83 FR 60916 - Self-Regulatory Organizations; Cboe C2 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 | 60916-60920 | |
| FR Document | 2018-25884 |
[Federal Register Volume 83, Number 228 (Tuesday, November 27, 2018)] [Notices] [Pages 60916-60920] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-25884] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-84643; File No. SR-C2-2018-022] Self-Regulatory Organizations; Cboe C2 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 C2 Exchange, Inc. (the ``Exchange'' or ``C2'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The 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 C2 Exchange, Inc. (the ``Exchange'' or ``C2'') proposes to adopt Complex Reserve Order functionality. (additions are italic; deletions are [bracketed]) * * * * * Rules of Cboe C2 Exchange, Inc. * * * * * Rule 6.13. Complex Orders Trading of complex orders is subject to all other Rules applicable to trading of orders, unless otherwise provided in this Rule 6.13. (a) No change. (b) Types of Complex Orders. The Exchange determines which Times- in-Force of Day, GTC, GTD, IOC, or OPG are available for complex orders (including for eligibility to enter the COB and initiate a COA). The Exchange determines which Capacities (i.e., non-broker-dealer customers, broker-dealers that are not Market-Makers on an options exchange, or Market-Makers on an options exchange) are eligible for entry onto the COB. Complex orders are Book Only and may be market or limit orders. Users may designate complex orders as Attributable or Non-Attributable. The System also accepts the following instructions for complex orders: (1)-(3) No change. (4) (Reserved) (5) (Reserved) (6) Complex Reserve Orders. 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 the Complex Reserve Order are available for potential execution pursuant to paragraphs (c) through (e) 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) No change. (d) Complex Order Auctions (COAs). (1) Commencement of COA. Upon receipt of a COA-eligible order, the System initiates the 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), Capacity, 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 (5) below. The Exchange may also determine to include the price in COA auction messages, which will be the limit order price or the SBO (SBB) (if initiated by a buy (sell) market complex order), or the drill-through price if the order is subject to the drill-through protection in Rule 6.14(b). (2)-(3) No change. (4) COA Responses. The System accepts a COA Response(s) with any Capacity in $0.01 increments during the Response Time Interval. (A) No change. (B) COA Responses may be larger than the COA-eligible order. The System aggregates the size of COA Responses submitted at the same price for an EFID, and caps the size of the aggregated COA Responses at the size of the COA-eligible order (including Display Quantity and Reserve Quantity if the COA-eligible order is a Complex Reserve Order). (C)-(D) No change. [[Page 60917]] (5) Processing of COA-Eligible Orders. (A) At the end of the Response Time Interval, the System executes a COA-eligible order (in whole or in part) against contra side interest in price priority. If there is contra side interest at the same price, the System allocates the contra side interest as follows: (i) Orders and quotes in the Simple Book (both displayed and nondisplayed orders) for the individual leg components of the complex order through Legging (subject to paragraph (g)), which the System allocates in accordance with the priority in Rule 6.12(a) applicable to the class. (ii) No change. (B) No change. (e) Processing of Do-Not-COA Orders/Orders Resting on the COB. Upon receipt of a do-not-COA order, or if the System determines an order resting on the COB is eligible for execution following evaluation pursuant to paragraph (i), the System executes it (in whole or in part) against contra side interest in price priority. If there is contra side interest at the same price, the System allocates the contra side interest as follows: (1) Orders and quotes in the Simple Book (both displayed and nondisplayed orders) for the individual leg components of the complex order through Legging (subject to paragraph (g)), which the System allocates in accordance with the priority in Rule 6.12(a) applicable to the class. (2) No change. The System enters any do-not-COA order (or unexecuted portion) that does not execute against the individual leg markets or complex orders into the COB (if eligible for entry), and applies a timestamp based on the time it enters the COB. The System cancels or rejects any complex order (or unexecuted portion) that would execute at a price outside of the SBBO, that is not eligible for entry into the COB, or in accordance with the User's instructions. Complex orders resting on the COB may execute pursuant to this paragraph (e) following evaluation pursuant to paragraph (i) and remain on the COB until they execute or are cancelled or rejected. (f) No change. (g) Legging [Restrictions]. A complex order may execute against orders and quotes in the Simple Book pursuant to subparagraphs (d)(5)(A)(i) and (e)(1) if it can execute in full or in a permissible ratio and if it has no more than a maximum number of legs (which the Exchange determines on a class-by-class basis and may be two, three or four) (``Legging''), subject to the following [restrictions]: (1)-(3) No change. (4) Reserved (5) 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 (d) or (e) after Legging will rest in the COB in accordance with the Complex Reserve Order instruction. (h) Additional Complex Order Handling. Processing and execution of complex orders pursuant to this Rule 6.13 (including pursuant to paragraphs (d) and (e), and following evaluation pursuant to paragraph (i)) are subject to the following: (1) Order Locks/Crosses Opposite Side of SBBO. A complex market order or a limit order with a price that locks or crosses the then- current opposite side SBBO and does not execute because the SBBO is the best price but not available for execution (because it does not satisfy the complex order ratio or the complex order cannot Leg into the Simple Book) enters the COB with a book and display price that improves the then-current opposite side SBBO by $0.01. If the SBBO changes, the System continuously reprices the book and display price of the complex order (or unexecuted portion) based on the new SBBO (up to the limit price, if it is a limit order), subject to the drill-through price protection described in Rule 6.14(b), until: (A)-(B) No change. (2) Zero NBB, NBO, or NBBO. If there is a zero NBO for any leg, the System replaces the zero with a price $0.01 above the NBB to calculate the SNBBO, and complex orders with any buy legs do not Leg into the Simple Book. If there is a zero NBB, the System replaces the zero with a price of $0.01, and complex orders with any sell legs do not Leg into the Simple Book. If there is a zero NBB and zero NBO, the System replaces the zero NBB with a price of $0.01 and replaces the zero NBO with a price of $0.02, and complex orders do not Leg into the Simple Book. (3) (Reserved) (4) Nondisplayed Orders. Displayed complex orders resting on the COB have priority over nondisplayed portions of Complex Reserve Orders resting on the COB. * * * * * The text of the proposed rule change is also available on the Exchange's website (http://www.c2exchange.com/Legal/), 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 also the parent company of Cboe Exchange, Inc. (``Cboe Options''), acquired Cboe EDGX Exchange, Inc. (``EDGX''), 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 add certain functionality to the Exchange's System that is currently offered by Cboe Options 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. Currently, the Exchange offers Reserve Order functionality for simple orders.\3\ Reserve Orders permit Users to enter orders with both displayed and nondisplayed amounts. Reserve Orders provide Users with additional flexibility to manage and display their orders and [[Page 60918]] additional control over their executions on the Exchange. --------------------------------------------------------------------------- \3\ See Rule 1.1, paragraph (j) in Order Instruction definition. --------------------------------------------------------------------------- The Exchange proposes to adopt Complex Reserve Order functionality.\4\ 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 1.1(j) (under the definition of ``Order Instruction''). 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 6.13(c) through (e).\5\ 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. --------------------------------------------------------------------------- \4\ See proposed Rule 6.13(b)(6). The Exchange recently proposed to amend its Rules to adopt Post Only complex order functionality. See Securities Exchange Act Release No. 34-84399 (October 10, 2018) (SR-C2-2018-021). The proposed rule text is based on the currently effective rule text (proposed reserved subparagraphs (b)(4) and (5), (g)(4), and (h)(3) accommodate proposed rule text the Exchange intends to include in an amendment to that rule filing). If SR-C2- 2018-021 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. \5\ Pursuant to Rule 6.13(c) through (e), 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 6.13(d)(1) provides that upon receipt of a COA- eligible order,\6\ the System initiates 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), Capacity, 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 6.13(d)(5).\7\ 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,\8\ 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.\9\ --------------------------------------------------------------------------- \6\ See Rule 6.13(b)(2) for the definition of a COA-eligible order. \7\ See proposed Rule 6.13(d)(1). \8\ See current Rule 6.13(d)(1) (COA auction messages identify, among other things, the quantity of the COA-eligible order). \9\ 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 1.1, paragraph (j) in Order Instruction definition. 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 6.13(g)(5) 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 6.13(d) or (e) after Legging will rest in the COB in accordance with the proposed Complex Reserve Order instruction.