82 FR 61637 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Order Approving a Proposed Rule Change To Amend Rule 6.56 To Include Procedures for Multi-Leg Positions
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 248 (December 28, 2017)
Federal Register Volume 82, Issue 248 (December 28, 2017)
| Page Range | 61637-61638 | |
| FR Document | 2017-28082 |
[Federal Register Volume 82, Number 248 (Thursday, December 28, 2017)] [Notices] [Pages 61637-61638] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-28082] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82398; File No. SR-CBOE-2017-070] Self-Regulatory Organizations; Cboe Exchange, Inc.; Order Approving a Proposed Rule Change To Amend Rule 6.56 To Include Procedures for Multi-Leg Positions December 22, 2017. I. Introduction On November 3, 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 to amend Rule 6.56 (Compression Forums) to include procedures for multi-leg positions. The proposed rule change was published for comment in the Federal Register on November 22, 2017.\3\ The Commission did not receive any comment letters on the proposed rule change. This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 82102 (Nov. 16, 2017), 82 FR 55667 (Nov. 22, 2017) (``Notice''). --------------------------------------------------------------------------- II. Description of the Proposed Rule Change As described in more detail in the Notice,\4\ the Exchange proposes to amend its SPX Compression Forum procedures set forth in Cboe Rule 6.56, primarily to authorize the Exchange to include information on hypothetical multi-leg positions constructed from the single series voluntarily submitted by Trading Permit Holders (``TPHs''). Specifically, in addition to the information Cboe Options currently provides on single series interest, the Exchange now also will generate a list, using the individual series of SPX options submitted by TPHs, of all possible multi-leg positions based on the three option strategies specified in Rule 6.56--vertical call spreads, vertical put spreads, and box spreads.\5\ --------------------------------------------------------------------------- \4\ Id. \5\ Id. at 55667. The Exchange represents that its ``provision of the list does not constitute advice, guidance, a commitment to trade, an execution, or a recommendation to trade.'' See id. Furthermore, the Exchange notes that TPHs determine whether to submit compression-list positions, whether to participate in the compression forum, and whether to represent orders on the trading floor. --------------------------------------------------------------------------- In addition to listing hypothetical multi-leg positions with offsetting interest in the compression-list position file, the Exchange also will provide to each TPH that submitted compression-list positions, a new individualized multi-leg position file that includes: (a) A complete list of all possible combinations of offsetting multi- leg positions that are composed of series the individual TPH submitted as part of a compression-list position; (b) a unique identification number for each multi-leg position (``PID'') that would enable the TPH to identify particular multi-leg positions; (c) the series that make up the multi-leg position; and (d) the offsetting size of the multi-leg position against other TPHs on an individualized and anonymous basis.\6\ TPHs would be able to give the Exchange permission to share their identity with the contra-party for a particular multi-leg position, and vice-versa, provided that both parties have agreed to reveal their identities.\7\ --------------------------------------------------------------------------- \6\ Id. at 55671. \7\ Id. at 55673. The disclosure of the TPH's identity would be done on a multi-leg position by multi-leg position basis, as referenced by the PID. --------------------------------------------------------------------------- Finally, Exchange will extend the hours for submitting compression- list positions from 3:15pm to 4:30pm Chicago time.\8\ --------------------------------------------------------------------------- \8\ Id. at 55674. --------------------------------------------------------------------------- [[Page 61638]] III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act \9\ and the rules and regulations thereunder applicable to a national securities exchange.\10\ In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,\11\ 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 system, and, in general, to protect investors and the public interest and that the rules are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \9\ 15 U.S.C. 78f. \10\ 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). \11\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- 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 a national market system by providing TPHs with information that may encourage them to close positions in series of SPX options at the end of the month, which the Exchange has stated is intended to ``foster liquidity in the SPX options market in light of the bank regulatory capital requirements.'' \12\ The Commission notes the Exchange has represented that the proposed multi-leg compression-list position file provided by the Exchange is for informational purposes only and does not constitute advice, guidance, a commitment to trade, an execution, or a recommendation to trade, and that participation in the process by TPHs is entirely voluntary.\13\ TPHs who receive the individualized multi-leg positions and wish to enter into a trade may only do so by finding a counterparty on the trading floor and executing a trade thereon, and all transactions must be effected in accordance with applicable rules.\14\ Furthermore, all TPHs on the trading floor, whether or not they submitted compression-list positions, have the opportunity to respond to orders on the trading floor, including orders represented in compression forums. For the reasons noted above, the Commission believes that the proposal to amend Rule 6.56 to include the proposed procedures for multi-leg compression-list positions is consistent with the Act. --------------------------------------------------------------------------- \12\ See Notice, supra note 3, at 55674. The Exchange stated its belief that those capital requirements ``could potentially limit the amount of capital clearing TPHs can allocate to their clients' transactions, which in turn, may impact liquidity, particularly in the SPX market.'' Id. \13\ See Notice, supra note 3, at 55667. The list is not ranked or weighted and contains all potential multi-leg positions with offsetting interest. Accordingly, not all the multi-leg positions on the list would be possible to trade since one series may be used to construct multiple potential multi-leg positions. \14\ See Notice, supra note 3, at 55675. --------------------------------------------------------------------------- IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\15\ that the proposed rule change (SR-CBOE-2017-070) be, and hereby is, approved. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\16\ --------------------------------------------------------------------------- \16\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-28082 Filed 12-27-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 248 / Thursday, December 28, 2017 / Notices 61637
the Pilot Program.14 Accordingly, the Commission and any person, other than the proposed rule change. This order
Commission designates the proposed those that may be withheld from the approves the proposed rule change.
