82_FR_60316 82 FR 60075 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 11.9, Primary Pegged Order

82 FR 60075 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 11.9, Primary Pegged Order

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 241 (December 18, 2017)

Page Range60075-60078
FR Document2017-27151

Federal Register, Volume 82 Issue 241 (Monday, December 18, 2017) 
[Federal Register Volume 82, Number 241 (Monday, December 18, 2017)]
[Notices]
[Pages 60075-60078]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-27151]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82304; File No. SR-CboeBZX-2017-008]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Exchange Rule 11.9, Primary Pegged Order

December 12, 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 November 29, 2017, Cboe BZX Exchange, Inc. (``BZX'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The

[[Page 60076]]

Exchange has designated this proposal as a ``non-controversial'' 
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(6) thereunder,\4\ which renders it effective upon filing 
with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend paragraph (c)(8)(A) of 
Exchange Rule 11.9, Primary Pegged Order, to restrict the Time-In-Force 
(``TIF'') instruction that a displayed Primary Pegged Order that 
includes a Primary Offset Amount (defined below) may have to Regular
    Hours Only (``RHO'') \5\ or Day \6\ if entered during Regular 
Trading Hours.\7\
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    \5\ See Exchange Rule 11.9(b)(7) (defining a TIF of RHO as a 
limit or market order that is designated for execution only during 
Regular Trading Hours).
    \6\ See Exchange Rule 11.9(b)(2) (defining a TIF of Day as a 
limit order to buy or sell which, if not executed, expires at the 
end of Regular Trading Hours).
    \7\ Regular Trading Hours is defined as the time between 9:30 
a.m. and 4:00 p.m. Eastern Time. See Exchange Rule 1.5(w).
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    The text of the proposed rule change is available at the Exchange's 
website at www.markets.cboe.com, at the principal office of the 
Exchange, 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 places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts 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 proposes to amend paragraph (c)(8)(A) of Exchange Rule 
11.9, Primary Pegged Order, to restrict the TIF instruction that a 
displayed Primary Pegged Order with a Primary Offset Amount may have to 
RHO, or if entered during Regular Trading Hours, a TIF instruction of 
Day.\8\ Exchange Rule 11.9(c)(8) describes a Pegged Order as a limit 
order that after entry into the System,\9\ the price of the order is 
automatically adjusted by the System in response to changes in the 
National Best Bid or Offer (``NBBO''). Exchange Rule 11.9(c)(8)(A) 
states that a User \10\ entering a Pegged Order can specify that such 
order's price will offset the inside quote on the same side of the 
market by an amount set by the User (``Primary Offset Amount''). The 
Primary Offset Amount for a displayed Primary Pegged Order must result 
in the price of such order being inferior to or equal to the inside 
quote on the same side of the market.
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    \8\ The Exchange also proposes a non-substantive change to 
delete the extraneous word ``order'' after ``Pegged Order'' in 
Exchange Rule 11.9(c)(8).
    \9\ See Exchange Rule 1.5(aa).
    \10\ See Exchange Rule 1.5(cc).
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    Some available TIF instructions enable a Primary Pegged Order to 
expire at a time past the end of Regular Trading Hours at 4:00 p.m. 
Eastern Time. These TIF instructions are Good-`til Extended Day 
(``GTX''), Good-`til Day (``GTD''), Pre-Opening Session `til Extended 
Day (``PTX''), and Pre-Opening Session `til Day (``PTD'').\11\
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    \11\ See Exchange Rule 11.9(b) (defining each of these TIF 
instructions).
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    The Exchange has observed that Primary Pegged Orders displayed on 
the BZX Book with non-aggressive Primary Offset Amounts and similar 
orders entered on away exchanges that remain active after the end of 
Regular Trading Hours may be pegged to and repriced off of each other 
during extended hours trading when no other reference price is 
available due to orders expiring or being cancelled at 4:00 p.m. 
Eastern Time. The following example illustrates this scenario. Assume 
the NBBO is $0.00 by $0.00. Market Maker 1 enters an order on Exchange 
A to buy 100 shares at $10.00 resulting in a new NBBO of $10.00 by 
$0.00. Market Maker 2 sends a Displayed Primary Peg order to Exchange B 
to buy 100 with a -$0.01 Primary Offset Amount. That order is posted on 
Exchange B at $9.99. Market Maker 3 then also sends a Displayed Primary 
Peg order to Exchange C to buy 100 with a -$0.01 Primary Offset Amount. 
That order is posted on Exchange C at $9.99. The NBBO remains $10.00 by 
$0.00. Market Maker 1 cancels their order to buy 100 shares at $10.00. 
The NBBO is now $9.99 by $0.00. Exchange B re-prices Market Maker 2's 
Displayed Primary Peg order to buy to $9.98, one cent below Market 
Maker 3's Displayed Primary Peg order on Exchange C. The NBBO is now 
$9.98 by $0.00. Exchange C then re-prices Market Maker 3's Displayed 
Primary Peg order to buy to $9.97, one cent below Market Maker 2's 
Displayed Primary Peg order on Exchange B. In the absence of new 
additional liquidity being entered at the NBB, each order would 
continue to be re-priced off each other until each reach $0.00.\12\
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    \12\ While this behavior may occur in less liquid securities 
during Regular Trading Hours, the Exchange has only witnesses [sic] 
this occurring after the close of trading, on only one occasion, and 
not with the use of any other pegged order type or instruction. The 
Exchange intends to monitor the use of displayed Primary Pegged 
Orders that include a Primary Offset Amount during Regular Trading 
Hours to identify when the situation subject to this proposal may 
occur.
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    To prevent this from occurring, the Exchange proposes to restrict 
the TIF instruction that a displayed Primary Pegged Order with a 
Primary Offset Amount may have to RHO, or, if entered during Regular 
Trading Hours, a TIF instruction of Day. Doing so, [sic] would cause 
displayed Primary Pegged Orders resting on the BZX Book to be eligible 
for execution from 9:30 a.m. to 4:00 p.m. Eastern Time. Limiting the 
TIF instructions to RHO and Day only for displayed Primary Pegged 
Orders with Primary Offset Amounts would ensure that these orders are 
eligible for execution during Regular Trading Hours, which is the most 
liquid portion of the trading day, thereby significantly decreasing the 
possibility that such orders may re-price off similar orders entered on 
away exchanges in the absence of additional liquidity at the NBB or 
NBO. The proposed rule change would cause displayed Primary Pegged 
Orders with Primary Offset Amounts to expire at the end of Regular 
Trading Hours when a vast majority of orders expire and do not 
participate in extended hours trading. As amended, paragraph (c)(8)(A) 
of the Rule 11.9 would be amended to state that a displayed Primary 
Pegged Order with a Primary Offset Amount shall only include a TIF of 
RHO or, if entered during Regular Trading Hours, a TIF instruction of 
Day. As is the case today, Users may continue to enter displayed 
Primary Pegged Orders with Primary Offset Amounts and TIF instructions 
of RHO beginning at 6:00 a.m. Eastern Time. However, those orders would 
not be eligible for execution until 9:30 a.m. Eastern Time, the start 
of Regular Trading Hours.\13\ Displayed Primary Peg orders with Primary 
Offset Amounts and a TIF of Day will be rejected if entered prior to 
9:30 a.m., the start of Regular Trading Hours. Primary Pegged orders 
that do not include a Primary Offset Amount or that are not displayed

