83 FR 60911 - Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing of a Proposed Rule Change Relating To Adopt Complex Reserve Order Functionality
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 228 (November 27, 2018)
Federal Register Volume 83, Issue 228 (November 27, 2018)
| Page Range | 60911-60916 | |
| FR Document | 2018-25883 |
[Federal Register Volume 83, Number 228 (Tuesday, November 27, 2018)] [Notices] [Pages 60911-60916] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-25883] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-84642; File No. SR-CboeEDGX-2018-049] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing of a Proposed Rule Change Relating To Adopt Complex Reserve Order Functionality November 21, 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 8, 2018, Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to adopt Complex Reserve Order functionality. (additions are italic; deletions are [bracketed]) * * * * * Rules of Cboe EDGX Exchange, Inc. * * * * * Rule 21.20. Complex Orders (a) No change. (b) Availability of Types of Complex Orders. The Exchange will determine and communicate to Members via specifications and/or a Regulatory Circular listing when the complex order types, among the complex order types set forth in this Rule, are available for use on the Exchange. The complex order types that may be submitted are limit orders and market orders, and orders with a Time in Force of GTD, IOC, DAY, GTC, or OPG as such terms are defined in Rule 21.1(f).The System also accepts the following instructions for complex orders[ will also be accepted by the Exchange]: (1)-(3) No change. (4) (Reserved) (5) (Reserved) (6) Complex Reserve Order. A ``Complex Reserve Order'' is a complex limit order with both a portion of the quantity displayed (``Display Quantity'') and a reserve portion of the quantity (``Reserve Quantity'') not displayed. Both the Display Quantity and Reserve Quantity of a Complex Reserve Order are available for potential execution pursuant to paragraphs (c) and (d) below. When entering a Complex Reserve Order, a User must instruct the Exchange as to the quantity of the Complex Reserve Order to be initially displayed by the System (``Max Floor''). If the Display Quantity of a Complex Reserve Order is fully executed, the System will, in accordance with the User's instruction, replenish the Display Quantity from the Reserve Quantity using one of the below replenishment instructions. If the remainder of a Complex Reserve Order is less than the replenishment amount, the System will display the entire remainder of the Complex Reserve Order. The System creates a new timestamp for both the Display Quantity and Reserve Quantity of the Complex Reserve Order each time it is replenished from reserve. (A) Random Replenishment. An instruction that a User may attach to a Complex Reserve Order where the System randomly replenishes the Display Quantity for the Complex Reserve Order with a number of contracts not outside a replenishment range, which equals the Max Floor plus and minus a replenishment value established by the User when entering a Complex Reserve Order with a Random Replenishment instruction. (B) Fixed Replenishment. For any Complex Reserve Order for which a User does not select Random Replenishment, the System will replenish the Display Quantity of the Complex Reserve Order with the number of contracts equal to the Max Floor (or the entire remainder of the Complex Reserve Order if it is less than the replenishment amount). (c) Trading of Complex Orders. The Exchange will determine and communicate to Members via specifications and/or Regulatory Circular which complex order origin codes (i.e., non-broker-dealer customers, broker-dealers that are not Market Makers on an options exchange, and/ or Market Makers on an options exchange) are eligible for entry onto the COB. Complex orders will be subject to all other Exchange Rules that pertain to orders submitted to the Exchange generally, unless otherwise provided in this Rule. (1) No change. (2) Execution of Complex Orders. (A)-(E) No change. (F) Legging. Complex orders up to a maximum number of legs (determined by the Exchange on a class-by-class basis as either two, three, or four legs [[Page 60912]] and communicated to Members via specifications and/or Regulatory Circular) may be automatically executed against bids and offers on the Simple Book (both displayed and nondisplayed orders) for the individual legs of the complex order (``Legging''), provided the complex order can be executed in full or in a permissible ratio by such bids and offers. Complex orders with two option legs where both legs are buying or both legs are selling and both legs are calls or both legs are puts may only trade against other complex orders on the COB and will not be permitted to leg into the Simple Book. Notwithstanding the foregoing, all two leg COA-eligible Customer complex orders will be allowed to leg into the Simple Book without restriction. Complex orders with three or four option legs where all legs are buying or all legs are selling may only trade against other complex orders on the COB and will not leg into the Simple Book, regardless of whether the option leg is a call or a put. The entire quantity of a Complex Reserve Order (both the Display Quantity and Reserve Quantity) Legs into the Simple Book at the same time, and any quantity that does not execute pursuant to paragraph (c) or (d) after Legging will rest in the COB in accordance with the Complex Reserve Order instruction. (G) No change. (3) Complex Order Priority. (A) No change. (B) Complex orders will be automatically executed against bids and offers on the COB in price priority. Bids and offers at the same price on the COB will be executed in time priority. Displayed complex orders resting on the COB have priority over nondisplayed portions of Complex Reserve Orders resting on the COB. If there are Priority Customer Orders in the Simple Book at the same price as orders resting on the COB against which an incoming complex order will execute, the order will first Leg into the Simple Book to execute against the Priority Customer Orders (both displayed and nondisplayed orders) before executing against complex orders in the COB. Complex orders that leg into the Simple Book (as described in subparagraph (c)(2)(F) above) will be executed in accordance with Rule 21.8. (4)-(6) No change. (d) COA Process. All option classes will be eligible to participate in a COA. Upon evaluation as set forth in subparagraph (c)(5) above, the Exchange may determine to automatically submit a COA-eligible order into a COA. (1) No change. (2) Commencement of COA. Upon receipt of a COA-eligible order, the Exchange will begin the COA process by sending a COA auction message. The COA auction message will be sent to all subscribers to the Exchange's data feeds that deliver COA auction messages. The COA auction message will identify the COA auction ID, instrument ID (i.e., complex strategy), origin code, quantity, and side of the market of the COA-eligible order. If the COA-eligible order is a Complex Reserve Order, the COA auction message only identifies the Display Quantity; however, the entire quantity (both the Display Quantity and Reserve Quantity) may execute following the COA pursuant to subparagraph (7) below. The Exchange may also determine to include the price in COA auction messages and if it does so it will announce such determination in published specifications and/or a Regulatory Circular to Members. The price included in the COA auction message will be the limit order price, unless the COA is initiated by a complex market order, in which case such price will be the SBBO, subject to any applicable price protections. (3) No change. (4) COA Response. Members may submit a response to the COA auction message (a ``COA Response'') during the Response Time Interval. COA Responses can be submitted by a Member with any origin code, including Priority Customer. COA Responses may be submitted in $0.01 increments and must specify the price, size, side of the market (i.e., a response to a buy COA as a sell or a response to a sell COA as a buy) and COA