rule change as operative upon filing public in accordance with the
with the Commission.15 provisions of 5 U.S.C. 552, will be II. Description of the Proposed Rule
At any time within 60 days of the available for website viewing and Change
filing of the proposed rule change, the printing in the Commission’s Public As described in more detail in the
Commission summarily may Reference Room, 100 F Street NE, Notice,4 the Exchange proposes to
temporarily suspend such rule change if Washington, DC 20549, on official amend its SPX Compression Forum
it appears to the Commission that such business days between the hours of procedures set forth in Cboe Rule 6.56,
action is necessary or appropriate in the 10:00 a.m. and 3:00 p.m. Copies of the primarily to authorize the Exchange to
public interest, for the protection of filing also will be available for include information on hypothetical
investors, or otherwise in furtherance of inspection and copying at the principal multi-leg positions constructed from the
the purposes of the Act. If the office of the Exchange. All comments single series voluntarily submitted by
Commission takes such action, the received will be posted without change. Trading Permit Holders (‘‘TPHs’’).
Commission shall institute proceedings Persons submitting comments are Specifically, in addition to the
under Section 19(b)(2)(B) 16 of the Act to cautioned that we do not redact or edit information Cboe Options currently
determine whether the proposed rule personal identifying information from provides on single series interest, the
change should be approved or comment submissions. You should Exchange now also will generate a list,
disapproved. submit only information that you wish
using the individual series of SPX
to make available publicly. All
IV. Solicitation of Comments options submitted by TPHs, of all
submissions should refer to File
Interested persons are invited to possible multi-leg positions based on
Number SR–C2–2017–032 and should
submit written data, views, and the three option strategies specified in
be submitted on or before January 18,
arguments concerning the foregoing, Rule 6.56—vertical call spreads, vertical
2018.
including whether the proposed rule put spreads, and box spreads.5
For the Commission, by the Division of
change is consistent with the Act. Trading and Markets, pursuant to delegated In addition to listing hypothetical
Comments may be submitted by any of authority.17 multi-leg positions with offsetting
the following methods: Eduardo A. Aleman, interest in the compression-list position
file, the Exchange also will provide to
Electronic Comments Assistant Secretary.
each TPH that submitted compression-
[FR Doc. 2017–27996 Filed 12–27–17; 8:45 am]
• Use the Commission’s internet list positions, a new individualized
BILLING CODE 8011–01–P
comment form (http://www.sec.gov/ multi-leg position file that includes: (a)
rules/sro.shtml); or A complete list of all possible
• Send an email to rule-comments@ combinations of offsetting multi-leg
SECURITIES AND EXCHANGE
sec.gov. Please include File Number SR– positions that are composed of series the
COMMISSION
C2–2017–032 on the subject line. individual TPH submitted as part of a
Paper Comments compression-list position; (b) a unique
[Release No. 34–82398; File No. SR–CBOE– identification number for each multi-leg
• Send paper comments in triplicate 2017–070]
position (‘‘PID’’) that would enable the
to Secretary, Securities and Exchange TPH to identify particular multi-leg
Commission, 100 F Street NE, Self-Regulatory Organizations; Cboe
Exchange, Inc.; Order Approving a positions; (c) the series that make up the
Washington, DC 20549–1090. multi-leg position; and (d) the offsetting
Proposed Rule Change To Amend Rule
All submissions should refer to File 6.56 To Include Procedures for Multi- size of the multi-leg position against
Number SR–C2–2017–032. This file Leg Positions other TPHs on an individualized and
number should be included on the anonymous basis.6 TPHs would be able
subject line if email is used. To help the December 22, 2017. to give the Exchange permission to
Commission process and review your share their identity with the contra-
I. Introduction
comments more efficiently, please use party for a particular multi-leg position,
only one method. The Commission will On November 3, 2017, the Cboe and vice-versa, provided that both
post all comments on the Commission’s Exchange, Inc. (‘‘Exchange’’ or ‘‘Cboe parties have agreed to reveal their
internet website (http://www.sec.gov/ Options’’) filed with the Securities and identities.7
rules/sro.shtml). Copies of the Exchange Commission (‘‘Commission’’),
Finally, Exchange will extend the
submission, all subsequent pursuant to Section 19(b)(1) of the
hours for submitting compression-list
amendments, all written statements Securities Exchange Act of 1934
positions from 3:15pm to 4:30pm
with respect to the proposed rule (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
Chicago time.8
change that are filed with the proposed rule to amend Rule 6.56
Commission, and all written (Compression Forums) to include 4 Id.