[[Page 60077]]

on the BZX Book would have no restrictions on the TIF instructions that 
may be attached to the order.
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    \13\ See Exchange Rule 11.1(a).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \14\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \15\ in particular, in that it is designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in 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. The proposed rule change 
removes impediments to and perfects the mechanism of a free and open 
market and a national market system by ensuring that Primary Pegged 
Orders with Primary Offset Amounts displayed on the EDGX [sic] Book do 
not inadvertently re-price off similar orders on away exchanges in 
absence of other liquidity creating the illusion of aberrant prices for 
the security. The proposed rule change would restrict the use of the 
order type to Regular Trading Hours only, the most liquid part of the 
trading day, thereby significantly decreasing the possibly [sic] of 
such orders re-pricing off of each other in the absence of additional 
liquidity. The Exchange does not propose to amend or alter the 
operation of Limit Orders with a Pegged instruction in any other 
manner. The proposed rule change also promotes just and equitable 
principles of trade by limiting the times at which such orders are 
active so as to ensure that the order pegs to prices that reflect the 
true NBBO of the security and not the Primary Offset Amount of a pegged 
order in the absence of other liquidity.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. The 
proposed rule change is intended to ensure Limit Orders with a Primary 
Pegged instruction and Primary Offset Amount displayed on the BZX Book 
do not inadvertently re-price off similar orders on away exchanges in 
absence of other liquidity. It is not intended to have a competitive 
impact.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    No comments were solicited or received 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: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
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 \16\ and paragraph 
(f)(6) of Rule 19b-4 thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of its filing. However, 
Rule 19b-4(f)(6)(iii)\18\ permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange has requested that the Commission 
waive the 30-day operative delay so that the proposed rule change will 
become operative upon filing. The Exchange stated that such waiver will 
enable the Exchange to update its functionality during the operative 
delay period such that Limit Orders with a Primary Pegged instruction 
and Primary Offset Amount displayed on the BZX Book do not 
inadvertently re-price off of similar orders on away exchanges in the 
absence of other liquidity. The Commission believes that waiver of the 
30-day operative delay is consistent with the protection of investors 
and the public interest because it would enable the Exchange to update 
its rule without delay to help prevent these types of pegged orders 
from inadvertently re-pricing to aberrant prices. Therefore, the 
Commission hereby waives the operative delay and designates the 
proposed rule change operative upon filing.\19\
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    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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 shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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-CboeBZX-2017-008 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--CboeBZX-2017-008. 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

