82 FR 9267 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Amend CBOE Rule 6.53C
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 22 (February 3, 2017)
Federal Register Volume 82, Issue 22 (February 3, 2017)
| Page Range | 9267-9270 | |
| FR Document | 2017-02260 |
[Federal Register Volume 82, Number 22 (Friday, February 3, 2017)] [Notices] [Pages 9267-9270] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-02260] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79899; File No. SR-CBOE-2016-080] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Amend CBOE Rule 6.53C January 30, 2017. I. Introduction On November 17, 2016, Chicago Board Options Exchange, Incorporated (``CBOE'' or the ``Exchange'') 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 amend CBOE Rule 6.53C, Interpretation and Policy .10, to provide for the electronic trading of complex orders consisting of series authorized for trading on the Hybrid 3.0 Platform and series authorized for trading on the Hybrid Trading System (``Hybrid'' or ``Hybrid Trading System''). The proposed rule change was published for comment in the Federal Register on December 2, 2016.\3\ The Commission received no comment letters regarding the proposed rule change. On December 30, 2016, the Exchange filed Amendment No. 1 to the proposed rule change.\4\ On January 12, 2017, the Commission extended the time for Commission consideration of the proposal until March 2, 2017.\5\ This order provides notice of filing of Amendment No. 1 and approves the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 79406 (November 28, 2016), 81 FR 87102 (``Notice''). \4\ As discussed more fully below, Amendment No. 1 revises the proposal to describe the treatment of an SPX/SPXW order resting on the complex order book (``COB'') that becomes marketable against orders residing in the EBook for the individual legs of the order; indicate when an incoming SPX/SPXW order will be subject to a complex order auction (``COA''); indicate that non-customer SPX/SPXW orders that are marketable upon receipt will not be COA-eligible; describe the treatment of SPX/SPXW orders during extended trading hours; and indicate that CBOE will announce the implementation date of the proposal via Regulatory Circular at least seven days prior to the implementation date. To promote transparency of its proposed amendment, when CBOE filed Amendment No. 1 with the Commission, it also submitted Amendment No. 1 as a comment letter to the file, which the Commission posted on its Web site and placed in the public comment file for CBOE-2016-080 (available at https://www.sec.gov/comments/sr-cboe-2016-080/cboe2016080-1454634-130131.pdf). CBOE also posted a copy of its Amendment No. 1 on its Web site (http://www.cboe.com/framed/PDFframed.aspx?content=/publish/RuleFilingsSEC/SR-CBOE-2016-080.a1.pdf§ion=SEC_ABOUT_CBOE_BOD&title=Proposal+Regarding+Complex+Orders+Consisting+of+SPX+Options+Series+and+SPXW+Options+Series) when it filed Amendment No. 1 with the Commission. \5\ See Securities Exchange Act Release No. 79783 (January 12, 2017), 82 FR 6673 (January 19, 2017). --------------------------------------------------------------------------- II. Description of the Proposed Rule Change Currently, there are two trading platforms operating on CBOE's trade engine, CBOE Command: (i) Hybrid; and (ii) the Hybrid 3.0 Platform.\6\ For each Hybrid 3.0 class, CBOE may determine to authorize a group of series of the class for trading on Hybrid.\7\ CBOE may establish Hybrid trading parameters for such a group on a group basis to the extent that CBOE's rules otherwise allow CBOE to establish such trading parameters on a class basis.\8\ Currently, options on the Standard & Poor's 500 Index (``S&P 500''), trading under the symbol SPX, are the only Hybrid 3.0 Platform class.\9\ CBOE has authorized a group of series within the S&P 500 options class, trading under the symbol SPXW, to trade on Hybrid.\10\ The SPX options series, which trade on the Hybrid 3.0 Platform, are a.m.-settled contracts with standard third Friday expirations.\11\ The SPXW options series, which trade on Hybrid, are p.m.-settled contracts with non-standard expirations.\12\ --------------------------------------------------------------------------- \6\ See Notice, 81 FR at 87103. As described more fully in the Notice, CBOE introduced Hybrid, an electronic trading platform integrated with CBOE's floor-based open-outcry auction market, in 2003. See Securities Exchange Act Release No. 47959 (May 30, 2003), 68 FR 34441 (June 9, 2003) (order approving File No. SR CBOE-2002- 05). CBOE subsequently implemented an enhanced version of Hybrid, known as Hybrid 2.0, which allows remote quoting in option classes. See Securities Exchange Act Release No. 50003 (July 12, 2004), 69 FR 43028 (July 19, 2004) (order approving File No. SR-CBOE-2004-24). CBOE later implemented the Hybrid 3.0 Platform, a trading platform on Hybrid that allows one or more quoters to submit electronic quotes that represent the aggregate Market Maker quotation interest in a series for the trading crowd. See Securities Exchange Act Release No. 55874 (June 7, 2007), 72 FR 32688 (June 13, 2007) (order approving File No. SR-CBOE-2006-101). In 2008, CBOE removed the distinction between Hybrid and Hybrid 2.0 classes and