82 FR 59683 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing of Amendment No. 2 to the Proposed Rule Change To Amend the Schedule of Fees and Assessments To Adopt a Fee Schedule To Establish Fees for Industry Members Related to the National Market System Plan Governing the Consolidated Audit Trail
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 240 (December 15, 2017)
Federal Register Volume 82, Issue 240 (December 15, 2017)
| Page Range | 59683-59685 | |
| FR Document | 2017-26995 |
[Federal Register Volume 82, Number 240 (Friday, December 15, 2017)] [Notices] [Pages 59683-59685] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-26995] [[Page 59683]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82273; File No. SR-CBOE-2017-040] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing of Amendment No. 2 to the Proposed Rule Change To Amend the Schedule of Fees and Assessments To Adopt a Fee Schedule To Establish Fees for Industry Members Related to the National Market System Plan Governing the Consolidated Audit Trail December 11, 2017. I. Introduction On May 16, 2017, Chicago Board Options Exchange, Incorporated, n/k/ a Cboe Exchange Inc. (``Exchange'' or ``SRO'') 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 adopt a fee schedule to establish the fees for Industry Members related to the National Market System Plan Governing the Consolidated Audit Trail (``CAT NMS Plan''). The proposed rule change was published in the Federal Register for comment on June 1, 2017.\3\ The Commission received seven comment letters on the proposed rule change,\4\ and a response to comments from the CAT NMS Plan Participants.\5\ On June 30, 2017, the Commission temporarily suspended and initiated proceedings to determine whether to approve or disapprove the proposed rule change.\6\ The Commission thereafter received seven comment letters,\7\ and a response to comments from the Participants.\8\ On November 3, 2017, the Exchange filed Amendment No. 1 to the proposed rule change.\9\ On November 9, 2017, the Commission extended the time period within which to approve the proposed rule change or disapprove the proposed rule change to January 14, 2018.\10\ On December 7, 2017, the Exchange filed Amendment No. 2 to the proposed rule change, as described in Item II, which Item has been prepared by the Exchange. The Commission is publishing this notice to solicit comments from interested persons on Amendment No. 2. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 80785 (May 26, 2017), 82 FR 25404 (June 1, 2017) (``Original Proposal''). \4\ Since the CAT NMS Plan Participants' proposed rule changes to adopt fees to be charged to Industry Members to fund the consolidated audit trail are substantively identical, the Commission is considering all comments received on the proposed rule changes regardless of the comment file to which they were submitted. See text accompanying note 12 infra, for a list of the CAT NMS Plan Participants. See Letter from Theodore R. Lazo, Managing Director and Associate General Counsel, Securities Industry and Financial Markets Association, to Brent J. Fields, Secretary, Commission (dated June 6, 2017), available at: https://www.sec.gov/comments/sr-batsbzx-2017-38/batsbzx201738-1788188-153228.pdf; Letter from Patricia L. Cerny and Steven O'Malley, Compliance Consultants, to Brent J. Fields, Secretary, Commission (dated June 12, 2017), available at: https://www.sec.gov/comments/sr-cboe-2017-040/cboe2017040-1799253-153675.pdf; Letter from Daniel Zinn, General Counsel, OTC Markets Group Inc., to Eduardo A. Aleman, Assistant Secretary, Commission (dated June 13, 2017), available at: https://www.sec.gov/comments/sr-finra-2017-011/finra2017011-1801717-153703.pdf; Letter from Joanna Mallers, Secretary, FIA Principal Traders Group, to Brent J. Fields, Secretary, Commission (dated June 22, 2017), available at: https:/www.sec.gov/comments/sr-cboe-2017-040/cboe2017040-1819670-154195.pdf; Letter from Stuart J. Kaswell, Executive Vice President and Managing Director, General Counsel, Managed Funds Association, to Brent J. Fields, Secretary, Commission (dated June 23, 2017), available at: https://www.sec.gov/comments/sr-finra-2017-011/finra2017011-1822454-154283.pdf; and Letter from Suzanne H. Shatto, Investor, to Commission (dated June 27, 2017), available at: https://www.sec.gov/comments/sr-batsedgx-2017-22/batsedgx201722-154443.pdf. The Commission also received a comment letter which is not pertinent to these proposed rule changes. See Letter from Christina Crouch, Smart Ltd., to Brent J. Fields, Secretary, Commission (dated June 5, 2017), available at: https://www.sec.gov/comments/sr-batsbzx-2017-38/batsbzx201738-1785545-153152.htm. \5\ See Letter from CAT NMS Plan Participants to Brent J. Fields, Secretary, Commission (dated June 29, 2017), available at: https://www.sec.gov/comments/sr-batsbyx-2017-11/batsbyx201711-1832632-154584.pdf. \6\ See Securities Exchange Act Release