82 FR 32210 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 6.47A, Automated Improvement Mechanism
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 132 (July 12, 2017)
Federal Register Volume 82, Issue 132 (July 12, 2017)
| Page Range | 32210-32213 | |
| FR Document | 2017-14557 |
[Federal Register Volume 82, Number 132 (Wednesday, July 12, 2017)] [Notices] [Pages 32210-32213] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-14557] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81085; File No. SR-CBOE-2017-054] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 6.47A, Automated Improvement Mechanism July 6, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on June 30, 2017, Chicago Board Options Exchange, Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ``non-controversial'' proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 15 U.S.C. 78s(b)(3)(A)(iii). \4\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange seeks to amend its rules related to Automated Improvement Mechanism (``AIM'') auctions. (additions are italicized; deletions are [bracketed]) * * * * * Chicago Board Options Exchange, Incorporated Rules * * * * * Rule 6.74A. Automated Improvement Mechanism (``AIM'') Notwithstanding the provisions of Rule 6.74, a Trading Permit Holder that represents agency orders may electronically execute an order it represents as agent (``Agency Order'') against principal interest or against a solicited order provided it submits the Agency Order for electronic execution into the AIM auction (``Auction'') pursuant to this Rule. (a) No change. (b) Auction Process. Only one Auction may be ongoing at any given time in a series and Auctions in the same series may not queue or overlap in any manner. The Auction may not be cancelled and shall proceed as follows: (1) Auction Period and request for Responses (RFRs). (A)-(C) No change. (D) Each Market-Maker with an appointment in the relevant option class may submit responses to the RFR (specifying prices and sizes). [Such responses cannot cross the disseminated Exchange quote on the opposite side of the market.] Responses that cross the opposite side of the Exchange's disseminated quote that exists at the conclusion of the Auction will be priced at the Exchange's disseminated quote on the opposite side of the market. (E) Trading Permit Holders acting as agent for orders resting at the top of the Exchange's book opposite the Agency Order may submit responses to the RFR (specifying prices and sizes) on behalf such orders. Such responses [cannot cross the disseminated Exchange quote on the opposite side of the market, and] may not exceed the size of the booked order being represented. Responses that cross the opposite side of the Exchange's disseminated quote that exists at the conclusion of the Auction will be priced at the Exchange's disseminated quote on the opposite side of the market. (F)-(I) No change. (2) Conclusion of Auction. The Auction shall conclude at the sooner of (A) through (F) below with the Agency Order executing pursuant to paragraph (3) below. (A)-(C) No change. (D) Reserved[Any time an RFR response matches the Exchange's disseminated quote on the opposite side of the market from the RFR responses]; (E)-(F) No change. (3) No change. . . . Interpretations and Policies: .01-.09 No change. * * * * * The text of the proposed rule change is also available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the [[Page 32211]] places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange seeks to amend its rules related to Automated Improvement Mechanism (``AIM'') auctions. Specifically, the Exchange seeks to amend Rule 6.74A(b)(2)(D) to allow AIM auctions to continue for the full auction exposure period (no less than 100 milliseconds and no more than 1 second) \5\ when an auction response matches the Exchange's disseminated quote on the opposite side of the market from the auction response. --------------------------------------------------------------------------- \5\ See Rule 6.74A(b)(1)(C). See also SR-CBOE-2017-029, which amended Rule 6.74A(b)(1)(C) to allow the Exchange to designate the auction exposure period to last no less than 100 milliseconds and no more than 1 second. --------------------------------------------------------------------------- An AIM auction consists of an Agency Order and a contra-side order. A Trading Permit Holder (``TPH'') may initiate an AIM auction provided that the Agency Order is in a class and of sufficient size as determined by the Exchange. An Agency Order must also be stopped at: (1) The better of the NBBO or the Agency Order's limit price (if the Agency Order is for 50 standard option contracts or more) or (2) the better of the NBBO price improved by one minimum price improvement increment or the Agency Order's limit price (if the Agency Order is for less than 50 standard option contracts).