83 FR 1639 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 6.13, CBOE Hybrid System Automatic Execution Feature
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 9 (January 12, 2018)
Federal Register Volume 83, Issue 9 (January 12, 2018)
| Page Range | 1639-1641 | |
| FR Document | 2018-00410 |
[Federal Register Volume 83, Number 9 (Friday, January 12, 2018)] [Notices] [Pages 1639-1641] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-00410] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82459; File No. SR-CBOE-2017-084] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 6.13, CBOE Hybrid System Automatic Execution Feature January 8, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on December 27, 2017, 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, II, and III 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. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The ``Exchange proposes to amend its rules related to stop orders. (Additions are in Italics; Deletions are [Bracketed]) * * * * * Cboe Exchange, Inc. Rules * * * * * Rule 6.13. [CBOE]Cboe Options Hybrid System Automatic Execution Feature (a) No change. (b) Automatic Execution: Orders eligible for automatic execution through the Cboe Options Hybrid System may be automatically executed in accordance [[Page 1640]] with the provisions of this Rule, Rule 6.13A or 6.14A, as applicable. This section governs automatic executions and split-price automatic executions. The allocation of orders or quotes that automatically execute through the Cboe Options Hybrid System is governed by Rule 6.45. (i)-(vi) No change. (vii) Stop and Stop-Limit Orders. The System cancels a buy (sell) stop or stop-limit order if the Exchange best bid (offer) at the time the System receives the order is equal to or above (below) the stop price. (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 proposed rule change amends Rule 6.13 to modify the automatic handling of stop and stop-limit orders. As defined in Rule 6.53(c), a stop order is a contingency order to buy or sell when the market for a particular option contract reaches a specified price on the Cboe Options floor. A stop order to buy becomes a market order when the option contract trades or is bid at or above the stop price on the Cboe Options floor. A stop order to sell becomes a market order when the option contract trades or is offered at or below the stop-limit price on the Cboe Options floor. A stop-limit order is a contingency order to buy or sell when the market for a particular option contract reaches a specified price. A stop order to buy becomes a limit order when the option contract trades or is bid at or above the stop-limit price. A stop-limit order to sell becomes a limit order when the option contract trades or is offered at or below the stop-limit price. The proposed rule change adds Rule 6.13(b)(vii), which states the System cancels a buy (sell) stop or stop-limit order if the Exchange best bid (offer) (``BBO'') at the time the System receives the order is equal to or above (below) the stop price. The purpose of a stop or stop-limit order is for it to become a market or limit order, respectively, after the price in a series reaches the stop price. Therefore, there is an implication the submitting Trading Permit Holder intends for the order to not become a market or limit order, respectively, until after an amount of time passes and the series price changes. If the BBO is above or below, as applicable, the stop price when the System receives a stop or stop-limit order, the order converts immediately to a market or limit order, respectively. This is inconsistent with the purpose of the order and the intentions of the submitting Trading Permit Holder. The Exchange believes if a Trading Permit Holder submitted an order at such a price, there is a strong possibility the order was submitted at that price as an error by the Trading Permit Holder. Pursuant to the proposed rule change, the System will reject a stop or stop-limit order that would otherwise immediately convert to a market or limit order, respectively, based on the BBO, which is consistent with the definitions and purposes of these orders. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.\5\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \6\ 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) \7\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \5\ 15 U.S.C. 78f(b). \6\ 15 U.S.C. 78f(b)(5). \7\ Id. --------------------------------------------------------------------------- In particular, the proposed rule change will protect investors and the public interest and maintain fair and orderly markets by mitigating potential risks associated with market participants entering stop and stop-limit orders at unintended prices, and risks associated with orders trading at prices that are potentially erroneous, which may likely have resulted from human or operational error. The proposed rule change is consistent with the definitions and purposes of stop and stop-limit orders. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange 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 rule change will apply in the same manner to all stop and stop-limit orders Trading Permit Holders submit to the Exchange and will help prevent potentially erroneous executions, which benefits all market participants. Because pursuant to the proposed rule change the System will reject stop and stop-limit orders it receives under certain conditions, the proposed rule change will only impact stop and stop-limit orders Trading Permit Holders submit to the Exchange, based on quotes on the Exchange, and thus will have no impact on intermarket competition. 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 designated this rule filing as non-controversial under Section 19(b)(3)(A) \8\ of the Act and Rule 19b-4(f)(6) \9\ thereunder. 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 [[Page 1641]] Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder. --------------------------------------------------------------------------- \8\ 15 U.S.C. 78s(b)(3)(A). \9\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- 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 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 CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-CBOE-2017-084 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2017-084. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2017-084 and should be submitted on or before February 2, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\10\ --------------------------------------------------------------------------- \10\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-00410 Filed 1-11-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 9 / Friday, January 12, 2018 / Notices 1639
change has made ISE more attractive or expirations that are provided by CBOE For the Commission, by the Division of
favorable. Finally, all options exchanges and Phlx? Trading and Markets, pursuant to delegated
are free to compete by listing and • What concerns do market authority.6
trading their own broad-based index participants have related to the Eduardo A. Aleman,
options with weekly or end of month proposed Nonstandard Expirations Pilot Assistant Secretary.
