82_FR_58024 82 FR 57790 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Order Approving a Proposed Rule Change Creating an Electronic-Only Order Type

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)

Page Range57790-57791
FR Document2017-26317

Federal Register, Volume 82 Issue 234 (Thursday, 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

57790 Federal Register / Vol. 82, No. 234 / Thursday, December 7, 2017 / Notices the amount of the applicable base with $2,015 for months in calendar year October 18, 2017.3 The Commission did respect to tier 1 taxes for 2018 under 2018. not receive any comment letters on the section 3231(e)(2) of the Internal proposed rule change. This order Maximum Daily Benefit Rate Revenue Code of 1986. Section 1(i) approves the proposed rule change. further provides that if the amount so Section 2(a)(3) contains a formula for determining the maximum daily benefit II. Description of the Proposed Rule determined is not a multiple of $5, it rate for registration periods beginning Change shall be rounded to the nearest multiple of $5. after June 30, 1989, and after each June The Exchange proposes to create an Using the calendar year 2018 tier 1 tax 30 thereafter. Legislation enacted on electronic-only order type. Currently, base of $128,400 for A above produces October 9, 1996, revised the formula for orders that Trading Permit Holders the amount of $1,558.73, which must indexing maximum daily benefit rates. (‘‘TPHs’’) submit to the Exchange will then be rounded to $1,560. Accordingly, Under the prescribed formula, the execute electronically and/or be the monthly compensation base is maximum daily benefit rate increases by handled manually on the Exchange determined to be $1,560 for months in approximately two-thirds of the floor.4 Under certain conditions calendar year 2018. cumulative growth in average national specified in the Exchange’s rules, wages since 1984. The maximum daily certain orders and remaining portions of Amounts Related to Changes in benefit rate for registration periods orders that do not execute electronically Monthly Compensation Base beginning after June 30, 2018, shall be are routed to a specified Public For years after 1988, sections 1(k), 3, equal to 5 percent of the monthly Automated Routing (‘‘PAR’’) 4(a–2)(i)(A) and 2(c) of the Act contain compensation base for the base year workstation or an Order Management formulas for determining amounts immediately preceding the beginning of Terminal (‘‘OMT’’) on the floor of the related to the monthly compensation the benefit year. Section 2(a)(3) further Exchange for manual handling.5 base. provides that if the amount so computed The Exchange proposes to introduce a Under section 1(k), remuneration is not a multiple of $1, it shall be new electronic-only order type to allow earned from employment covered under rounded down to the nearest multiple of TPHs to submit orders that will not be the Act cannot be considered subsidiary $1. subject to any manual handling. remuneration if the employee’s base The calendar year 2017 monthly Specifically, electronic-only orders will year compensation is less than 2.5 times compensation base is $1,545. only: (i) Auto-execute, (ii) route to an the monthly compensation base for Multiplying $1,545 by 0.05 yields electronic auction, or (iii) route to the months in such base year. Under section $77.25. Accordingly, the maximum electronic book, and in all cases will 3, an employee shall be a ‘‘qualified daily benefit rate for days of cancel back to the TPH that entered the employee’’ if his/her base year unemployment and days of sickness order if Exchange rules would otherwise compensation is not less than 2.5 times beginning in registration