communications relating to the procedures for multi-leg positions. The 5 Id. at 55667. The Exchange represents that its
proposed rule change between the proposed rule change was published for ‘‘provision of the list does not constitute advice,
comment in the Federal Register on guidance, a commitment to trade, an execution, or
14 See Securities Exchange Act Release No. 61061 November 22, 2017.3 The Commission a recommendation to trade.’’ See id. Furthermore,
sradovich on DSK3GMQ082PROD with NOTICES
(November 24, 2009), 74 FR 62857 (December 1, did not receive any comment letters on the Exchange notes that TPHs determine whether to
2009) (SR–NYSEArca–2009–44). See also supra submit compression-list positions, whether to
note 5. participate in the compression forum, and whether
15 For purposes only of waiving the operative 17 17 CFR 200.30–3(a)(12). to represent orders on the trading floor.
1 15 U.S.C. 78s(b)(1). 6 Id. at 55671.
delay for this proposal, the Commission has
considered the proposed rule’s impact on 2 17 CFR 240.19b–4. 7 Id. at 55673. The disclosure of the TPH’s
efficiency, competition, and capital formation. See 3 See Securities Exchange Act Release No. 82102 identity would be done on a multi-leg position by
15 U.S.C. 78c(f). (Nov. 16, 2017), 82 FR 55667 (Nov. 22, 2017) multi-leg position basis, as referenced by the PID.
16 15 U.S.C. 78s(b)(2)(B). (‘‘Notice’’). 8 Id. at 55674.
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![61638 Federal Register / Vol. 82, No. 248 / Thursday, December 28, 2017 / Notices
III. Discussion and Commission submitted compression-list positions, The text of the proposed rule change
Findings have the opportunity to respond to is available on the Exchange’s website at
After careful review, the Commission orders on the trading floor, including http://www.miaxoptions.com/rule-
finds that the proposed rule change is orders represented in compression filings, at MIAX’s principal office, and
consistent with the requirements of the forums. For the reasons noted above, the at the Commission’s Public Reference
Act 9 and the rules and regulations Commission believes that the proposal Room.
thereunder applicable to a national to amend Rule 6.56 to include the II. Self-Regulatory Organization’s
securities exchange.10 In particular, the proposed procedures for multi-leg Statement of the Purpose of, and
Commission finds that the proposed compression-list positions is consistent Statutory Basis for, the Proposed Rule
rule change is consistent with Section with the Act. Change
6(b)(5) of the Act,11 which requires, IV. Conclusion In its filing with the Commission, the
among other things, that the rules of a
It is therefore ordered, pursuant to Exchange included statements
national securities exchange be
Section 19(b)(2) of the Act,15 that the concerning the purpose of and basis for
designed to remove impediments to and
proposed rule change (SR–CBOE–2017– the proposed rule change and discussed
perfect the mechanism of a free and
070) be, and hereby is, approved. any comments it received on the
open market and a national market
proposed rule change. The text of these
system, and, in general, to protect For the Commission, by the Division of
statements may be examined at the
investors and the public interest and Trading and Markets, pursuant to delegated
authority.16 places specified in Item IV below. The
that the rules are not designed to permit
Exchange has prepared summaries, set
unfair discrimination between Eduardo A. Aleman,
forth in sections A, B, and C below, of
customers, issuers, brokers, or dealers. Assistant Secretary.