\6\ --------------------------------------------------------------------------- \6\ See Rule 6.74A(a). --------------------------------------------------------------------------- Additionally, an AIM auction will currently conclude at the sooner of: The end of the auction period; upon receipt by the Hybrid System of an unrelated order (in the same series as the Agency Order) that is marketable against either the Exchange's disseminated quote (when such quote is the NBBO) or the auction responses; upon receipt by the Hybrid System of an unrelated limit order (in the same series as the Agency Order and on the opposite side of the market as the Agency Order) that improves any auction response; any time an auction response matches the Exchange's disseminated quote on the opposite side of the market from the auction response; any time there is a quote lock on the Exchange pursuant to Rule 6.45(c); or any time there is a trading halt in the series on the Exchange. As noted above, AIM auctions end when an auction response matches the Exchange's disseminated quote on the opposite side of the market from the auction response.\7\ For example, assume the NBBO and the Exchange's BBO are 1.00-1.20 when an auction is initiated. If the Agency Order is an order to buy and an auction response is to sell at 1.00, the auction will end early (i.e., prior to the full duration of the auction exposure period). An individual auction response may not exceed the size of the Agency Order.\8\ A response to sell at 1.00 will end the auction early and necessarily does not have sufficient size to execute both the Agency Order and all priority customer interest in the book at 1.00. Thus, with priority customer interest in the book at 1.00 the Agency Order will execute against the auction response at one minimum auction response increment worse than the final auction price (1.01 in the above example).\9\ --------------------------------------------------------------------------- \7\ See Rule 6.74A(b)(2)(D). \8\ See Rule 6.74A(b)(1)(H). \9\ See Rule 6.74A(b)(3)(I). --------------------------------------------------------------------------- When an auction ends early because an auction response matches the Exchange's disseminated quote on the opposite side of the market from the auction response, the auction's termination prevents the Exchange from receiving more auction responses. More auction responses increase the opportunity that the auction responses, in the aggregate, will have enough size to allow the Exchange to execute both the Agency Order and priority customer interest in the book against the auction responses. In cases where there is sufficient auction response interest to satisfy both the Agency Order and all priority customer interest in the book, then the Agency Order receives an execution price that is one minimum price increment better than would occur without this change (i.e., the Agency Order in the above example is executed at 1.00 instead of 1.01). Thus, the Exchange seeks to amend subparagraph (D) of Rule 6.74(b)(2) to allow an AIM auction to continue for the full duration of the auction exposure period any time an auction response matches the Exchange's disseminated quote on the opposite side of the market from the auction response. Furthermore, the Exchange also seeks to amend subparagraphs (D) and (E) of Rule 6.74A(b)(1) to provide further clarity as to how the Exchange's systems will function. Subparagraphs (D) and (E) of Rule 6.74A(b)(1) provide that auction responses cannot cross the disseminated Exchange quote on the opposite side of the market. Currently, the Exchange does not reject responses that cross the disseminated Exchange quote on the opposite side of the market but instead systematically enforces the restriction in subparagraphs (D) and (E) by treating all responses that cross the disseminated Exchange quote on the opposite side of the market as a response at the disseminated price, which, in accordance with subparagraph (D) of Rule 6.74A(b)(2) described above, currently ends the auction early because such a response is marketable with the Exchange's disseminated quote on the opposite side of the market from the auction response. Since auctions will no longer conclude early upon the receipt of a marketable response, the Exchange seeks to amend subparagraphs (D) and (E) to specify that responses that cross the opposite side of the Exchange's disseminated quote that exists at the conclusion of the Auction will be priced at the Exchange's disseminated quote on the opposite side of the market. The below examples describe the manner in which the current rule operates as well as how the proposed rule will operate. Example #1 (current rule):The disseminated Exchange quote prior to the initiation of an auction is 1.00-1.20. The Agency Order is an order to buy and is stopped at 1.19. The Exchange receives an auction response priced at .99 or lower. An auction response priced at .99 or lower when the Exchange's quote is 1.00-1.20 is marketable against the Exchange's disseminated quote on the opposite side of the market form the auction responses. Thus, pursuant to Rule 6.74A(b)(2) the auction is terminated. At the conclusion of the auction the Exchange's market is 1.00-1.20. An auction response at .99 or lower is treated as a response at 1.00, and the Agency Order is allocated in accordance with Rule 6.74A(b)(3). If the 1.00 bid in the book is a public customer and there are not enough responses priced at 1.00 to allow the booked public customer order and the Agency Order to be executed, the Agency Order is executed at 1.01 pursuant to subparagraph (I) of