83 FR 12234 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 6.56, Compression Forums

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 54 (March 20, 2018)

[Federal Register Volume 83, Number 54 (Tuesday, March 20, 2018)]
[Notices]
[Pages 12234-12236]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-05564]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82875; File No. SR-CBOE-2018-022]


 Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 
6.56, Compression Forums

March 14, 2018.
    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 March 8, 2018, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe 
Options'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Exchange 
filed the proposal as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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)(iii).
    \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 proposes to amend Rule 6.56. The text of the proposed 
rule change is provided below.

(additions are italicized; deletions are [bracketed])

* * * * *

Cboe Exchange, Inc. Rules

* * * * *

Rule 6.56. Compression Forums

    (a) Procedure.
    (1) Prior to 4:30 p.m. Chicago time on the second to last business 
day of each calendar week; the second, third, and fourth to last 
business day of each calendar month; and the second, third, fourth, 
fifth, and sixth to last business day of each calendar quarter, in a 
manner and format determined by the Exchange, a Trading Permit Holder 
may provide the Exchange with a list of open SPX options positions that 
it would like to close through the compression forum for that calendar 
month (``compression-list positions''). Trading Permit Holders may also 
permit their Clearing Trading Permit Holders or the Clearing 
Corporation to submit a list of these positions to the Exchange on 
their behalf.
    (2) Prior to the open of Regular Trading Hours on the last business 
day of each calendar week; each of the last three business days of each 
calendar month; and each of the last five business days of each 
calendar quarter, [second to last business day, and third to last 
business day of each calendar month,] the Exchange will make available 
to all Trading Permit Holders a list including the size of the 
offsetting compression-list positions (including all possible 
combinations of offsetting multi-leg positions) in each series (and 
multi-leg position) for which both long and short compression-list 
positions have been submitted to the Exchange (``compression-list 
positions file'').
    (3)-(5) No change.
    (6) The Exchange will make available an open outcry ``compression 
forum'' in which all Trading Permit Holders may participate on the last 
business day of each calendar week, each of the last three business 
days of every calendar month, and each of the last five business days 
of every calendar quarter, at a location on the trading floor 
determined by the Exchange. The compression forum will be held for four 
(4) hours during Regular Trading Hours on the last business day of each 
calendar week, each of the last three business days of every calendar 
month, and each of the last five business days of every calendar 
quarter, unless [or three (3) hours if] any of those days is an 
abbreviated trading day, as[t times] determined by the Exchange, in 
which case the compression forum will be held for three (3) hours.
    (b)-(c) (No change).
* * * * *
    The text of the proposed rule change is also available on the 
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, 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 aspects 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 rule 6.56 (Compression Forums) to 
increase the number of compression forums that are held on the 
Exchange.
    Currently, compression forums are held on each of the last three 
business days of every calendar month.\5\ In addition to holding 
compression forums on each of the last three business days of every 
calendar month, the Exchange seeks to hold compression forums on the 
last business day of every calendar week and each of the last five 
business days of every calendar quarter. In order to increase the 
frequency of compression forums the Exchange also proposes to increase 
the frequency with which TPHs submit compression-list positions to the 
Exchange and the frequency with which the Exchange generates the 
compression-list positions file. The Exchange notes that it is not 
proposing any modification to the type of information TPHs submit to 
the Exchange pursuant to Rule 6.56 nor modifying the manner by which 
the Exchange generates files and information pursuant to Rule 6.56. 
Rather, the Exchange is simply increasing the frequency with which TPHs 
may submit compression-list positions, the frequency with which the 
Exchange generates the compression-list positions file, and the number 
of compression forums that will be held on the Exchange. The Exchange 
believes that more frequent compression forums will further encourage 
the closing of positions, which, once closed, may serve to alleviate 
the capital requirement constraints on TPHs and improve overall market 
liquidity by freeing capital currently tied up in certain SPX 
positions.
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    \5\ See Rule 6.56(a)(6).
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    The Exchange proposes to implement this rule change on March 22, 
2018, in order to allow a compression forum to be held on March 23rd 
and each of the last five business days of March.

[[Page 12235]]

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\6\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \7\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and 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. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \8\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ Id.
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    In particular, the proposed rule change will increase the number of 
compression forums that are held and thereby further encourage the 
closing of positions, which, in general, helps to protect investors and 
the public interest because closing positions via the compression 
process serves to alleviate the adverse impact of bank capital 
requirements.

B. Self-Regulatory Organization's Statement on Burden on Competition

    Cboe Options does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed change would 
encourage the closing of positions, which, once closed, may serve to 
alleviate the capital requirement constraints on TPHs and improve 
overall market liquidity by freeing capital currently tied up in 
certain SPX positions. The Exchange does not believe that the proposed 
rule changes will impose any burden on intermarket competition that is 
not necessary or appropriate in furtherance of the purposes of the Act 
because the proposed rule change applies only to the trading of SPX 
options, which are exclusively-listed on Cboe Options. To the extent 
that the proposed changes make the Exchange a more attractive 
marketplace for market participants at other exchanges, such market 
participants are eligible to participant through Cboe Options TPHs. 
Furthermore, participation in compression forums is completely 
voluntary and open to all TPHs.

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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
Because the 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, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) \12\ thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of 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) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative on March 22, 2018 to allow for the 
compression forum to be held on March 23, 2018, in addition to each of 
the last five business days of March as the calendar quarter ends. The 
Commission notes that the proposal is not modifying the information 
that TPHs submit or the information that the Exchange prepares, but 
rather adds a few additional days on which compression forums will be 
held and correspondingly increases as the number of opportunities for 
TPHs to submit positions and receive compression lists from the 
Exchange in connection with those compression forums. Therefore, the 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the 30-day operative delay 
and designates the proposal operative on March 22, 2018.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waving the 30-day operative delay, the 
Commission has considered the purposed 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 will institute proceedings to 
determine whether the proposed rule change 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-CBOE-2018-022 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-2018-022. 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

[[Page 12236]]

amendments, all written statements with respect to the proposed rule 
change that are filed with the Commission, and all written 
communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for website viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE, Washington, DC 20549 on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
the filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change. Persons submitting comments are cautioned that we do 
not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
CBOE-2018-022 and should be submitted on or before April 10, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-05564 Filed 3-19-18; 8:45 am]
 BILLING CODE 8011-01-P