further, even market
                                                  allowing SSFs to be priced in the dollar                 the value of the asset itself. Accordingly,             participants trading programmatically
                                                  value that translates to the desired basis               when market participants trade an SSF,                  (and who are not market-makers) are
                                                  point equivalent.                                        they are calculating the futures trade                  limited to a maximum of ten orders per
                                                                                                           price by considering not only the stock                 second across all products, which
                                                     Since a trade in an SSF is not the                                                                            minimizes the potential that any one
                                                  purchase of an asset, but instead allows                 price, but also the days left to expiry
                                                                                                           and the prevailing interest rate.10                     market participant would repeatedly
                                                  the individual to carry a position to a                                                                          enter and modify orders in one
                                                  future time, the most accurate way to                    Concerns Raised by Reg NMS                              particular product.
                                                  price the interest rate of the trade is in                  OneChicago has considered whether                       Accordingly, OneChicago believes
                                                  basis points. In order to trade in basis                 permitting market participants to quote                 that it is unlikely that limit orders will
                                                  points, market participants need the                     and trade SSFs in up to four decimals                   be frequently stepped ahead of due to
                                                  ability to price trades to the fourth                    will impose any burdens on or                           the low messaging quantity threshold
                                                  numerical decimal point.8 The decimal                    otherwise negatively impact the SSF                     permitted by the Exchange. OneChicago
                                                  pricing expressed in dollars and cents                   marketplace.11 OneChicago does not                      notes on this topic that if a limit order
                                                  can simply be viewed as a translation                    believe that permitting quoting and                     loses execution priority to another limit
                                                  tool to permit market participants to                    trading SSFs in up to four decimals will                order priced exactly $0.0001 above (in
                                                  trade at their desired level of basis                    cause market participants to step ahead                 the case of a buy order) or $0.0001
                                                  points.                                                  of each other’s limit orders for nominal                below (in the case of a sell order) the
                                                     OneChicago believes that two decimal                  amounts, and thereby cause resting limit                resting order, this loss of priority
                                                  pricing is not sufficient to translate a                 orders to lose their execution priority in              typically would not have occurred for a
                                                  dollar value to an interest rate with                    the CLOB. Since $0.0001 in an SSF                       nominal amount.13 As described above,
                                                  precision. For example, an SSF bid-ask                   trade price may represent varying                       the fourth decimal place of an SSF trade
                                                  spread of $4.01 by $4.02 on a $4.00                      notional amounts depending on the                       can represent a different dollar value
                                                  underlying stock with sixty-four days                    trade price, quantity, and days left until              depending on the price of the
                                                  left until expiration would represent a                  expiry, OneChicago does not believe it                  underlying security and the days left
                                                  1.40% (140 bps) difference between the                   is appropriate to prohibit four decimal                 until expiry of the futures contract.
                                                  best bid and best ask. Specifically, the                 pricing based on such a concern.12 This                 Accordingly, the Exchange believes that
                                                  bid at $4.01 translates to a 1.41% (141                                                                          in most instances, the new limit order
                                                  bps) interest rate, whereas the offer at                    10 Interest rates are typically expressed in five    would have provided actual interest rate
                                                  $4.02 translates to a 2.81% (281 bps)                    decimal places (or alternatively, in basis points out   improvement over the resting order. In
                                                                                                           to three decimal places). See e.g., ICE Libor           fact, the Exchange predicts that this rule
                                                  interest rate.9 A market participant                     Historical Rates, available at https://
                                                  desiring to enter into a long position in                www.theice.com/marketdata/reports/170.
                                                                                                                                                                   change will encourage the entry of more
                                                  the SSF at any interest rate between 140                    11 Rule 612 of Regulation NMS, 17 CFR 242.612,       competitive orders due to increased
                                                  bps and 281 bps would be prohibited                      prohibits national securities exchanges from            participation by both retail investors
                                                  from doing so by two decimal pricing,                    accepting or ranking orders in any NMS security         and market makers.14
                                                                                                           priced greater than $1.00 per share in an increment        Furthermore, OneChicago does not
                                                                                                           smaller than $0.01. By prohibiting sub-penny
                                                     8 OneChicago notes that the greater number of         pricing, Regulation NMS sought to prevent market
                                                                                                                                                                   anticipate any capacity burden
                                                  numerical decimal places available in a trade price,     participants from stepping ahead of each other for      generated as a result of permitting four
                                                  the more precisely the basis point rate of a trade       a nominal or infinitesimally small amount, thereby
                                                  may be targeted. OneChicago believes that four           discouraging the use of limit orders, and also to       interest. By way of example, a 5 contract trade at
                                                  decimal point pricing is currently sufficient to         prevent overburdening market participants’ systems      a futures trade price of $13.9835 results in a
                                                  provide interest rate precision, while also avoiding     due to increased messaging traffic resulting from       notional value of $6991.75. Without the third and
                                                  increased complexity that may be associated with         sub penny orders. Although SSFs are not NMS             fourth decimal places (a futures trade price of
                                                  five or six (or greater) decimal point pricing. Due      securities, OneChicago has considered the               $13.98), the notional value would be $6990.00, a
                                                  to the 100 share multiplier, per-share trade prices      prohibition on sub-penny pricing in NMS                 difference of $1.75.
                                                  in four decimals would permit contract settlement        securities, and has concluded that the concerns            13 As described in footnote 12, $0.05 may
mstockstill on DSK30JT082PROD with NOTICES




