83 FR 52285 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 200 (October 16, 2018)

Page Range		52285-52287
FR Document		2018-22425
Federal Register, Volume 83 Issue 200 (Tuesday, October 16, 2018)
[Federal Register Volume 83, Number 200 (Tuesday, October 16, 2018)]
[Notices]
[Pages 52285-52287]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-22425]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84395; File No. SR-CBOE-2018-065]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fees Schedule

October 10, 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 September 28, 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, 
II, and III below, which Items have been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend its fees schedule. 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

[[Page 52286]]

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 its Fees Schedule, effective October 
1, 2018 to amend its fee incentive program for Lead Market-Makers 
(``LMM'') in VIX during Global Trading Hours (``GTH''). By way of 
background, pursuant to Footnote 38 of the Fees Schedule, if a LMM in 
VIX options during GTH (1) provides continuous electronic quotes in at 
least the lesser of 99% of the non-adjusted series or 100% of the non-
adjusted series minus one call-put pair in an GTH allocated class 
(excluding intra-day add-on series on the day during which such series 
are added for trading) and (2) enters opening quotes within five 
minutes of the initiation of an opening rotation in any series that is 
not open due to the lack of a quote, provided that the LMM will not be 
required to enter opening quotes in more than the same percentage of 
series set forth in clause (1) for at least 90% of the trading days 
during GTH in a given month, the LMM will receive a rebate for that 
month in the amount of a pro-rata share of a compensation pool equal to 
$15,000 times the number of LMMs in that class \3\ (or pro-rated if an 
appointment begins after the first trading day of the month or ends 
prior to the last trading day of the month). The Exchange proposes to 
amend Footnote 38 to increase the compensation pool for VIX LMMs to 
$20,000 per LMM. The Exchange also proposes to update the example of 
how the compensation pool works for the Fees Schedule. The Exchange 
notes that GTH LMMs are not obligated to satisfy the heightened quoting 
standards described in the Fees Schedule. Rather, the LMMs are eligible 
to receive a rebate if they satisfy the heightened standards, which the 
Exchange believes will encourage LMMs to provide liquidity during GTH. 
Additionally, the Exchange notes that LMMs may have to undertake other 
expenses to be able to quote at the heightened standard during GTH, 
such as purchase additional bandwidth.
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    \3\ For example, if there is one LMM appointed in VIX, a 
compensation pool will be established each month totaling $20,000. 
If that LMM meets the heightened continuous quoting standard in VIX 
in a month, that LMM will receive $20,000. If there are two LMMs 
appointed in VIX, a compensation pool will be established each month 
totaling $40,000. If each LMM meets the heightened continuous 
quoting standard in VIX during a month, each will receive $20,000. 
If only one LMM meets the heightened continuous quoting standard in 
VIX during a month, that LMM would receive $40,000 and the other one 
would receive nothing.
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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.\4\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \5\ 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) \6\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ Id.
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    In particular, the Exchange believes it is reasonable, equitable 
and not unfairly discriminatory to offer LMMs in VIX during GTH a 
rebate if they meet a certain heightened quoting standard (described 
above) to encourage LMMs in VIX to provide increased liquidity. More 
specifically, the Exchange believes the amount of the amended rebate 
($20,000) is reasonable because it provides an increased rebate for 
meeting the heightened quoting standard and takes into consideration 
additional costs an LMM may incur. Particularly, the Exchange believes 
the proposed amount is such that it will incentivize an appointed LMM 
to meet the GTH quoting standards for VIX. The Exchange notes the 
proposed amount is also in line with incentives given to LMMs for other 
products.\7\ Additionally, if a LMM does not satisfy the heightened 
quoting standard, then it will not receive the rebate. The Exchange 
believes it is equitable and not unfairly discriminatory to only offer 
the rebate to LMMs because it benefits all market participants in GTH 
to encourage LMMs to satisfy the heightened quoting standards, which 
may increase liquidity during those hours and provide more trading 
opportunities and tighter spreads.
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    \7\ See e.g., Cboe Options Fees Schedule, MSCI LMM Incentive 
Program.
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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 Exchange does not 
believe that the proposed rule change will impose any burden on 
intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, because the amended rebate is 
intended to encourage LMMs to bring liquidity in VIX during GTH, which 
benefits all market participants. Furthermore, 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 VIX is a proprietary 
product that will only be traded on Cboe Options. To the extent that 
the proposed changes make Cboe Options a more attractive marketplace 
for market participants at other exchanges, such market participants 
are welcome to become Cboe Options market participants.