expirations. Program? If any, please be specific in [FR Doc. 2018–00409 Filed 1–11–18; 8:45 am]
describing your concerns. If any, will BILLING CODE 8011–01–P
C. Self-Regulatory Organization’s
the pilot data contemplated in this
Statement on Comments on the
notice allow the Commission to
Proposed Rule Change Received From SECURITIES AND EXCHANGE
examine whether the concerns are
Members, Participants, or Others COMMISSION
valid?
No written comments were either Comments may be submitted by any [Release No. 34–82459; File No. SR–CBOE–
solicited or received. of the following methods: 2017–084]
III. Date of Effectiveness of the Electronic Comments
Proposed Rule Change and Timing for Self-Regulatory Organizations; Cboe
• Use the Commission’s internet Exchange, Inc.; Notice of Filing and
Commission Action comment form (http://www.sec.gov/ Immediate Effectiveness of a Proposed
Within 45 days of the date of rules/sro.shtml); or Rule Change To Amend Rule 6.13,
publication of this notice in the Federal • Send an email to rule-comments@ CBOE Hybrid System Automatic
Register or within such longer period (i) sec.gov. Please include File Number SR– Execution Feature
as the Commission may designate up to ISE–2017–111 on the subject line.
90 days of such date if it finds such January 8, 2018.
Paper Comments Pursuant to Section 19(b)(1) of the
longer period to be appropriate and
publishes its reasons for so finding or • Send paper comments in triplicate Securities Exchange Act of 1934
(ii) as to which the Exchange consents, to Secretary, Securities and Exchange (‘‘Act’’),1 and Rule 19b–4 thereunder,2
the Commission shall: (a) By order Commission, 100 F Street NE, notice is hereby given that on December
approve or disapprove such proposed Washington, DC 20549–1090. 27, 2017, Cboe Exchange, Inc. (the
rule change, or (b) institute proceedings All submissions should refer to File ‘‘Exchange’’ or ‘‘Cboe Options’’) filed
to determine whether the proposed rule Number SR–ISE–2017–111. This file with the Securities and Exchange
change should be disapproved. number should be included on the Commission (the ‘‘Commission’’) the
subject line if email is used. To help the proposed rule change as described in
IV. Solicitation of Comments Items I, II, and III below, which Items
Commission process and review your
Interested persons are invited to comments more efficiently, please use have been prepared by the Exchange.
submit written data, views, and only one method. The Commission will The Exchange filed the proposal as a
arguments concerning the foregoing, post all comments on the Commission’s ‘‘non-controversial’’ proposed rule
including whether the proposed rule internet website (http://www.sec.gov/ change pursuant to Section
change is consistent with the Act. In rules/sro.shtml). Copies of the 19(b)(3)(A)(iii) of the Act 3 and Rule
particular, the Commission solicits submission, all subsequent 19b–4(f)(6) thereunder.4 The
comment on the following: amendments, all written statements Commission is publishing this notice to
• Will the pilot data contemplated in with respect to the proposed rule solicit comments on the proposed rule
this notice allow the Commission to change that are filed with the change from interested persons.
determine whether the weekly and Commission, and all written I. Self-Regulatory Organization’s
monthly PM-settled options proposed in communications relating to the Statement of the Terms of Substance of
this filing have adverse effects on proposed rule change between the the Proposed Rule Change
market volatility and the operation of Commission and any person, other than
fair and orderly markets in the those that may be withheld from the The ‘‘Exchange proposes to amend its
underlying cash market? public in accordance with the rules related to stop orders.