[[Page 60078]]

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-CboeBZX-2017-008 and should 
be submitted on or before January 8, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12) and (59).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-27151 Filed 12-15-17; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 82, No. 241 / Monday, December 18, 2017 / Notices 60075 manner. The proposed rule change also functionality during the operative delay rules/sro.shtml). Copies of the promotes just and equitable principles period such that Limit Orders with a submission, all subsequent of trade by limiting the times at which Primary Pegged instruction and Primary amendments, all written statements such orders are active so as to ensure Offset Amount displayed on the BYX with respect to the proposed rule that the order pegs to prices that reflect Book do not inadvertently re-price off of change that are filed with the the true NBBO of the security and not similar orders on away exchanges in the Commission, and all written the Primary Offset Amount of a pegged absence of other liquidity. The communications relating to the order in the absence of other liquidity. Commission believes that waiver of the proposed rule change between the 30-day operative delay is consistent Commission and any person, other than (B) Self-Regulatory Organization’s with the protection of investors and the those that may be withheld from the Statement on Burden on Competition public interest because it would enable public in accordance with the The Exchange does not believe that the Exchange to update its rule without provisions of 5 U.S.C. 552, will be the proposed rule change will result in delay to help prevent these types of available for website viewing and any burden on competition that is not pegged orders from inadvertently re- printing in the Commission’s Public necessary or appropriate in furtherance pricing to aberrant prices. Therefore, the Reference Room, 100 F Street NE, of the purposes of the Act, as amended. Commission hereby waives the Washington, DC 20549, on official The proposed rule change is intended to operative delay and designates the business days between the hours of ensure Limit Orders with a Primary proposed rule change operative upon 10:00 a.m. and 3:00 p.m. Copies of the Pegged instruction and Primary Offset filing.18 filing also will be available for Amount displayed on the BYX Book do At any time within 60 days of the inspection and copying at the principal not inadvertently re-price off similar filing of the proposed rule change, the office of the Exchange. All comments orders on away exchanges in absence of Commission summarily may received will be posted without change. other liquidity. It is not intended to temporarily suspend such rule change if Persons submitting comments are have a competitive impact. it appears to the Commission that such cautioned that we do not redact or edit (C) Self-Regulatory Organization’s action is necessary or appropriate in the personal identifying information from Statement on Comments on the public interest, for the protection of comment submissions. You should Proposed Rule Change Received From investors, or otherwise in furtherance of submit only information that you wish Members, Participants or Others the purposes of the Act. If the to make available publicly. All Commission takes such action, the submissions should refer to File No comments were solicited or Commission shall institute proceedings Number SR–CboeBYX–2017–002 and received on the proposed rule change. to determine whether the proposed rule should be submitted on or before III. Date of Effectiveness of the should be approved or disapproved. January 8,2018. Proposed Rule Change and Timing for IV. Solicitation of Comments For the Commission, by the Division of Commission Action Trading and Markets, pursuant to delegated Interested persons are invited to authority.19 Because the foregoing proposed rule submit written data, views, and change does not: (i) Significantly affect Robert W. Errett, arguments concerning the foregoing, the protection of investors or the public Deputy Secretary. including whether the proposed rule interest; (ii) impose any significant change is consistent with the Act. [FR Doc. 2017–27150 Filed 12–15–17; 8:45 am] burden on competition; and (iii) become Comments may be submitted by any of BILLING CODE 8011–01–P operative for 30 days from the date on the following methods: which it was filed, or such shorter time as the Commission may designate, it has Electronic Comments SECURITIES AND EXCHANGE become effective pursuant to Section • Use the Commission’s internet COMMISSION 19(b)(3)(A) of the Act 15 and paragraph comment form (http://www.sec.gov/ [Release No. 34–82304; File No. SR– (f)(6) of Rule 19b–4 thereunder.16 rules/sro.shtml); or CboeBZX–2017–008] A proposed rule change filed under • Send an email to rule-comments@ Rule 19b–4(f)(6) normally does not sec.gov. Please include File Number SR– Self-Regulatory Organizations; Cboe become operative for 30 days after the CboeBYX–2017–002 on the subject line. BZX Exchange, Inc.; Notice of Filing date of its filing. However, Rule 19b– and Immediate Effectiveness of a 4(f)(6)(iii) 17 permits the Commission to Paper Comments Proposed Rule Change To Amend designate a shorter time if such action • Send paper comments in triplicate Exchange Rule 11.9, Primary Pegged is consistent with the protection of to Secretary, Securities and Exchange Order investors and the public interest. The Commission, 100 F Street NE, Exchange has requested that the December 12, 2017. Washington, DC 20549–1090. Commission waive the 30-day operative Pursuant to Section 19(b)(1) of the All submissions should refer to File delay so that the proposed rule change Securities Exchange Act of 1934 (the Number SR–CboeBYX–2017–002. This will become operative upon filing. The ‘‘Act’’),1 and Rule 19b–4 thereunder,2 file number should be included on the notice is hereby given that on November Exchange stated that such waiver will subject line if email is used. To help the enable the Exchange to update its 29, 2017, Cboe BZX Exchange, Inc. Commission process and review your (‘‘BZX’’ or the ‘‘Exchange’’) filed with comments more efficiently, please use the Securities and Exchange 15 15 U.S.C. 78s(b)(3)(A). only one method. The Commission will Commission (‘‘Commission’’) the daltland on DSKBBV9HB2PROD with NOTICES 16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give post all comments on the Commission’s proposed rule change as described in the Commission written notice of its intent to file internet website (http://www.sec.gov/ Items I and II below, which Items have the proposed rule change at least five business days prior to the date of filing of the proposed rule 18 For purposes only of waiving the 30-day been prepared by the Exchange. The change, or such shorter time as designated by the operative delay, the Commission has also 19 17 CFR 200.30–3(a)(12) and (59). Commission. The Exchange has satisfied this considered the proposed rule’s impact on requirement. efficiency, competition, and capital formation. See 1 15 U.S.C. 78s(b)(1). 17 17 CFR 240.19b–4(f)(6)(iii). 15 U.S.C. 78c(f). 2 17 CFR 240.19b–4. VerDate Sep<11>2014 17:53 Dec 15, 2017 Jkt 244001 PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 E:\FR\FM\18DEN1.SGM 18DEN1