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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \8\ and paragraph (f) of Rule 19b-4 \9\ 
thereunder. 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.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f).

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[[Page 52287]]

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-2018-065 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-2018-065. 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-2018-065 and should be submitted on 
or before November 6, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-22425 Filed 10-15-18; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices 52285

Exchange notes that it operates in a to determine whether the proposed rule For the Commission, by the Division of
highly competitive market in which should be approved or disapproved. Trading and Markets, pursuant to delegated
market participants can readily favor authority.13
IV. Solicitation of Comments Eduardo A. Aleman,
competing venues if they deem rebate
opportunities available at other venues Interested persons are invited to Assistant Secretary.
to be more favorable. In such an submit written data, views, and [FR Doc. 2018–22424 Filed 10–15–18; 8:45 am]
environment, the Exchange must arguments concerning the foregoing, BILLING CODE 8011–01–P
continually adjust its rebates to remain including whether the proposed rule
competitive with other exchanges. change is consistent with the Act.
Because competitors are free to modify Comments may be submitted by any of SECURITIES AND EXCHANGE
their own rebates in response, the the following methods: COMMISSION
Exchange believes that the degree to
Electronic Comments
which rebate changes in this market [Release No. 34–84395; File No. SR–CBOE–
may impose any burden on competition • Use the Commission’s internet 2018–065]
is limited. For the reasons discussed comment form (http://www.sec.gov/
above, the Exchange believes that the rules/sro.shtml); or Self-Regulatory Organizations; Cboe
proposed changes do not impose an • Send an email to rule-comments@ Exchange, Inc.; Notice of Filing and
undue burden on competition. sec.gov. Please include File Number SR– Immediate Effectiveness of a Proposed
Further, the Exchange does not BOX–2018–34 on the subject line. Rule Change To Amend Its Fees
believe that offering a rebate to Floor Schedule
Brokers will impose an undue burden Paper Comments
October 10, 2018.
on intra-market competition because all • Send paper comments in triplicate
Floor Brokers are eligible to transact Pursuant to Section 19(b)(1) of the
to Secretary, Securities and Exchange
Strategy QOO Orders and receive a Securities Exchange Act of 1934 (the
Commission, 100 F Street NE,
rebate. Further, as discussed above, the ‘‘Act’’),1 and Rule 19b–4 thereunder,2
Washington, DC 20549–1090.
Exchange believes that applying the notice is hereby given that on
All submissions should refer to File September 28, 2018, Cboe Exchange,
proposed rebate to Floor Brokers and Number SR–BOX–2018–34. This file
not to Floor Market Makers is Inc. (the ‘‘Exchange’’ or ‘‘Cboe
number should be included on the Options’’) filed with the Securities and
appropriate as Floor Market Makers subject line if email is used. To help the
only represent their own interest on the Exchange Commission (the
Commission process and review your ‘‘Commission’’) the proposed rule
Trading Floor and therefore do not need comments more efficiently, please use
a similar incentive. Lastly, the Exchange change as described in Items I, II, and
only one method. The Commission will III below, which Items have been
believes that the rebate will promote post all comments on the Commission’s
competition by allowing Floor Brokers prepared by the Exchange. The
internet website (http://www.sec.gov/ Commission is publishing this notice to
to competitively price their services and rules/sro.shtml). Copies of the
for the Exchange to remain competitive solicit comments on the proposed rule
submission, all subsequent change from interested persons.
with other exchanges with trading amendments, all written statements
floors. with respect to the proposed rule I. Self-Regulatory Organization’s
C. Self-Regulatory Organization’s change that are filed with the Statement of the Terms of Substance of
Statement on Comments on the Commission, and all written the Proposed Rule Change
Proposed Rule Change Received From communications relating to the Cboe Exchange, Inc. (the ‘‘Exchange’’
Members, Participants, or Others proposed rule change between the or ‘‘Cboe Options’’) proposes to amend
Commission and any person, other than its fees schedule. The text of the
No written comments were either
those that may be withheld from the proposed rule change is also available
solicited or received.
public in accordance with the on the Exchange’s website (http://
III. Date of Effectiveness of the provisions of 5 U.S.C. 552, will be www.cboe.com/AboutCBOE/CBOELegal
Proposed Rule Change and Timing for available for website viewing and RegulatoryHome.aspx), at the
Commission Action printing in the Commission’s Public Exchange’s Office of the Secretary, and
The foregoing rule change has become Reference Room, 100 F Street NE, at the Commission’s Public Reference
effective pursuant to Section Washington, DC 20549 on official Room.
19(b)(3)(A)(ii) of the Exchange Act 11 business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such II. Self-Regulatory Organization’s
and Rule 19b–4(f)(2) thereunder,12 Statement of the Purpose of, and
because it establishes or changes a due, filing also will be available for
inspection and copying at the principal Statutory Basis for, the Proposed Rule
or fee. Change
At any time within 60 days of the office of the Exchange. All comments
filing of the proposed rule change, the received will be posted without change. In its filing with the Commission, the
Commission summarily may Persons submitting comments are Exchange included statements
temporarily suspend the rule change if cautioned that we do not redact or edit concerning the purpose of and basis for
it appears to the Commission that the personal identifying information from the proposed rule change and discussed
action is necessary or appropriate in the comment submissions. You should any comments it received on the
public interest, for the protection of submit only information that you wish proposed rule change. The text of these
amozie on DSK3GDR082PROD with NOTICES1