No. 81067 (June 30, 2017), 82 FR 31656 (July 7, 2017). \7\ See Letter from W. Hardy Callcott, Partner, Sidley Austin LLP, to Brent J. Fields, Secretary, Commission (dated July 27, 2017), available at: https://www.sec.gov/comments/sr-batsbyx-2017-11/batsbyx201711-2148338-157737.pdf; Letter from Kevin Coleman, General Counsel and Chief Compliance Officer, Belvedere Trading LLC, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: https://www.sec.gov/comments/sr-batsbyx-2017-11/batsbyx201711-2148360-157740.pdf; Letter from Joanna Mallers, Secretary, FIA Principal Traders Group, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: https://www.sec.gov/comments/sr-batsbyx-2017-11/batsbyx201711-2151228-157745.pdf; Letter from Theodore R. Lazo, Managing Director and Associate General Counsel, SIFMA, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: https://www.sec.gov/comments/sr-batsbyx-2017-11/batsbyx201711-2150977-157744.pdf; Letter from Stuart J. Kaswell, Executive Vice President and Managing Director, General Counsel, Managed Funds Association, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: https://www.sec.gov/comments/sr-batsbyx-2017-11/batsbyx201711-2150818-157743.pdf; Letter from John Kinahan, Chief Executive Officer, Group One Trading, L.P., to Brent J. Fields, Secretary, Commission (dated August 10, 2017), available at: https://www.sec.gov/comments/sr-finra-2017-011/finra2017011-2214568-160619.pdf; Letter from Joseph Molluso, Executive Vice President and CFO, Virtu Financial, to Brent J. Fields, Commission (dated August 18, 2017), available at: https://www.sec.gov/comments/sr-finra-2017-011/finra2017011-2238648-160830.pdf. \8\ See Letter from Michael Simon, Chair, CAT NMS Plan Operating Committee, to Brent J. Fields, Commission, Secretary (dated November 2, 2017), available at: https://www.sec.gov/comments/sr-batsbyx-2017-11/batsbyx201711-2674608-161412.pdf. \9\ Amendment No. 1 to the proposed rule change replaced and superseded the Original Proposal in its entirety. See Securities Exchange Act Release No. 34-82272 (December 11, 2017). \10\ See Securities Exchange Act Release No. 82049 (November 9, 2017), 82 FR 53549 (November 16, 2017). --------------------------------------------------------------------------- II. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Amendment On May 16, 2017, Cboe Exchange, Inc. (``SRO'') filed with the Securities and Exchange Commission (``Commission'' or ``SEC'') proposed rule change SR-CBOE-2017-040 (the ``Original Proposal''), pursuant to which SRO proposed to adopt a fee schedule to establish the fees for Industry Members related to the National Market System Plan Governing the Consolidated Audit Trail (the ``CAT NMS Plan'' or ``Plan'').\11\ On November 3, 2017, SRO filed an amendment to the Original Proposal (``First Amendment''). SRO files this proposed rule change (the ``Second Amendment'') to amend the Original Proposal as amended by the First Amendment. --------------------------------------------------------------------------- \11\ Unless otherwise specified, capitalized terms used in this fee filing are defined as set forth herein, the CAT Compliance Rule Series, in the CAT NMS Plan, or the Original Proposal. --------------------------------------------------------------------------- With this Second Amendment, SRO is including Exhibit 4, which reflects the changes to the text of the proposed rule change as set forth in the First Amendment, and Exhibit 5, which reflects all proposed changes to SRO's current rule text. BOX Options Exchange LLC, Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe C2 Exchange, Inc., Cboe Exchange, Inc., Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc. (``FINRA''), Investors' Exchange LLC, Miami International Securities Exchange, LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC, NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc. and NYSE National, Inc.\12\ (collectively, the ``Participants'') [[Page 59684]] filed with the Commission, pursuant to Section 11A of the Exchange Act \13\ and Rule 608 of Regulation NMS thereunder,\14\ the CAT NMS Plan.\15\ The Participants filed the Plan to comply with Rule 613 of Regulation NMS under the Exchange Act. The Plan was published for comment in the Federal Register on May 17, 2016,\16\ and approved by the Commission, as modified, on November 15, 2016.\17\ The Plan is designed to create, implement and maintain a consolidated audit trail (``CAT'') that would capture customer and order event information for orders in NMS Securities and OTC Equity Securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution in a single consolidated data source. The Plan accomplishes this by creating CAT NMS, LLC (the ``Company''), of which each Participant is a member, to operate the CAT.\18\ Under the CAT NMS Plan, the Operating Committee of the Company (``Operating Committee'') has discretion to establish funding for the Company to operate the CAT, including establishing fees that the Participants will pay, and establishing fees for Industry Members that will be implemented by the Participants (``CAT Fees'').