                                                  in two decimal places.                                   raised by sub-penny pricing are not applicable to       represent a spectrum of interest rates, depending on
                                                     9 As an ancillary matter, OneChicago notes that       SSFs and unnecessary to impose on the SSF market.       the futures trade price and days remaining until
                                                  the Exchange trading platform does not support              12 The average trade quantity on the CLOB is 5       expiry.
                                                  market orders partly to protect market participants      contracts. Accordingly, the fourth decimal place           14 OneChicago notes that its spread marketplace

                                                  from inadvertently crossing these large interest rate    would represent, on average, a $0.05 difference in      has been trading on a centralized order book in four
                                                  spreads and executing at an unexpected or                trade value, which may translate to a meaningful        decimal places since July 20, 2015. Since that time,
                                                  undesired interest rate. Limit orders are the only       interest rate, depending on the trade price and time    OneChicago has not observed any instance in which
                                                  order type that allow participants to precisely target   until expiration. On a typical CLOB trade, the          a limit order for a spread transaction was stepped
                                                  an interest rate with their order price.                 fourth decimal place may represent 0.1 to 3 bps in      ahead of.



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                                                                                  Federal Register / Vol. 82, No. 125 / Friday, June 30, 2017 / Notices                                            29955

                                                  decimal quoting and trading, as                         investors to trade in four decimals,                   2. Statutory Basis
                                                  OneChicago does not expect its                          OneChicago anticipates this rule change                   OneChicago believes that the
                                                  messaging traffic to increase as a result               will cause sophisticated participants                  proposed rule change is consistent with
                                                  of this change. Therefore, the Exchange                 who can already transact in four                       Section 6(b) of the Act,18 in general, and
                                                  does not believe quote submission or                    decimal places in the block marketplace                furthers the objectives of Section
                                                  market data receipt will be impacted in                 to begin to transition their activity to the
                                                                                                                                                                 6(b)(5) 19 in particular. The proposed
                                                  any anyway. Moreover, four decimal                      CLOB. By aggregating and concentrating
                                                                                                                                                                 rule change furthers the objectives of
                                                  pricing is currently commonplace in the                 more SSF activity in the CLOB,
                                                                                                                                                                 Section 6(b)(5) because it is designed to
                                                  futures industry outside of SSFs.15                     OneChicago expects that all market
                                                                                                                                                                 prevent fraudulent and manipulative
                                                                                                          participants will transact at more
                                                  Impact on Retail Investors                                                                                     acts and practices, to promote just and
                                                                                                          competitive levels than those present
                                                     OneChicago believes that the primary                                                                        equitable principles of trade, to foster
                                                                                                          today.
                                                  beneficiaries of this rule change will be                                                                      cooperation and coordination with
                                                  retail investors. OneChicago’s SSFs offer               Monitoring of Four Decimal Trading                     persons engaged in regulating, clearing,
                                                  retail investors an alternative to                         As stated above, OneChicago does not                settling, processing information with
                                                  financing their equity securities                       anticipate that the transition of outright             respect to, and facilitating transactions
                                                  positions via margin loan from their                    SSF trading to four decimals will harm                 in securities, to remove impediments to
                                                  brokers, and offer these investors the                  or disadvantage any market participant.                and perfect the mechanism of a free and
                                                  ability to acquire synthetic exposure to                Nonetheless, in order to address any                   open market and a national market
                                                  equity securities at competitive                        concerns related to stepping ahead, the                system, and, in general, to protect
                                                  financing rates. OneChicago believes the                Exchange plans to monitor its trading                  investors and the public interest; and is
                                                  lack of four decimal pricing for outright               activity to determine whether                          not designed to permit unfair
                                                  trades has hampered the ability of the                  permitting outright SSFs to trade in up                discrimination between customers,
                                                  Exchange’s market makers to make                        to four decimal places has caused any                  issuers, brokers, or dealers.
                                                  competitive markets which would allow                   harm to investors or deterioration in                     The Exchange believes that the