auction ID for the COA to which the response is targeted. COA Responses may be larger than the COA-eligible order. Multiple COA Responses from the same Member may be submitted during the Response Time Interval. COA Responses represent non-firm interest that can be modified or withdrawn at any time prior to the end of the Response Time Interval, though any modification to a COA Response other than a decrease of size will result in a new timestamp and a loss of priority. COA Responses will not be displayed by the Exchange. At the end of the Response Time Interval, COA Responses are firm (i.e., guaranteed at their price and size). Any COA Responses not executed in full will expire at the end of the COA. Any COA Responses not executable based on the price of the COA will be cancelled immediately. (5)-(6) No change. (7) Allocation at the Conclusion of a COA. Orders executed in a COA will be allocated first in price priority based on their original limit price as follows: (A) Priority Customer Orders (both displayed and nondisplayed Priority Customer Orders) resting on the Simple Book; (B) COA Responses and unrelated orders on the COB (displayed complex orders have priority over nondisplayed portions of Complex Reserve Orders) in time priority; (C) No change. (8)-(9) No change. Interpretations and Policies: .01-.06 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 In 2016, the Exchange's parent company, Cboe Global Markets, Inc. (formerly named CBOE Holdings, Inc.) (``Cboe Global''), which is the parent company of Cboe Exchange, Inc. (``Cboe Options'') and Cboe C2 Exchange, Inc., acquired the Exchange, Cboe EDGA Exchange, Inc. (``EDGA''), Cboe BZX Exchange, Inc. (``BZX or BZX Options''), and Cboe BYX Exchange, Inc. (``BYX'' and, together with C2, Cboe Options, EDGX, EDGA, and BZX, the ``Cboe Affiliated Exchanges''). The Cboe Affiliated Exchanges are working to align certain system functionality, retaining only intended differences between the Cboe Affiliated Exchanges, in the context of the technology migration of Cboe Options to the same trading platform as the Exchange. Thus, the proposed rule change is intended to [[Page 60913]] add certain functionality to the Exchange's System that is currently offered by Cboe Options \3\ in order to ultimately provide a consistent technology offering for market participants who interact with the Cboe Affiliated Exchanges. Although the Exchange intentionally offers certain features that differ from those offered by its affiliates and will continue to do so, the Exchange believes that offering similar functionality to the extent practicable will reduce potential confusion for Users. --------------------------------------------------------------------------- \3\ Cboe Options currently offers reserve functionality for complex orders. See Cboe Options Regulatory Circular RG11-016 (January 27, 2011); see also Cboe Options Rule 6.53 (which permits Cboe Options to determine which orders types are available for which Exchange systems). --------------------------------------------------------------------------- Currently, one of the Order Types in the Rules for simple orders is a Reserve Order.\4\ When implemented, simple Reserve Orders will permit Users to enter orders with both displayed and nondisplayed amounts. Reserve Orders will provide Users with additional flexibility to manage and display their orders and additional control over their executions on the Exchange. --------------------------------------------------------------------------- \4\ See Rule 21.1(d)(1). This rule is currently effective but not yet operative. See SR-CboeEDGX-2018-051 (November 5, 2018). The Exchange intends to implement simple Reserve Order functionality on November 29, 2018. --------------------------------------------------------------------------- The Exchange proposes to adopt Complex Reserve Order functionality.\5\ Complex Reserve Orders would generally function in the same manner as simple Reserve Orders, as currently described in the definition of Reserve Orders in Rule 21.1(d)(1).\6\ Specifically, a ``Complex Reserve Order'' is a complex limit order with both a portion of the quantity displayed (``Display Quantity'') and a reserve portion of the quantity (``Reserve Quantity'') not displayed. Both the Display Quantity and Reserve Quantity of a Complex Reserve Order are available for execution pursuant to Rule 21.20(c) and (d).\7\ When entering a Complex Reserve Order, a User must instruct the Exchange as to the quantity of the Complex Reserve Order to be initially displayed by the System (``Max Floor''). If the Display Quantity of a Complex Reserve Order is fully executed, the System will, in accordance with the User's instruction, replenish the Display Quantity from the Reserve Quantity using one of the below replenishment instructions. If the remainder of a Complex Reserve Order is less than the replenishment amount, the System will display the entire remainder of the Complex Reserve Order. The System creates a new timestamp for both the Display Quantity and Reserve Quantity of the Complex Reserve Order each time it is replenished from reserve. --------------------------------------------------------------------------- \5\ See proposed Rule 21.20(b)(6). The Exchange recently proposed to amend its Rules to adopt Post Only complex order functionality. See Securities Exchange Act Release No. 34-84393 (October 10, 2018), 83 FR 52264 (October 16, 2018) (SR-CboeEDGX- 2018-043). The proposed rule text is based on the currently effective rule text (the proposed reserved subparagraphs (b)(4) and 5) accommodate proposed rule text the Exchange intends to include in an amendment to that rule filing). If SR-CboeEDGX-2018-043 is approved by the Securities and Exchange Commission (the ``Commission'') prior to the date the Commission acts on this rule filing, the Exchange will amend this rule filing to update the proposed rule text to reflect the rule text as amended by that filing. \6\ See supra note 4. \7\ Pursuant to Rule 21.20(c) and (d), complex orders (including the Display and Reserve Quantities of Complex Reserve Orders) may execute during the COB opening process, against incoming complex orders, simple orders in the Simple Book (via Legging), or following a COA (if the complex order is COA-eligible pursuant to Rule 21.20(b)(2)). Complex Reserve Orders will be COA-eligible, subject to a User's instructions. --------------------------------------------------------------------------- A User may determine that a Complex Reserve Order it submits should be subject to ``Random Replenishment'' or ``Fixed Replenishment.'' If a Complex Reserve Order has a Random Replenishment instruction, the System randomly replenishes the Display Quantity for the Complex Reserve Order with a number of contracts not outside a replenishment range, which equals the Max Floor plus and minus a replenishment value established by the User when entering a Complex Reserve Order with a Random Replenishment instruction. For any Complex Reserve Order for which a User does not select Random Replenishment, the System will replenish the Display Quantity of the Complex Reserve Order with the number of contracts equal to the Max Floor (or the entire remainder of the Complex Reserve Order if it is less than the replenishment amount). Current Rule 21.20(d)(2) provides that upon receipt of a COA- eligible order,\8\ the Exchange will begin the complex order auction (``COA'') process by sending a COA auction message to all subscribers to the Exchange's data feeds that deliver COA auction messages. A COA auction message identifies the COA auction ID, instrument ID (i.e. complex strategy), origin code, quantity, and side of the market of the COA-eligible order. The proposed rule change provides that if the COA- eligible order is a Complex Reserve Order, the COA auction message only identifies the Display Quantity; however, the entire quantity (both the Display Quantity and Reserve Quantity) may execute following the COA pursuant to Rule 21.20(d)(7).