\19\ The Participants are required to file with the SEC under Section 19(b) of the Exchange Act any such CAT Fees applicable to Industry Members that the Operating Committee approves.\20\ Accordingly, SRO submitted the Original Proposal to propose the Consolidated Audit Trail Funding Fees, which would require Industry Members that are SRO members to pay the CAT Fees determined by the Operating Committee. --------------------------------------------------------------------------- \12\ Note that Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., LLC, C2 Options Exchange, Incorporated, and Chicago Board Options Exchange, Incorporated, have been renamed Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe C2 Exchange, Inc., Cboe Exchange, Inc., respectively. \13\ 15 U.S.C. 78k-1. \14\ 17 CFR 242.608. \15\ See Letter from the Participants to Brent J. Fields, Secretary, Commission, dated September 30, 2014; and Letter from Participants to Brent J. Fields, Secretary, Commission, dated February 27, 2015. On December 24, 2015, the Participants submitted an amendment to the CAT NMS Plan. See Letter from Participants to Brent J. Fields, Secretary, Commission, dated December 23, 2015. \16\ Securities Exchange Act Rel. No. 77724 (Apr. 27, 2016), 81 FR 30614 (May 17, 2016). \17\ Securities Exchange Act Rel. No. 79318 (Nov. 15, 2016), 81 FR 84696 (Nov. 23, 2016) (``Approval Order''). \18\ The Plan also serves as the limited liability company agreement for the Company. \19\ Section 11.1(b) of the CAT NMS Plan. \20\ Id. --------------------------------------------------------------------------- The Commission published the Original Proposal for public comment in the Federal Register on June 1, 2017,\21\ and received comments in response to the Original Proposal or similar fee filings by other Participants.\22\ On June 30, 2017, the Commission suspended, and instituted proceedings to determine whether to approve or disapprove, the Original Proposal.\23\ The Commission received seven comment letters in response to those proceedings.\24\ --------------------------------------------------------------------------- \21\ Securities Exchange Act Rel. No. 80785 (May 26, 2017), 82 FR 25404 (June 1, 2017) (SR-CBOE-2017-040). \22\ For a summary of comments, see generally Securities Exchange Act Rel. No. 81067 (June 30, 2017), 82 FR 31656 (July 7, 2017) (``Suspension Order''). \23\ Suspension Order. \24\ See Letter from Stuart J. Kaswell, Executive Vice President, Managing Director and General Counsel, Managed Funds Association, to Brent J. Fields, Secretary, SEC (July 28, 2017); Letter from Theodore R. Lazo, Managing Director and Associate General Counsel, SIFMA, to Brent J. Fields, Secretary, SEC (July 28, 2017); Joanna Mallers, Secretary, FIA Principal Traders Group, to Brent J. Fields, Secretary, SEC (July 28, 2017); Letter from Kevin Coleman, General Counsel & Chief Compliance Officer, Belvedere Trading LLC, to Brent J. Fields, Secretary, SEC (July 28, 2017); Letter from W. Hardy Callcott, Sidley Austin LLP, to Brent J. Fields, Secretary, SEC (July 27, 2017); Letter from John Kinahan, Chief Executive Officer, Group One Trading, L.P., to Brent J. Fields, Secretary, SEC (Aug. 10, 2017); and Letter from Joseph Molluso, Executive Vice President, Virtu Financial, to Brent J. Fields, Secretary, SEC (Aug. 18, 2017). --------------------------------------------------------------------------- In response to the comments on the Original Proposal, the Operating Committee determined to make the following changes to the funding model: (1) Adds two additional CAT Fee tiers for Equity Execution Venues; (2) discounts the market share of Execution Venue ATSs exclusively trading OTC Equity Securities as well as the market share of the FINRA over-the-counter reporting facility (``ORF'') by the average shares per trade ratio between NMS Stocks and OTC Equity Securities (calculated as 0.17% based on available data from the second quarter of 2017) when calculating the market share of Execution Venue ATS exclusively trading OTC Equity Securities and FINRA; (3) discounts the Options Market Maker quotes by the trade to quote ratio for options (calculated as 0.01% based on available data for June 2016 through June 2017) when calculating message traffic for Options Market Makers; (4) discounts equity market maker quotes by the trade to quote ratio for equities (calculated as 5.43% based on available data for June 2016 through June 2017) when calculating message traffic for equity market makers; (5) decreases the number of tiers for Industry Members (other than the Execution Venue ATSs) from nine to seven; (6) changes the allocation of CAT costs between Equity Execution Venues and Options Execution Venues from 75%/25% to 67%/33%; (7) adjusts tier percentages and recovery allocations for Equity