deleted references to the Hybrid 2.0 platform because CBOE migrated all option classes, other than classes traded on the Hybrid 3.0 Platform, from Hybrid to Hybrid 2.0. See Securities Exchange Act Release No. 58153 (July 14, 2008), 73 FR 41386 (July 18, 2008) (notice of filing and immediate effectiveness of File No. SR-CBOE- 2008-067). Following the removal of the Hybrid 2.0 distinction, all options classes, other than those trading on the Hybrid 3.0 Platform, have been referred to as Hybrid classes trading on the Hybrid Trading System. \7\ See CBOE Rule 8.14, Interpretation and Policy .01. \8\ See CBOE Rule 8.14, Interpretation and Policy .01(c). \9\ See CBOE Rule 8.3(c)(iii). \10\ See Notice, 81 FR at 87103. \11\ See id. at 87103-87104. \12\ See id. at 87104. --------------------------------------------------------------------------- Currently, when CBOE receives a complex order consisting of both SPX and SPXW options series (an ``SPX/SPXW order'') during regular trading hours, the order is routed to a PAR workstation pursuant to CBOE Rule 6.12(a)(1) to provide an opportunity for the order to trade in open outcry.\13\ If CBOE receives an SPX/SPXW order during extended trading hours, the order is rejected back to the sender.\14\ CBOE handles SPX/SPXW orders in this manner because its system currently cannot accept complex orders consisting of series that trade on different trading platforms.\15\ CBOE is updating its system to accept SPX/SPXW orders so they will be able to trade with other SPX/SPXW orders electronically during regular trading hours and extended trading hours.\16\ As described in more detail below, the proposal amends CBOE's rules to specify the manner in which SPX/SPXW orders, and any other complex orders consisting of series that trade on Hybrid and on the Hybrid 3.0 Platform, will be executed electronically.\17\ --------------------------------------------------------------------------- \13\ See id. \14\ See id. See also CBOE Rule 6.1A(b) and RG15-013. \15\ See Notice, 81 FR at 87104. \16\ See id. \17\ Although the proposal focuses on SPX/SPXW orders, the proposed rules will apply to all complex orders consisting of series that trade on Hybrid and series that trade on the Hybrid 3.0 Platform. See Notice, 81 FR at 87104. See also CBOE Rule 6.53C, Interpretation and Policy .10. --------------------------------------------------------------------------- CBOE Rule 6.53C, Interpretation and Policy .10 provides rules governing the execution of complex orders in Hybrid 3.0 classes trading on the Hybrid 3.0 Platform. CBOE proposes to amend CBOE Rule 6.53C, Interpretation and Policy .10 to provide that if CBOE authorizes a group of series of a Hybrid 3.0 class for trading on Hybrid pursuant to CBOE Rule 8.14, Interpretation and Policy .01, CBOE Rule 6.53C, Interpretation and Policy .10 will apply to a complex order with at least one leg in a series from the group authorized for trading on the Hybrid 3.0 Platform, including if the order has another leg(s) [[Page 9268]] in a series from the group authorized for trading on Hybrid. In addition, CBOE proposes to amend CBOE Rule 6.53C, Interpretation and Policy .10(a) to indicate that a marketable complex order that consists solely of a group of series that is authorized for trading on the Hybrid 3.0 Platform will execute automatically against individual orders residing in the EBook, provided the complex order can be executed in full (or in a permissible ratio) by orders in the EBook and the orders in the EBook are priced equal to or better than the individual quotes residing in the EBook. A marketable complex order that consists of a group of series that is authorized for trading on the Hybrid 3.0 Platform and a group of series authorized for trading on Hybrid will not automatically execute against individual orders residing in the EBook.\18\ CBOE states that SPX/SPXW complex orders (unlike SPX complex orders) will not automatically execute against individual orders residing in the EBook because of system limitations that would be prohibitively expensive to modify.\19\ SPX/SPXW orders that are marketable against individual orders residing in the EBook instead will be routed to a PAR workstation during regular trading hours and rejected during extended trading hours, consistent with the existing treatment of SPX/SPXW orders.\20\ Except for this difference, SPX/SPXW orders will be executed in accordance with CBOE Rule 6.53C, Interpretation and Policy .10 in the same manner as complex orders consisting solely of series that are authorized for trading on the Hybrid 3.0 Platform, i.e., SPX complex orders.\21\ --------------------------------------------------------------------------- \18\ See CBOE Rule 6.53C, Interpretation and Policy .10(a). \19\ See Notice, 81 FR at 87104. \20\ See id. \21\ See id. --------------------------------------------------------------------------- CBOE states that SPX/SPXW orders will trade using a price-time matching algorithm.\22\ During regular trading hours, CBOE will handle SPX/SPXW orders in the following manner: --------------------------------------------------------------------------- \22\ See id. See also CBOE Rules 6.45B(a) (giving CBOE the ability to determine the matching algorithm) and Rule 8.14, Interpretation and Policy .01(c). ---------------------------------------------------------------------------SPX/SPXW orders with more than four legs will be routed for manual handling, consistent with the manner in which CBOE handles SPX complex orders.