\10\ As stated in the definition of a Reserve Order and proposed definition of a Complex Reserve Order,\11\ 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 accordance with proposed Rule 6.13(b)(6). --------------------------------------------------------------------------- \10\ The proposed rule change also amends the heading name and introductory paragraph language of paragraph (g), as that paragraph does not necessarily describe restrictions on Legging, but rather describes additional handling for certain orders when they Leg into the Simple Book. \11\ See Rule 1.1, paragraph (j) in Order Instruction definition and proposed Rule 6.13(b)(6). \12\ See Rule 6.13(d)(5) (describing the processing of COA- Eligible Orders following a COA), (e) (describing the processing of orders that do not initiate COA upon submission to the System or after resting on the COB), and (i) (describing the evaluation process). --------------------------------------------------------------------------- The proposed rule change also amends Rule 6.13(d)(4)(B) to clarify that COA Responses may be larger than the COA-eligible order (in response to which the COA Response is submitted), and that when the System caps the size of aggregated COA Responses at the size of the COA-eligible order, the size of the COA-eligible order includes the Display Quantity and Reserve Quantity if the COA-eligible order is a Complex Reserve Order. Neither the System nor the Rules limit the initial 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 [[Page 60919]] Display Quantity of the Complex Reserve Order (which the System will cap at the entire size of the Complex Reserve Order in the same manner that the System caps COA Responses at the size of another type of COA- eligible 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 6.13(c) through (e), subject to the current handling provisions in Rule 6.13(h).\13\ Proposed Rule 6.13(h)(4) 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.\14\ The proposed rule change also clarifies in Rule 6.13(d)(5)(A)(i) and (e)(1) that both displayed and nondisplayed orders and quotes in the Simple Book 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 6.13(d)(5)(A)(i) and (e)(1) states that the System executes a complex order against orders and quotes in the Simple Book for the individual leg components of the complex order through Legging, which the System allocates in accordance with the priority in Rule 6.12(a). Rule 6.12(a) provides that resting orders and quotes are prioritized according to price and there [sic] are allocated in time priority or on a pro-rata basis, 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\ The proposed rule change also adds headings to the current subparagraphs in paragraph (h). \14\ See Rule 6.12(a)(3). --------------------------------------------------------------------------- If a complex order Legs into the Simple Book, the execution priority of contra-side interest will be as follows:Displayed simple orders Nondisplayed portions of simple orders Displayed complex orders and COA Responses, if applicable Nondisplayed portions of Complex Reserve 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 simple orders, second against displayed complex orders and COA responses, third against nondisplayed portions of simple orders, and fourth against nondisplayed portions of Complex Reserve 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. 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 for simple orders, which functions substantially in the same manner as the proposed Complex Reserve Order functionality. The purpose of a Complex Reserve Order is the same as the purpose of a simple Reserve Order. 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 [[Page 60920]] 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 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.\18\ --------------------------------------------------------------------------- \18\ 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-C2-2018-022 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-C2-2018-022. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-C2-2018-022, and should be submitted on or before December 18, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2018-25884 Filed 11-26-18; 8:45 am] BILLING CODE 8011-01-P
![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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![Federal Register / Vol. 83, No. 228 / Tuesday, November 27, 2018 / Notices 60917
(5) Processing of COA-Eligible Orders. (4) Reserved II. Self-Regulatory Organization’s
(A) At the end of the Response Time (5) The entire quantity of a Complex Statement of the Purpose of, and
Interval, the System executes a COA- Reserve Order (both the Display Statutory Basis for, the Proposed Rule
eligible order (in whole or in part) Quantity and Reserve Quantity) Legs Change
against contra side interest in price into the Simple Book at the same time,
priority. If there is contra side interest In its filing with the Commission, the
and any quantity that does not execute Exchange included statements
at the same price, the System allocates pursuant to paragraph (d) or (e) after
the contra side interest as follows: concerning the purpose of and basis for
Legging will rest in the COB in the proposed rule change and discussed
(i) Orders and quotes in the Simple accordance with the Complex Reserve
Book (both displayed and nondisplayed any comments it received on the
Order instruction. proposed rule change. The text of these
orders) for the individual leg
components of the complex order (h) Additional Complex Order statements may be examined at the
through Legging (subject to paragraph Handling. Processing and execution of places specified in Item IV below. The
(g)), which the System allocates in complex orders pursuant to this Rule Exchange has prepared summaries, set
accordance with the priority in Rule 6.13 (including pursuant to paragraphs forth in sections A, B, and C below, of
6.12(a) applicable to the class. (d) and (e), and following evaluation the most significant aspects of such
(ii) No change. pursuant to paragraph (i)) are subject to statements.