Execution Venues, Options Execution Venues and Industry Members (other than Execution Venue ATSs); (8) focuses the comparability of CAT Fees on the individual entity level, rather than primarily on the comparability of affiliated entities; (9) commences invoicing of CAT Reporters as promptly as possible following the latest of the operative date of the Consolidated Audit Trail Funding Fees for each of the Participants and the operative date of the CAT NMS Plan amendment adopting CAT Fees for Participants; and (10) requires the proposed fees to automatically expire two years from the operative date of the CAT NMS Plan amendment adopting CAT Fees for Participants. On November 3, 2017, SRO filed the First Amendment and proposed to amend the Original Proposal to reflect these changes. SRO submits this Second Amendment to the revise the proposal as set forth in the First Amendment to discount the OTC Equity Securities market share of all Execution Venue ATSs trading OTC Equity Securities, rather than applying the discount solely to those Execution Venue ATSs that exclusively trade OTC Equity Securities, when calculating the market share of Execution Venue ATS trading OTC Equity Securities. As discussed in the First Amendment: The Operating Committee determined to discount the market share of Execution Venue ATSs exclusively trading OTC Equity Securities as well as the market share of the FINRA ORF in recognition of the different trading characteristics of the OTC Equity Securities market as compared to the market in NMS Stocks. Many OTC Equity Securities are priced at less than one dollar--and a significant number at less than one penny--per share and low-priced shares tend to trade in larger quantities. Accordingly, a disproportionately large number of shares are involved in transactions involving OTC Equity Securities versus NMS Stocks. Because the proposed fee tiers are based on market share calculated by share volume, Execution Venue ATSs exclusively trading OTC Equity Securities and FINRA would likely be subject to higher tiers than their operations may warrant.\25\ --------------------------------------------------------------------------- \25\ SR-CBOE-2017-040, Amendment No. 1 at page 30. The Operating Committee believes that this argument applies equally to both Execution Venue ATSs exclusively trading OTC Equity Securities and to Execution Venue ATSs that trade OTC Equity Securities as well as other securities. Accordingly, SRO proposes to amend paragraph (b)(2) of the Consolidated Audit Trail Funding Fees to apply the discount to all Execution Venue ATSs trading OTC Equity Securities. Specifically, SRO proposes [[Page 59685]] to change the parenthetical regarding the OTC Equity Securities discount in paragraph (b)(2) of the proposed fee schedule from ``with a discount for Equity ATSs exclusively trading OTC Equity Securities based on the average shares per trade ratio between NMS Stocks and OTC Equity Securities'' to ``with a discount for OTC Equity Securities market share of Equity ATSs trading OTC Equity Securities based on the average shares per trade ratio between NMS Stocks and OTC Equity Securities.'' III. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposal, as amended by Amendment No. 1 and Amendment No. 2, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-CBOE-2017-040 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-2017-040. 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 website (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 website 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. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2017-040, and should be submitted on or before January 5, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\26\ --------------------------------------------------------------------------- \26\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2017-26995 Filed 12-14-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 240 / Friday, December 15, 2017 / Notices 59683
SECURITIES AND EXCHANGE and a response to comments from the rule change or disapprove the proposed
COMMISSION CAT NMS Plan Participants.5 On June rule change to January 14, 2018.10 On
30, 2017, the Commission temporarily December 7, 2017, the Exchange filed
[Release No. 34–82273; File No. SR–CBOE–
suspended and initiated proceedings to Amendment No. 2 to the proposed rule
2017–040]
determine whether to approve or change, as described in Item II, which
Self-Regulatory Organizations; Cboe disapprove the proposed rule change.6 Item has been prepared by the
Exchange, Inc.; Notice of Filing of The Commission thereafter received Exchange. The Commission is
Amendment No. 2 to the Proposed seven comment letters,7 and a response publishing this notice to solicit
Rule Change To Amend the Schedule to comments from the Participants.8 On comments from interested persons on
of Fees and Assessments To Adopt a November 3, 2017, the Exchange filed Amendment No. 2.