60076 Federal Register / Vol. 82, No. 241 / Monday, December 18, 2017 / Notices Exchange has designated this proposal entered during Regular Trading Hours, a $0.00. Exchange C then re-prices Market as a ‘‘non-controversial’’ proposed rule TIF instruction of Day.8 Exchange Rule Maker 3’s Displayed Primary Peg order change pursuant to Section 19(b)(3)(A) 11.9(c)(8) describes a Pegged Order as a to buy to $9.97, one cent below Market of the Act 3 and Rule 19b–4(f)(6) limit order that after entry into the Maker 2’s Displayed Primary Peg order thereunder,4 which renders it effective System,9 the price of the order is on Exchange B. In the absence of new upon filing with the Commission. The automatically adjusted by the System in additional liquidity being entered at the Commission is publishing this notice to response to changes in the National Best NBB, each order would continue to be solicit comments on the proposed rule Bid or Offer (‘‘NBBO’’). Exchange Rule re-priced off each other until each reach change from interested persons. 11.9(c)(8)(A) states that a User 10 $0.00.12 entering a Pegged Order can specify that To prevent this from occurring, the I. Self-Regulatory Organization’s such order’s price will offset the inside Exchange proposes to restrict the TIF Statement of the Terms of Substance of quote on the same side of the market by instruction that a displayed Primary the Proposed Rule Change an amount set by the User (‘‘Primary Pegged Order with a Primary Offset The Exchange filed a proposal to Offset Amount’’). The Primary Offset Amount may have to RHO, or, if entered amend paragraph (c)(8)(A) of Exchange Amount for a displayed Primary Pegged during Regular Trading Hours, a TIF Rule 11.9, Primary Pegged Order, to Order must result in the price of such instruction of Day. Doing so, [sic] would restrict the Time-In-Force (‘‘TIF’’) order being inferior to or equal to the cause displayed Primary Pegged Orders instruction that a displayed Primary inside quote on the same side of the resting on the BZX Book to be eligible Pegged Order that includes a Primary market. for execution from 9:30 a.m. to 4:00 p.m. Offset Amount (defined below) may Some available TIF instructions Eastern Time. Limiting the TIF have to Regular enable a Primary Pegged Order to expire instructions to RHO and Day only for Hours Only (‘‘RHO’’) 5 or Day 6 if at a time past the end of Regular Trading displayed Primary Pegged Orders with entered during Regular Trading Hours.7 Hours at 4:00 p.m. Eastern Time. These Primary Offset Amounts would ensure The text of the proposed rule change TIF instructions are Good-‘til Extended that these orders are eligible for is available at the Exchange’s website at Day (‘‘GTX’’), Good-‘til Day (‘‘GTD’’), execution during Regular Trading www.markets.cboe.com, at the principal Pre-Opening Session ‘til Extended Day Hours, which is the most liquid portion office of the Exchange, and at the (‘‘PTX’’), and Pre-Opening Session ‘til of the trading day, thereby significantly Commission’s Public Reference Room. Day (‘‘PTD’’).11 decreasing the possibility that such The Exchange has observed that orders may re-price off similar orders II. Self-Regulatory Organization’s Primary Pegged Orders displayed on the entered on away exchanges in the Statement of the Purpose of, and BZX Book with non-aggressive Primary absence of additional liquidity at the Statutory Basis for, the Proposed Rule Offset Amounts and similar orders NBB or NBO. The proposed rule change Change entered on away exchanges that remain would cause displayed Primary Pegged In its filing with the Commission, the active after the end of Regular Trading Orders with Primary Offset Amounts to Exchange included statements Hours may be pegged to and repriced off expire at the end of Regular Trading concerning the purpose of and basis for of each other during extended hours Hours when a vast