• Will the pilot data contemplated in provisions of 5 U.S.C. 552, will be (Additions are in Italics; Deletions are
this notice allow the Commission to available for website viewing and [Bracketed])
determine whether the weekly and printing in the Commission’s Public
* * * * *
monthly PM-settled options proposed in Reference Room, 100 F Street NE,
this filing have adverse effects on Washington, DC 20549, on official Cboe Exchange, Inc.
liquidity, volume, open interest, trading business days between the hours of Rules
patterns, and volatility in other option 10:00 a.m. and 3:00 p.m. Copies of the
contracts with standard expirations? filing also will be available for * * * * *
• Will the pilot data contemplated in inspection and copying at the principal Rule 6.13. [CBOE]Cboe Options Hybrid
this notice allow the Commission to office of the Exchange. All comments System Automatic Execution Feature
determine whether the weekly and received will be posted without change.
monthly PM-settled options proposed in Persons submitting comments are (a) No change.
cautioned that we do not redact or edit (b) Automatic Execution: Orders
this filing have adverse effects on index
personal identifying information from eligible for automatic execution through
price volatility?
sradovich on DSK3GMQ082PROD with NOTICES
the Cboe Options Hybrid System may be
• Will the weekly and monthly PM- comment submissions. You should
submit only information that you wish automatically executed in accordance
settled options proposed in this filing
affect the market for options contracts to make available publicly. All 6 17 CFR 200.30–3(a)(12).
with nonstandard expirations offered by submissions should refer to File 1 15 U.S.C. 78s(b)(1).
CBOE and Phlx? If so, how? In addition, Number SR–ISE–2017–111, and should 2 17 CFR 240.19b–4.
how would this proposal affect the data be submitted on or before February 2, 3 15 U.S.C. 78s(b)(3)(A)(iii).
and information related to nonstandard 2018. 4 17 CFR 240.19b–4(f)(6).
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![Federal Register / Vol. 83, No. 9 / Friday, January 12, 2018 / Notices 1641
Commission may designate, it has inspection and copying at the principal and at the Commission’s Public
become effective pursuant to Section office of the Exchange. All comments Reference Room.
19(b)(3)(A) of the Act and Rule 19b– received will be posted without change.
II. Self-Regulatory Organization’s
4(f)(6) thereunder. Persons submitting comments are
At any time within 60 days of the Statement of the Purpose of, and
cautioned that we do not redact or edit
filing of the proposed rule change, the personal identifying information from Statutory Basis for, the Proposed Rule
Commission summarily may comment submissions. You should Change
temporarily suspend such rule change if submit only information that you wish In its filing with the Commission, the
it appears to the Commission that such to make available publicly. All Exchange included statements
action is necessary or appropriate in the submissions should refer to File concerning the purpose of and basis for
public interest, for the protection of Number SR–CBOE–2017–084 and the proposed rule change and discussed
investors, or otherwise in furtherance of should be submitted on or before any comments it received on the
the purposes of the Act. If the February 2, 2018. proposed rule change. The text of these
Commission takes such action, the For the Commission, by the Division of statements may be examined at the
Commission shall institute proceedings Trading and Markets, pursuant to delegated places specified in Item IV below. The
to determine whether the proposed rule authority.10 Exchange has prepared summaries, set
change should be approved or Eduardo A. Aleman, forth in sections A, B, and C below, of
