83 FR 1643 - Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 6.12, Order and Quote Execution and Priority
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 9 (January 12, 2018)
Federal Register Volume 83, Issue 9 (January 12, 2018)
| Page Range | 1643-1644 | |
| FR Document | 2018-00408 |
[Federal Register Volume 83, Number 9 (Friday, January 12, 2018)] [Notices] [Pages 1643-1644] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-00408] [[Page 1643]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82457; File No. SR-C2-2017-033] Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 6.12, Order and Quote Execution and Priority 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 C2 Exchange, Inc. (the ``Exchange'' or ``C2'') 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 C2 Exchange, Inc. Rules * * * * * Rule 6.12. Order and Quote Execution and Priority System orders and quotes shall be executed consistent with the following provisions: (a)-(h) No change. (i) 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. * * * * * 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 6.12 to modify the automatic handling of stop and stop-limit orders. As defined in Rule 6.10(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 Exchange. 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 Exchange. 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 Exchange. A stop- limit order is a contingency order to buy or sell when the market for a particular option contract reaches a specified price on the Exchange. A stop order to buy becomes a limit order when the option contract trades or is bid at or above the stop-limit price on the Exchange. 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 on the Exchange. The proposed rule change adds Rule 6.12(i), 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. [[Page 1644]] 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 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-C2-2017-033 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-C2-2017-033. 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-C2-2017-033 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. 2018-00408 Filed 1-11-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 9 / Friday, January 12, 2018 / Notices 1643
SECURITIES AND EXCHANGE the Secretary, and at the Commission’s when the System receives a stop or stop-
COMMISSION Public Reference Room. limit order, the order converts
immediately to a market or limit order,
[Release No. 34–82457; File No. SR–C2– II. Self-Regulatory Organization’s
2017–033] Statement of the Purpose of, and respectively. This is inconsistent with
Statutory Basis for, the Proposed Rule the purpose of the order and the
Self-Regulatory Organizations; Cboe Change intentions of the submitting Trading
C2 Exchange, Inc.; Notice of Filing and Permit Holder. The Exchange believes if
Immediate Effectiveness of a Proposed In its filing with the Commission, the a Trading Permit Holder submitted an
Rule Change to Rule 6.12, Order and Exchange included statements order at such a price, there is a strong
Quote Execution and Priority concerning the purpose of and basis for possibility the order was submitted at
the proposed rule change and discussed that price as an error by the Trading
January 8, 2018. any comments it received on the Permit Holder. Pursuant to the proposed
Pursuant to Section 19(b)(1) of the proposed rule change. The text of these rule change, the System will reject a
Securities Exchange Act of 1934 statements may be examined at the stop or stop-limit order that would
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 places specified in Item IV below. The otherwise immediately convert to a
notice is hereby given that on December Exchange has prepared summaries, set market or limit order, respectively,
27, 2017, Cboe C2 Exchange, Inc. (the forth in sections A, B, and C below, of based on the BBO, which is consistent
‘‘Exchange’’ or ‘‘C2’’) filed with the the most significant aspects of such with the definitions and purposes of
Securities and Exchange Commission statements. these orders.
(the ‘‘Commission’’) the proposed rule
A. Self-Regulatory Organization’s
change as described in Items I, II, and 2. Statutory Basis
Statement of the Purpose of, and
III below, which Items have been
Statutory Basis for, the Proposed Rule The Exchange believes the proposed
prepared by the Exchange. The
Change rule change is consistent with the Act
Exchange filed the proposal as a ‘‘non-
controversial’’ proposed rule change 1. Purpose and the rules and regulations
pursuant to Section 19(b)(3)(A)(iii) of thereunder applicable to the Exchange
The proposed rule change amends and, in particular, the requirements of
the Act 3 and Rule 19b–4(f)(6) Rule 6.12 to modify the automatic
thereunder.4 The Commission is Section 6(b) of the Act.5 Specifically,
handling of stop and stop-limit orders. the Exchange believes the proposed rule
publishing this notice to solicit As defined in Rule 6.10(c), a stop order
comments on the proposed rule change change is consistent with the Section
is a contingency order to buy or sell 6(b)(5) 6 requirements that the rules of
from interested persons. when the market for a particular option an exchange be designed to prevent
I. Self-Regulatory Organization’s contract reaches a specified price on the
fraudulent and manipulative acts and
Statement of the Terms of Substance of Exchange. A stop order to buy becomes
practices, to promote just and equitable
the Proposed Rule Change a market order when the option contract
principles of trade, to foster cooperation
The Exchange proposes to amend its trades or is bid at or above the stop price
and coordination with persons engaged
rules related to stop orders. on the Exchange. A stop order to sell
in regulating, clearing, settling,
becomes a market order when the
(additions are in italics; deletions are processing information with respect to,
option contract trades or is offered at or
[bracketed]) and facilitating transactions in
below the stop-limit price on the
securities, to remove impediments to
* * * * * Exchange. A stop-limit order is a
and perfect the mechanism of a free and
contingency order to buy or sell when
Cboe C2 Exchange, Inc. open market and a national market
the market for a particular option
contract reaches a specified price on the system, and, in general, to protect
Rules investors and the public interest.