majority of orders the proposed rule change and discussed trading when no other reference price is expire and do not participate in any comments it received on the available due to orders expiring or being extended hours trading. As amended, proposed rule change. The text of these cancelled at 4:00 p.m. Eastern Time. paragraph (c)(8)(A) of the Rule 11.9 statements may be examined at the The following example illustrates this would be amended to state that a places specified in Item IV below. The scenario. Assume the NBBO is $0.00 by displayed Primary Pegged Order with a Exchange has prepared summaries, set $0.00. Market Maker 1 enters an order Primary Offset Amount shall only forth in Sections A, B, and C below, of on Exchange A to buy 100 shares at include a TIF of RHO or, if entered the most significant parts of such $10.00 resulting in a new NBBO of during Regular Trading Hours, a TIF statements. $10.00 by $0.00. Market Maker 2 sends instruction of Day. As is the case today, a Displayed Primary Peg order to Users may continue to enter displayed (A) Self-Regulatory Organization’s Exchange B to buy 100 with a ¥$0.01 Primary Pegged Orders with Primary Statement of the Purpose of, and Primary Offset Amount. That order is Offset Amounts and TIF instructions of Statutory Basis for, the Proposed Rule posted on Exchange B at $9.99. Market RHO beginning at 6:00 a.m. Eastern Change Maker 3 then also sends a Displayed Time. However, those orders would not 1. Purpose Primary Peg order to Exchange C to buy be eligible for execution until 9:30 a.m. 100 with a ¥$0.01 Primary Offset Eastern Time, the start of Regular The Exchange proposes to amend Amount. That order is posted on Trading Hours.13 Displayed Primary Peg paragraph (c)(8)(A) of Exchange Rule Exchange C at $9.99. The NBBO remains orders with Primary Offset Amounts 11.9, Primary Pegged Order, to restrict $10.00 by $0.00. Market Maker 1 cancels and a TIF of Day will be rejected if the TIF instruction that a displayed their order to buy 100 shares at $10.00. entered prior to 9:30 a.m., the start of Primary Pegged Order with a Primary The NBBO is now $9.99 by $0.00. Regular Trading Hours. Primary Pegged Offset Amount may have to RHO, or if Exchange B re-prices Market Maker 2’s orders that do not include a Primary Displayed Primary Peg order to buy to Offset Amount or that are not displayed 3 15 U.S.C. 78s(b)(3)(A). 4 17 $9.98, one cent below Market Maker 3’s CFR 240.19b–4(f)(6). 5 See Exchange Rule 11.9(b)(7) (defining a TIF of Displayed Primary Peg order on 12 While this behavior may occur in less liquid Exchange C. The NBBO is now $9.98 by securities during Regular Trading Hours, the daltland on DSKBBV9HB2PROD with NOTICES RHO as a limit or market order that is designated Exchange has only witnesses [sic] this occurring for execution only during Regular Trading Hours). after the close of trading, on only one occasion, and 6 See Exchange Rule 11.9(b)(2) (defining a TIF of 8 The Exchange also proposes a non-substantive not with the use of any other pegged order type or Day as a limit order to buy or sell which, if not change to delete the extraneous word ‘‘order’’ after instruction. The Exchange intends to monitor the executed, expires at the end of Regular Trading ‘‘Pegged Order’’ in Exchange Rule 11.9(c)(8). use of displayed Primary Pegged Orders that 9 See Exchange Rule 1.5(aa). Hours). include a Primary Offset Amount during Regular 7 Regular Trading Hours is defined as the time 10 See Exchange Rule 1.5(cc). Trading Hours to identify when the situation between 9:30 a.m. and 4:00 p.m. Eastern Time. See 11 See Exchange Rule 11.9(b) (defining each of subject to this proposal may occur. Exchange Rule 1.5(w). these TIF instructions). 13 See Exchange Rule 11.1(a). VerDate Sep<11>2014 17:53 Dec 15, 2017 Jkt 244001 PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 E:\FR\FM\18DEN1.SGM 18DEN1