investors, or would otherwise further to make available publicly. All statements may be examined at the
the purposes of the Act. If the submissions should refer to File places specified in Item IV below. The
Commission takes such action, the Number SR–BOX–2018–34, and should Exchange has prepared summaries, set
Commission shall institute proceedings be submitted on or before November 6, forth in sections A, B, and C below, of
2018.
11 15 U.S.C. 78s(b)(3)(A)(ii). 1 15 U.S.C. 78s(b)(1).
12 17 CFR 240.19b–4(f)(2). 13 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.

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Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices 52287

IV. Solicitation of Comments For the Commission, by the Division of require such registration. As such, the
Trading and Markets, pursuant to delegated Exchange is amending current Rules 341
Interested persons are invited to authority.10 and 341A of the Office Rules and Rules
submit written data, views, and Eduardo A. Aleman, 2.4E and 2.21E of the Equities Rules
arguments concerning the foregoing, Assistant Secretary. regarding continuing education
including whether the proposed rule [FR Doc. 2018–22425 Filed 10–15–18; 8:45 am] requirements to reflect the FINRA rule;
change is consistent with the Act. BILLING CODE 8011–01–P adopting Commentary .06 to current
Comments may be submitted by any of Rule 341A regarding fingerprint
the following methods: information; adopting new Rule 2.1210
SECURITIES AND EXCHANGE regarding registration requirements and
Electronic Comments
COMMISSION related Commentary to new Rule
• Use the Commission’s internet [Release No. 34–84388; File No. SR– 2.1210; adopting new Rule 2.1220
comment form (http://www.sec.gov/ NYSEAMER–2018–46] regarding registration categories 4 and
rules/sro.shtml); or related Commentary to new Rule
Self-Regulatory Organizations; NYSE 2.1220; and adopting new Rule 2.1230
• Send an email to rule-comments@
American LLC; Notice of Filing and regarding associated persons exempt
sec.gov. Please include File Number SR–
Immediate Effectiveness of from registration and related
CBOE–2018–065 on the subject line.
Amendments to Rules Regarding Commentary to new Rule 2.1230. Each
Paper Comments Qualification, Registration and of these rule changes, which are [sic]
Continuing Education Applicable to described in more detail below, would
• Send paper comments in triplicate Member Organizations, Equity Trading become operative on October 1, 2018.
to Secretary, Securities and Exchange Permit Holders, and American Trading The proposed rule change is available
Commission, 100 F Street NE, Permit Holders on the Exchange’s website at
Washington, DC 20549–1090. www.nyse.com, at the principal office of
October 10, 2018. the Exchange, and at the Commission’s
All submissions should refer to File Pursuant to Section 19(b)(1) 1 of the
Number SR–CBOE–2018–065. This file Public Reference Room.
Securities Exchange Act of 1934 (the
number should be included on the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 II. Self-Regulatory Organization’s
subject line if email is used. To help the notice is hereby given that on Statement of the Purpose of, and
Commission process and review your September 27, 2018, NYSE American Statutory Basis for, the Proposed Rule
comments more efficiently, please use LLC (the ‘‘Exchange’’ or ‘‘NYSE Change
only one method. The Commission will American’’) filed with the Securities In its filing with the Commission, the
post all comments on the Commission’s and Exchange Commission (the self-regulatory organization included
internet website (http://www.sec.gov/ ‘‘Commission’’) the proposed rule statements concerning the purpose of,
