83 FR 57757 - Self-Regulatory Organizations; Cboe Futures Exchange, LLC; Notice of Filing of a Proposed Rule Change Regarding Correction of Reporting Errors

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 222 (November 16, 2018)

Page Range		57757-57758
FR Document		2018-24982
Federal Register, Volume 83 Issue 222 (Friday, November 16, 2018)
[Federal Register Volume 83, Number 222 (Friday, November 16, 2018)]
[Notices]
[Pages 57757-57758]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-24982]



[[Page 57757]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84560; File No. SR-CFE-2018-002]


Self-Regulatory Organizations; Cboe Futures Exchange, LLC; Notice 
of Filing of a Proposed Rule Change Regarding Correction of Reporting 
Errors

November 9, 2018.
    Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 31, 2018 Cboe 
Futures Exchange, LLC (``CFE'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change described in Items I, II, and III below, which 
Items have been prepared by CFE. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons. CFE also has filed this proposed rule change with the 
Commodity Futures Trading Commission (``CFTC''). CFE filed a written 
certification with the CFTC under Section 5c(c) of the Commodity 
Exchange Act (``CEA'') \2\ on October 31, 2018.
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    \1\ 15 U.S.C. 78s(b)(7).
    \2\ 7 U.S.C. 7a-2(c).
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I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    The Exchange proposes to extend the time frame for the correction 
of Block Trade and Exchange of Contract for Related Position (``ECRP'') 
transaction reporting errors. The scope of this filing is limited 
solely to the application of the proposed rule amendments to security 
futures that may be traded on CFE. Although no security futures are 
currently listed for trading on CFE, CFE may list security futures for 
trading in the future. The text of the proposed rule change is attached 
as Exhibit 4 to the filing but is not attached to the publication of 
this notice.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CFE 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. CFE 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
    Policy and Procedure III (Resolution of Error Trades) of the 
Policies and Procedures section of the CFE Rulebook includes a section 
which allows for the busting or adjusting of a Block Trade or the CFE 
contract leg of an ECRP transaction that is reported to CFE with a 
mistake, inaccuracy, or error. Specifically, Section G of Policy and 
Procedure III provides that CFE's Trade Desk is authorized to bust or 
adjust a Block Trade or the CFE contract leg of an ECRP transaction if 
both (i) there was a mistake, inaccuracy, or error in the information 
that was inputted into CFE's system for the Block Trade or the contract 
leg of the ECRP transaction and (ii) an Authorized Reporter for or 
party to the transaction notifies the Trade Desk of the mistake, 
inaccuracy, or error in a form and manner prescribed by the Exchange 
within thirty minutes from the time the transaction is reported in CFE 
market data. The proposed rule change extends the time period for the 
notification to the Trade Desk of such an error to 4:00 p.m. Chicago 
time of the business day of the transaction. The proposed rule change 
also makes clear that in order for the Trade Desk to bust or adjust a 
Block Trade or the CFE contract leg of an ECRP transaction under this 
provision, an Authorized Reporter or party on each side of the 
transaction must agree upon the mistake, inaccuracy, or error that 
occurred.
    The Exchange believes that the proposed rule change will benefit 
CFE's market and CFE market participants by reducing risk to market 
participants and by clarifying when the Trade Desk is authorized to 
bust or adjust a Block Trade or the CFE contract leg of an ECRP 
transaction that is reported to CFE with a mistake, inaccuracy, or 
error. If a Block Trade or ECRP transaction is reported with a mistake, 
inaccuracy, or error that is not corrected, the parties to the 
transaction will receive a position or price other than what they 
intended to receive. Holding a position that a market participant did 
not intend to assume causes that market participant to assume risk in 
holding that position and can impact the market if the market 
participant needs to liquidate the position. Allowing parties to a 
Block Trade or ECRP transaction that is reported with a mistake, 
inaccuracy, or error additional time to realize that an error has 
occurred in the reporting of the transaction and to have the Trade Desk 
correct that error reduces the possibility of these scenarios. 
Additionally, the clarification that an Authorized Reporter or party on 
each side of the transaction must agree upon the mistake, inaccuracy, 
or error that occurred adds clarity that one side is not able to 
unilaterally get out of a transaction when the other side does not 
agree that that a mistake, inaccuracy, or error occurred. To the extent 
that parties have a dispute in this regard, they may seek to resolve it 
in an appropriate manner between themselves, including through the 
arbitration provisions of Chapter 8 of CFE's rules.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\3\ in general, and furthers the 
objectives of Section 6(b)(5) \4\ in particular, in that it is 
designed:
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
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     To foster cooperation and coordination with persons 
engaged in regulating, clearing, settling, processing information with 
respect to, and facilitating transactions in securities, and
     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.
    When a Block Trade or ECRP transaction is reported in error and 
cannot be busted or adjusted, the parties to the transaction can incur 
risk by becoming party to a transaction that is different than what the 
parties intended and because they then need to determine how to 
remediate the issue. CFE believes that the proposed rule change reduces 
this risk by extending the time period during which these errors may be 
identified and corrected while also balancing the need for CFE to 
timely receive information required to report transactions for 
clearing. CFE believes that the proposed rule change provides guidance 
to market participants regarding the parameters under which CFE's Trade 
Desk is able to address reporting errors involving Block Trade and ECRP 
transactions and improves the functioning and efficiency of CFE's 
reporting mechanism for these transactions by broadening the ability of 
the Trade Desk to address these types of reporting errors. The proposed 
rule change also makes clear to market participants that an Authorized 
Reporter