(B) No change. the following:
A. Self-Regulatory Organization’s
(e) Processing of Do-Not-COA Orders/ (1) Order Locks/Crosses Opposite Side Statement of the Purpose of, and
Orders Resting on the COB. Upon of SBBO. A complex market order or a Statutory Basis for, the Proposed Rule
receipt of a do-not-COA order, or if the limit order with a price that locks or Change
System determines an order resting on crosses the then-current opposite side
the COB is eligible for execution SBBO and does not execute because the 1. Purpose
following evaluation pursuant to SBBO is the best price but not available In 2016, the Exchange’s parent
paragraph (i), the System executes it (in for execution (because it does not satisfy company, Cboe Global Markets, Inc.
whole or in part) against contra side the complex order ratio or the complex (formerly named CBOE Holdings, Inc.)
interest in price priority. If there is order cannot Leg into the Simple Book) (‘‘Cboe Global’’), which is also the
contra side interest at the same price, enters the COB with a book and display parent company of Cboe Exchange, Inc.
the System allocates the contra side price that improves the then-current (‘‘Cboe Options’’), acquired Cboe EDGX
interest as follows: opposite side SBBO by $0.01. If the
(1) Orders and quotes in the Simple Exchange, Inc. (‘‘EDGX’’), Cboe EDGA
SBBO changes, the System continuously Exchange, Inc. (‘‘EDGA’’), Cboe BZX
Book (both displayed and nondisplayed reprices the book and display price of
orders) for the individual leg Exchange, Inc. (‘‘BZX or BZX Options’’),
the complex order (or unexecuted and Cboe BYX Exchange, Inc. (‘‘BYX’’
components of the complex order portion) based on the new SBBO (up to
through Legging (subject to paragraph and, together with C2, Cboe Options,
the limit price, if it is a limit order), EDGX, EDGA, and BZX, the ‘‘Cboe
(g)), which the System allocates in subject to the drill-through price
accordance with the priority in Rule Affiliated Exchanges’’). The Cboe
protection described in Rule 6.14(b), Affiliated Exchanges are working to
6.12(a) applicable to the class. until:
(2) No change. align certain system functionality,
The System enters any do-not-COA (A)–(B) No change. retaining only intended differences
order (or unexecuted portion) that does (2) Zero NBB, NBO, or NBBO. If there between the Cboe Affiliated Exchanges,
not execute against the individual leg is a zero NBO for any leg, the System in the context of the technology
markets or complex orders into the COB replaces the zero with a price $0.01 migration of Cboe Options to the same
(if eligible for entry), and applies a above the NBB to calculate the SNBBO, trading platform as the Exchange. Thus,
timestamp based on the time it enters and complex orders with any buy legs the proposed rule change is intended to
the COB. The System cancels or rejects do not Leg into the Simple Book. If there add certain functionality to the
any complex order (or unexecuted is a zero NBB, the System replaces the Exchange’s System that is currently
portion) that would execute at a price zero with a price of $0.01, and complex offered by Cboe Options in order to
outside of the SBBO, that is not eligible orders with any sell legs do not Leg into ultimately provide a consistent
for entry into the COB, or in accordance the Simple Book. If there is a zero NBB technology offering for market
with the User’s instructions. Complex and zero NBO, the System replaces the participants who interact with the Cboe
orders resting on the COB may execute zero NBB with a price of $0.01 and Affiliated Exchanges. Although the
pursuant to this paragraph (e) following replaces the zero NBO with a price of Exchange intentionally offers certain
evaluation pursuant to paragraph (i) and $0.02, and complex orders do not Leg features that differ from those offered by
remain on the COB until they execute or into the Simple Book. its affiliates and will continue to do so,
are cancelled or rejected. (3) (Reserved) the Exchange believes that offering
(f) No change. similar functionality to the extent
(4) Nondisplayed Orders. Displayed practicable will reduce potential
(g) Legging [Restrictions]. A complex
complex orders resting on the COB have confusion for Users.
