83 FR 58307 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Amend the Volume Incentive Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 223 (November 19, 2018)

[Federal Register Volume 83, Number 223 (Monday, November 19, 2018)]
[Notices]
[Pages 58307-58309]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-25099]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84577; File No. SR-CBOE-2018-068]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Relating 
To Amend the Volume Incentive Program

November 13, 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 November 1, 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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[[Page 58308]]

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 the Volume Incentive Program.
    The text of the proposed rule change is also available on the 
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to amend the Volume Incentive Program 
(``VIP'').\3\ By way of background, under the Volume Incentive Program 
(``VIP''), the Exchange credits each Trading Permit Holder (``TPH'') 
the per contract amount set forth in the VIP table for Public Customer 
orders (``C'' origin code) transmitted by that TPH (with certain 
exceptions) which is executed electronically on the Exchange, provided 
the TPH meets certain volume thresholds in a month.\4\ VIP offers both 
rates for Complex and Simple orders. VIP provides however, that a TPH 
will only receive the Complex credit rates for both its Complex AIM and 
Non-AIM volume if at least 40% of that TPH's qualifying VIP volume (in 
both AIM and Non-AIM) in the previous month was comprised of Simple 
volume. If the TPH's previous month's volume does not meet the 40% 
Simple volume threshold, then the TPH's Customer (C) Complex volume 
will receive credits at the Simple rate only (i.e., all volume, both 
Simple and Complex, will receive credits at the applicable Simple 
rate). The Exchange proposes to reduce the 40% threshold to 38%. The 
purpose of the proposed change is to make it slightly easier for TPHs 
to obtain the Complex credits. The Exchange believes the proposed 
change will still encourage TPHs to continue to send both Simple and 
Complex volume to the Exchange.
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    \3\ The proposed VIP amendment will be effective November 1, 
2018 (i.e., November discounts will be based on October 2018 volume 
using the proposed threshold change).
    \4\ See Cboe Options Fees Schedule, Volume Incentive Program.
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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.\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 
Section 6(b)(4) of the Act,\7\ which requires that Exchange rules 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its Trading Permit Holders and other persons using 
its facilities.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed amendment to VIP is reasonable 
because it makes it slightly easier for TPHs to meet the qualifying 
criteria to receive the Complex credits and notes that no credit 
amounts are changing. The Exchange notes that VIP will continue to 
provide an incremental incentive for TPHs to strive for the highest 
tier level, which provides increasingly higher credits, for both 
Complex and Simple volume. The Exchange believes the proposed change is 
equitable and not unfairly discriminatory because the proposed applies 
to all TPHs uniformly.

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. In particular, the Exchange 
believes the proposed change does not impose a burden on intramarket 
competition because it applies uniformly to all TPHs and continues to 
incentivize the sending of more simple and complex orders to the 
Exchange, which provides greater liquidity and trading opportunities.
    The Exchange believes that the proposed rule change will not cause 
an unnecessary burden on intermarket competition because the proposed 
rule change only affects trading on the Exchange. To the extent that 
the proposed changes make the Exchange 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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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

[[Page 58309]]

     Send an email to [email protected]. Please include 
File Number SR-CBOE-2018-068 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-2018-068. 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-2018-068 and should be submitted on 
or before December 10, 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. 2018-25099 Filed 11-16-18; 8:45 am]
 BILLING CODE 8011-01-P