[[Page 57758]]

or party on each side of a Block Trade or ECRP transaction must agree 
upon the mistake, inaccuracy or error that occurred in order for the 
Trade Desk to bust or adjust the transaction under Section G of Policy 
and Procedure III. Additionally, the proposed rule change will not 
interfere with CFE's ability to capture and retain required audit trail 
information relating to these transactions.

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

    CFE does not believe that the proposed rule change will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act, in that the proposed rule change will 
contribute to reducing market risk by enhancing the ability of the 
Exchange to correct transaction reporting errors. The Exchange believes 
that the proposed rule change is equitable and not unfairly 
discriminatory in that the rule amendments included in the proposed 
rule change would apply equally to all CFE market participants.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    The proposed rule change will become operative on November 15, 
2018. At any time within 60 days of the date of effectiveness of the 
proposed rule change, the Commission, after consultation with the CFTC, 
may summarily abrogate the proposed rule change and require that the 
proposed rule change be refiled in accordance with the provisions of 
Section 19(b)(1) of the Act.\5\
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    \5\ 15 U.S.C. 78s(b)(1).
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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 rule-comments@sec.gov. Please include 
File Number SR-CFE-2018-002 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-CFE-2018-002. 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 such 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-CFE-2018-002, 
and should be submitted on or before December 7, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(73).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-24982 Filed 11-15-18; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 222 / Friday, November 16, 2018 / Notices 57757

