82 FR 57790 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Order Approving a Proposed Rule Change Creating an Electronic-Only Order Type

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 234 (December 7, 2017)

[Federal Register Volume 82, Number 234 (Thursday, December 7, 2017)]
[Notices]
[Pages 57790-57791]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-26317]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34- 82196; File No. SR-CBOE-2017-064]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Order 
Approving a Proposed Rule Change Creating an Electronic-Only Order Type

December 1, 2017.

I. Introduction

    On September 29, 2017, the Cboe Exchange, Inc. (``Exchange'' or 
``Cboe Options'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to create an electronic-only order type. The 
proposed rule change was published for comment in the Federal Register 
on October 18, 2017.\3\ The Commission did not receive any comment 
letters on the proposed rule change. This order approves the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 81862 (Oct. 12, 
2017), 82 FR 48550 (Oct. 18. 2017) (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange proposes to create an electronic-only order type. 
Currently, orders that Trading Permit Holders (``TPHs'') submit to the 
Exchange will execute electronically and/or be handled manually on the 
Exchange floor.\4\ Under certain conditions specified in the Exchange's 
rules, certain orders and remaining portions of orders that do not 
execute electronically are routed to a specified Public Automated 
Routing (``PAR'') workstation or an Order Management Terminal (``OMT'') 
on the floor of the Exchange for manual handling.\5\
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    \4\ See id. at 48550.
    \5\ See id. at 48550 and Cboe Options Rules 6.12(a) and 6.12A. 
According to Cboe Options Rule 6.12A, once an order has been routed 
to a PAR, the PAR user may, among other options, submit the order 
for electronic processing, execute the order in open outcry, route 
the order to an OMT designated by the TPH, or route the order to an 
away exchange. See Notice, supra note 3, at 48550.
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    The Exchange proposes to introduce a new electronic-only order type 
to allow TPHs to submit orders that will not be subject to any manual 
handling. Specifically, electronic-only orders will only: (i) Auto-
execute, (ii) route to an electronic auction, or (iii) route to the 
electronic book, and in all cases will cancel back to the TPH that 
entered the order if Exchange rules would otherwise require the order 
to be routed to the Exchange floor for manual handling.\6\
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    \6\ Notice, supra note 3, at 48550.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act \7\ and the rules 
and regulations thereunder applicable to a national securities 
exchange.\8\ In particular, the Commission finds that the proposed rule 
change is consistent with Section 6(b)(5) of the Act,\9\ which 
requires, among other things, that the rules of a national securities 
exchange be designed to remove impediments to and perfect the mechanism 
of a free and open market and a national market

[[Page 57791]]

system, and, in general, to protect investors and the public interest.
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    \7\ 15 U.S.C. 78f.
    \8\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposed rule change is designed 
to remove impediments to and perfect the mechanism of a free and open 
market and national market system by providing TPHs with a more 
efficient means to submit to the Exchange instructions to prevent an 
order from routing to a PAR or OMT on the floor of the Exchange. 
Currently, a TPH that seeks to avoid manual handling of a specific 
order and obtain a solely electronic execution must inform its OMT 
operator or PAR broker of this instruction. The Exchange's new 
electronic-only order type will avoid the need for a TPH to take this 
additional step and will allow the TPH to submit such order 
instructions directly to the Exchange when it submits its order.\10\ 
The Commission notes that Cboe Options represents that the new 
electronic-only order type will not materially change how orders are 
handled or processed on the Exchange, but rather will streamline how 
TPHs can indicate their instructions that a particular order avoid 
manual handling on the Exchange's floor.\11\ For the reasons noted 
above, the Commission believes that the proposal to create an 
electronic-only order type is consistent with the Act.
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    \10\ See Notice, supra note 3, at 48551.
    \11\ See id.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-CBOE-2017-064) be, and 
hereby is, approved.
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    \12\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-26317 Filed 12-6-17; 8:45 am]
BILLING CODE 8011-01-P