\23\ --------------------------------------------------------------------------- \23\ See Notice, 81 FR at 87104. The current number of legs permitted for complex orders for electronic processing is four. See CBOE Rule 6.53C(a)(1) (providing that complex orders with no more than the applicable number of legs as determined by the Exchange are eligible for processing). Pursuant to CBOE Rule 6.12(a)(1), orders initially routed for electronic processing that are not eligible for automatic execution or book entry will by default route to PAR or back to the Trading Permit Holder. --------------------------------------------------------------------------- SPX/SPXW orders for the accounts of non-customers \24\ will not be allowed to rest in the Complex Order Book (``COB''), but will instead be routed for manual handling, consistent with the manner in which CBOE handles SPX complex orders.\25\ SPX/SPXW orders from all other participants will be allowed to rest in the COB.\26\ --------------------------------------------------------------------------- \24\ CBOE notes that, in this context, ``non-customers'' would include CBOE market makers, non-CBOE market makers, and proprietary firms. See Amendment No. 1. \25\ See Notice, 81 FR at 87104. See also CBOE Rule 6.53C(c)(i) (allowing CBOE to determine which classes and order origin types are eligible for entry into the COB) and RG15-195. \26\ See id. --------------------------------------------------------------------------- SPX/SPXW orders for the accounts of customers and non- customers will be permitted to participate in the COB opening process and trade against SPX/SPXW orders resting in the COB, consistent with the manner in which CBOE handles SPX complex orders.\27\ --------------------------------------------------------------------------- \27\ See Notice, 81 FR at 87104. See also CBOE Rule 6.53C.11 and RG15-195. CBOE notes that, as with SPX complex orders, customers and non-customers submitting SPX/SPXW orders during extended trading hours may use the contingency OPG to book orders that will participate in the regular trading hours opening. Any portion of an SPX/SPXW order marked OPG that is not executed during the opening will be cancelled. In addition, customers may use a non-OPG contingency to allow their SPX/SPXW orders to remain on the COB after the opening. See Amendment No. 1. --------------------------------------------------------------------------- As discussed above, marketable SPX/SPXW orders will not be eligible to automatically execute against individual orders residing in the EBook for the legs of the order.\28\ CBOE notes that not allowing SPX/SPXW orders to automatically execute against individual orders residing in the EBook for the legs of the SPX/SPXW order effectively means that CBOE is not changing the manner in which CBOE treats these SPX/SPXW orders.\29\ --------------------------------------------------------------------------- \28\ See CBOE Rule 6.53C, Interpretation and Policy .10(a). \29\ See Notice, 81 FR at 87104. --------------------------------------------------------------------------- Marketable SPX/SPXW orders will be eligible to automatically execute against other SPX/SPXW orders resting in the COB, provided the execution is at a net price that has priority over the individual orders and quotes residing in the EBook, consistent with the manner in which CBOE handles SPX complex orders.\30\ --------------------------------------------------------------------------- \30\ See id. See also CBOE Rule 6.53C, Interpretation and Policy .10(b). --------------------------------------------------------------------------- Marketable SPX/SPXW orders will not be eligible to automatically execute against individual Market-Maker quotes resting in the EBook for the legs, consistent with the manner in which CBOE handles SPX complex orders.\31\ --------------------------------------------------------------------------- \31\ See CBOE Rule 6.53C.10 (providing that the Exchange may determine to not allow marketable complex orders entered into COB and/or COA to automatically execute against individual quotes residing in the EBook) and RG 12-025 (providing marketable SPX complex orders will not execute with individual quotes). --------------------------------------------------------------------------- SPX/SPXW orders resting in the COB that become marketable against Market-Maker quotes in the individual legs will be subject to a complex order auction (``COA''),\32\ consistent with the manner in which CBOE handles SPX complex orders.\33\ Such an order (or the remaining portion of such an order) that is not executed but is still marketable will be routed for manual handling, consistent with the manner in which CBOE handles SPX complex orders.\34\ --------------------------------------------------------------------------- \32\ See CBOE Rule 6.53C(d)(i)(1). \33\ See Notice, 81 FR at 87104. See also CBOE Rule 6.53C, Interpretation and Policy .10(d). \34\ See Notice, 81 FR at 87104-87105. See also CBOE Rule 6.53C, Interpretation and Policy .10(d). --------------------------------------------------------------------------- Pursuant to CBOE Rule 6.53C, Interpretation and Policy .10(e), CBOE will submit incoming customer SPX/SPXW orders to a COA if they are COA-eligible.