SECURITIES AND EXCHANGE and C below, of the most significant error additional time to realize that an
COMMISSION aspects of such statements. error has occurred in the reporting of
the transaction and to have the Trade
A. Self-Regulatory Organization’s
[Release No. 34–84560; File No. SR–CFE– Desk correct that error reduces the
Statement of the Purpose of, and
2018–002] possibility of these scenarios.
Statutory Basis for, the Proposed Rule
Additionally, the clarification that an
Self-Regulatory Organizations; Cboe Change
Authorized Reporter or party on each
Futures Exchange, LLC; Notice of 1. Purpose side of the transaction must agree upon
Filing of a Proposed Rule Change the mistake, inaccuracy, or error that
Regarding Correction of Reporting Policy and Procedure III (Resolution
of Error Trades) of the Policies and occurred adds clarity that one side is
Errors not able to unilaterally get out of a
Procedures section of the CFE Rulebook
November 9, 2018. includes a section which allows for the transaction when the other side does not
busting or adjusting of a Block Trade or agree that that a mistake, inaccuracy, or
Pursuant to Section 19(b)(7) of the
the CFE contract leg of an ECRP error occurred. To the extent that parties
Securities Exchange Act of 1934
transaction that is reported to CFE with have a dispute in this regard, they may
(‘‘Act’’),1 notice is hereby given that on seek to resolve it in an appropriate
October 31, 2018 Cboe Futures a mistake, inaccuracy, or error.
Specifically, Section G of Policy and manner between themselves, including
Exchange, LLC (‘‘CFE’’ or ‘‘Exchange’’) through the arbitration provisions of
filed with the Securities and Exchange Procedure III provides that CFE’s Trade
Chapter 8 of CFE’s rules.
Commission (‘‘SEC’’ or ‘‘Commission’’) Desk is authorized to bust or adjust a
the proposed rule change described in Block Trade or the CFE contract leg of 2. Statutory Basis
Items I, II, and III below, which Items an ECRP transaction if both (i) there was The Exchange believes that the
have been prepared by CFE. The a mistake, inaccuracy, or error in the proposed rule change is consistent with
Commission is publishing this notice to information that was inputted into Section 6(b) of the Act,3 in general, and
solicit comments on the proposed rule CFE’s system for the Block Trade or the furthers the objectives of Section
change from interested persons. CFE contract leg of the ECRP transaction and 6(b)(5) 4 in particular, in that it is
also has filed this proposed rule change (ii) an Authorized Reporter for or party designed:
with the Commodity Futures Trading to the transaction notifies the Trade • To foster cooperation and
Commission (‘‘CFTC’’). CFE filed a Desk of the mistake, inaccuracy, or error coordination with persons engaged in
written certification with the CFTC in a form and manner prescribed by the regulating, clearing, settling, processing
under Section 5c(c) of the Commodity Exchange within thirty minutes from information with respect to, and
Exchange Act (‘‘CEA’’) 2 on October 31, the time the transaction is reported in facilitating transactions in securities,
2018. CFE market data. The proposed rule and
change extends the time period for the • to remove impediments to and
I. Self-Regulatory Organization’s notification to the Trade Desk of such an perfect the mechanism of a free and
Description of the Proposed Rule error to 4:00 p.m. Chicago time of the open market and a national market
Change business day of the transaction. The system, and in general, to protect
The Exchange proposes to extend the proposed rule change also makes clear investors and the public interest.
time frame for the correction of Block that in order for the Trade Desk to bust When a Block Trade or ECRP
Trade and Exchange of Contract for or adjust a Block Trade or the CFE transaction is reported in error and
Related Position (‘‘ECRP’’) transaction contract leg of an ECRP transaction cannot be busted or adjusted, the parties
reporting errors. The scope of this filing under this provision, an Authorized to the transaction can incur risk by
is limited solely to the application of the Reporter or party on each side of the becoming party to a transaction that is
proposed rule amendments to security transaction must agree upon the different than what the parties intended
futures that may be traded on CFE. mistake, inaccuracy, or error that and because they then need to
Although no security futures are occurred. determine how to remediate the issue.
currently listed for trading on CFE, CFE The Exchange believes that the CFE believes that the proposed rule
may list security futures for trading in proposed rule change will benefit CFE’s change reduces this risk by extending
the future. The text of the proposed rule market and CFE market participants by the time period during which these
change is attached as Exhibit 4 to the reducing risk to market participants and errors may be identified and corrected
filing but is not attached to the by clarifying when the Trade Desk is while also balancing the need for CFE
publication of this notice. authorized to bust or adjust a Block to timely receive information required
Trade or the CFE contract leg of an to report transactions for clearing. CFE
II. Self-Regulatory Organization’s ECRP transaction that is reported to CFE believes that the proposed rule change
Statement of the Purpose of, and with a mistake, inaccuracy, or error. If provides guidance to market
Statutory Basis for, the Proposed Rule a Block Trade or ECRP transaction is participants regarding the parameters
Change reported with a mistake, inaccuracy, or under which CFE’s Trade Desk is able
In its filing with the Commission, CFE error that is not corrected, the parties to to address reporting errors involving
included statements concerning the the transaction will receive a position or Block Trade and ECRP transactions and
purpose of and basis for the proposed price other than what they intended to improves the functioning and efficiency
rule change and discussed any receive. Holding a position that a market of CFE’s reporting mechanism for these
comments it received on the proposed participant did not intend to assume transactions by broadening the ability of
amozie on DSK3GDR082PROD with NOTICES

rule change. The text of these statements causes that market participant to assume the Trade Desk to address these types of
may be examined at the places specified risk in holding that position and can reporting errors. The proposed rule
in Item IV below. CFE has prepared impact the market if the market change also makes clear to market
summaries, set forth in Sections A, B, participant needs to liquidate the participants that an Authorized Reporter
position. Allowing parties to a Block
1 15 U.S.C. 78s(b)(7). Trade or ECRP transaction that is 3 15 U.S.C. 78f(b).
27 U.S.C. 7a–2(c). reported with a mistake, inaccuracy, or 4 15 U.S.C. 78f(b)(5).

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57758 Federal Register / Vol. 83, No. 222 / Friday, November 16, 2018 / Notices