Rule 6.74A(b)(3). Example #2 (proposed rule): The disseminated Exchange quote prior to the initiation of an auction is 1.00-1.20. The Agency Order is an order to buy and is stopped at 1.19. The Exchange receives an auction response priced at .99 or lower. The Exchange does not end the auction early. The auction will instead last for the full auction exposure period, [[Page 32212]] which, again, allows for the possibility of more auction responses. As described above, more auction responses increases the opportunity that the auction responses, in the aggregate, will have enough size to allow the Exchange to execute both the Agency Order and priority customer interest in the book against the auction responses. At the conclusion of the auction the Exchange's market is 1.00-1.20. An auction response priced at .99 or lower is treated as a response at 1.00, and the Agency Order is allocated in accordance with Rule 6.74A(b)(3). If the 1.00 bid in the book is a public customer and there are not enough responses priced at 1.00 to allow the booked public customer order and the Agency Order to be executed, the Agency Order is executed at 1.01 pursuant to subparagraph (I) of Rule 6.74A(b)(3). Example #3 (proposed rule): The disseminated Exchange quote prior to the initiation of an auction is 1.00-1.20. The Agency Order is an order to buy and is stopped at 1.19. The Exchange's disseminated bid is updated to 1.05 during the auction so the market is now 1.05-1.20. The Exchange receives an auction response priced at 1.04 or lower. The Exchange does not end the auction early. The auction will instead last for the full auction exposure period, which, again, allows for the possibility of more auction responses. As described above, more auction responses increases the opportunity that the auction responses, in the aggregate, will have enough size to allow the Exchange to execute both the Agency Order and priority customer interest in the book against the auction responses. At the conclusion of the auction the Exchange's market is 1.05-1.20. An auction response priced at 1.04 or lower is treated as a response at 1.05, and the Agency Order is allocated in accordance with Rule 6.74A(b)(3). If the 1.05 bid in the book is a public customer and there are not enough responses priced at 1.05 to allow the booked public customer order and the Agency Order to be executed, the Agency Order is executed at 1.06 pursuant to subparagraph (I) of Rule 6.74A(b)(3). Example #4 (proposed rule): The disseminated Exchange quote prior to the initiation of an auction is 1.00-1.20. The Agency Order is an order to buy and is stopped at 1.19. The Exchange's disseminated bid is updated to 1.05 during the auction so the market is now 1.05-1.20. The Exchange receives an auction response priced at 1.04. The Exchange does not end the auction early. The auction will instead last for the full auction exposure period, which, again, allows for the possibility of more auction responses. As described above, more auction responses increases the opportunity that the auction responses, in the aggregate, will have enough size to allow the Exchange to execute both the Agency Order and priority customer interest in the book against the auction responses. The 1.05 bid is cancelled prior to the end of the auction and the market returns to 1.00-1.20. At the conclusion of the auction the Exchange's market is 1.00-1.20. At the conclusion of the auction the auction response priced at 1.04 remains a response at 1.04 because the market is 1.00- 1.20 at the conclusion of the auction (i.e., the response priced at 1.04 does not cross the disseminated quote on the opposite side of the market from the auction response), and the Agency Order is allocated in accordance with Rule 6.74A(b)(3). The Exchange notes that if the Exchange's systems were designed to reject the 1.04 in example #4 the Agency Order would not have received price improvement beyond the stop price of 1.19. Allowing an AIM auction to continue for the full duration of the auction exposure period any time an auction response matches the Exchange's disseminated quote on the opposite side of the market from the auction response provides more opportunity for the Exchange to receive auction responses that satisfy priority interest in the book as well as the Agency Order. The Exchange is not amending the manner in which orders are allocated at the conclusion of an AIM auction. Orders will continue to be allocated in accordance with Rule 6.74A(b)(3). The Exchange notes that other exchanges with similar auctions allow the auctions to continue for the full duration when an auction response matches the disseminated quote on the opposite of the market from the auction response.\10\ --------------------------------------------------------------------------- \10\ See Bats EDGX Exchange, Inc. (``EDGX'') Rule 21.19(b)(2); Nasdaq BX, Inc. (``Nasdaq'') Rules, Section 9; Nasdaq PHLX LLC (``Phlx) [sic] Rule 1080(n); and International Securities Exchange, LLC (``ISE'') Rule 723. --------------------------------------------------------------------------- The Exchange will announce the implementation date of the proposed rule change in a Regulatory Circular to be published no later than 90 days following the effective date. The implementation date will be no later than 180 days following the effective date. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ``Act'') and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.\11\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \12\ requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \13\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78f(b). \12\ 15 U.S.C. 78f(b)(5). \13\ Id. --------------------------------------------------------------------------- In particular, the Exchange believes allowing an AIM auction to continue for the full duration of the auction exposure period any time an auction response matches the Exchange's disseminated quote on the opposite side of the market from the auction response will provide increased opportunities for the Agency Order and priority interest in the book to be executed, which helps to perfect the mechanism of a free and open market and, in general, helps to protect investors and the public interest. The Exchange notes that other exchanges with similar auctions allow the auctions to continue for the full duration when an auction response matches the disseminated quote on the opposite of the market from the auction response.\14\ The Exchange also notes that the proposal helps protect the public interest by treating responses that cross the opposite side of the Exchange's disseminated quote as responses priced at the Exchange's disseminated quote because doing so allows Agency Orders to receive price improvement beyond the stopped price. --------------------------------------------------------------------------- \14\ See EDGX Rule 21.19(b)(2); Nasdaq Rules, Section 9; Phlx Rule 1080(n); and ISE Rule 723. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any [[Page 32213]] burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposal simply provides more opportunity for Agency Orders and priority interest in the book to be executed in full when an auction response matches the Exchange's disseminated quote on the opposite of the market from the auction response. The Exchange notes that another exchange with a similar auction allows the auction to continue for its full duration when an auction response matches the disseminated quote on the opposite of the market from the auction response. The Exchange also notes that the proposal helps protect the public interest by treating responses that cross the opposite side of the Exchange's disseminated quote as responses priced at the Exchange's disseminated quote because doing so allows Agency Orders to receive price improvement beyond the stopped price. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: A. Significantly affect the protection of investors or the public interest; B. impose any significant burden on competition; and C. become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-4(f)(6) \16\ thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A). \16\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-CBOE-2017-054 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-CBOE-2017-054. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2017-054 and should be submitted on or before August 2, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\17\ --------------------------------------------------------------------------- \17\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-14557 Filed 7-11-17; 8:45 am] BILLING CODE 8011-01-P
![32210 Federal Register / Vol. 82, No. 132 / Wednesday, July 12, 2017 / Notices
Service request, the title of each Postal SECURITIES AND EXCHANGE same series may not queue or overlap in
Service request, the request’s acceptance COMMISSION any manner. The Auction may not be
date, and the authority cited by the cancelled and shall proceed as follows:
[Release No. 34–81085; File No. SR–CBOE– (1) Auction Period and request for
Postal Service for each request. For each 2017–054]
request, the Commission appoints an Responses (RFRs).
officer of the Commission to represent Self-Regulatory Organizations; (A)–(C) No change.
(D) Each Market-Maker with an
the interests of the general public in the Chicago Board Options Exchange,
Incorporated; Notice of Filing and appointment in the relevant option class
proceeding, pursuant to 39 U.S.C. 505
Immediate Effectiveness of a Proposed may submit responses to the RFR
(Public Representative). Section II also
Rule Change to Rule 6.47A, Automated (specifying prices and sizes). [Such
establishes comment deadline(s) responses cannot cross the disseminated
pertaining to each request. Improvement Mechanism
Exchange quote on the opposite side of
The public portions of the Postal July 6, 2017. the market.] Responses that cross the
Service’s request(s) can be accessed via Pursuant to Section 19(b)(1) of the opposite side of the Exchange’s
the Commission’s Web site (http:// Securities Exchange Act of 1934 (the disseminated quote that exists at the
www.prc.gov). Non-public portions of ‘‘Act’’),1 and Rule 19b–4 thereunder,2 conclusion of the Auction will be priced
the Postal Service’s request(s), if any, notice is hereby given that on June 30, at the Exchange’s disseminated quote
can be accessed through compliance 2017, Chicago Board Options Exchange, on the opposite side of the market.