                                                  retail investors to transact at                         market quality. OneChicago plans to                    proposed rule change is equitable and
                                                  competitive financing rates. With four                  monitor this in two ways. First, the                   not unfairly discriminatory because it
                                                  decimal pricing in the CLOB for outright                Exchange plans to monitor its trading                  would apply equally to all market
                                                  trades, OneChicago anticipates that new                 directly for any incidence of stepping                 participants. The ability to trade
                                                  market makers will enter the                            ahead. To do so, the Exchange will                     outright transactions in up to four
                                                  marketplace and make more competitive                   implement surveillance procedures that                 decimal places will not be limited to
                                                  markets, increasing trading activity on                 identify instances in which a market                   any class of market participant, and all
                                                  the CLOB.                                               participant uses the third or fourth                   market participants are eligible to trade
                                                     Further, as stated above, this rule                  decimal place to step ahead of limit                   on OneChicago’s CLOB. The
                                                  change will encourage market                            orders on the CLOB. OneChicago will                    requirements to trade on the CLOB are
                                                  participants to transact in OneChicago’s                review such activity and determine                     no more restrictive than the
                                                  CLOB, rather than in the block                          whether there is a pattern or practice of              requirements to trade block, EFP, or
                                                  marketplace, thereby increasing                         conduct not in line with just and                      spread transactions. Permitting outright
                                                  competition in trading and quoting                      equitable principles of trade. Second,                 transactions to trade in up to four
                                                  these products. Currently, block trades,                OneChicago will, on a periodic basis,                  decimal allows all OneChicago
                                                  which are privately negotiated                          assess its market quality by looking to                participants to trade in the same way,
                                                  transactions available only to eligible                 various factors such as spreads, market                thereby promoting just and equitable
                                                  contract participants, as that term is                  depth, and number and diversity of                     principles of trade.
                                                  defined in section 1a(18) of the CEA,16                 market participants. Using this two-                      OneChicago has considered whether
                                                  are already priced in four decimals. This               pronged approached, the Exchange can                   permitting SSFs to quote and trade in
                                                  change will place retail investors, who                 determine whether permitting quoting                   up to four decimal places could permit
                                                  may not access the block marketplace,                   and trading of SSFs in up to four                      manipulation or other violative activity
                                                  on equal footing with these more                        decimals has promoted market quality,                  in either the underlying equity or SSF,
                                                  sophisticated participants by permitting                while ensuring market integrity. If                    and has determined that no such
                                                  them to price their SSF trades in up to                 OneChicago makes the determination                     concern exists. Four decimal pricing for
                                                  four decimals. As a result of this                      that four decimal pricing has harmed                   SSFs would not present any new
                                                  bifurcated structure in which                           either market quality or integrity, the                methods for market participants to
                                                  sophisticated parties can transact blocks               Exchange will amend OneChicago Rule                    engage in behavior that may be violative
                                                  in four decimals, but retail investors                  902 to return to two decimal pricing. In               of Exchange Rules or any applicable
                                                  may not, retail investors are at a                      order to provide its market participants               law.
                                                  disadvantage as they receive less                       with sufficient notice regarding this this                Further, as currently drafted,
                                                  competitive interest rates on their CLOB                [sic] change, OneChicago plans to                      OneChicago Rule 902(e) provides that
                                                  trades.17 In addition to permitting retail              distribute a Notice to Members before                  the Exchange may amend the minimum
                                                                                                          implementing the change to permit its                  price fluctuation for SSFs without
                                                     15 Many futures products tied to interest rates
                                                                                                          market participants to make any                        amending the text of the rule itself.
                                                  trade in greater than two decimals. Although the        necessary technology or operational
                                                  per-contract notional value in these products are
                                                                                                                                                                 Specifically, the clause ‘‘or as otherwise
                                                                                                          changes, which OneChicago anticipates                  stated by the Exchange’’ effectively
mstockstill on DSK30JT082PROD with NOTICES