Fee Schedule To Establish Fees for Amendment No. 1 to the proposed rule
change.9 On November 9, 2017, the II. Self-Regulatory Organization’s
Industry Members Related to the Statement of the Terms of Substance of
National Market System Plan Commission extended the time period
within which to approve the proposed the Proposed Amendment
Governing the Consolidated Audit Trail
On May 16, 2017, Cboe Exchange, Inc.
December 11, 2017. https://www.sec.gov/comments/sr-finra-2017-011/ (‘‘SRO’’) filed with the Securities and
finra2017011-1822454-154283.pdf; and Letter from Exchange Commission (‘‘Commission’’
I. Introduction Suzanne H. Shatto, Investor, to Commission (dated
June 27, 2017), available at: https://www.sec.gov/
or ‘‘SEC’’) proposed rule change SR–
On May 16, 2017, Chicago Board comments/sr-batsedgx-2017-22/batsedgx201722- CBOE–2017–040 (the ‘‘Original
Options Exchange, Incorporated, n/k/a 154443.pdf. The Commission also received a Proposal’’), pursuant to which SRO
Cboe Exchange Inc. (‘‘Exchange’’ or comment letter which is not pertinent to these proposed to adopt a fee schedule to
‘‘SRO’’) filed with the Securities and proposed rule changes. See Letter from Christina
Crouch, Smart Ltd., to Brent J. Fields, Secretary, establish the fees for Industry Members
Exchange Commission (‘‘Commission’’), Commission (dated June 5, 2017), available at: related to the National Market System
pursuant to Section 19(b)(1) of the https://www.sec.gov/comments/sr-batsbzx-2017-38/ Plan Governing the Consolidated Audit
Securities Exchange Act of 1934 batsbzx201738-1785545-153152.htm. Trail (the ‘‘CAT NMS Plan’’ or
5 See Letter from CAT NMS Plan Participants to
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a ‘‘Plan’’).11 On November 3, 2017, SRO
Brent J. Fields, Secretary, Commission (dated June
proposed rule change to adopt a fee 29, 2017), available at: https://www.sec.gov/ filed an amendment to the Original
schedule to establish the fees for comments/sr-batsbyx-2017-11/batsbyx201711- Proposal (‘‘First Amendment’’). SRO
Industry Members related to the 1832632-154584.pdf. files this proposed rule change (the
National Market System Plan Governing 6 See Securities Exchange Act Release No. 81067
‘‘Second Amendment’’) to amend the
the Consolidated Audit Trail (‘‘CAT (June 30, 2017), 82 FR 31656 (July 7, 2017).
7 See Letter from W. Hardy Callcott, Partner, Original Proposal as amended by the
NMS Plan’’). The proposed rule change Sidley Austin LLP, to Brent J. Fields, Secretary, First Amendment.
was published in the Federal Register Commission (dated July 27, 2017), available at: With this Second Amendment, SRO is
for comment on June 1, 2017.3 The https://www.sec.gov/comments/sr-batsbyx-2017-11/ including Exhibit 4, which reflects the
Commission received seven comment batsbyx201711-2148338-157737.pdf; Letter from
Kevin Coleman, General Counsel and Chief
changes to the text of the proposed rule
letters on the proposed rule change,4 Compliance Officer, Belvedere Trading LLC, to change as set forth in the First
Brent J. Fields, Secretary, Commission (dated July Amendment, and Exhibit 5, which
1 15 U.S.C. 78s(b)(1). 28, 2017), available at: https://www.sec.gov/ reflects all proposed changes to SRO’s
2 17 CFR 240.19b–4. comments/sr-batsbyx-2017-11/batsbyx201711-
3 See Securities Exchange Act Release No. 80785 2148360-157740.pdf; Letter from Joanna Mallers,
current rule text.