\9\ The Exchange believes this is consistent with the purpose of a Reserve Order. If a User submits a Reserve Order (simple or complex), the User does so to only have a certain specified size publicly displayed. If the entire quantity of a Complex Reserve Order was auctioned in a COA, the entire size of the Complex Reserve Order would be publicly displayed,\10\ rather than the Display Quantity the User indicated it wanted publicly visible. Therefore, the Exchange believes it is appropriate to include only the Display Quantity of a Complex Reserve Order in a COA message.\11\ --------------------------------------------------------------------------- \8\ See Rule 21.20(b)(2) for the definition of a COA-eligible order. \9\ See proposed Rule 21.20(d)(2). \10\ See current Rule 21.20(d)(2) (COA auction messages identify, among other things, the quantity of the COA-eligible order). \11\ Making both the Display Quantity and Reserve Quantity available for execution at the end of a COA is consistent with the definition of the Reserve Order instruction for simple orders, which provides that both portions are available for potential execution against incoming orders. See Rule 21.1(d)(1). The proposed rule change provides the entire quantity of a Complex Reserve Order that initiates a COA with an opportunity to execute following a COA. --------------------------------------------------------------------------- Proposed Rule 21.20(c)(2)(F) states the entire quantity of a Complex Reserve Order (both the Display Quantity and Reserve Quantity) will Leg into the Simple Book at the same time, and any quantity that does not execute pursuant to Rule 21.20(c) or (d) after Legging will rest in the COB in accordance with the proposed Complex Reserve Order instruction. As stated in the definition of a Reserve Order and the proposed definition of a Complex Reserve Order, both the Displayed Quantity and Reserve Quantity are eligible for execution against incoming orders. The Exchange believes it is appropriate to similarly make both the Displayed Quantity and Reserve Quantity eligible for execution against orders and quotes in the Simple Book as well. This will maximize the size of resting orders and quotes on the Simple Book that may execute when these orders Leg into the Simple Book, as well as provide the entire quantity of a Complex Reserve Order with an opportunity to execute against orders in the Simple Book. A Complex Reserve Order may Leg into the Simple Book after a COA, following submission to the System (if not COA-eligible), or following evaluation when resting in the COB.\12\ If any portion of a Complex Reserve Order does not execute in those circumstances, the remaining quantity will enter the COB with a Display Quantity and Reserve Quantity with amounts determined in [[Page 60914]] accordance with proposed Rule 21.20(b)(6). --------------------------------------------------------------------------- \12\ See Rule 21.20(c)(2)(G) (describing the initial evaluation process), (c)(5) (describing the evaluation process after a complex order is resting in the COB), and (d)(5) (describing the processing of COA-eligible orders). --------------------------------------------------------------------------- The proposed rule change also amends Rule 21.20(d)(4) to clarify that COA Responses may be larger than the COA-eligible order (in response to which the COA Response is submitted). Neither the System nor the Rules limit the size of COA Responses to the size of the COA- eligible order, and the Exchange believes this proposed change will provide Users with additional clarity. Because COA Responses are not limited to the size of COA-eligible orders, if a Complex Reserve Order initiates a COA, COA Responses with size larger than the Display Quantity of the Complex Reserve Order will have the opportunity to execute against the entire size of the Complex Reserve Order. Processing and execution of Complex Reserve Orders will generally occur in the same manner as other complex orders in accordance with current Rule 21.20(c) and (d). Proposed Rule 21.20(c)(3)(B) and (d)(7)(B) states that displayed complex orders resting on the COB have priority over nondisplayed portions of Complex Reserve Orders resting on the COB. This is consistent with the current handling of simple Reserve Orders.\13\ The proposed rule change also clarifies in 21.20(c)(2)(F), (c)(3)(B), and (d)(7)(A) that both displayed and nondisplayed Priority Customer bids and offers on the Simple Book \14\ for the individual leg components of the complex order trade before complex orders (both displayed and nondisplayed orders) resting on the COB and COA Responses, if applicable, at the same price when a complex order Legs into the Simple Book. This is consistent with current functionality and current Rules. Specifically, Rule 21.20(c)(3)(B) states that complex orders that leg into the Simple Book will be executed in accordance with Rule 21.8, which provides that resting orders and quotes are prioritized according to price and there [sic] are allocated in a pro-rata fashion (subject to priority overlays, such as Priority Customer Overlays and Entitlements), and that displayed orders have priority over nondisplayed orders. Therefore, if a complex order Legs in to the Simple Book, it would execute against displayed and then nondisplayed resting interest in the Simple Book at the applicable price before executing against other complex orders. The proposed rule change adds clarity to the priority of resting orders when a complex order Legs into the Simple Book, as well as describes how complex reserve orders will be prioritized. --------------------------------------------------------------------------- \13\ See Rule 21.1(d)(1) and supra note 4. \14\ Priority Customer orders on the Simple Book have first priority pursuant to the Customer Overlay. See Rule 21.8(d). Because, pursuant to current Rule 21.20(c)(3)(A), a complex order must improve the price of the BBO of a component of a complex strategy by at least $0.01 if it consists of a Priority Customer Order, if the execution price of a complex order is the same as the SBBO that consists of Priority Customer Orders, the order will first Leg into the Simple Book pursuant to Rule 21.20(c)(2)(F). The proposed rule change to Rule 21.20(c)(3)(A) clarifies this order of priority. Specifically, the proposed rule change states if there are Priority Customer Orders in the Simple Book at the same price as orders resting on the COB against which an incoming complex order will execute, the order will first Leg into the Simple Book to execute against the Priority Customer Orders (both displayed and nondisplayed orders) before executing against complex orders in the COB. --------------------------------------------------------------------------- If a complex order Legs into the Simple Book, the execution priority of contra-side interest will be as follows:Displayed Priority Customer simple orders Nondisplayed portions of Priority Customer simple orders Displayed complex orders and COA Responses, if applicable Nondisplayed portions of Complex Reserve Orders Displayed non-Priority Customer simple orders Nondisplayed portions of non-Priority Customer simple orders The Exchange believes this is reasonable, as it ensures protection of the leg markets while ensuring system stability. This priority order results in nondisplayed orders on the Simple Book ahead of displayed complex orders on the COB. While the Exchange generally prioritizes displayed orders over nondisplayed orders to encourage Users to submit displayed liquidity, executing complex orders first against displayed Priority Customer simple orders, second against displayed complex orders and COA responses, third against displayed non-Priority Customer simple orders, fourth against nondisplayed portions Priority Customer simple orders, fifth against nondisplayed portions of Complex Reserve Orders, and sixth against nondisplayed portions of non-Priority Customer simple orders would significantly increase the complexity of the proposed functionality. The Simple Book and COB are entirely separate functioning books, and moving a complex order back and forth between the two books increases systematic risk related to Legging. Additionally, this would increase the execution time for complex orders that are able to Leg, which may harm Users. The Exchange believes the need to ensure system stability and efficient executions in connection with offering the proposed functionality to Users outweighs any potential benefits of prioritizing all displayed interest ahead of nondisplayed interest in this context. The proposed rule change also makes a nonsubstantive change to the introductory sentence to the list of complex order types in Rule 21.20(b) to eliminate the use of passive voice in that sentence. 