                                                  usually larger than the typical outright SSF notional
                                                  value, OneChicago believes the need for interest        will be minimal.                                       permits the Exchange to set a minimum
                                                  rate precision is consistent across all of these                                                               price fluctuation by notice or other
                                                  products.                                               Currently, participants in the block marketplace
                                                     16 7 U.S.C. 1a(18).
                                                                                                                                                                 means. OneChicago is now proposing to
                                                                                                          receive more favorable interest rates than those in
                                                     17 Although block trades typically have greater      the outright CLOB marketplace due to (1) the ability
                                                                                                                                                                 amend OneChicago Rule 902(e) to delete
                                                  trade quantities than outright trades, block trades     to pre-hedge block trades, and (2) four decimal
                                                                                                                                                                  18 15   U.S.C. 78f(b).
                                                  may trade in minimum quantities as low as five          pricing, which is currently available in blocks but
                                                  contracts for OneChicago’s NoDivRisk products.          not for outright trades.                                19 15   U.S.C. 78f(b)(5).



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                                                  29956                              Federal Register / Vol. 82, No. 125 / Friday, June 30, 2017 / Notices

                                                  this clause, thereby providing certainty                   Electronic Comments                                     SECURITIES AND EXCHANGE
                                                  to market participants that the                                                                                    COMMISSION
                                                  minimum price fluctuation is stated                          • Use the Commission’s Internet
                                                                                                             comment form (http://www.sec.gov/                       [Release No. 34–81018; File No. SR–FINRA–
                                                  solely in OneChicago Rule 902, and will                                                                            2017–023]
                                                  not be amended other than through the                      rules/sro.shtml); or
                                                  rule change process. OneChicago                              • Send an email to rule-comments@                     Self-Regulatory Organizations;
                                                  believes that its existing surveillance                    sec.gov. Please include File Number SR–                 Financial Industry Regulatory
                                                  systems and capacity is sufficient to                      OC–2017–02 on the subject line.                         Authority, Inc.; Notice of Filing and
                                                  monitor and review trading activity for                                                                            Immediate Effectiveness of Proposed
                                                  any violative trading in the SSF market.                   Paper Comments
                                                                                                                                                                     Rule Change Relating to Reporting of
                                                  B. Self-Regulatory Organization’s                            • Send paper comments in triplicate                   Certain ATS Transactions in U.S.
                                                  Statement on Burden on Competition                         to Secretary, Securities and Exchange                   Treasury Securities
                                                     OneChicago does not believe that the                    Commission, 100 F Street NE.,                           June 26, 2017.
                                                  rule change will impose any burden on                      Washington, DC 20549–1090.                                 Pursuant to Section 19(b)(1) of the
                                                  competition not necessary or                               All submissions should refer to File                    Securities Exchange Act of 1934
                                                  appropriate in furtherance of the                          Number SR–OC–2017–02. This file                         (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
                                                  purposes of the Act, in that the rule                      number should be included on the                        notice is hereby given that on June 23,
                                                  change simply allows an additional type                    subject line if email is used. To help the              2017, Financial Industry Regulatory
                                                  of transaction to be priced in up to four                                                                          Authority, Inc. (‘‘FINRA’’) filed with the
                                                                                                             Commission process and review your
                                                  decimal places. This change will allow                                                                             Securities and Exchange Commission
                                                                                                             comments more efficiently, please use
                                                  all market participants to more precisely                                                                          (‘‘Commission’’) the proposed rule
                                                  price the interest rate component of                       only one method. The Commission will
                                                                                                                                                                     change as described in Items I and II
                                                  their outright transactions. By pricing                    post all comments on the Commission’s                   below, which Items have been prepared
                                                  futures trades more precisely, market                      Internet Web site (http://www.sec.gov/                  by FINRA. FINRA has designated the
                                                  participants will be able to submit more                   rules/sro.shtml). Copies of the                         proposed rule change as constituting a
                                                  competitive bids and offers on the                         submission, all subsequent                              ‘‘non-controversial’’ rule change under
                                                  Exchange. Further, as described above,                     amendments, all written statements                      paragraph (f)(6) of Rule 19b–4 under the
                                                  OneChicago believes this rule change                       with respect to the proposed rule                       Act,3 which renders the proposal
                                                  will increase competition in that it will                  change that are filed with the                          effective upon receipt of this filing by
                                                  allow all market participants to transact                  Commission, and all written                             the Commission. The Commission is
                                                  at four decimal places, and not just                       communications relating to the                          publishing this notice to solicit