(May 26, 2017), 82 FR 25404 (June 1, 2017) Secretary, FIA Principal Traders Group, to Brent J. BOX Options Exchange LLC, Cboe
(‘‘Original Proposal’’). Fields, Secretary, Commission (dated July 28, 2017), BYX Exchange, Inc., Cboe BZX
4 Since the CAT NMS Plan Participants’ proposed available at: https://www.sec.gov/comments/sr- Exchange, Inc., Cboe EDGA Exchange,
rule changes to adopt fees to be charged to Industry batsbyx-2017-11/batsbyx201711-2151228- Inc., Cboe EDGX Exchange, Inc., Cboe
Members to fund the consolidated audit trail are 157745.pdf; Letter from Theodore R. Lazo,
Managing Director and Associate General Counsel, C2 Exchange, Inc., Cboe Exchange, Inc.,
substantively identical, the Commission is
considering all comments received on the proposed SIFMA, to Brent J. Fields, Secretary, Commission Chicago Stock Exchange, Inc., Financial
rule changes regardless of the comment file to (dated July 28, 2017), available at: https:// Industry Regulatory Authority, Inc.
which they were submitted. See text accompanying www.sec.gov/comments/sr-batsbyx-2017-11/ (‘‘FINRA’’), Investors’ Exchange LLC,
note 12 infra, for a list of the CAT NMS Plan batsbyx201711-2150977-157744.pdf; Letter from
Stuart J. Kaswell, Executive Vice President and Miami International Securities
Participants. See Letter from Theodore R. Lazo,
Managing Director and Associate General Counsel, Managing Director, General Counsel, Managed Exchange, LLC, MIAX PEARL, LLC,
Securities Industry and Financial Markets Funds Association, to Brent J. Fields, Secretary, NASDAQ BX, Inc., Nasdaq GEMX, LLC,
Association, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: Nasdaq ISE, LLC, Nasdaq MRX, LLC,
Commission (dated June 6, 2017), available at: https://www.sec.gov/comments/sr-batsbyx-2017-11/
batsbyx201711-2150818-157743.pdf; Letter from NASDAQ PHLX LLC, The NASDAQ
https://www.sec.gov/comments/sr-batsbzx-2017-38/
batsbzx201738-1788188-153228.pdf; Letter from John Kinahan, Chief Executive Officer, Group One Stock Market LLC, New York Stock
Patricia L. Cerny and Steven O’Malley, Compliance Trading, L.P., to Brent J. Fields, Secretary, Exchange LLC, NYSE American LLC,
Consultants, to Brent J. Fields, Secretary, Commission (dated August 10, 2017), available at: NYSE Arca, Inc. and NYSE National,
Commission (dated June 12, 2017), available at: https://www.sec.gov/comments/sr-finra-2017-011/
finra2017011-2214568-160619.pdf; Letter from Inc.12 (collectively, the ‘‘Participants’’)
https://www.sec.gov/comments/sr-cboe-2017-040/
cboe2017040-1799253-153675.pdf; Letter from Joseph Molluso, Executive Vice President and CFO,
Virtu Financial, to Brent J. Fields, Commission 10 See Securities Exchange Act Release No. 82049
Daniel Zinn, General Counsel, OTC Markets Group
Inc., to Eduardo A. Aleman, Assistant Secretary, (dated August 18, 2017), available at: https:// (November 9, 2017), 82 FR 53549 (November 16,
Commission (dated June 13, 2017), available at: www.sec.gov/comments/sr-finra-2017-011/ 2017).
https://www.sec.gov/comments/sr-finra-2017-011/ finra2017011-2238648-160830.pdf. 11 Unless otherwise specified, capitalized terms
8 See Letter from Michael Simon, Chair, CAT used in this fee filing are defined as set forth herein,
finra2017011-1801717-153703.pdf; Letter from
sradovich on DSK3GMQ082PROD with NOTICES
Joanna Mallers, Secretary, FIA Principal Traders NMS Plan Operating Committee, to Brent J. Fields, the CAT Compliance Rule Series, in the CAT NMS
Group, to Brent J. Fields, Secretary, Commission Commission, Secretary (dated November 2, 2017), Plan, or the Original Proposal.