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.\15\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \16\ 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) \17\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78f(b). \16\ 15 U.S.C. 78f(b)(5). \17\ Id. --------------------------------------------------------------------------- In particular, the proposed rule change will remove impediments to and perfect the mechanism of a free and open national market system, as well as benefit investors by providing Users with additional flexibility to manage and display their complex orders and additional control over their executions on the Exchange. This may encourage market participants to bring additional liquidity to the market, which benefits all investors. The Exchange notes that Reserve Order functionality is not new or unique and is already available in a similar capacity for simple orders. While the Reserve Order functionality is not currently available for complex orders, the Exchange has Reserve Order functionality in its Rules for simple orders, which functions substantially in the same manner as the proposed Complex Reserve Order functionality.\18\ [[Page 60915]] The purpose of a Complex Reserve Order is the same as the purpose of a simple Reserve Order. --------------------------------------------------------------------------- \18\ As noted above, Reserve Order functionality for simple orders is described in Rules that are currently effective but not yet operative. --------------------------------------------------------------------------- The proposed rule change to only include the Displayed Quantity of a Complex Reserve Order in a COA message protects investors, as it is consistent with the purpose of a Complex Reserve Order and the intention of a User that submits a Complex Reserve Order, which is to only have a certain specified size publicly displayed. This provides Complex Reserve Orders with the potential for price improvement in a manner consistent with the objective of a Reserve Order. Therefore, the Exchange believes it is appropriate to only include the Display Quantity of a Complex Reserve Order in a COA message. The Exchange believes the proposed rule change regarding how Complex Reserve Orders Leg into the Simple Book will benefit investors. The proposed rule change is consistent with the definition of a Reserve Order, which states that the entire quantity is eligible for potential execution against incoming orders, and thus provides the entire quantity of a Reserve Order with an opportunity to execute against orders and quotes in the Simple Book. Additionally, this will maximize the size of resting orders and quotes on the Simple Book that may execute when Complex Reserve Orders Leg into the Simple Book. Therefore, the Exchange believes the proposed rule change may increase execution opportunities for both Complex Reserve Orders and simple orders and quotes resting on the Simple Book. The Exchange believes the proposed rule change related to the priority of Complex Reserve Orders promotes just and equitable principles of trade, as it is consistent with current priority in the Simple Book that provides displayed orders have priority over nondisplayed orders. The proposed rule change that displayed portions of complex orders resting on the COB have priority over nondisplayed portions of Complex Reserve Orders resting on the COB is reasonable, because it is consistent with the current handling of simple Reserve Orders, as discussed above. Additionally, the proposed rule change to clarify that displayed and nondisplayed Priority Customer orders and quotes resting on the Simple Book have priority over all displayed and nondisplayed orders resting on the COB when a complex order Legs into the Simple Book is consistent with current functionality and current Rules describing how complex orders Leg into the Simple Book. This additional clarity regarding the order in which resting orders and quotes on the Simple Book will trade when a complex order Legs into the Simple Book benefits investors, as it provides more detail regarding the priority of executions on the Exchange. The Exchange also believes the proposed priority ensures system stability and efficient executions outweighs [sic]. The Exchange notes it is not novel for nondisplayed interest to trade ahead of displayed interest.\19\ --------------------------------------------------------------------------- \19\ See supra note 15 [sic]. --------------------------------------------------------------------------- The proposed rule change is generally intended to add certain system functionality to the Exchange's System in order to provide a consistent technology offering for the Cboe Affiliated Exchanges, as Cboe Options currently offers (and intends to offer following its migration to the same technology platform as the Exchange) complex reserve order functionality. A consistent technology offering, in turn, will simplify the technology implementation, changes, and maintenance by Users of the Exchange that are also participants on Cboe Affiliated Exchanges. The proposed rule change will provide Users with additional flexibility to manage and display their orders and control their executions on the Exchange. This may encourage market participants to bring additional liquidity to the market, which benefits all investors. Additionally, this will provide Users with greater harmonization between the order handling instructions available among the Cboe Affiliated Exchanges. 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 believes the proposed rule change will not burden intramarket competition because the Reserve Order instruction on complex orders will be available to all market participants. Additionally, use of the Reserve Order instruction on complex orders is voluntary. The Exchange also believes the proposed rule change will not impose any burden on intermarket competition because this relates to an instruction on orders that are submitted to the Exchange and how the Exchange's System will handle and execute them. Additionally, nothing prevents other options exchanges that offer complex orders from adopting a Reserve Order functionality for complex orders. The Exchange also believes the proposed rule change will promote competition, as Complex Reserve Orders will provide Users with additional flexibility to manage and display their complex orders and additional control over their executions on the Exchange. This may encourage market participants to bring additional liquidity to the market, which benefits all investors. 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 Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: A. By order approve or disapprove such proposed rule change, or B. institute proceedings to determine whether the proposed rule change should be 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 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-CboeEDGX-2018-049 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-CboeEDGX-2018-049. 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 [[Page 60916]] 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- CboeEDGX-2018-049, and should be submitted on or before December 18, 2018. --------------------------------------------------------------------------- \20\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ Brent J. Fields, Secretary. [FR Doc. 2018-25883 Filed 11-26-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 228 / Tuesday, November 27, 2018 / Notices 60911
Electronic Comments SECURITIES AND EXCHANGE and a reserve portion of the quantity
COMMISSION (‘‘Reserve Quantity’’) not displayed.