\35\ Incoming non-customer SPX/SPXW orders that are marketable upon receipt will not be COA-eligible, and will instead route for manual handling.\36\ --------------------------------------------------------------------------- \35\ See Amendment No. 1. \36\ See id. --------------------------------------------------------------------------- During extended trading hours, SPX/SPXW orders for the accounts of customers and non-customers will be allowed to rest in the COB.\37\ Any customer or non-customer SPX/SPXW order resting in the COB during extended trading hours that becomes marketable will be subject to a COA, and any portion of the order that remains unexecuted at the conclusion of the COA will be returned to the order entry firm.\38\ During extended trading hours, an incoming customer SPX/SPXW order that is marketable upon receipt will be subject to a COA, and an incoming non-customer SPX/SPXW order that is marketable upon receipt will be cancelled.\39\ --------------------------------------------------------------------------- \37\ See Notice, 81 FR at 87105. See also RG15-013. \38\ See Amendment No. 1. \39\ See id. --------------------------------------------------------------------------- As with all products that trade during both regular trading hours and extended trading hours, no SPX/SPXW order on the COB at the end of regular trading hours will interact with or be transferred to the COB for extended trading hours, nor will an SPX/SPXW order on the COB at the end of extended trading hours interact with or be transferred to the COB.\40\ --------------------------------------------------------------------------- \40\ See id. --------------------------------------------------------------------------- CBOE will announce the implementation date of the proposal, [[Page 9269]] which will be within 120 days of the Commission's approval of the filing, via Regulatory Circular at leave seven days prior to the implementation date.\41\ The Regulatory Circular announcing the implementation date also will describe the changes made by the proposal.\42\ --------------------------------------------------------------------------- \41\ See id. \42\ See id. --------------------------------------------------------------------------- III. Discussion and Commission Findings After careful review of the proposed rule change, as modified by Amendment No. 1, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\43\ In particular, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with Section 6(b)(5) of the Act,\44\ which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, 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. --------------------------------------------------------------------------- \43\ 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). \44\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- Currently, complex orders consisting of one or more series that trade on Hybrid and one or more series that trade on the Hybrid 3.0 Platform must be executed in open outcry because CBOE's system cannot accept complex orders consisting of series that trade on different trading platforms.\45\ CBOE proposes to update its system to allow complex orders consisting of series that trade on Hybrid and series that trade on the Hybrid 3.0 Platform, including SPX/SPXW orders, to trade against other SPX/SPXW orders electronically during regular trading hours and extended trading hours, in addition to trading in open outcry. The Commission believes that providing for the electronic trading of complex orders consisting of series that trade on Hybrid and series that trade on the Hybrid 3.0 Platform could provide additional execution and price improvement opportunities for these complex orders. As discussed above, complex orders consisting of both Hybrid series and Hybrid 3.0 Platform series will be subject to the same trading rules as complex orders comprised solely of series that trade on the Hybrid 3.0 Platform (i.e., complex orders consisting solely of SPX series), except that complex orders consisting of series that trade on Hybrid and series that trade on the Hybrid 3.0 Platform will not be able to execute electronically against orders on the EBook for the individual legs of the complex order.\46\ Instead, a complex order that consists of series that trade on Hybrid and on the Hybrid 3.0 Platform that is marketable against orders on the EBook will be routed to a PAR workstation during regular trading hours or returned to the order entry firm during extended trading hours, consistent with the existing treatment of SPX/SPXW orders.\47\ The Commission notes that CBOE will announce the implementation date of the proposal via Regulatory Circular at least seven days prior to the implementation date.