Exchange. A stop order to buy becomes
* * * * * a limit order when the option contract Additionally, the Exchange believes the
trades or is bid at or above the stop-limit proposed rule change is consistent with
Rule 6.12. Order and Quote Execution
price on the Exchange. A stop-limit the Section 6(b)(5) 7 requirement that
and Priority
order to sell becomes a limit order when the rules of an exchange not be designed
System orders and quotes shall be to permit unfair discrimination between
executed consistent with the following the option contract trades or is offered
at or below the stop-limit price on the customers, issuers, brokers, or dealers.
provisions:
(a)–(h) No change. Exchange. In particular, the proposed rule
(i) Stop and Stop-Limit Orders. The The proposed rule change adds Rule change will protect investors and the
System cancels a buy (sell) stop or stop- 6.12(i), which states the System cancels public interest and maintain fair and
limit order if the Exchange best bid a buy (sell) stop or stop-limit order if the orderly markets by mitigating potential
(offer) at the time the System receives Exchange best bid (offer) (‘‘BBO’’) at the risks associated with market
the order is equal to or above (below) time the System receives the order is participants entering stop and stop-limit
the stop price. equal to or above (below) the stop price. orders at unintended prices, and risks
* * * * * The purpose of a stop or stop-limit order associated with orders trading at prices
The text of the proposed rule change is for it to become a market or limit that are potentially erroneous, which
is also available on the Exchange’s order, respectively, after the price in a may likely have resulted from human or
series reaches the stop price. Therefore,
sradovich on DSK3GMQ082PROD with NOTICES
website (http://www.cboe.com/ operational error. The proposed rule
AboutCBOE/CBOELegalRegulatory there is an implication the submitting change is consistent with the definitions
Home.aspx), at the Exchange’s Office of Trading Permit Holder intends for the and purposes of stop and stop-limit
order to not become a market or limit orders.
1 15 U.S.C. 78s(b)(1). order, respectively, until after an
2 17 CFR 240.19b–4. amount of time passes and the series 5 15 U.S.C. 78f(b).
3 15 U.S.C. 78s(b)(3)(A)(iii). price changes. If the BBO is above or 6 15 U.S.C. 78f(b)(5).
4 17 CFR 240.19b–4(f)(6). below, as applicable, the stop price 7 Id.
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![1644 Federal Register / Vol. 83, No. 9 / Friday, January 12, 2018 / Notices
B. Self-Regulatory Organization’s IV. Solicitation of Comments For the Commission, by the Division of
Statement on Burden on Competition Trading and Markets, pursuant to delegated
Interested persons are invited to authority.10
The Exchange does not believe that submit written data, views, and Eduardo A. Aleman,
the proposed rule change will impose arguments concerning the foregoing, Assistant Secretary.
any burden on competition that is not including whether the proposed rule [FR Doc. 2018–00408 Filed 1–11–18; 8:45 am]
necessary or appropriate in furtherance change is consistent with the Act. BILLING CODE 8011–01–P
of the purposes of the Act. The Comments may be submitted by any of
proposed rule change will apply in the the following methods:
same manner to all stop and stop-limit SECURITIES AND EXCHANGE
orders Trading Permit Holders submit to Electronic Comments COMMISSION
the Exchange and will help prevent • Use the Commission’s internet [Investment Company Act Release No.
potentially erroneous executions, which
comment form (http://www.sec.gov/ 32965; File No. 812–14784]
benefits all market participants. Because
rules/sro.shtml); or
pursuant to the proposed rule change Harbor Funds and Harbor Capital
the System will reject stop and stop- • Send an email to rule-comments@ Advisors, Inc.
limit orders it receives under certain sec.gov. Please include File Number SR–
conditions, the proposed rule change C2–2017–033 on the subject line. January 9, 2018.
will only impact stop and stop-limit AGENCY: Securities and Exchange
Paper Comments Commission (‘‘Commission’’).
orders Trading Permit Holders submit to
the Exchange, based on quotes on the • Send paper comments in triplicate ACTION: Notice.