• Use the Commission’s internet Both the Display Quantity and Reserve
comment form (http://www.sec.gov/ [Release No. 34–84642; File No. SR–
Quantity of a Complex Reserve Order
rules/sro.shtml); or CboeEDGX–2018–049]
are available for potential execution
• Send an email to rule-comments@ Self-Regulatory Organizations; Cboe pursuant to paragraphs (c) and (d)
sec.gov. Please include File Number SR– EDGX Exchange, Inc.; Notice of Filing below. When entering a Complex
NASDAQ–2018–093 on the subject line. of a Proposed Rule Change Relating Reserve Order, a User must instruct the
To Adopt Complex Reserve Order Exchange as to the quantity of the
Paper Comments Complex Reserve Order to be initially
Functionality
displayed by the System (‘‘Max Floor’’).
• Send paper comments in triplicate November 21, 2018. If the Display Quantity of a Complex
to Secretary, Securities and Exchange Pursuant to Section 19(b)(1) of the Reserve Order is fully executed, the
Commission, 100 F Street NE, Securities Exchange Act of 1934 (the System will, in accordance with the
Washington, DC 20549–1090. ‘‘Act’’),1 and Rule 19b–4 thereunder,2 User’s instruction, replenish the Display
All submissions should refer to File notice is hereby given that on November Quantity from the Reserve Quantity
Number SR–NASDAQ–2018–093. This 8, 2018, Cboe EDGX Exchange, Inc. (the using one of the below replenishment
file number should be included on the ‘‘Exchange’’ or ‘‘EDGX’’) filed with the instructions. If the remainder of a
subject line if email is used. To help the Securities and Exchange Commission Complex Reserve Order is less than the
(the ‘‘Commission’’) the proposed rule replenishment amount, the System will
Commission process and review your
change as described in Items I, II, and display the entire remainder of the
comments more efficiently, please use Complex Reserve Order. The System
III below, which Items have been
only one method. The Commission will creates a new timestamp for both the
prepared by the Exchange. The
post all comments on the Commission’s Commission is publishing this notice to Display Quantity and Reserve Quantity
internet website (http://www.sec.gov/ solicit comments on the proposed rule of the Complex Reserve Order each time
rules/sro.shtml). Copies of the change from interested persons. it is replenished from reserve.
submission, all subsequent (A) Random Replenishment. An
amendments, all written statements I. Self-Regulatory Organization’s instruction that a User may attach to a
with respect to the proposed rule Statement of the Terms of Substance of Complex Reserve Order where the
change that are filed with the the Proposed Rule Change System randomly replenishes the
Commission, and all written Cboe EDGX Exchange, Inc. (the Display Quantity for the Complex
communications relating to the ‘‘Exchange’’ or ‘‘EDGX’’) proposes to Reserve Order with a number of
proposed rule change between the adopt Complex Reserve Order contracts not outside a replenishment
Commission and any person, other than functionality. range, which equals the Max Floor plus
those that may be withheld from the (additions are italic; deletions are and minus a replenishment value
public in accordance with the [bracketed]) established by the User when entering a
provisions of 5 U.S.C. 552, will be * * * * * Complex Reserve Order with a Random
available for website viewing and Replenishment instruction.
Rules of Cboe EDGX Exchange, Inc. (B) Fixed Replenishment. For any
printing in the Commission’s Public
* * * * * Complex Reserve Order for which a User
Reference Room, 100 F Street NE,
does not select Random Replenishment,
Washington, DC 20549, on official Rule 21.20. Complex Orders the System will replenish the Display
business days between the hours of Quantity of the Complex Reserve Order
(a) No change.
10:00 a.m. and 3:00 p.m. Copies of the (b) Availability of Types of Complex with the number of contracts equal to
filing also will be available for Orders. The Exchange will determine the Max Floor (or the entire remainder
inspection and copying at the principal and communicate to Members via of the Complex Reserve Order if it is less
office of the Exchange. All comments specifications and/or a Regulatory than the replenishment amount).
received will be posted without change. Circular listing when the complex order (c) Trading of Complex Orders. The
Persons submitting comments are types, among the complex order types Exchange will determine and
cautioned that the Commission does not set forth in this Rule, are available for communicate to Members via
edit personal identifying information use on the Exchange. The complex order specifications and/or Regulatory
from submissions. You should submit types that may be submitted are limit Circular which complex order origin
only information that you wish to make orders and market orders, and orders codes (i.e., non-broker-dealer customers,
available publicly. All submissions with a Time in Force of GTD, IOC, DAY, broker-dealers that are not Market
should refer to File Number SR– GTC, or OPG as such terms are defined Makers on an options exchange, and/or
NASDAQ–2018–093 and should be in Rule 21.1(f).The System also accepts Market Makers on an options exchange)
submitted on or before December 18, the following instructions for complex are eligible for entry onto the COB.
2018. orders[ will also be accepted by the Complex orders will be subject to all
Exchange]: other Exchange Rules that pertain to
For the Commission, by the Division of orders submitted to the Exchange
(1)–(3) No change.
Trading and Markets, pursuant to delegated (4) (Reserved) generally, unless otherwise provided in
authority.13 (5) (Reserved) this Rule.
amozie on DSK3GDR082PROD with NOTICES1
Eduardo A. Aleman, (6) Complex Reserve Order. A (1) No change.
Assistant Secretary. ‘‘Complex Reserve Order’’ is a complex (2) Execution of Complex Orders.