\48\ --------------------------------------------------------------------------- \45\ See Notice, 81 FR at 87104. If CBOE receives an SPX/SPXW order during extended trading hours, it rejects the order back to the sender. See id. See also CBOE Rule 6.1A(b) and RG15-013. \46\ See CBOE Rule 6.53C, Interpretation and Policy .10 and .10(a). \47\ See Notice, 81 FR at 87105. \48\ See Amendment No. 1. --------------------------------------------------------------------------- IV. Solicitation of Comments on Amendment No. 1 Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 1 to 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-CBOE-2016-080 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-2016-080. 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 Web site (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 Web site 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; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2016-080 and should be submitted on or before February 24, 2017. V. Accelerated Approval of the Proposed Rule Change, as Modified by Amendment No. 1 The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 1, prior to the 30th day after the date of publication of notice of the amended proposal in the Federal Register. Amendment No. 1 modifies the proposal to provide additional details regarding the operation of the proposed rules. In particular, Amendment No. 1 identifies ``non-customers'' for purposes of the proposal; indicates that an SPX/SPXW order resting in the COB that become marketable will be subject to a COA, including, during extended trading hours, a non-customer SPX/SPXW order; notes that non-customer SPX/SPXW orders that are marketable on receipt will not be COA- eligible, but instead will be routed for manual handling during regular trading hours and cancelled during extended trading hours; states that both customers and non-customers may submit SPX/SPXW orders with the contingency OPG to participate in the regular trading hours opening, and that customers may use a non-OPG contingency to allow their SPX/ SPXW orders to remain on the COB after the open; notes that no SPX/SPXW order on the COB at the end of regular trading hours will not interact with, or be transferred to, the COB for extended trading hours, nor will an SPX/SPXW order on the COB at the end of extended trading hours interact with, or be transferred to, the COB for regular trading hours; and states that CBOE will announce the implementation date of the proposal via Regulatory Circular at [[Page 9270]] least seven days prior to the implementation date, and that the Regulatory Circular announcing the implementation date will describe the changes made by the proposal. The Commission believes that Amendment No. 1 will benefit investors and other market participants by providing them with additional information concerning the handling of complex orders consisting of Hybrid and Hybrid 3.0 Platform series, including SPX/SPXW orders. Among other things, Amendment No. 1 identifies ``non-customers'' in the context of the proposal as CBOE market makers, non-CBOE market makers, and proprietary trading firms, and clarifies the treatment of non-customer SPX/SPXW orders during extended trading hours. The changes in Amendment No. 1 provide additional detail to the proposal and do not introduce material, new, or novel concepts. Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,\49\ to approve the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. --------------------------------------------------------------------------- \49\ 15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\50\ that the proposed rule change (SR-CBOE-2016-080), as modified by Amendment No. 1, is approved on an accelerated basis. --------------------------------------------------------------------------- \50\ See id. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\51\ --------------------------------------------------------------------------- \51\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-02260 Filed 2-2-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 22 / Friday, February 3, 2017 / Notices 9267
For the Commission, by the Division of Commission extended the time for Platform class.9 CBOE has authorized a
Trading and Markets, pursuant to delegated Commission consideration of the group of series within the S&P 500
authority.14 proposal until March 2, 2017.5 This options class, trading under the symbol
Eduardo A. Aleman, order provides notice of filing of SPXW, to trade on Hybrid.10 The SPX
Assistant Secretary. Amendment No. 1 and approves the options series, which trade on the
[FR Doc. 2017–02261 Filed 2–2–17; 8:45 am] proposed rule change, as modified by Hybrid 3.0 Platform, are a.m.-settled
BILLING CODE 8011–01–P Amendment No. 1, on an accelerated contracts with standard third Friday
basis. expirations.11 The SPXW options series,
which trade on Hybrid, are p.m.-settled
SECURITIES AND EXCHANGE II. Description of the Proposed Rule
contracts with non-standard
COMMISSION Change
expirations.12
Currently, there are two trading Currently, when CBOE receives a
[Release No. 34–79899; File No. SR–CBOE–
2016–080]
platforms operating on CBOE’s trade complex order consisting of both SPX
engine, CBOE Command: (i) Hybrid; and and SPXW options series (an ‘‘SPX/
Self-Regulatory Organizations; (ii) the Hybrid 3.0 Platform.6 For each SPXW order’’) during regular trading
Chicago Board Options Exchange, Hybrid 3.0 class, CBOE may determine hours, the order is routed to a PAR
Incorporated; Notice of Filing of to authorize a group of series of the class workstation pursuant to CBOE Rule