(dated June 22, 2017), available at: https:/ available at: https://www.sec.gov/comments/sr- 12 Note that Bats BYX Exchange, Inc., Bats BZX
www.sec.gov/comments/sr-cboe-2017-040/ batsbyx-2017-11/batsbyx201711-2674608- Exchange, Inc., Bats EDGA Exchange, Inc., Bats
cboe2017040-1819670-154195.pdf; Letter from 161412.pdf. EDGX Exchange, Inc., LLC, C2 Options Exchange,
Stuart J. Kaswell, Executive Vice President and 9 Amendment No. 1 to the proposed rule change Incorporated, and Chicago Board Options Exchange,
Managing Director, General Counsel, Managed replaced and superseded the Original Proposal in Incorporated, have been renamed Cboe BYX
Funds Association, to Brent J. Fields, Secretary, its entirety. See Securities Exchange Act Release Exchange, Inc., Cboe BZX Exchange, Inc., Cboe
Commission (dated June 23, 2017), available at: No. 34–82272 (December 11, 2017). Continued
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to change the parenthetical regarding Persons submitting comments are publication serves as notice of no
the OTC Equity Securities discount in cautioned that we do not redact or edit objection to the Advance Notice.
paragraph (b)(2) of the proposed fee personal identifying information from
I. Background
schedule from ‘‘with a discount for comment submissions. You should
Equity ATSs exclusively trading OTC submit only information that you wish OCC filed this Advance Notice in
Equity Securities based on the average to make available publicly. All connection with its proposed change to
shares per trade ratio between NMS submissions should refer to File modify the tools available to OCC to
Stocks and OTC Equity Securities’’ to Number SR–CBOE–2017–040, and provide a mechanism for addressing the
‘‘with a discount for OTC Equity should be submitted on or before risks of liquidity shortfalls, specifically,
Securities market share of Equity ATSs January 5, 2017. in the extraordinary situation where
trading OTC Equity Securities based on OCC faces a liquidity need to meet its
For the Commission, by the Division of same-day settlement obligations
the average shares per trade ratio Trading and Markets, pursuant to delegated
between NMS Stocks and OTC Equity resulting from a Settlement Entity’s
authority.26
Securities.’’ failure to achieve daily settlement.
Robert W. Errett, OCC’s By-Laws currently grant OCC
III. Solicitation of Comments Deputy Secretary. the authority to borrow against its
Interested persons are invited to [FR Doc. 2017–26995 Filed 12–14–17; 8:45 am] Clearing Fund where a Settlement
submit written data, views and BILLING CODE 8011–01–P Entity fails to make timely settlement
arguments concerning the foregoing, with OCC due to the bankruptcy,
including whether the proposal, as insolvency, resolution, suspension of
amended by Amendment No. 1 and SECURITIES AND EXCHANGE operations or similar event of such
Amendment No. 2, is consistent with COMMISSION Settlement Entity.4 The Advance Notice
the Act. Comments may be submitted by seeks to expand this borrowing
any of the following methods: [Release No. 34–82296; File No. SR–OCC– authority to circumstances relatively
2017–806] less severe than bankruptcy, insolvency,
Electronic Comments or a similar event to include a
• Use the Commission’s internet Self-Regulatory Organizations; the temporary failure of a Settlement Entity
comment form (http://www.sec.gov/ Options Clearing Corporation; Notice to achieve daily settlement.
rules/sro.shtml); or of No Objection to Advance Notice Specifically, Article VIII, Section 5(e)
• Send an email to rule-comments@ Concerning Liquidity for Same-Day of OCC’s By-Laws provides OCC with
sec.gov. Please include File Number SR– Settlement the authority to borrow against the
CBOE–2017–040 on the subject line. Clearing Fund in two circumstances.