[FR Doc. 2018–25740 Filed 11–26–18; 8:45 am] limit order with both a portion of the (A)–(E) No change.
quantity displayed (‘‘Display Quantity’’) (F) Legging. Complex orders up to a
BILLING CODE 8011–01–P
maximum number of legs (determined
1 15 U.S.C. 78s(b)(1). by the Exchange on a class-by-class
13 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. basis as either two, three, or four legs
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![60914 Federal Register / Vol. 83, No. 228 / Tuesday, November 27, 2018 / Notices
accordance with proposed Rule and there [sic] are allocated in a pro-rata potential benefits of prioritizing all
21.20(b)(6). fashion (subject to priority overlays, displayed interest ahead of
The proposed rule change also such as Priority Customer Overlays and nondisplayed interest in this context.
amends Rule 21.20(d)(4) to clarify that Entitlements), and that displayed orders The proposed rule change also makes
COA Responses may be larger than the have priority over nondisplayed orders. a nonsubstantive change to the
COA-eligible order (in response to Therefore, if a complex order Legs in to introductory sentence to the list of
which the COA Response is submitted). the Simple Book, it would execute complex order types in Rule 21.20(b) to
Neither the System nor the Rules limit against displayed and then eliminate the use of passive voice in
the size of COA Responses to the size of nondisplayed resting interest in the that sentence.
the COA-eligible order, and the Simple Book at the applicable price 2. Statutory Basis
Exchange believes this proposed change before executing against other complex
will provide Users with additional orders. The proposed rule change adds The Exchange believes the proposed
clarity. Because COA Responses are not clarity to the priority of resting orders rule change is consistent with the
limited to the size of COA-eligible when a complex order Legs into the Securities Exchange Act of 1934 (the
orders, if a Complex Reserve Order Simple Book, as well as describes how ‘‘Act’’) and the rules and regulations
initiates a COA, COA Responses with complex reserve orders will be thereunder applicable to the Exchange
size larger than the Display Quantity of prioritized. and, in particular, the requirements of
the Complex Reserve Order will have If a complex order Legs into the Section 6(b) of the Act.15 Specifically,
the opportunity to execute against the Simple Book, the execution priority of the Exchange believes the proposed rule
entire size of the Complex Reserve contra-side interest will be as follows: change is consistent with the Section
Order. 6(b)(5) 16 requirements that the rules of
• Displayed Priority Customer simple an exchange be designed to prevent
Processing and execution of Complex
orders fraudulent and manipulative acts and
Reserve Orders will generally occur in
• Nondisplayed portions of Priority practices, to promote just and equitable
the same manner as other complex
Customer simple orders principles of trade, to foster cooperation
orders in accordance with current Rule
• Displayed complex orders and COA and coordination with persons engaged
21.20(c) and (d). Proposed Rule
Responses, if applicable in regulating, clearing, settling,
21.20(c)(3)(B) and (d)(7)(B) states that
• Nondisplayed portions of Complex processing information with respect to,
displayed complex orders resting on the
Reserve Orders and facilitating transactions in
COB have priority over nondisplayed
• Displayed non-Priority Customer securities, to remove impediments to
portions of Complex Reserve Orders
simple orders and perfect the mechanism of a free and
resting on the COB. This is consistent
• Nondisplayed portions of non-Priority open market and a national market
with the current handling of simple
Customer simple orders system, and, in general, to protect
Reserve Orders.13 The proposed rule
change also clarifies in 21.20(c)(2)(F), The Exchange believes this is investors and the public interest.
(c)(3)(B), and (d)(7)(A) that both reasonable, as it ensures protection of Additionally, the Exchange believes the
displayed and nondisplayed Priority the leg markets while ensuring system proposed rule change is consistent with
Customer bids and offers on the Simple stability. This priority order results in the Section 6(b)(5) 17 requirement that
Book 14 for the individual leg nondisplayed orders on the Simple the rules of an exchange not be designed
components of the complex order trade Book ahead of displayed complex orders to permit unfair discrimination between
before complex orders (both displayed on the COB. While the Exchange customers, issuers, brokers, or dealers.
and nondisplayed orders) resting on the generally prioritizes displayed orders In particular, the proposed rule
COB and COA Responses, if applicable, over nondisplayed orders to encourage change will remove impediments to and
at the same price when a complex order Users to submit displayed liquidity, perfect the mechanism of a free and
Legs into the Simple Book. This is executing complex orders first against open national market system, as well as
consistent with current functionality displayed Priority Customer simple benefit investors by providing Users
and current Rules. Specifically, Rule orders, second against displayed with additional flexibility to manage
21.20(c)(3)(B) states that complex orders complex orders and COA responses, and display their complex orders and
that leg into the Simple Book will be third against displayed non-Priority additional control over their executions
executed in accordance with Rule 21.8, Customer simple orders, fourth against on the Exchange. This may encourage
which provides that resting orders and nondisplayed portions Priority market participants to bring additional
quotes are prioritized according to price Customer simple orders, fifth against liquidity to the market, which benefits
nondisplayed portions of Complex all investors.
13 See Rule 21.1(d)(1) and supra note 4. Reserve Orders, and sixth against The Exchange notes that Reserve
14 Priority Customer orders on the Simple Book nondisplayed portions of non-Priority Order functionality is not new or unique
have first priority pursuant to the Customer Customer simple orders would and is already available in a similar
Overlay. See Rule 21.8(d). Because, pursuant to capacity for simple orders. While the
current Rule 21.20(c)(3)(A), a complex order must
significantly increase the complexity of
improve the price of the BBO of a component of a the proposed functionality. The Simple Reserve Order functionality is not
complex strategy by at least $0.01 if it consists of Book and COB are entirely separate currently available for complex orders,
a Priority Customer Order, if the execution price of functioning books, and moving a the Exchange has Reserve Order
a complex order is the same as the SBBO that functionality in its Rules for simple
consists of Priority Customer Orders, the order will complex order back and forth between
first Leg into the Simple Book pursuant to Rule the two books increases systematic risk orders, which functions substantially in
21.20(c)(2)(F). The proposed rule change to Rule related to Legging. Additionally, this the same manner as the proposed
amozie on DSK3GDR082PROD with NOTICES1
21.20(c)(3)(A) clarifies this order of priority. would increase the execution time for Complex Reserve Order functionality.18
Specifically, the proposed rule change states if there
are Priority Customer Orders in the Simple Book at complex orders that are able to Leg,
15 15 U.S.C. 78f(b).
the same price as orders resting on the COB against which may harm Users. The Exchange
16 15 U.S.C. 78f(b)(5).
which an incoming complex order will execute, the believes the need to ensure system 17 Id.
order will first Leg into the Simple Book to execute
against the Priority Customer Orders (both
stability and efficient executions in 18 As noted above, Reserve Order functionality for
displayed and nondisplayed orders) before connection with offering the proposed simple orders is described in Rules that are
executing against complex orders in the COB. functionality to Users outweighs any currently effective but not yet operative.