with the requirements of 39 CFR Incorporated (the ‘‘Exchange’’ or (E) Trading Permit Holders acting as
3007.40. ‘‘CBOE’’) filed with the Securities and agent for orders resting at the top of the
Exchange Commission (the Exchange’s book opposite the Agency
The Commission invites comments on Order may submit responses to the RFR
‘‘Commission’’) the proposed rule
whether the Postal Service’s request(s) (specifying prices and sizes) on behalf
change as described in Items I, II, and
in the captioned docket(s) are consistent III below, which Items have been such orders. Such responses [cannot
with the policies of title 39. For prepared by the Exchange. The cross the disseminated Exchange quote
request(s) that the Postal Service states Exchange filed the proposal as a ‘‘non- on the opposite side of the market, and]
concern market dominant product(s), controversial’’ proposed rule change may not exceed the size of the booked
applicable statutory and regulatory pursuant to Section 19(b)(3)(A)(iii) of order being represented. Responses that
requirements include 39 U.S.C. 3622, 39 the Act 3 and Rule 19b–4(f)(6) cross the opposite side of the
U.S.C. 3642, 39 CFR part 3010, and 39 thereunder.4 The Commission is Exchange’s disseminated quote that
CFR part 3020, subpart B. For request(s) publishing this notice to solicit exists at the conclusion of the Auction
that the Postal Service states concern comments on the proposed rule change will be priced at the Exchange’s
competitive product(s), applicable from interested persons. disseminated quote on the opposite side
statutory and regulatory requirements of the market.
I. Self-Regulatory Organization’s (F)–(I) No change.
include 39 U.S.C. 3632, 39 U.S.C. 3633,
Statement of the Terms of Substance of (2) Conclusion of Auction. The
39 U.S.C. 3642, 39 CFR part 3015, and
the Proposed Rule Change Auction shall conclude at the sooner of
39 CFR part 3020, subpart B. Comment
deadline(s) for each request appear in The Exchange seeks to amend its rules (A) through (F) below with the Agency
section II. related to Automated Improvement Order executing pursuant to paragraph
Mechanism (‘‘AIM’’) auctions. (3) below.
II. Docketed Proceeding(s) (additions are italicized; deletions are (A)–(C) No change.
[bracketed]) (D) Reserved[Any time an RFR
1. Docket No(s).: MC2017–155 and response matches the Exchange’s
CP2017–219; Filing Title: Request of the * * * * *
disseminated quote on the opposite side
United States Postal Service to Add Chicago Board Options Exchange, of the market from the RFR responses];
Parcel Select Contract 22 to Competitive Incorporated Rules (E)–(F) No change.
Product List and Notice of Filing (Under (3) No change.
* * * * * . . . Interpretations and Policies:
Seal) of Unredacted Governors’
Decision, Contract, and Supporting Rule 6.74A. Automated Improvement .01–.09 No change.
Data; Filing Acceptance Date: July 6, Mechanism (‘‘AIM’’) * * * * *
2017; Filing Authority: 39 U.S.C. 3642 Notwithstanding the provisions of The text of the proposed rule change
and 39 CFR 3020.30 et seq.; Public Rule 6.74, a Trading Permit Holder that is also available on the Exchange’s Web
Representative: Christopher C. Mohr; represents agency orders may site (http://www.cboe.com/AboutCBOE/
Comments Due: July 14, 2017. electronically execute an order it CBOELegalRegulatoryHome.aspx), at
represents as agent (‘‘Agency Order’’) the Exchange’s Office of the Secretary,
This notice will be published in the and at the Commission’s Public
Federal Register. against principal interest or against a
solicited order provided it submits the Reference Room.