Amendment No. 1 and Order Granting for trading on Hybrid.7 CBOE may 6.12(a)(1) to provide an opportunity for
Accelerated Approval of a Proposed establish Hybrid trading parameters for the order to trade in open outcry.13 If
Rule Change, as Modified by such a group on a group basis to the CBOE receives an SPX/SPXW order
Amendment No. 1, To Amend CBOE extent that CBOE’s rules otherwise during extended trading hours, the
Rule 6.53C allow CBOE to establish such trading order is rejected back to the sender.14
parameters on a class basis.8 Currently, CBOE handles SPX/SPXW orders in this
January 30, 2017. options on the Standard & Poor’s 500 manner because its system currently
I. Introduction Index (‘‘S&P 500’’), trading under the cannot accept complex orders consisting
symbol SPX, are the only Hybrid 3.0 of series that trade on different trading
On November 17, 2016, Chicago
platforms.15 CBOE is updating its
Board Options Exchange, Incorporated a comment letter to the file, which the Commission system to accept SPX/SPXW orders so
(‘‘CBOE’’ or the ‘‘Exchange’’) filed with posted on its Web site and placed in the public
they will be able to trade with other
the Securities and Exchange comment file for CBOE–2016–080 (available at
https://www.sec.gov/comments/sr-cboe-2016-080/ SPX/SPXW orders electronically during
Commission (‘‘Commission’’), pursuant
cboe2016080-1454634-130131.pdf). CBOE also regular trading hours and extended
to Section 19(b)(1) of the Securities posted a copy of its Amendment No. 1 on its Web trading hours.16 As described in more
Exchange Act of 1934 (‘‘Act’’) 1 and Rule site (http://www.cboe.com/framed/
detail below, the proposal amends
19b–4 thereunder,2 a proposed rule PDFframed.aspx?content=/publish/RuleFilingsSEC/
SR-CBOE-2016-080.a1.pdf§ion=SEC_ABOUT_ CBOE’s rules to specify the manner in
change to amend CBOE Rule 6.53C,
CBOE_BOD&title=Proposal+Regarding+Complex+ which SPX/SPXW orders, and any other
Interpretation and Policy .10, to provide Orders+Consisting+of+SPX+Options+Series+and+ complex orders consisting of series that
for the electronic trading of complex SPXW+Options+Series) when it filed Amendment
trade on Hybrid and on the Hybrid 3.0
orders consisting of series authorized for No. 1 with the Commission.
5 See Securities Exchange Act Release No. 79783 Platform, will be executed
trading on the Hybrid 3.0 Platform and
(January 12, 2017), 82 FR 6673 (January 19, 2017). electronically.17
series authorized for trading on the 6 See Notice, 81 FR at 87103. As described more CBOE Rule 6.53C, Interpretation and
Hybrid Trading System (‘‘Hybrid’’ or fully in the Notice, CBOE introduced Hybrid, an Policy .10 provides rules governing the
‘‘Hybrid Trading System’’). The electronic trading platform integrated with CBOE’s execution of complex orders in Hybrid
proposed rule change was published for floor-based open-outcry auction market, in 2003.
See Securities Exchange Act Release No. 47959 3.0 classes trading on the Hybrid 3.0
comment in the Federal Register on (May 30, 2003), 68 FR 34441 (June 9, 2003) (order Platform. CBOE proposes to amend
December 2, 2016.3 The Commission approving File No. SR CBOE–2002–05). CBOE CBOE Rule 6.53C, Interpretation and
received no comment letters regarding subsequently implemented an enhanced version of Policy .10 to provide that if CBOE
the proposed rule change. On December Hybrid, known as Hybrid 2.0, which allows remote
quoting in option classes. See Securities Exchange authorizes a group of series of a Hybrid
30, 2016, the Exchange filed Act Release No. 50003 (July 12, 2004), 69 FR 43028 3.0 class for trading on Hybrid pursuant
Amendment No. 1 to the proposed rule (July 19, 2004) (order approving File No. SR–CBOE– to CBOE Rule 8.14, Interpretation and
change.4 On January 12, 2017, the 2004–24). CBOE later implemented the Hybrid 3.0 Policy .01, CBOE Rule 6.53C,
Platform, a trading platform on Hybrid that allows
14 17 one or more quoters to submit electronic quotes that Interpretation and Policy .10 will apply
CFR 200.30–3(a)(12).
1 15
represent the aggregate Market Maker quotation to a complex order with at least one leg
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
interest in a series for the trading crowd. See in a series from the group authorized for
Securities Exchange Act Release No. 55874 (June 7, trading on the Hybrid 3.0 Platform,
3 See Securities Exchange Act Release No. 79406
2007), 72 FR 32688 (June 13, 2007) (order approving
(November 28, 2016), 81 FR 87102 (‘‘Notice’’). File No. SR–CBOE–2006–101). In 2008, CBOE including if the order has another leg(s)
4 As discussed more fully below, Amendment No. removed the distinction between Hybrid and
1 revises the proposal to describe the treatment of Hybrid 2.0 classes and deleted references to the 9 See CBOE Rule 8.3(c)(iii).
an SPX/SPXW order resting on the complex order Hybrid 2.0 platform because CBOE migrated all 10 See Notice, 81 FR at 87103.
book (‘‘COB’’) that becomes marketable against option classes, other than classes traded on the 11 See id. at 87103–87104.
orders residing in the EBook for the individual legs Hybrid 3.0 Platform, from Hybrid to Hybrid 2.0. See 12 See id. at 87104.
of the order; indicate when an incoming SPX/SPXW Securities Exchange Act Release No. 58153 (July 14, 13 See id.