The Commission believes that the the most significant aspects of such
[FR Doc. 2017–28082 Filed 12–27–17; 8:45 am] statements.
proposed rule change is designed to BILLING CODE 8011–01–P
remove impediments to and perfect the A. Self-Regulatory Organization’s
mechanism of a free and open market Statement of the Purpose of, and
and a national market system by SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule
providing TPHs with information that COMMISSION Change
may encourage them to close positions
in series of SPX options at the end of the 1. Purpose
[Release No. 34–82394; File No. SR–MIAX–
month, which the Exchange has stated 2017–49] The Exchange proposes to amend
is intended to ‘‘foster liquidity in the Rule 612, Aggregate Risk Manager
SPX options market in light of the bank Self-Regulatory Organizations; Miami (ARM), and Rule 518, Complex Orders,
regulatory capital requirements.’’ 12 The International Securities Exchange LLC; to enhance the Aggregate Risk Manager
Commission notes the Exchange has Notice of Filing and Immediate (‘‘ARM’’) protections available to Market
represented that the proposed multi-leg Effectiveness of a Proposed Rule Makers 3 on the Exchange, for both
compression-list position file provided Change To Amend MIAX Options Rule simple and complex quotes.
by the Exchange is for informational 612, Aggregate Risk Manager (ARM) Specifically, the Exchange proposes to
purposes only and does not constitute and Rule 518, Complex Orders adopt a Market Maker single side
advice, guidance, a commitment to protection (‘‘SSP’’) feature, which is an
December 22, 2017.
trade, an execution, or a additional, optional, and more granular
recommendation to trade, and that Pursuant to the provisions of Section feature of the ARM protections that are
participation in the process by TPHs is 19(b)(1) of the Securities Exchange Act currently offered by the Exchange.
entirely voluntary.13 TPHs who receive of 1934 (‘‘Act’’) 1 and Rule 19b–4 Accordingly, the Exchange proposes to
the individualized multi-leg positions thereunder,2 notice is hereby given that modify: (i) Rule 612, Interpretations and
and wish to enter into a trade may only on December 15, 2017, Miami Policies .02, to adopt new subsection
do so by finding a counterparty on the International Securities Exchange, LLC (c), Market Maker Single Side
trading floor and executing a trade (‘‘MIAX Options’’ or ‘‘Exchange’’) filed Protection, as well as to make minor,
thereon, and all transactions must be with the Securities and Exchange non-substantive clarifications to
effected in accordance with applicable Commission (‘‘Commission’’) a subsections (a) and (b) for greater
rules.14 Furthermore, all TPHs on the proposed rule change as described in precision for simple quotes; and (ii)
trading floor, whether or not they Items I, II, and III below, which Items Rule 518, Interpretations and Policies
have been prepared by the Exchange. .05, to adopt new subsection (g), Market
9 15 U.S.C. 78f. The Commission is publishing this Maker Single Side Protection for
10 In approving this proposed rule change, the notice to solicit comments on the complex quotes.
Commission has considered the proposed rule’s proposed rule change from interested The Exchange currently offers a
impact on efficiency, competition, and capital persons.
formation. See 15 U.S.C. 78c(f). number of risk protection mechanisms
11 15 U.S.C. 78f(b)(5).
I. Self-Regulatory Organization’s to its Members in both the simple and
12 See Notice, supra note 3, at 55674. The
Statement of the Terms of Substance of complex markets. For Market Makers,
Exchange stated its belief that those capital an important risk protection mechanism
requirements ‘‘could potentially limit the amount of the Proposed Rule Change
capital clearing TPHs can allocate to their clients’ is the ARM. The purpose of the ARM is
The Exchange is filing a proposal to to remove the Market Maker from the
transactions, which in turn, may impact liquidity,
sradovich on DSK3GMQ082PROD with NOTICES
particularly in the SPX market.’’ Id. amend Rule 612, Aggregate Risk market, once certain pre-determined
13 See Notice, supra note 3, at 55667. The list is Manager (ARM), and Rule 518, Complex trading limit thresholds (set up in
not ranked or weighted and contains all potential Orders. advance by the Market Maker) have
multi-leg positions with offsetting interest.
Accordingly, not all the multi-leg positions on the
15 15 U.S.C. 78s(b)(2).
list would be possible to trade since one series may 3 The term ‘‘Market Makers’’ refers to ‘‘Lead
16 17 CFR 200.30–3(a)(12).
be used to construct multiple potential multi-leg Market Makers’’, ‘‘Primary Lead Market Makers’’
positions. 1 15 U.S.C. 78s(b)(1).
and ‘‘Registered Market Makers’’ collectively. See
14 See Notice, supra note 3, at 55675. 2 17 CFR 240.19b–4. Exchange Rule 100.
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Document Created: 2017-12-28 00:43:41
Document Modified: 2017-12-28 00:43:41
| 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 61637 |
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