Ruth Ann Abrams, Agency Order for electronic execution II. Self-Regulatory Organization’s
Acting Secretary. into the AIM auction (‘‘Auction’’) Statement of the Purpose of, and
[FR Doc. 2017–14564 Filed 7–11–17; 8:45 am] pursuant to this Rule. Statutory Basis for, the Proposed Rule
asabaliauskas on DSKBBXCHB2PROD with NOTICES
(a) No change. Change
BILLING CODE 7710–FW–P
(b) Auction Process. Only one
Auction may be ongoing at any given In its filing with the Commission, the
time in a series and Auctions in the Exchange included statements
concerning the purpose of and basis for
1 15 U.S.C. 78s(b)(1). the proposed rule change and discussed
2 17 CFR 240.19b–4. any comments it received on the
3 15 U.S.C. 78s(b)(3)(A)(iii). proposed rule change. The text of these
4 17 CFR 240.19b–4(f)(6). statements may be examined at the
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![32212 Federal Register / Vol. 82, No. 132 / Wednesday, July 12, 2017 / Notices
which, again, allows for the possibility • The Exchange receives an auction 2. Statutory Basis
of more auction responses. As described response priced at 1.04. The Exchange believes the proposed
above, more auction responses increases • The Exchange does not end the rule change is consistent with the
the opportunity that the auction auction early. The auction will instead Securities Exchange Act of 1934 (the
responses, in the aggregate, will have last for the full auction exposure period, ‘‘Act’’) and the rules and regulations
enough size to allow the Exchange to which, again, allows for the possibility thereunder applicable to the Exchange
execute both the Agency Order and of more auction responses. As described and, in particular, the requirements of
priority customer interest in the book above, more auction responses increases Section 6(b) of the Act.11 Specifically,
against the auction responses. the opportunity that the auction the Exchange believes the proposed rule
• At the conclusion of the auction the responses, in the aggregate, will have change is consistent with the Section
Exchange’s market is 1.00–1.20. enough size to allow the Exchange to 6(b)(5) 12 requirements that the rules of
• An auction response priced at .99 or execute both the Agency Order and an exchange be designed to prevent
lower is treated as a response at 1.00, priority customer interest in the book fraudulent and manipulative acts and
and the Agency Order is allocated in against the auction responses. practices, to promote just and equitable
accordance with Rule 6.74A(b)(3). If the • The 1.05 bid is cancelled prior to
principles of trade, to foster cooperation
1.00 bid in the book is a public the end of the auction and the market
and coordination with persons engaged
customer and there are not enough returns to 1.00–1.20.
• At the conclusion of the auction the in regulating, clearing, settling,
responses priced at 1.00 to allow the processing information with respect to,
booked public customer order and the Exchange’s market is 1.00–1.20.
• At the conclusion of the auction the and facilitating transactions in
Agency Order to be executed, the securities, to remove impediments to
Agency Order is executed at 1.01 auction response priced at 1.04 remains
a response at 1.04 because the market is and perfect the mechanism of a free and
pursuant to subparagraph (I) of Rule open market and a national market
6.74A(b)(3). 1.00–1.20 at the conclusion of the
auction (i.e., the response priced at 1.04 system, and, in general, to protect
Example #3 (proposed rule): investors and the public interest.
• The disseminated Exchange quote does not cross the disseminated quote
on the opposite side of the market from Additionally, the Exchange believes the
prior to the initiation of an auction is proposed rule change is consistent with
1.00–1.20. the auction response), and the Agency
Order is allocated in accordance with the Section 6(b)(5) 13 requirement that
• The Agency Order is an order to the rules of an exchange not be designed
buy and is stopped at 1.19. Rule 6.74A(b)(3).
The Exchange notes that if the to permit unfair discrimination between
• The Exchange’s disseminated bid is customers, issuers, brokers, or dealers.
updated to 1.05 during the auction so Exchange’s systems were designed to
reject the 1.04 in example #4 the Agency In particular, the Exchange believes
the market is now 1.05–1.20. allowing an AIM auction to continue for
• The Exchange receives an auction Order would not have received price
improvement beyond the stop price of the full duration of the auction exposure
response priced at 1.04 or lower. period any time an auction response
• The Exchange does not end the 1.19.
matches the Exchange’s disseminated
auction early. The auction will instead Allowing an AIM auction to continue
for the full duration of the auction quote on the opposite side of the market
last for the full auction exposure period, from the auction response will provide
which, again, allows for the possibility exposure period any time an auction
response matches the Exchange’s increased opportunities for the Agency
of more auction responses. As described Order and priority interest in the book
above, more auction responses increases disseminated quote on the opposite side
of the market from the auction response to be executed, which helps to perfect
the opportunity that the auction the mechanism of a free and open
responses, in the aggregate, will have provides more opportunity for the
Exchange to receive auction responses market and, in general, helps to protect
enough size to allow the Exchange to investors and the public interest. The
execute both the Agency Order and that satisfy priority interest in the book
as well as the Agency Order. The Exchange notes that other exchanges
priority customer interest in the book with similar auctions allow the auctions
against the auction responses. Exchange is not amending the manner
in which orders are allocated at the to continue for the full duration when
• At the conclusion of the auction the
conclusion of an AIM auction. Orders an auction response matches the
Exchange’s market is 1.05–1.20.