Exchange, and thus will have no impact to Brent J. Fields, Secretary, Securities
on intermarket competition. Notice of an application for an order
and Exchange Commission, 100 F Street
pursuant to: (a) Section 6(c) of the
C. Self-Regulatory Organization’s NE, Washington, DC 20549–1090.
Investment Company Act of 1940
Statement on Comments on the All submissions should refer to File (‘‘Act’’) granting an exemption from
Proposed Rule Change Received From Number SR–C2–2017–033. This file sections 18(f) and 21(b) of the Act; (b)
Members, Participants, or Others number should be included on the section 12(d)(1)(J) of the Act granting an
subject line if email is used. To help the exemption from section 12(d)(1) of the
The Exchange neither solicited nor Act; (c) sections 6(c) and 17(b) of the
received comments on the proposed Commission process and review your
comments more efficiently, please use Act granting an exemption from sections
rule change. 17(a)(1), 17(a)(2) and 17(a)(3) of the Act;
only one method. The Commission will
III. Date of Effectiveness of the post all comments on the Commission’s and (d) section 17(d) of the Act and rule
Proposed Rule Change and Timing for internet website (http://www.sec.gov/ 17d–1 under the Act to permit certain
Commission Action rules/sro.shtml). Copies of the joint arrangements and transactions.
submission, all subsequent Applicants request an order that would
The Exchange has designated this rule permit certain registered open-end
amendments, all written statements
filing as non-controversial under management investment companies to
with respect to the proposed rule
Section 19(b)(3)(A) 8 of the Act and Rule participate in a joint lending and
19b–4(f)(6) 9 thereunder. Because the change that are filed with the
borrowing facility.
proposed rule change does not: (i) Commission, and all written
APPLICANTS: Harbor Funds, a Delaware
Significantly affect the protection of communications relating to the
statutory trust registered under the Act
investors or the public interest; (ii) proposed rule change between the
as an open-end management series
impose any significant burden on Commission and any person, other than
investment company, and Harbor
competition; and (iii) become operative those that may be withheld from the
Capital Advisors, Inc. (the ‘‘Adviser’’),
for 30 days from the date on which it public in accordance with the registered as an investment adviser
was filed, or such shorter time as the provisions of 5 U.S.C. 552, will be under the Investment Advisers Act of
Commission may designate, it has available for website viewing and 1940.
become effective pursuant to Section printing in the Commission’s Public
FILING DATES: The application was filed
19(b)(3)(A) of the Act and Rule 19b– Reference Room, 100 F Street NE, on June 13, 2017 and amended on
4(f)(6) thereunder. Washington, DC 20549, on official November 15, 2017.
At any time within 60 days of the business days between the hours of
HEARING OR NOTIFICATION OF HEARING: An
filing of the proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of the
order granting the requested relief will
Commission summarily may filing also will be available for
be issued unless the Commission orders
temporarily suspend such rule change if inspection and copying at the principal a hearing. Interested persons may
it appears to the Commission that such office of the Exchange. All comments request a hearing by writing to the
action is necessary or appropriate in the received will be posted without change. Commission’s Secretary and serving
public interest, for the protection of Persons submitting comments are applicants with a copy of the request,
investors, or otherwise in furtherance of cautioned that we do not redact or edit personally or by mail.
the purposes of the Act. If the personal identifying information from Hearing requests should be received
Commission takes such action, the comment submissions. You should
sradovich on DSK3GMQ082PROD with NOTICES
by the Commission by 5:30 p.m. on
Commission shall institute proceedings submit only information that you wish February 2, 2018 and should be
to determine whether the proposed rule to make available publicly. All accompanied by proof of service on the
change should be approved or submissions should refer to File applicants, in the form of an affidavit,
disapproved. Number SR–C2–2017–033 and should or, for lawyers, a certificate of service.
be submitted on or before February 2, Pursuant to Rule 0–5 under the Act,
8 15 U.S.C. 78s(b)(3)(A). 2018.
9 17 CFR 240.19b–4(f)(6). 10 17 CFR 200.30–3(a)(12).
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Document Created: 2018-10-26 09:52:19
Document Modified: 2018-10-26 09:52:19
| 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 1643 |
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