periods after require the order to be routed to the the monthly compensation base for June 30, 2018, is determined to be $77. Exchange floor for manual handling.6 months in such base year. Under section By Authority of the Board. III. Discussion and Commission 4(a–2)(i)(A), an employee who leaves Martha P. Rico, Findings work voluntarily without good cause is Secretary to the Board. disqualified from receiving [FR Doc. 2017–26430 Filed 12–6–17; 8:45 am] After careful review, the Commission unemployment benefits until he has finds that the proposed rule change is BILLING CODE 7905–01–P been paid compensation of not less than consistent with the requirements of the 2.5 times the monthly compensation Act 7 and the rules and regulations base for months in the calendar year in thereunder applicable to a national which the disqualification ends. SECURITIES AND EXCHANGE securities exchange.8 In particular, the Multiplying 2.5 by the calendar year COMMISSION Commission finds that the proposed 2018 monthly compensation base of [Release No. 34- 82196; File No. SR–CBOE– rule change is consistent with Section $1,560 produces $3,900.00. 2017–064] 6(b)(5) of the Act,9 which requires, Accordingly, the amount determined among other things, that the rules of a under sections 1(k), 3 and 4(a–2)(i)(A) is Self-Regulatory Organizations; Cboe national securities exchange be $3,900.00 for calendar year 2018. Exchange, Inc.; Order Approving a designed to remove impediments to and Under section 2(c), the maximum Proposed Rule Change Creating an perfect the mechanism of a free and amount of normal benefits paid for days Electronic-Only Order Type open market and a national market of unemployment within a benefit year December 1, 2017. and the maximum amount of normal 3 See Securities Exchange Act Release No. 81862 benefits paid for days of sickness within I. Introduction (Oct. 12, 2017), 82 FR 48550 (Oct. 18. 2017) (‘‘Notice’’). a benefit year shall not exceed an On September 29, 2017, the Cboe 4 See id. at 48550. employee’s compensation in the base Exchange, Inc. (‘‘Exchange’’ or ‘‘Cboe 5 See id. at 48550 and Cboe Options Rules 6.12(a) year. In determining an employee’s base Options’’) filed with the Securities and and 6.12A. According to Cboe Options Rule 6.12A, year compensation, any money Exchange Commission (‘‘Commission’’), once an order has been routed to a PAR, the PAR remuneration in a month not in excess user may, among other options, submit the order for pursuant to Section 19(b)(1) of the electronic processing, execute the order in open of an amount that bears the same ratio Securities Exchange Act of 1934 outcry, route the order to an OMT designated by the to $775 as the monthly compensation sradovich on DSK3GMQ082PROD with NOTICES (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a TPH, or route the order to an away exchange. See base for that year bears to $600 shall be proposed rule change to create an Notice, supra note 3, at 48550. taken into account. The calendar year electronic-only order type. The 6 Notice, supra note 3, at 48550. 7 15 U.S.C. 78f. 2018 monthly compensation base is proposed rule change was published for 8 In approving this proposed rule change, the $1,560. The ratio of $1,560 to $600 is comment in the Federal Register on Commission has considered the proposed rule’s 2.60000000. Multiplying 2.60000000 by impact on efficiency, competition, and capital $775 produces $2,015. Accordingly, the 1 15 U.S.C. 78s(b)(1). formation. See 15 U.S.C. 78c(f). amount determined under section 2(c) is 2 17 CFR 240.19b–4. 9 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 18:50 Dec 06, 2017 Jkt 244001 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 E:\FR\FM\07DEN1.SGM 07DEN1