Federal Register / Vol. 82, No. 241 / Monday, December 18, 2017 / Notices 60077 on the BZX Book would have no (C) Self-Regulatory Organization’s At any time within 60 days of the restrictions on the TIF instructions that Statement on Comments on the filing of the proposed rule change, the may be attached to the order. Proposed Rule Change Received From Commission summarily may Members, Participants or Others temporarily suspend such rule change if 2. Statutory Basis it appears to the Commission that such No comments were solicited or The Exchange believes that its action is necessary or appropriate in the received on the proposed rule change. proposal is consistent with Section 6(b) public interest, for the protection of III. Date of Effectiveness of the investors, or otherwise in furtherance of of the Act 14 in general, and furthers the Proposed Rule Change and Timing for the purposes of the Act. If the objectives of Section 6(b)(5) of the Act 15 Commission Action Commission takes such action, the in particular, in that it is designed to Commission shall institute proceedings promote just and equitable principles of Because the foregoing proposed rule to determine whether the proposed rule trade, to foster cooperation and change does not: (i) Significantly affect should be approved or disapproved. coordination with persons engaged in the protection of investors or the public facilitating transactions in securities, to interest; (ii) impose any significant IV. Solicitation of Comments remove impediments to and perfect the burden on competition; and (iii) become Interested persons are invited to mechanism of a free and open market operative for 30 days from the date on submit written data, views, and and a national market system and, in which it was filed, or such shorter time arguments concerning the foregoing, general, to protect investors and the as the Commission may designate, it has including whether the proposed rule public interest. The proposed rule become effective pursuant to Section change is consistent with the Act. change removes impediments to and 19(b)(3)(A) of the Act 16 and paragraph Comments may be submitted by any of perfects the mechanism of a free and (f)(6) of Rule 19b–4 thereunder.17 the following methods: open market and a national market A proposed rule change filed under Electronic Comments system by ensuring that Primary Pegged Rule 19b–4(f)(6) normally does not become operative for 30 days after the • Use the Commission’s internet Orders with Primary Offset Amounts date of its filing. However, Rule 19b– comment form (http://www.sec.gov/ displayed on the EDGX [sic] Book do 4(f)(6)(iii)18 permits the Commission to rules/sro.shtml); or not inadvertently re-price off similar • Send an email to rule-comments@ orders on away exchanges in absence of designate a shorter time if such action is consistent with the protection of sec.gov. Please include File Number SR– other liquidity creating the illusion of CboeBZX–2017–008 on the subject line. aberrant prices for the security. The investors and the public interest. The Exchange has requested that the Paper Comments proposed rule change would restrict the Commission waive the 30-day operative use of the order type to Regular Trading • Send paper comments in triplicate delay so that the proposed rule change Hours only, the most liquid part of the to Secretary, Securities and Exchange will become operative upon filing. The trading day, thereby significantly Commission, 100 F Street NE, Exchange stated that such waiver will decreasing the possibly [sic] of such Washington, DC 20549–1090. enable the Exchange to update its orders re-pricing off of each other in the functionality during the operative delay All submissions should refer to File absence of additional liquidity. The period such that Limit Orders with a Number SR–-CboeBZX–2017–008. This Exchange does not propose to amend or Primary Pegged instruction and Primary file number should be included on the alter the operation of Limit Orders with Offset Amount displayed on the BZX subject line if email is used. To help the a Pegged instruction in any other Book do not inadvertently re-price off of Commission process and review your manner. The proposed rule change also similar orders on away exchanges in the comments more efficiently, please use promotes just and equitable principles absence of other liquidity. The only one method. The Commission will of trade by limiting the times at which Commission believes that waiver of the post all comments on the Commission’s such orders are active so as to ensure 30-day operative delay is consistent internet website (http://www.sec.gov/ that the order pegs to prices that reflect with the protection of investors and the rules/sro.shtml). Copies of the the true NBBO of the security and not public interest because it would enable submission, all subsequent the Primary Offset Amount of a pegged the Exchange to update its rule without amendments, all written statements order in the absence of other liquidity. delay to help prevent these types of with respect to the proposed rule pegged orders from inadvertently re- change that are filed with the (B) Self-Regulatory Organization’s pricing to aberrant prices. Therefore, the Commission, and all written Statement on Burden on Competition Commission hereby waives the communications relating to the operative delay and designates the proposed rule change between the The Exchange does not believe that Commission and any person, other than the proposed rule change will result in proposed rule change operative upon filing.19 those that may be withheld from the any burden on competition that is not public in accordance with the necessary or appropriate in furtherance provisions of 5 U.S.C. 552, will be 16 15 U.S.C. 78s(b)(3)(A). of the purposes of the Act, as amended. 17 17 available for website viewing and CFR 240.19b–4(f)(6). In addition, Rule 19b– The proposed rule change is intended to 4(f)(6) requires a self-regulatory organization to give printing in the Commission’s Public ensure Limit Orders with a Primary the Commission written notice of its intent to file Reference Room, 100 F Street NE, Pegged instruction and Primary Offset the proposed rule change at least five business days Washington, DC 20549, on official Amount displayed on the BZX Book do prior to the date of filing of the proposed rule business days between the hours of daltland on DSKBBV9HB2PROD with NOTICES change, or such shorter time as designated by the not inadvertently re-price off similar Commission. The Exchange has satisfied this 10:00 a.m. and 3:00 p.m. Copies of the orders on away exchanges in absence of requirement. filing also will be available for other liquidity. It is not intended to 18 17 CFR 240.19b–4(f)(6)(iii). inspection and copying at the principal 19 For purposes only of waiving the 30-day have a competitive impact. office of the Exchange. All comments operative delay, the Commission has also considered the proposed rule’s impact on received will be posted without change. 14 15 U.S.C. 78f(b). efficiency, competition, and capital formation. See Persons submitting comments are 15 15 U.S.C. 78f(b)(5). 15 U.S.C. 78c(f). cautioned that we do not redact or edit VerDate Sep<11>2014 17:53 Dec 15, 2017 Jkt 244001 PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 E:\FR\FM\18DEN1.SGM 18DEN1