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![Federal Register / Vol. 83, No. 228 / Tuesday, November 27, 2018 / Notices 60915
The purpose of a Complex Reserve regarding the order in which resting as Complex Reserve Orders will provide
Order is the same as the purpose of a orders and quotes on the Simple Book Users with additional flexibility to
simple Reserve Order. will trade when a complex order Legs manage and display their complex
The proposed rule change to only into the Simple Book benefits investors, orders and additional control over their
include the Displayed Quantity of a as it provides more detail regarding the executions on the Exchange. This may
Complex Reserve Order in a COA priority of executions on the Exchange. encourage market participants to bring
message protects investors, as it is The Exchange also believes the additional liquidity to the market,
consistent with the purpose of a proposed priority ensures system which benefits all investors.
Complex Reserve Order and the stability and efficient executions
intention of a User that submits a outweighs [sic]. The Exchange notes it C. Self-Regulatory Organization’s
Complex Reserve Order, which is to is not novel for nondisplayed interest to Statement on Comments on the
only have a certain specified size trade ahead of displayed interest.19 Proposed Rule Change Received From
publicly displayed. This provides The proposed rule change is generally Members, Participants, or Others
Complex Reserve Orders with the intended to add certain system The Exchange neither solicited nor
potential for price improvement in a functionality to the Exchange’s System received comments on the proposed
manner consistent with the objective of in order to provide a consistent rule change.
a Reserve Order. Therefore, the technology offering for the Cboe
Exchange believes it is appropriate to Affiliated Exchanges, as Cboe Options III. Date of Effectiveness of the
only include the Display Quantity of a currently offers (and intends to offer Proposed Rule Change and Timing for
Complex Reserve Order in a COA following its migration to the same Commission Action
message. technology platform as the Exchange) Within 45 days of the date of
The Exchange believes the proposed complex reserve order functionality. A publication of this notice in the Federal
rule change regarding how Complex consistent technology offering, in turn, Register or within such longer period
Reserve Orders Leg into the Simple will simplify the technology up to 90 days (i) as the Commission may
Book will benefit investors. The implementation, changes, and designate if it finds such longer period
proposed rule change is consistent with maintenance by Users of the Exchange to be appropriate and publishes its
the definition of a Reserve Order, which that are also participants on Cboe reasons for so finding or (ii) as to which
states that the entire quantity is eligible Affiliated Exchanges. The proposed rule the Exchange consents, the Commission
for potential execution against incoming change will provide Users with will:
orders, and thus provides the entire additional flexibility to manage and A. By order approve or disapprove
quantity of a Reserve Order with an display their orders and control their such proposed rule change, or
opportunity to execute against orders executions on the Exchange. This may B. institute proceedings to determine
and quotes in the Simple Book. encourage market participants to bring whether the proposed rule change
Additionally, this will maximize the additional liquidity to the market, should be disapproved.
size of resting orders and quotes on the which benefits all investors.
IV. Solicitation of Comments
Simple Book that may execute when Additionally, this will provide Users
Complex Reserve Orders Leg into the with greater harmonization between the Interested persons are invited to
Simple Book. Therefore, the Exchange order handling instructions available submit written data, views, and
believes the proposed rule change may among the Cboe Affiliated Exchanges. arguments concerning the foregoing,
increase execution opportunities for including whether the proposed rule
both Complex Reserve Orders and B. Self-Regulatory Organization’s change is consistent with the Act.
simple orders and quotes resting on the Statement on Burden on Competition Comments may be submitted by any of
Simple Book. The Exchange does not believe that the following methods:
The Exchange believes the proposed the proposed rule change will impose
any burden on competition that is not Electronic Comments
rule change related to the priority of
Complex Reserve Orders promotes just necessary or appropriate in furtherance • Use the Commission’s internet
and equitable principles of trade, as it of the purposes of the Act. The comment form (http://www.sec.gov/
is consistent with current priority in the Exchange believes the proposed rule rules/sro.shtml); or
Simple Book that provides displayed change will not burden intramarket • Send an email to rule-comments@
orders have priority over nondisplayed competition because the Reserve Order sec.gov. Please include File Number SR–
orders. The proposed rule change that instruction on complex orders will be CboeEDGX–2018–049 on the subject
displayed portions of complex orders available to all market participants. line.
resting on the COB have priority over Additionally, use of the Reserve Order Paper Comments
nondisplayed portions of Complex instruction on complex orders is
Reserve Orders resting on the COB is voluntary. The Exchange also believes • Send paper comments in triplicate
reasonable, because it is consistent with the proposed rule change will not to Secretary, Securities and Exchange
the current handling of simple Reserve impose any burden on intermarket Commission, 100 F Street NE,
Orders, as discussed above. competition because this relates to an Washington, DC 20549–1090.
Additionally, the proposed rule change instruction on orders that are submitted All submissions should refer to File
to clarify that displayed and to the Exchange and how the Exchange’s Number SR–CboeEDGX–2018–049. This
nondisplayed Priority Customer orders System will handle and execute them. file number should be included on the
and quotes resting on the Simple Book Additionally, nothing prevents other subject line if email is used. To help the
amozie on DSK3GDR082PROD with NOTICES1
have priority over all displayed and options exchanges that offer complex Commission process and review your
nondisplayed orders resting on the COB orders from adopting a Reserve Order comments more efficiently, please use
when a complex order Legs into the functionality for complex orders. The only one method. The Commission will
Simple Book is consistent with current Exchange also believes the proposed post all comments on the Commission’s
functionality and current Rules rule change will promote competition, internet website (http://www.sec.gov/
describing how complex orders Leg into rules/sro.shtml). Copies of the
the Simple Book. This additional clarity 19 See supra note 15 [sic]. submission, all subsequent
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![60916 Federal Register / Vol. 83, No. 228 / Tuesday, November 27, 2018 / Notices
amendments, all written statements solicit comments on the proposed rule creates a new timestamp for both the
with respect to the proposed rule change from interested persons. Display Quantity and Reserve Quantity
change that are filed with the of the Complex Reserve Order each time
I. Self-Regulatory Organization’s
Commission, and all written it is replenished from reserve.