December 12, 2017. First, the By-Laws provide OCC the
Paper Comments
The Options Clearing Corporation authority to borrow where OCC ‘‘deems
• Send paper comments in triplicate it necessary or advisable to borrow or
(‘‘OCC’’) filed on October 13, 2017 with
to Secretary, Securities and Exchange otherwise obtain funds from third
the Securities and Exchange
Commission, 100 F Street NE, parties in order to meet obligations
Commission (‘‘Commission’’) advance
Washington, DC 20549–1090. arising out of the default or suspension
notice SR–OCC–2017–806 (‘‘Advance
All submissions should refer to File Notice’’) pursuant to Section 806(e)(1) of of a Clearing Member or any action
Number SR–CBOE–2017–040. This file Title VIII of the Dodd-Frank Wall Street taken by the Corporation in connection
number should be included on the Reform and Consumer Protection Act, therewith pursuant to Chapter XI of the
subject line if email is used. To help the entitled the Payment, Clearing and Rules or otherwise.’’ Second, the By-
Commission process and review your Settlement Supervision Act of 2010 Laws provide OCC the authority to
comments more efficiently, please use (‘‘Clearing Supervision Act’’) 1 and Rule borrow against the Clearing Fund where
only one method. The Commission will 19b–4(n)(1)(i) under the Securities OCC ‘‘sustains a loss reimbursable out
post all comments on the Commission’s Exchange Act of 1934 (‘‘Exchange of the Clearing Fund pursuant to
internet website (http://www.sec.gov/ Act’’) 2 to modify the tools it has [Article VIII, Section 5(b) of OCC’s By-
rules/sro.shtml). Copies of the available to address the risks of liquidity Laws] but [OCC] elects to borrow or
submission, all subsequent shortfalls when OCC faces a liquidity otherwise obtain funds from third
amendments, all written statements need to meet its same-day settlement parties in lieu of immediately charging
with respect to the proposed rule obligations resulting from the failure of such loss to the Clearing Fund.’’ In
change that are filed with the a bank or securities or commodities order for a loss to be reimbursable out
Commission, and all written clearing organization (‘‘Settlement of the Clearing Fund under Article VIII,
communications relating to the Entity’’) to achieve daily settlement. The Section 5(b) of OCC’s By-Laws, the loss
proposed rule change between the Advance Notice was published for must arise from a situation in which any
Commission and any person, other than comment in the Federal Register on Settlement Entity has failed ‘‘to perform
those that may be withheld from the November 13, 2017.3 The Commission any obligation to [OCC] when due
public in accordance with the has not received any comments on the because of its bankruptcy, insolvency,
provisions of 5 U.S.C. 552, will be Advance Notice to date. This receivership, suspension of operations,
available for website viewing and or because of any similar event.’’ 5
printing in the Commission’s Public 26 17 Under either of the circumstances
CFR 200.30–3(a)(12).
Reference Room, 100 F Street NE,
sradovich on DSK3GMQ082PROD with NOTICES
1 12 U.S.C. 5465(e)(1). above, OCC is authorized to borrow
Washington, DC 20549, on official 2 17 CFR 240.19b–4(n)(1)(i).
business days between the hours of 3 SR–OCC–2017–806. Securities Exchange Act 4 OCC By-Laws, Article VIII, Section 5.
10:00 a.m. and 3:00 p.m. Copies of the Release No. 82056 (Nov. 13, 2017) 82 FR 54430 5 To the extent that a loss resulting from any of
filing also will be available for (Nov. 17, 2017). OCC also filed a proposed rule the events referred to in Article VIII, Section 5(b)
change with the Commission in connection with is recoverable out of the Clearing Fund pursuant to
inspection and copying at the principal the proposed change. See Securities Exchange Act Article VIII, Section 5(a), the provisions of Article
office of the Exchange. All comments Release No. 81956 (Oct. 26, 2017), 82 FR 50705 VIII, Section 5(a) control and render the provisions
received will be posted without change. (Nov. 1, 2017) (SR–OCC–2017–017). of Article VIII, Section 5(b) inapplicable.
VerDate Sep<11>2014 23:42 Dec 14, 2017 Jkt 244001 PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 E:\FR\FM\15DEN1.SGM 15DEN1](https://thefederalregister.org/doc/82_FR_59923/page/3.svg)
Document Created: 2017-12-15 03:37:04
Document Modified: 2017-12-15 03:37:04
| 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 59683 |
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