order may execute against orders and
priority over nondisplayed portions of
quotes in the Simple Book pursuant to Currently, the Exchange offers
Complex Reserve Orders resting on the
subparagraphs (d)(5)(A)(i) and (e)(1) if it Reserve Order functionality for simple
COB.
can execute in full or in a permissible orders.3 Reserve Orders permit Users to
amozie on DSK3GDR082PROD with NOTICES1
ratio and if it has no more than a * * * * * enter orders with both displayed and
maximum number of legs (which the The text of the proposed rule change nondisplayed amounts. Reserve Orders
Exchange determines on a class-by-class is also available on the Exchange’s provide Users with additional flexibility
basis and may be two, three or four) website (http://www.c2exchange.com/ to manage and display their orders and
(‘‘Legging’’), subject to the following Legal/), at the Exchange’s Office of the
[restrictions]: Secretary, and at the Commission’s 3 See Rule 1.1, paragraph (j) in Order Instruction
(1)–(3) No change. Public Reference Room. definition.
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![Federal Register / Vol. 83, No. 228 / Tuesday, November 27, 2018 / Notices 60919
Display Quantity of the Complex • Nondisplayed portions of simple proposed rule change is consistent with
Reserve Order (which the System will orders the Section 6(b)(5) 17 requirement that
cap at the entire size of the Complex • Displayed complex orders and COA the rules of an exchange not be designed
Reserve Order in the same manner that Responses, if applicable to permit unfair discrimination between
the System caps COA Responses at the • Nondisplayed portions of Complex customers, issuers, brokers, or dealers.
size of another type of COA-eligible Reserve Orders In particular, the proposed rule
order) will have the opportunity to The Exchange believes this is change will remove impediments to and
execute against the entire size of the reasonable, as it ensures protection of perfect the mechanism of a free and
Complex Reserve Order. the leg markets while ensuring system open national market system, as well as
Processing and execution of Complex stability. This priority order results in benefit investors, by providing Users
Reserve Orders will generally occur in nondisplayed orders on the Simple with additional flexibility to manage
the same manner as other complex Book ahead of displayed complex orders and display their complex orders and
orders in accordance with current Rule on the COB. While the Exchange additional control over their executions
6.13(c) through (e), subject to the generally prioritizes displayed orders on the Exchange. This may encourage
current handling provisions in Rule over nondisplayed orders to encourage market participants to bring additional
6.13(h).13 Proposed Rule 6.13(h)(4) Users to submit displayed liquidity, liquidity to the market, which benefits
states that displayed complex orders executing complex orders first against all investors.
resting on the COB have priority over displayed simple orders, second against The Exchange notes that Reserve
nondisplayed portions of Complex displayed complex orders and COA Order functionality is not new or unique
Reserve Orders resting on the COB. This responses, third against nondisplayed and is already available in a similar
is consistent with the current handling portions of simple orders, and fourth capacity for simple orders. While the
of simple Reserve Orders.14 The against nondisplayed portions of Reserve Order functionality is not
proposed rule change also clarifies in Complex Reserve Orders would currently available for complex orders,
Rule 6.13(d)(5)(A)(i) and (e)(1) that both significantly increase the complexity of the Exchange has Reserve Order
the proposed functionality. The Simple functionality for simple orders, which
displayed and nondisplayed orders and
Book and COB are entirely separate functions substantially in the same
quotes in the Simple Book for the
functioning books, and moving a manner as the proposed Complex
individual leg components of the
complex order back and forth between Reserve Order functionality. The
complex order trade before complex
the two books increases systematic risk purpose of a Complex Reserve Order is
orders (both displayed and
related to Legging. Additionally, this the same as the purpose of a simple
nondisplayed orders) resting on the
would increase the execution time for Reserve Order.