2008), 73 FR 41386 (July 18, 2008) (notice of filing
asabaliauskas on DSK3SPTVN1PROD with NOTICES
order will be subject to a complex order auction 14 See id. See also CBOE Rule 6.1A(b) and RG15–
(‘‘COA’’); indicate that non-customer SPX/SPXW and immediate effectiveness of File No. SR–CBOE–
orders that are marketable upon receipt will not be 2008–067). Following the removal of the Hybrid 2.0 013.
15 See Notice, 81 FR at 87104.
COA-eligible; describe the treatment of SPX/SPXW distinction, all options classes, other than those
orders during extended trading hours; and indicate trading on the Hybrid 3.0 Platform, have been 16 See id.
that CBOE will announce the implementation date referred to as Hybrid classes trading on the Hybrid 17 Although the proposal focuses on SPX/SPXW
of the proposal via Regulatory Circular at least Trading System. orders, the proposed rules will apply to all complex
7 See CBOE Rule 8.14, Interpretation and Policy
seven days prior to the implementation date. To orders consisting of series that trade on Hybrid and
promote transparency of its proposed amendment, .01. series that trade on the Hybrid 3.0 Platform. See
when CBOE filed Amendment No. 1 with the 8 See CBOE Rule 8.14, Interpretation and Policy Notice, 81 FR at 87104. See also CBOE Rule 6.53C,
Commission, it also submitted Amendment No. 1 as .01(c). Interpretation and Policy .10.
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![9270 Federal Register / Vol. 82, No. 22 / Friday, February 3, 2017 / Notices
least seven days prior to the Schedule 14A under the Securities Web site by searching for the file
implementation date, and that the Exchange Act of 1934, and Sections 6– number, or for an applicant using the
Regulatory Circular announcing the 07(2)(a), (b), and (c) of Regulation S–X Company name box, at http://
implementation date will describe the (‘‘Disclosure Requirements’’). The www.sec.gov/search/search.htm or by
changes made by the proposal. The requested exemption would permit an calling (202) 551–8090.
Commission believes that Amendment investment adviser to hire and replace Summary of the Application
No. 1 will benefit investors and other certain sub-advisers without
market participants by providing them shareholder approval and grant relief 1. The Adviser will serve as the
with additional information concerning from the Disclosure Requirements as investment adviser to each Subadvised
the handling of complex orders they relate to fees paid to the sub- Series pursuant to an investment
consisting of Hybrid and Hybrid 3.0 advisers. advisory agreement with the applicable
Platform series, including SPX/SPXW Trust (the ‘‘Advisory Agreement’’).2 The
orders. Among other things, APPLICANTS: Destra Investment Trust, Adviser will provide the Subadvised
Amendment No. 1 identifies ‘‘non- Destra Investment Trust II, and Destra Series with continuous and
customers’’ in the context of the Exchange-Traded Fund Trust (each, a comprehensive investment management
proposal as CBOE market makers, non- ‘‘Trust’’), Massachusetts business trusts services subject to the supervision of,
CBOE market makers, and proprietary registered under the Act as an open-end and policies established by, each
trading firms, and clarifies the treatment management investment company with Subadvised Series’ board of trustees
of non-customer SPX/SPXW orders multiple series,1 and Destra Capital (‘‘Board’’). The Advisory Agreement
during extended trading hours. The Advisors LLC (the ‘‘Initial Adviser’’), a permits the Adviser, subject to the
changes in Amendment No. 1 provide Delaware corporation registered as an approval of the Board, to delegate to one
additional detail to the proposal and do investment adviser under the or more sub-advisers (each, a ‘‘Sub-
not introduce material, new, or novel Investment Advisers Act of 1940. Adviser’’ and collectively, the ‘‘Sub-
concepts. Accordingly, the Commission FILING DATES: The application was filed
Advisers’’) the responsibility to provide
finds good cause, pursuant to Section on March 18, 2016, and amended on the day-to-day portfolio investment
19(b)(2) of the Act,49 to approve the July 18, 2016. management of each Subadvised Series,
proposed rule change, as modified by subject to the supervision and direction
HEARING OR NOTIFICATION OF HEARING:
Amendment No. 1, on an accelerated of the Adviser. The primary
basis. An order granting the application will responsibility for managing the
be issued unless the Commission orders Subadvised Series will remain vested in
VI. Conclusion a hearing. Interested persons may the Adviser. The Adviser will hire,
It is therefore ordered, pursuant to request a hearing by writing to the evaluate, allocate assets to and oversee
Section 19(b)(2) of the Act,50 that the Commission’s Secretary and serving the Sub-Advisers, including
proposed rule change (SR–CBOE–2016– applicants with a copy of the request, determining whether a Sub-Adviser
080), as modified by Amendment No. 1, personally or by mail. Hearing requests should be terminated, at all times
is approved on an accelerated basis. should be received by the Commission subject to the authority of the Board.