                                                  sophisticated parties who qualify as                       proposed rule change between the                        comments on the proposed rule change
                                                  eligible contract participants.                            Commission and any person, other than                   from interested persons.
                                                                                                             those that may be withheld from the
                                                  C. Self-Regulatory Organization’s                                                                                  I. Self-Regulatory Organization’s
                                                  Statement on Comments on the                               public in accordance with the
                                                                                                                                                                     Statement of the Terms of Substance of
                                                  Proposed Rule Change Received From                         provisions of 5 U.S.C. 552, will be                     the Proposed Rule Change
                                                  Members, Participants, or Others                           available for Web site viewing and
                                                                                                             printing in the Commission’s Public                        FINRA is proposing to amend FINRA
                                                    No written comments were solicited                       Reference Room, 100 F Street NE.,                       Rule 6730 (Transaction Reporting) to
                                                  or received with respect to the proposed                                                                           provide a temporary exception to permit
                                                                                                             Washington, DC 20549 on official
                                                  rule change.                                                                                                       member alternative trading systems
                                                                                                             business days between the hours of
                                                                                                                                                                     (‘‘ATSs’’) and member subscribers to
                                                  III. Date of Effectiveness of the                          10:00 a.m. and 3:00 p.m. Copies of the
                                                                                                                                                                     report aggregate trade information to
                                                  Proposed Rule Change and Timing for                        filing also will be available for
                                                                                                                                                                     TRACE for certain transactions in U.S.
                                                  Commission Action                                          inspection and copying at the principal                 Treasury Securities.
                                                     The proposed rule change has become                     office of the Exchange. All comments                       The text of the proposed rule change
                                                  effective on June 16, 2017 and will be                     received will be posted without change;                 is available on FINRA’s Web site at
                                                  implemented on July 10, 2017.                              the Commission does not edit personal                   http://www.finra.org, at the principal
                                                     At any time within 60 days of the date                  identifying information from                            office of FINRA and at the
                                                  of effectiveness of the proposed rule                      submissions. You should submit only                     Commission’s Public Reference Room.
                                                  change, the Commission, after                              information that you wish to make
                                                  consultation with the CFTC, may                            publicly available. All submissions                     II. Self-Regulatory Organization’s
                                                  summarily abrogate the proposed rule                                                                               Statement of the Purpose of, and
                                                                                                             should refer to File Number SR–OC–
                                                  change and require that the proposed                                                                               Statutory Basis for, the Proposed Rule
                                                                                                             2017–02 and should be submitted on or
                                                  rule change be refiled in accordance                                                                               Change
                                                                                                             before July 21, 2017.
                                                  with the provisions of Section 19(b)(1)                                                                               In its filing with the Commission,
                                                  of the Act.20                                                For the Commission, by the Division of
                                                                                                                                                                     FINRA included statements concerning
                                                                                                             Trading and Markets, pursuant to delegated
                                                                                                                                                                     the purpose of and basis for the
                                                  IV. Solicitation of Comments                               authority.21
                                                                                                                                                                     proposed rule change and discussed any
                                                    Interested persons are invited to                        Robert W. Errett,                                       comments it received on the proposed
                                                  submit written data, views, and
mstockstill on DSK30JT082PROD with NOTICES




                                                                                                             Deputy Secretary.                                       rule change. The text of these statements
                                                  arguments concerning the foregoing,                        [FR Doc. 2017–13707 Filed 6–29–17; 8:45 am]             may be examined at the places specified
                                                  including whether the proposed rule                        BILLING CODE 8011–01–P                                  in Item IV below. FINRA has prepared
                                                  change is consistent with the Act.                                                                                 summaries, set forth in sections A, B,
                                                  Comments may be submitted by any of
                                                  the following methods:                                                                                              1 15 U.S.C. 78s(b)(1).
                                                                                                                                                                      2 17 CFR 240.19b–4.
                                                    20 15   U.S.C. 78s(b)(1).                                  21 17   CFR 200.30–3(a)(12).                           3 17 CFR 240.19b–4(f)(6).




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Document Created: 2017-06-30 06:01:39
Document Modified: 2017-06-30 06:01:39
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 29953 

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