• An auction response priced at 1.04 will continue to be allocated in disseminated quote on the opposite of
or lower is treated as a response at 1.05, accordance with Rule 6.74A(b)(3). The the market from the auction response.14
and the Agency Order is allocated in Exchange notes that other exchanges The Exchange also notes that the
accordance with Rule 6.74A(b)(3). If the with similar auctions allow the auctions proposal helps protect the public
1.05 bid in the book is a public to continue for the full duration when interest by treating responses that cross
customer and there are not enough an auction response matches the the opposite side of the Exchange’s
responses priced at 1.05 to allow the disseminated quote on the opposite of disseminated quote as responses priced
booked public customer order and the the market from the auction response.10 at the Exchange’s disseminated quote
Agency Order to be executed, the The Exchange will announce the because doing so allows Agency Orders
Agency Order is executed at 1.06 implementation date of the proposed to receive price improvement beyond
pursuant to subparagraph (I) of Rule rule change in a Regulatory Circular to the stopped price.
6.74A(b)(3). be published no later than 90 days B. Self-Regulatory Organization’s
following the effective date. The
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Example #4 (proposed rule): Statement on Burden on Competition
• The disseminated Exchange quote implementation date will be no later
than 180 days following the effective CBOE does not believe that the
prior to the initiation of an auction is
date. proposed rule change will impose any
1.00–1.20.
• The Agency Order is an order to 11 15 U.S.C. 78f(b).
10 See Bats EDGX Exchange, Inc. (‘‘EDGX’’) Rule
buy and is stopped at 1.19. 12 15 U.S.C. 78f(b)(5).
21.19(b)(2); Nasdaq BX, Inc. (‘‘Nasdaq’’) Rules,
• The Exchange’s disseminated bid is Section 9; Nasdaq PHLX LLC (‘‘Phlx) [sic] Rule 13 Id.
updated to 1.05 during the auction so 1080(n); and International Securities Exchange, LLC 14 See EDGX Rule 21.19(b)(2); Nasdaq Rules,
the market is now 1.05–1.20. (‘‘ISE’’) Rule 723. Section 9; Phlx Rule 1080(n); and ISE Rule 723.
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![Federal Register / Vol. 82, No. 132 / Wednesday, July 12, 2017 / Notices 32213
burden on competition that is not arguments concerning the foregoing, SECURITIES AND EXCHANGE
necessary or appropriate in furtherance including whether the proposed rule COMMISSION
of the purposes of the Act. The proposal change is consistent with the Act.
simply provides more opportunity for Comments may be submitted by any of Proposed Collection; Comment
Agency Orders and priority interest in the following methods: Request
the book to be executed in full when an Upon Written Request Copies Available
Electronic Comments
auction response matches the From: Securities and Exchange
Exchange’s disseminated quote on the • Use the Commission’s Internet Commission, Office of FOIA Services,
opposite of the market from the auction comment form (http://www.sec.gov/ 100 F Street NE., Washington, DC
response. The Exchange notes that rules/sro.shtml); or 20549–2736
another exchange with a similar auction • Send an email to rule-comments@ Extension: Form S–11
allows the auction to continue for its sec.gov. Please include File Number SR– SEC File No. 270–064, OMB Control No.
full duration when an auction response CBOE–2017–054 on the subject line. 3235–0067
matches the disseminated quote on the
opposite of the market from the auction Paper Comments Notice is hereby given that, pursuant
response. The Exchange also notes that to the Paperwork Reduction Act of 1995
• Send paper comments in triplicate (44 U.S.C. 3501 et seq.), the Securities
the proposal helps protect the public to Secretary, Securities and Exchange
interest by treating responses that cross and Exchange Commission
Commission, 100 F Street NE., (‘‘Commission’’) is soliciting comments
the opposite side of the Exchange’s Washington, DC 20549–1090.
disseminated quote as responses priced on the collection of information
at the Exchange’s disseminated quote All submissions should refer to File summarized below. The Commission
because doing so allows Agency Orders Number SR–CBOE–2017–054. This file plans to submit this existing collection
to receive price improvement beyond number should be included on the of information to the Office of
the stopped price. subject line if email is used. To help the Management and Budget for extension
Commission process and review your and approval.