rules/sro.shtml). Copies of the change as described in Items I and II and basis for, the proposed rule change
submission, all subsequent below, which Items have been prepared and discussed any comments it received
amendments, all written statements by the self-regulatory organization. The on the proposed rule change. The text
with respect to the proposed rule Commission is publishing this notice to of those statements may be examined at
change that are filed with the solicit comments on the proposed rule the places specified in Item IV below.
Commission, and all written change from interested persons. The Exchange has prepared summaries,
communications relating to the I. Self-Regulatory Organization’s set forth in sections A, B, and C below,
proposed rule change between the Statement of the Terms of Substance of of the most significant parts of such
Commission and any person, other than the Proposed Rule Change statements.
those that may be withheld from the
public in accordance with the The Exchange proposes amendments A. Self-Regulatory Organization’s
provisions of 5 U.S.C. 552, will be to the Exchange’s rules regarding Statement of the Purpose of, and the
available for website viewing and qualification, registration and Statutory Basis for, the Proposed Rule
continuing education requirements Change
printing in the Commission’s Public
Reference Room, 100 F Street NE, applicable to member organizations, 1. Purpose
Washington, DC 20549 on official Equity Trading Permit (‘‘ETP’’) Holders,
and American Trading Permit (‘‘ATP’’) The Exchange proposes to amend its
business days between the hours of qualification, registration, and
Holders. The Exchange’s rule proposal
10:00 a.m. and 3:00 p.m. Copies of the continuing education requirements
is intended to harmonize its rules with
filing also will be available for applicable to members and member
Financial Regulatory Authority, Inc.
inspection and copying at the principal organizations and ETP Holders. The
(‘‘FINRA’’) rules and thus promote
office of the Exchange. All comments proposed amendments are intended to:
consistency within the securities
received will be posted without change. (i) Provide transparency and clarity with
industry, and therefore the Exchange is
Persons submitting comments are only adopting rules that are relevant to respect to the Exchange’s registration,
cautioned that we do not redact or edit the Exchange’s members and member qualification and examination
personal identifying information from organization and ETP Holders. The
comment submissions. You should Exchange is not adopting registration 4 The relevant principal registration categories the

submit only information that you wish categories that are not applicable to
Exchange proposes to adopt are (1) Principal; (2)
amozie on DSK3GDR082PROD with NOTICES1

to make available publicly. All General Securities Principal; (3) Compliance
members and member organizations and Officer; (4) Financial and Operations Principal and
submissions should refer to File ETP Holders because they do not engage Introducing Broker-Dealer Financial and Operations
Number SR–CBOE–2018–065 and in the type of business that would Principal; (5) Securities Trader Principal; (6)
should be submitted on or before General Securities Sales Supervisor; and (7)
November 6, 2018. Registered Options Principal. The relevant
1 15 U.S.C. 78s(b)(1). representative registration categories the Exchange
2 15 U.S.C. 78a. proposes to adopt are (1) Representative; (2) General
10 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4. Securities Representative; and (3) Securities Trader.

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Document Created: 2018-10-15 23:42:08
Document Modified: 2018-10-15 23:42:08
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 52285