COB and COA Responses, if applicable, The proposed rule change to only
at the same price when a complex order complex orders that are able to Leg,
which may harm Users. The Exchange include the Displayed Quantity of a
Legs into the Simple Book. This is Complex Reserve Order in a COA
consistent with current functionality believes the need to ensure system
stability and efficient executions in message protects investors, as it is
and current Rules. Specifically, Rule consistent with the purpose of a
6.13(d)(5)(A)(i) and (e)(1) states that the connection with offering the proposed
functionality to Users outweighs any Complex Reserve Order and the
System executes a complex order intention of a User that submits a
potential benefits of prioritizing all
against orders and quotes in the Simple Complex Reserve Order, which is to
displayed interest ahead of
Book for the individual leg components only have a certain specified size
nondisplayed interest in this context.
of the complex order through Legging, publicly displayed. This provides
which the System allocates in 2. Statutory Basis Complex Reserve Orders with the
accordance with the priority in Rule The Exchange believes the proposed potential for price improvement in a
6.12(a). Rule 6.12(a) provides that rule change is consistent with the manner consistent with the objective of
resting orders and quotes are prioritized Securities Exchange Act of 1934 (the a Reserve Order. Therefore, the
according to price and there [sic] are ‘‘Act’’) and the rules and regulations Exchange believes it is appropriate to
allocated in time priority or on a pro- thereunder applicable to the Exchange only include the Display Quantity of a
rata basis, and that displayed orders and, in particular, the requirements of Complex Reserve Order in a COA
have priority over nondisplayed orders. Section 6(b) of the Act.15 Specifically, message.
Therefore, if a complex order Legs in to the Exchange believes the proposed rule The Exchange believes the proposed
the Simple Book, it would execute change is consistent with the Section rule change regarding how Complex
against displayed and then 6(b)(5) 16 requirements that the rules of Reserve Orders Leg into the Simple
nondisplayed resting interest in the an exchange be designed to prevent Book will benefit investors. The
Simple Book at the applicable price fraudulent and manipulative acts and proposed rule change is consistent with
before executing against other complex practices, to promote just and equitable the definition of a Reserve Order, which
orders. The proposed rule change adds principles of trade, to foster cooperation states that the entire quantity is eligible
clarity to the priority of resting orders and coordination with persons engaged for potential execution against incoming
when a complex order Legs into the in regulating, clearing, settling, orders, and thus provides the entire
Simple Book, as well as describes how processing information with respect to, quantity of a Reserve Order with an
complex reserve orders will be and facilitating transactions in opportunity to execute against orders
prioritized. securities, to remove impediments to and quotes in the Simple Book.
If a complex order Legs into the and perfect the mechanism of a free and Additionally, this will maximize the
amozie on DSK3GDR082PROD with NOTICES1
Simple Book, the execution priority of open market and a national market size of resting orders and quotes on the
contra-side interest will be as follows: system, and, in general, to protect Simple Book that may execute when
• Displayed simple orders investors and the public interest. Complex Reserve Orders Leg into the
Additionally, the Exchange believes the Simple Book. Therefore, the Exchange
13 The proposed rule change also adds headings believes the proposed rule change may
to the current subparagraphs in paragraph (h). 15 15 U.S.C. 78f(b).
14 See Rule 6.12(a)(3). 16 15 U.S.C. 78f(b)(5). 17 Id.
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![60920 Federal Register / Vol. 83, No. 228 / Tuesday, November 27, 2018 / Notices
increase execution opportunities for order handling instructions available including whether the proposed rule
both Complex Reserve Orders and among the Cboe Affiliated Exchanges. change is consistent with the Act.
simple orders and quotes resting on the Comments may be submitted by any of
B. Self-Regulatory Organization’s
Simple Book. the following methods:
The Exchange believes the proposed Statement on Burden on Competition
rule change related to the priority of The Exchange does not believe that Electronic Comments
Complex Reserve Orders promotes just the proposed rule change will impose • Use the Commission’s internet
and equitable principles of trade, as it any burden on competition that is not comment form (http://www.sec.gov/
is consistent with current priority in the necessary or appropriate in furtherance rules/sro.shtml); or
Simple Book that provides displayed of the purposes of the Act. The • Send an email to rule-comments@
orders have priority over nondisplayed Exchange believes the proposed rule sec.gov. Please include File Number SR–
orders. The proposed rule change that change will not burden intramarket C2–2018–022 on the subject line.
displayed portions of complex orders competition because the Reserve Order Paper Comments
resting on the COB have priority over instruction on complex orders will be
nondisplayed portions of Complex available to all market participants. • Send paper comments in triplicate
Reserve Orders resting on the COB is Additionally, use of the Reserve Order to Secretary, Securities and Exchange
reasonable, because it is consistent with instruction on complex orders is Commission, 100 F Street NE,
the current handling of simple Reserve voluntary. The Exchange also believes Washington, DC 20549–1090.