C. Self-Regulatory Organization’s comments more efficiently, please use Form S–11 (17 CFR 239.18) is the
Statement on Comments on the only one method. The Commission will registration statement form used to
Proposed Rule Change Received From post all comments on the Commission’s register securities issued in real estate
Members, Participants, or Others Internet Web site (http://www.sec.gov/ investment trusts by issuers whose
The Exchange neither solicited nor rules/sro.shtml). Copies of the business is primarily that of acquiring
received comments on the proposed submission, all subsequent and holding investment interest in real
rule change. amendments, all written statements estate under the Securities Act of 1933
with respect to the proposed rule (15 U.S.C. 77a et seq.). The information
III. Date of Effectiveness of the change that are filed with the filed with the Commission permits
Proposed Rule Change and Timing for Commission, and all written verifications of compliance with
Commission Action communications relating to the securities law requirements and assures
Because the foregoing proposed rule proposed rule change between the public availability. We estimate that
change does not: Commission and any person, other than Form S–11 takes approximately 779.04
A. Significantly affect the protection those that may be withheld from the hours per response and is filed by
of investors or the public interest; public in accordance with the approximately 64 issuers annually. In
B. impose any significant burden on provisions of 5 U.S.C. 552, will be addition, we estimate that 25% of the
competition; and available for Web site viewing and 779.04 hours per response (194.76
C. become operative for 30 days from printing in the Commission’s Public hours) is prepared by the issuer for
the date on which it was filed, or such Reference Room, 100 F Street NE., annual reporting burden of 12,465 hours
shorter time as the Commission may Washington, DC 20549 on official (194.76 hours per response x 64
designate, it has become effective business days between the hours of responses)
pursuant to Section 19(b)(3)(A) of the 10:00 a.m. and 3:00 p.m. Copies of the Written comments are invited on: (a)
Act 15 and Rule 19b–4(f)(6) 16 filing also will be available for Whether this proposed collection of
thereunder. At any time within 60 days inspection and copying at the principal information is necessary for the proper
of the filing of the proposed rule change, office of the Exchange. All comments performance of the functions of the
the Commission summarily may received will be posted without change; agency, including whether the
temporarily suspend such rule change if the Commission does not edit personal information will have practical utility;
it appears to the Commission that such identifying information from (b) the accuracy of the agency’s estimate
action is necessary or appropriate in the submissions. You should submit only of the burden of the collection of
public interest, for the protection of information that you wish to make information collection information; (c)
investors, or otherwise in furtherance of available publicly. All submissions ways to enhance the quality, utility, and
the purposes of the Act. If the should refer to File Number SR–CBOE– clarity of the information collected; and
Commission takes such action, the 2017–054 and should be submitted on (d) ways to minimize the burden of the
Commission will institute proceedings or before August 2, 2017. collection of information on
to determine whether the proposed rule respondents, including through the use
For the Commission, by the Division of
asabaliauskas on DSKBBXCHB2PROD with NOTICES
change should be approved or of automated collection techniques or
Trading and Markets, pursuant to delegated
disapproved. authority.17
other forms of information technology.
Consideration will be given to
IV. Solicitation of Comments Eduardo A. Aleman,
comments and suggestions submitted in
Assistant Secretary. writing within 60 days of this
Interested persons are invited to
submit written data, views, and [FR Doc. 2017–14557 Filed 7–11–17; 8:45 am] publication.
BILLING CODE 8011–01–P An agency may not conduct or
15 15 U.S.C. 78s(b)(3)(A). sponsor, and a person is not required to
16 17 CFR 240.19b–4(f)(6). 17 17 CFR 200.30–3(a)(12). respond to, a collection of information
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Document Created: 2017-07-12 03:00:24
Document Modified: 2017-07-12 03:00:24
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 82 FR 32210 |
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