disapproved. Assistant Secretary. the most significant aspects of such
IV. Solicitation of Comments [FR Doc. 2018–00410 Filed 1–11–18; 8:45 am] statements.
Interested persons are invited to BILLING CODE 8011–01–P A. Self-Regulatory Organization’s
submit written data, views, and Statement of the Purpose of, and
arguments concerning the foregoing, Statutory Basis for, the Proposed Rule
SECURITIES AND EXCHANGE Change
including whether the proposed rule
COMMISSION
change is consistent with the Act. 1. Purpose
Comments may be submitted by any of [Release No. 34–82461; File No. SR–CBOE–
the following methods: 2017–083] The Exchange proposes to amend its
Fees Schedule. Footnotes 24 and 25
Electronic Comments Self-Regulatory Organizations; Cboe describe the Market-Maker Trading
• Use the Commission’s internet Exchange, Inc.; Notice of Filing and Permit Sliding Scale and Floor Broker
comment form (http://www.sec.gov/ Immediate Effectiveness of a Proposed Trading Permit Sliding Scale programs,
rules/sro.shtml); or Rule Change To Amend the Fees respectively.3 Each program requires a
• Send an email to rule-comments@ Schedule Trading Permit Holder to commit in
sec.gov. Please include File Number SR– January 8, 2018.
advance to a specific tier that includes
CBOE–2017–084 on the subject line. a minimum number of eligible Market-
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the Maker Trading Permits or Floor Broker
Paper Comments
‘‘Act’’),1 and Rule 19b–4 thereunder,2 Trading Permits, as applicable, for each
• Send paper comments in triplicate calendar. To do so, a Trading Permit
to Brent J. Fields, Secretary, Securities notice is hereby given that on December
26, 2017, Cboe Exchange, Inc. (the Holder must notify the Registration
and Exchange Commission, 100 F Street Services Department by December 25th
NE, Washington, DC 20549–1090. ‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange (or the preceding business day if the
All submissions should refer to File 25th is not a business day) of the year
Commission (the ‘‘Commission’’) the
Number SR–CBOE–2017–084. This file prior to each year in which the Trading
proposed rule change as described in
number should be included on the Permit Holder would like to commit to
Items I, II, and III below, which Items
subject line if email is used. To help the the sliding scale of the tier of eligible
have been prepared by the Exchange.
Commission process and review your Trading Permits committed to by that
The Commission is publishing this
comments more efficiently, please use Trading Permit Holder for that year.
notice to solicit comments on the
only one method. The Commission will Generally, the Exchange issues a
proposed rule change from interested
post all comments on the Commission’s Regulatory Circular to remind Trading
persons.
internet website (http://www.sec.gov/ Permit Holders of this notification
rules/sro.shtml). Copies of the I. Self-Regulatory Organization’s deadline, including a description of
submission, all subsequent Statement of the Terms of Substance of how Trading Permit Holders should
amendments, all written statements the Proposed Rule Change notify the Registration Services
with respect to the proposed rule The Exchange proposes to amend its Department. However, for the 2018
change that are filed with the Fees Schedule. Footnotes 24 and 25 sliding scale program, the Exchange was
Commission, and all written describe the Market-Maker Trading unable to issue a reminder until
communications relating to the Permit Sliding Scale and Floor Broker December 22, 2017, which is the
proposed rule change between the Trading Permit Sliding Scale programs, business day prior to December 25,
Commission and any person, other than respectively. 2017, and thus the notification deadline.
those that may be withheld from the The text of the proposed rule change To ensure Trading Permit Holders have
public in accordance with the is also available on the Exchange’s sufficient time to provide notification to
provisions of 5 U.S.C. 552, will be
sradovich on DSK3GMQ082PROD with NOTICES
website (http://www.cboe.com/ the Exchange regarding their tier
available for website viewing and AboutCBOE/ commitments for 2018, the Exchange
printing in the Commission’s Public CBOELegalRegulatoryHome.aspx), at
Reference Room, 100 F Street NE, the Exchange’s Office of the Secretary, 3 This filing was originally submitted on
Washington, DC 20549, on official December 26, 2017 as SR–CBOE–2017–081. SR–
CBOE–2017–081 was withdrawn on December 26,
business days between the hours of 10 17 CFR 200.30–3(a)(12). 2017 and replaced by SR–CBOE–2017–082. SR–
10:00 a.m. and 3:00 p.m. Copies of the 1 15 U.S.C. 78s(b)(1). CBOE–2017–082 was withdrawn on December 26,
filing also will be available for 2 17 CFR 240.19b–4. 2017 and replaced by this filing.
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Document Created: 2018-10-26 09:50:25
Document Modified: 2018-10-26 09:50:25
| 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 | 83 FR 1639 |
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