Statement of the Terms of Substance of
communications relating to the (A) Random Replenishment. An
the Proposed Rule Change
proposed rule change between the instruction that a User may attach to a
Commission and any person, other than Cboe C2 Exchange, Inc. (the Complex Reserve Order where the
those that may be withheld from the ‘‘Exchange’’ or ‘‘C2’’) proposes to adopt System randomly replenishes the
public in accordance with the Complex Reserve Order functionality. Display Quantity for the Complex
provisions of 5 U.S.C. 552, will be (additions are italic; deletions are Reserve Order with a number of
available for website viewing and [bracketed]) contracts not outside a replenishment
printing in the Commission’s Public * * * * * range, which equals the Max Floor plus
Reference Room, 100 F Street NE, and minus a replenishment value
Rules of Cboe C2 Exchange, Inc. established by the User when entering a
Washington, DC 20549 on official
business days between the hours of * * * * * Complex Reserve Order with a Random
10:00 a.m. and 3:00 p.m. Copies of the Replenishment instruction.
Rule 6.13. Complex Orders
filing also will be available for (B) Fixed Replenishment. For any
inspection and copying at the principal Trading of complex orders is subject Complex Reserve Order for which a User
office of the Exchange. All comments to all other Rules applicable to trading does not select Random Replenishment,
received will be posted without change. of orders, unless otherwise provided in the System will replenish the Display
Persons submitting comments are this Rule 6.13. Quantity of the Complex Reserve Order
cautioned that we do not redact or edit (a) No change. with the number of contracts equal to
(b) Types of Complex Orders. The the Max Floor (or the entire remainder
personal identifying information from
Exchange determines which Times-in- of the Complex Reserve Order if it is less
comment submissions. You should
Force of Day, GTC, GTD, IOC, or OPG than the replenishment amount).
submit only information that you wish
are available for complex orders (c) No change.
to make available publicly. All
(including for eligibility to enter the (d) Complex Order Auctions (COAs).
submissions should refer to File
COB and initiate a COA). The Exchange (1) Commencement of COA. Upon
Number SR–CboeEDGX–2018–049, and
determines which Capacities (i.e., non- receipt of a COA-eligible order, the
should be submitted on or before
broker-dealer customers, broker-dealers System initiates the COA process by
December 18, 2018.
that are not Market-Makers on an sending a COA auction message to all
For the Commission, by the Division of options exchange, or Market-Makers on subscribers to the Exchange’s data feeds
Trading and Markets, pursuant to delegated an options exchange) are eligible for that deliver COA auction messages. A
authority.20
entry onto the COB. Complex orders are COA auction message identifies the
Brent J. Fields, Book Only and may be market or limit COA auction ID, instrument ID (i.e.,
Secretary. orders. Users may designate complex complex strategy), Capacity, quantity,
[FR Doc. 2018–25883 Filed 11–26–18; 8:45 am] orders as Attributable or Non- and side of the market of the COA-
BILLING CODE 8011–01–P Attributable. The System also accepts eligible order. If the COA-eligible order
the following instructions for complex is a Complex Reserve Order, the COA
orders: auction message only identifies the
SECURITIES AND EXCHANGE (1)–(3) No change. Display Quantity; however, the entire
COMMISSION (4) (Reserved) quantity (both the Display Quantity and
(5) (Reserved) Reserve Quantity) may execute
[Release No. 34–84643; File No. SR–C2– (6) Complex Reserve Orders. A following the COA pursuant to
2018–022] ‘‘Complex Reserve Order’’ is a complex subparagraph (5) below. The Exchange
limit order with both a portion of the may also determine to include the price
Self-Regulatory Organizations; Cboe quantity displayed (‘‘Display Quantity’’) in COA auction messages, which will be
C2 Exchange, Inc.; Notice of Filing of and a reserve portion of the quantity the limit order price or the SBO (SBB)
a Proposed Rule Change Relating To (‘‘Reserve Quantity’’) not displayed. (if initiated by a buy (sell) market
Adopt Complex Reserve Order Both the Display Quantity and Reserve complex order), or the drill-through
Functionality Quantity of the Complex Reserve Order price if the order is subject to the drill-
are available for potential execution through protection in Rule 6.14(b).
November 21, 2018. pursuant to paragraphs (c) through (e) (2)–(3) No change.
Pursuant to Section 19(b)(1) of the below. When entering a Complex (4) COA Responses. The System
Securities Exchange Act of 1934 (the Reserve Order, a User must instruct the accepts a COA Response(s) with any
‘‘Act’’),1 and Rule 19b–4 thereunder,2 Exchange as to the quantity of the Capacity in $0.01 increments during the
notice is hereby given that on November Complex Reserve Order to be initially Response Time Interval.
8, 2018, Cboe C2 Exchange, Inc. (the displayed by the System (‘‘Max Floor’’). (A) No change.
‘‘Exchange’’ or ‘‘C2’’) filed with the If the Display Quantity of a Complex (B) COA Responses may be larger
Securities and Exchange Commission Reserve Order is fully executed, the than the COA-eligible order. The System
(the ‘‘Commission’’) the proposed rule System will, in accordance with the aggregates the size of COA Responses
change as described in Items I, II, and User’s instruction, replenish the Display submitted at the same price for an EFID,
amozie on DSK3GDR082PROD with NOTICES1
III below, which Items have been Quantity from the Reserve Quantity and caps the size of the aggregated COA
prepared by the Exchange. The using one of the below replenishment Responses at the size of the COA-
Commission is publishing this notice to instructions. If the remainder of a eligible order (including Display
Complex Reserve Order is less than the Quantity and Reserve Quantity if the
20 17 CFR 200.30–3(a)(12). replenishment amount, the System will COA-eligible order is a Complex Reserve
1 15 U.S.C. 78s(b)(1). display the entire remainder of the Order).
2 17 CFR 240.19b–4. Complex Reserve Order. The System (C)–(D) No change.
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Document Created: 2018-11-27 01:24:26
Document Modified: 2018-11-27 01:24:26
| 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 60911 |
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