by 5:30 p.m. on February 24, 2017, and 2. Applicants request an exemption to
For the Commission, by the Division of
Trading and Markets, pursuant to delegated should be accompanied by proof of permit the Adviser, subject to Board
authority.51 service on the applicants, in the form of approval, to hire certain Sub-Advisers
Eduardo A. Aleman, an affidavit or, for lawyers, a certificate pursuant to Sub-Advisory Agreements
Assistant Secretary.
of service. Pursuant to rule 0–5 under and materially amend existing Sub-
the Act, hearing requests should state Advisory Agreements without obtaining
[FR Doc. 2017–02260 Filed 2–2–17; 8:45 am]
the nature of the writer’s interest, any the shareholder approval required under
BILLING CODE 8011–01–P
facts bearing upon the desirability of a section 15(a) of the Act and rule 18f-2
hearing on the matter, the reason for the under the Act.3 Applicants also seek an
SECURITIES AND EXCHANGE request, and the issues contested.
COMMISSION Persons who wish to be notified of a 2 Applicants request relief with respect to any
hearing may request notification by existing and any future series of the Trust and any
[Investment Company Act Release No. writing to the Commission’s Secretary. other registered open-end management company or
32458; File No. 812–14629] series thereof that: (a) Is advised by the Initial
ADDRESSES: Secretary, U.S. Securities Adviser or its successor or by a person controlling,
Destra Capital Advisors LLC, et al.; and Exchange Commission, 100 F Street controlled by, or under common control with the
NE., Washington, DC 20549–1090. Initial Adviser or its successor (each, an ‘‘Adviser’’);
Notice of Application (b) uses the manager of managers structure
Applicants: One North Wacker Drive, described in the application; and (c) complies with
January 30, 2017. 48th Floor, Chicago, IL 60606. the terms and conditions of the application (each,
AGENCY: Securities and Exchange FOR FURTHER INFORMATION CONTACT: a ‘‘Subadvised Series’’). For purposes of the
Commission (‘‘Commission’’). Jessica Shin, Attorney-Adviser, at (202) requested order, ‘‘successor’’ is limited to an entity
that results from a reorganization into another
ACTION: Notice of an application under 551–5921, or David J. Marcinkus, jurisdiction or a change in the type of business
section 6(c) of the Investment Company Branch Chief, at (202) 551–6821 organization. Subadvised Series may be operated as
Act of 1940 (‘‘Act’’) for an exemption (Division of Investment Management, a master-feeder structure pursuant to section
from section 15(a) of the Act and rule 12(d)(1)(E) of the Act. In such a structure, certain
Chief Counsel’s Office). series of the Trust (each, a ‘‘Feeder Fund’’) may
asabaliauskas on DSK3SPTVN1PROD with NOTICES
18f–2 under the Act, as well as from SUPPLEMENTARY INFORMATION: The invest substantially all of their assets in a
certain disclosure requirements in rule following is a summary of the Subadvised Series (a ‘‘Master Fund’’) pursuant to
20a–1 under the Act, Item 19(a)(3) of application. The complete application section 12(d)(1)(E) of the Act. No Feeder Fund will
Form N–1A, Items 22(c)(1)(ii), engage any sub-advisers other than through
may be obtained via the Commission’s approving the engagement of one or more of the
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Master Fund’s sub-advisers.
1 Prior to relying on the relief requested, Destra 3 The requested relief will not extend to any sub-
49 15 U.S.C. 78s(b)(2). Exchange-Traded Fund will be registered under the adviser that is an affiliated person, as defined in
50 See id.
Act as an open-end management investment section 2(a)(3) of the Act, of a Subadvised Series or
51 17 CFR 200.30–3(a)(12). company. the Adviser, other than by reason of serving as a
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Document Created: 2018-02-01 14:34:58
Document Modified: 2018-02-01 14:34:58
| 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 9267 |
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