60078 Federal Register / Vol. 82, No. 241 / Monday, December 18, 2017 / Notices personal identifying information from Hours Only (‘‘RHO’’) 7 or Day 8 if inferior to or equal to the inside quote comment submissions. You should entered during Regular Trading Hours.9 on the same side of the market. submit only information that you wish The text of the proposed rule change Exchange Rule 11.8(b)(2) sets forth the to make available publicly. All is available at the Exchange’s website at TIF instructions that may be attached to submissions should refer to File www.markets.cboe.com, at the principal a Limit Order. Some available TIF Number SR–CboeBZX–2017–008 and office of the Exchange, and at the instructions enable a Limit Order to should be submitted on or before Commission’s Public Reference Room. expire at a time past the end of Regular January 8, 2018. Trading Hours at 4:00 p.m. Eastern II. Self-Regulatory Organization’s Time. These TIF instructions are Good- For the Commission, by the Division of Trading and Markets, pursuant to delegated Statement of the Purpose of, and ‘til Extended Day (‘‘GTX’’), Good-‘til authority.20 Statutory Basis for, the Proposed Rule Day (‘‘GTD’’), Pre-Opening Session ‘til Robert W. Errett, Change Extended Day (‘‘PTX’’), and Pre- Deputy Secretary. Opening Session ‘til Day (‘‘PTD’’).11 The In its filing with the Commission, the System automatically defaults the Limit [FR Doc. 2017–27151 Filed 12–15–17; 8:45 am] Exchange included statements Order to include a TIF instruction of BILLING CODE 8011–01–P concerning the purpose of and basis for Day if the User does not select a the proposed rule change and discussed different TIF instruction.12 any comments it received on the The Exchange has observed that Limit SECURITIES AND EXCHANGE proposed rule change. The text of these Orders with a Primary Peg instruction COMMISSION statements may be examined at the displayed on the EDGX Book with non- [Release No. 34–82306; File No. SR– places specified in Item IV below. The aggressive Primary Offset Amounts and CboeEDGX–2017–002] Exchange has prepared summaries, set similar orders entered on away forth in Sections A, B, and C below, of exchanges that remain active after the Self-Regulatory Organizations; Cboe the most significant parts of such end of Regular Trading Hours may be EDGX Exchange, Inc.; Notice of Filing statements. pegged to and repriced off of each other and Immediate Effectiveness of a during extended hours trading when no Proposed Rule Change To Amend (A) Self-Regulatory Organization’s Statement of the Purpose of, and other reference price is available due to Exchange Rule 11.8, Order Types orders expiring or being cancelled at Statutory Basis for, the Proposed Rule December 12, 2017. Change 4:00 p.m. Eastern Time. The following example illustrates this scenario. Pursuant to Section 19(b)(1) of the 1. Purpose Assume the NBBO is $0.00 by $0.00. Securities Exchange Act of 1934 (the Market Maker 1 enters an order on ‘‘Act’’),1 and Rule 19b–4 thereunder,2 The Exchange proposes to amend Exchange A to buy 100 shares at $10.00 notice is hereby given that on November paragraph (b) of Exchange Rule 11.8, resulting in a new NBBO of $10.00 by 29, 2017, Cboe EDGX Exchange, Inc. Order Types, to restrict the TIF $0.00. Market Maker 2 sends a (‘‘EDGX’’ or the ‘‘Exchange’’) filed with instruction that a Limit Order with both Displayed Primary Peg order to the Securities and Exchange a Display instruction and Primary Peg Exchange B to buy 100 with a ¥$0.01 Commission (‘‘Commission’’) the instruction and a Primary Offset Primary Offset Amount. That order is proposed rule change as described in Amount may have to RHO or, if entered posted on Exchange B at $9.99. Market Items I and II below, which Items have during Regular Trading Hours, a TIF of Maker 3 then also sends a Displayed been prepared by the Exchange. The Day. Exchange Rule 11.8(b)(9) allows for Primary Peg order to Exchange C to buy Exchange has designated this proposal a Limit Order to include a Primary Peg 100 with a ¥$0.01 Primary Offset as a ‘‘non-controversial’’ proposed rule instruction. Exchange Rule 11.6(j)(2) Amount. That order is posted on change pursuant to Section 19(b)(3)(A) describes the Primary Peg instruction as Exchange C at $9.99. The NBBO remains of the Act 3 and Rule 19b–4(f)(6) an order with instructions to peg to the $10.00 by $0.00. Market Maker 1 cancels thereunder,4 which renders it effective National Best Bid (‘‘NBB’’), for a buy their order to buy 100 shares at $10.00. upon filing with the Commission. The order, or the National Best Offer The NBBO is now $9.99 by $0.00. Commission is publishing this notice to (‘‘NBO’’), for a sell order. A User 10 may, Exchange B re-prices Market Maker 2’s solicit comments on the proposed rule but is not required to, elect an offset Displayed Primary Peg order to buy to change from interested persons. equal to or greater than one Minimum $9.98, one cent below Market Maker 3’s I. Self-Regulatory Organization’s Price Variation above or below the NBB Displayed Primary Peg order on Statement of the Terms of Substance of or NBO that the order is pegged to Exchange C. The NBBO is now $9.98 by the Proposed Rule Change (‘‘Primary Offset Amount’’). The $0.00. Exchange C then re-prices Market Primary Offset Amount for an order Maker 3’s Displayed Primary Peg order The Exchange filed a proposal to with Primary Peg instruction that is to amend paragraph (b) of Exchange Rule to buy to $9.97, one cent below Market be displayed on the EDGX Book must Maker 2’s Displayed Primary Peg order 11.8, Order Types, to restrict the Time- result in the price of such order being In-Force (‘‘TIF’’) instruction that a Limit on Exchange B. In the absence of new Order with both a Display 5 instruction additional liquidity being entered at the 7 See Exchange Rule 11.6(q)(6) (defining a TIF of and Primary Peg 6 instruction that also NBB, each order would continue to be RHO as an instruction a User may attach to an order includes a Primary Offset Amount designating it for execution only during Regular re-priced off each other until each reach (defined below) may have to Regular Trading Hours). $0.00.13 daltland on DSKBBV9HB2PROD with NOTICES 8 See Exchange Rule 11.6(q)(2) (defining a TIF of 20 17 Day as an instruction a User may attach to an order 11 See Exchange Rule 11.6(q) (defining each of CFR 200.30–3(a)(12) and (59). 1 15 U.S.C. 78s(b)(1). stating that an order to buy or sell which, if not these TIF instructions). executed, expires at the end of Regular Trading 12 See Exchange Rule 11.8(b)(2). 2 17 CFR 240.19b–4. Hours). 13 While this behavior may occur in less liquid 3 15 U.S.C. 78s(b)(3)(A). 9 Regular Trading Hours is defined as the time securities during Regular Trading Hours, the 4 17 CFR 240.19b–4(f)(6). between 9:30 a.m. and 4:00 p.m. Eastern Time. See Exchange has only witnessed this occurring after 5 See Exchange Rule 11.6(e)(1). Exchange Rule 1.5(y). the close of trading, on only one occasion, and not 6 See Exchange Rule 11.6(j)(2). 10 See Exchange Rule 1.5(ee). with the use of any other pegged order type or VerDate Sep<11>2014 17:53 Dec 15, 2017 Jkt 244001 PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 E:\FR\FM\18DEN1.SGM 18DEN1


Document Created: 2017-12-15 23:54:57
Document Modified: 2017-12-15 23:54:57
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 60075 
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