Federal Register / Vol. 82, No. 234 / Thursday, December 7, 2017 / Notices 57791 system, and, in general, to protect SECURITIES AND EXCHANGE later than the current established cut-off investors and the public interest. COMMISSION time designated by NSCC of 8:00 p.m. The Commission believes that the ET. With the introduction of the [Release No. 34–82193; File No. SR–NSCC– proposed rule change is designed to 2017–019] additional cycles, NSCC would also remove impediments to and perfect the revise the current input file and output Self-Regulatory Organizations; files to include additional information, mechanism of a free and open market National Securities Clearing such as a reversal/correction indicator and national market system by Corporation; Notice of Filing of and the time of the transaction, as providing TPHs with a more efficient further described below. means to submit to the Exchange Proposed Rule Change To Enhance the Process for Submitting and In addition, NSCC proposes to make instructions to prevent an order from a technical correction to clarify that Accepting ETF Creations and routing to a PAR or OMT on the floor next-day settling creation and Redemptions of the Exchange. Currently, a TPH that redemption instructions are no longer seeks to avoid manual handling of a December 1, 2017. processed differently than other specific order and obtain a solely Pursuant to Section 19(b)(1) of the instructions when they are submitted to electronic execution must inform its Securities Exchange Act of 1934 NSCC, as further described below. OMT operator or PAR broker of this (‘‘Act’’),1 and Rule 19b–4 thereunder,2 NSCC also proposes to introduce an instruction. The Exchange’s new notice is hereby given that on November automated threshold value reasonability electronic-only order type will avoid the 29, 2017, National Securities Clearing check that would pend submissions of need for a TPH to take this additional Corporation (‘‘NSCC’’) filed with the creation and redemption instructions on step and will allow the TPH to submit Securities and Exchange Commission clearing-eligible ETFs that exceed such order instructions directly to the (‘‘Commission’’) the proposed rule certain thresholds versus the most change as described in Items I, II and III recent closing price, as further described Exchange when it submits its order.10 below, which Items have been prepared below. The Commission notes that Cboe by the clearing agency. The Commission Options represents that the new is publishing this notice to solicit II. Clearing Agency’s Statement of the electronic-only order type will not comments on the proposed rule change Purpose of, and Statutory Basis for, the materially change how orders are from interested persons. Proposed Rule Change handled or processed on the Exchange, I. Clearing Agency’s Statement of the In its filing with the Commission, the but rather will streamline how TPHs can clearing agency included statements indicate their instructions that a Terms of Substance of the Proposed Rule Change concerning the purpose of and basis for particular order avoid manual handling the proposed rule change and discussed on the Exchange’s floor.11 For the The proposed rule change consists of any comments it received on the reasons noted above, the Commission modifications to the Rules & Procedures proposed rule change. The text of these believes that the proposal to create an (‘‘Rules’’) 3 of NSCC to introduce two statements may be examined at the electronic-only order type is consistent additional cycles (referred to herein as places specified in Item IV below. The with the Act. the ‘‘intraday cycle’’ and the clearing agency has prepared ‘‘supplemental cycle’’) during which summaries, set forth in sections A, B, IV. Conclusion exchange-traded fund (‘‘ETF’’) agents 4 and C below, of the most significant could submit creation and redemption It is therefore ordered, pursuant to aspects of such statements. instructions, as described in greater Section 19(b)(2) of the Act,12 that the detail below. The intraday cycle would (A) Clearing Agency’s Statement of the proposed rule change (SR–CBOE–2017– span from 12:30 a.m. ET to 2:00 p.m. Purpose of, and Statutory Basis for, the 064) be, and hereby is, approved. ET. The supplemental cycle would span Proposed Rule Change For the Commission, by the Division of from 9:00 p.m. ET to 11:30 p.m. ET. The 1. Purpose Trading and Markets, pursuant to delegated introduction of the intraday cycle would authority.13 enable NSCC to receive, on an intraday (i) Current Processes Eduardo A. Aleman, basis, creation and redemption Outside of NSCC, ETF sponsors 5 have instructions that are marked as-of a processes and/or technology platforms Assistant Secretary. prior trade date. Furthermore, with the that allow them to bilaterally agree to [FR Doc. 2017–26317 Filed 12–6–17; 8:45 am] introduction of the intraday cycle, create or redeem ETF shares with ETF BILLING CODE 8011–01–P NSCC would be able to receive creation authorized participants 6 intraday and and redemption instructions for same- these results are recorded by ETF agents day settlement until the designated cut- on the ETF agents’ technology off time of 11:30 a.m. ET. The platforms. These processes are not introduction of the supplemental cycle uniformly automated and may involve would enable ETF agents to submit any users manually entering data that is creation and redemption instructions eventually submitted to NSCC within 1 15 the standardized create-and-redeem U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. input file. As is the case with any 3 Capitalized terms not defined herein are defined manually entered data, there is the risk sradovich on DSK3GMQ082PROD with NOTICES in the Rules, available at http://www.dtcc.com/∼/ media/Files/Downloads/legal/rules/nscc_rules.pdf. 5 ETF sponsors are issuers of ETFs. 4 ETF agents are referred to as ‘‘Index Receipt 6 ETF authorized participants are (1) broker/ Agents’’ in the Rules. Section 4 of Rule 7 states that, dealers that have authorized participant agreements 10 See Notice, supra note 3, at 48551. for purposes of the Rules, an Index Receipt Agent with ETF sponsors and/or (2) broker/dealers that 11 See shall be a Member which has entered into an Index are full-service Members pursuant to Rule 2 with id. Receipt Authorization Agreement as required by an established ETF trading relationship with an 12 15 U.S.C. 78s(b)(2). NSCC from time to time. See Rule 1 and Rule 7, ETF agent that is representing the ETF. See Rule 2, 13 17 CFR 200.30–3(a)(12). Sec. 4, supra note 3. supra note 3. VerDate Sep<11>2014 18:50 Dec 06, 2017 Jkt 244001 PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 E:\FR\FM\07DEN1.SGM 07DEN1


Document Created: 2017-12-07 00:34:59
Document Modified: 2017-12-07 00:34:59
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 57790 
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