Orders, as discussed above. the proposed rule change will not All submissions should refer to File
Additionally, the proposed rule change impose any burden on intermarket Number SR–C2–2018–022. This file
to clarify that displayed and competition because this relates to an number should be included on the
nondisplayed orders and quotes resting instruction on orders that are submitted subject line if email is used. To help the
on the Simple Book have priority over to the Exchange and how the Exchange’s Commission process and review your
all displayed and nondisplayed orders System will handle and execute them. comments more efficiently, please use
resting on the COB when a complex Additionally, nothing prevents other only one method. The Commission will
order Legs into the Simple Book is options exchanges that offer complex post all comments on the Commission’s
consistent with current functionality orders from adopting a Reserve Order internet website (http://www.sec.gov/
and current Rules describing how functionality for complex orders. The rules/sro.shtml). Copies of the
complex orders Leg into the Simple Exchange also believes the proposed submission, all subsequent
Book. This additional clarity regarding rule change will promote competition, amendments, all written statements
the order in which resting orders and as Complex Reserve Orders will provide with respect to the proposed rule
quotes on the Simple Book will trade Users with additional flexibility to change that are filed with the
when a complex order Legs into the manage and display their complex Commission, and all written
Simple Book benefits investors, as it orders and additional control over their communications relating to the
provides more detail regarding the executions on the Exchange. This may proposed rule change between the
priority of executions on the Exchange. encourage market participants to bring Commission and any person, other than
The Exchange also believes the additional liquidity to the market, those that may be withheld from the
proposed priority ensures system which benefits all investors. public in accordance with the
stability and efficient executions provisions of 5 U.S.C. 552, will be
outweighs [sic]. The Exchange notes it C. Self-Regulatory Organization’s available for website viewing and
is not novel for nondisplayed interest to Statement on Comments on the printing in the Commission’s Public
trade ahead of displayed interest.18 Proposed Rule Change Received From Reference Room, 100 F Street NE,
The proposed rule change is generally Members, Participants, or Others Washington, DC 20549 on official
intended to add certain system The Exchange neither solicited nor business days between the hours of
functionality to the Exchange’s System received comments on the proposed 10:00 a.m. and 3:00 p.m. Copies of the
in order to provide a consistent rule change. filing also will be available for
technology offering for the Cboe inspection and copying at the principal
Affiliated Exchanges, as Cboe Options III. Date of Effectiveness of the
Proposed Rule Change and Timing for office of the Exchange. All comments
currently offers (and intends to offer received will be posted without change.
following its migration to the same Commission Action
Persons submitting comments are
technology platform as the Exchange) Within 45 days of the date of cautioned that we do not redact or edit
complex reserve order functionality. A publication of this notice in the Federal personal identifying information from
consistent technology offering, in turn, Register or within such longer period comment submissions. You should
will simplify the technology up to 90 days (i) as the Commission may submit only information that you wish
implementation, changes, and designate if it finds such longer period to make available publicly. All
maintenance by Users of the Exchange to be appropriate and publishes its submissions should refer to File
that are also participants on Cboe reasons for so finding or (ii) as to which Number SR–C2–2018–022, and should
Affiliated Exchanges. The proposed rule the Exchange consents, the Commission be submitted on or before December 18,
change will provide Users with will: 2018.
additional flexibility to manage and A. by order approve or disapprove
display their orders and control their such proposed rule change, or For the Commission, by the Division of
executions on the Exchange. This may Trading and Markets, pursuant to delegated
B. institute proceedings to determine
amozie on DSK3GDR082PROD with NOTICES1
encourage market participants to bring authority.19
whether the proposed rule change
additional liquidity to the market, Brent J. Fields,
should be disapproved.
which benefits all investors. Secretary.
Additionally, this will provide Users IV. Solicitation of Comments [FR Doc. 2018–25884 Filed 11–26–18; 8:45 am]
with greater harmonization between the Interested persons are invited to BILLING CODE 8011–01–P
submit written data, views, and
18 See supra note 15 [sic]. arguments concerning the foregoing, 19 17 CFR 200.30–3(a)(12).
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Document Created: 2018-11-27 01:25:11
Document Modified: 2018-11-27 01:25:11
| 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 60916 |
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