or party on each side of a Block Trade • Send an email to rule-comments@ SECURITIES AND EXCHANGE
or ECRP transaction must agree upon sec.gov. Please include File Number SR– COMMISSION
the mistake, inaccuracy or error that CFE–2018–002 on the subject line. [Release No. 34–84571; File No. SR–
occurred in order for the Trade Desk to NASDAQ–2018–086]
bust or adjust the transaction under Paper Comments
Section G of Policy and Procedure III. • Send paper comments in triplicate Self-Regulatory Organizations; The
Additionally, the proposed rule change to Secretary, Securities and Exchange Nasdaq Stock Market LLC; Notice of
will not interfere with CFE’s ability to Filing and Immediate Effectiveness of
Commission, 100 F Street NE,
capture and retain required audit trail Proposed Rule Change To Amend
Washington, DC 20549–1090.
information relating to these General 8 of the Exchange’s Rules
transactions. All submissions should refer to File
Number SR–CFE–2018–002. This file November 9, 2018.
B. Self-Regulatory Organization’s Pursuant to Section 19(b)(1) of the
Statement on Burden on Competition number should be included on the
subject line if email is used. To help the Securities Exchange Act of 1934
CFE does not believe that the (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Commission process and review your
proposed rule change will impose any notice is hereby given that on October
comments more efficiently, please use
burden on competition not necessary or 29, 2018, The Nasdaq Stock Market LLC
only one method. The Commission will (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
appropriate in furtherance of the post all comments on the Commission’s
purposes of the Act, in that the Securities and Exchange Commission
internet website (http://www.sec.gov/ (‘‘Commission’’) the proposed rule
proposed rule change will contribute to rules/sro.shtml). Copies of the
reducing market risk by enhancing the change as described in Items I and II
submission, all subsequent below, which Items have been prepared
ability of the Exchange to correct amendments, all written statements
transaction reporting errors. The by the Exchange. The Commission is
with respect to the proposed rule publishing this notice to solicit
Exchange believes that the proposed
change that are filed with the comments on the proposed rule change
rule change is equitable and not unfairly
discriminatory in that the rule Commission, and all written from interested persons.
amendments included in the proposed communications relating to the
I. Self-Regulatory Organization’s
rule change would apply equally to all proposed rule change between the Statement of the Terms of Substance of
CFE market participants. Commission and any person, other than the Proposed Rule Change
those that may be withheld from the
C. Self-Regulatory Organization’s public in accordance with the The Exchange proposes to amend
Statement on Comments on the provisions of 5 U.S.C. 552, will be General 8 of the Exchange’s Rules, as
Proposed Rule Change Received From described below.
available for website viewing and The text of the proposed rule change
Members, Participants, or Others printing in the Commission’s Public is available on the Exchange’s website at
No written comments were solicited Reference Room, 100 F Street NE, http://nasdaq.cchwallstreet.com, at the
or received with respect to the proposed Washington, DC 20549, on official principal office of the Exchange, and at
rule change. business days between the hours of the Commission’s Public Reference
10:00 a.m. and 3:00 p.m. Copies of such Room.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for filing also will be available for
inspection and copying at the principal II. Self-Regulatory Organization’s
Commission Action Statement of the Purpose of, and
office of the Exchange. All comments
The proposed rule change will Statutory Basis for, the Proposed Rule
received will be posted without change.
become operative on November 15, Change
Persons submitting comments are
2018. At any time within 60 days of the In its filing with the Commission, the
cautioned that we do not redact or edit
date of effectiveness of the proposed Exchange included statements
rule change, the Commission, after personal identifying information from concerning the purpose of and basis for
consultation with the CFTC, may comment submissions. You should the proposed rule change and discussed
summarily abrogate the proposed rule submit only information that you wish any comments it received on the
change and require that the proposed to make available publicly. All proposed rule change. The text of these
rule change be refiled in accordance submissions should refer to File statements may be examined at the
with the provisions of Section 19(b)(1) Number SR–CFE–2018–002, and should places specified in Item IV below. The
of the Act.5 be submitted on or before December 7, Exchange has prepared summaries, set
2018. forth in sections A, B, and C below, of
IV. Solicitation of Comments
For the Commission, by the Division of the most significant aspects of such
Interested persons are invited to Trading and Markets, pursuant to delegated statements.
submit written data, views, and authority.6 A. Self-Regulatory Organization’s
arguments concerning the foregoing, Eduardo A. Aleman, Statement of the Purpose of, and
including whether the proposed rule
Assistant Secretary. Statutory Basis for, the Proposed Rule
change is consistent with the Act.
[FR Doc. 2018–24982 Filed 11–15–18; 8:45 am] Change
Comments may be submitted by any of
the following methods: BILLING CODE 8011–01–P 1. Purpose
amozie on DSK3GDR082PROD with NOTICES

Electronic Comments The Exchange proposes to amend
General 8 of its Rules, which govern the
• Use the Commission’s internet provision by the Exchange of colocation,
comment form (http://www.sec.gov/ connectivity, and direct connectivity
rules/sro.shtml); or
1 15 U.S.C. 78s(b)(1).
5 15 U.S.C. 78s(b)(1). 6 17 CFR 200.30–3(a)(73). 2 17 CFR 240.19b–4.

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Document Created: 2018-11-16 07:22:46
Document Modified: 2018-11-16 07:22:46
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 57757