83 FR 6294 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Delete Obsolete Rules
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 30 (February 13, 2018)
Federal Register Volume 83, Issue 30 (February 13, 2018)
| Page Range | 6294-6299 | |
| FR Document | 2018-02857 |
[Federal Register Volume 83, Number 30 (Tuesday, February 13, 2018)] [Notices] [Pages 6294-6299] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-02857] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82646; File No. SR-CBOE-2018-010] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Delete Obsolete Rules February 7, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on January 25, 2018, Cboe Exchange, Inc. (``Exchange'' or ``Cboe Options'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ``non-controversial'' proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b- 4(f)(6) [[Page 6295]] thereunder.\4\ 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. \3\ 15 U.S.C. 78s(b)(3)(A)(iii). \4\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to delete Rules that no longer apply to the Exchange and make other nonsubstantive changes to the Rules. The text of the proposed rule change is also available on the Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this rule change is to delete Rules that no longer apply to the Exchange and to make other nonsubstantive changes to the Rules.\5\ --------------------------------------------------------------------------- \5\ The Exchange initially filed the proposed rule change on January 3, 2018 (SR-CBOE-2018-003). On January 25, 2018 the Exchange withdrew SR-CBOE-2018-003 and refiled as SR-CBOE-2018-009. On business date January 25, 2018, the Exchange subsequently withdrew SR-CBOE-108-009 [sic] and submitted this filing. --------------------------------------------------------------------------- Deletion of Rules The Exchange proposes to delete the following rules and chapters from its rulebook:Rule 2.40--Market-Maker Surcharge for Brokerage. Rule 2.40 operated as a pilot program until March 30, 2000, at which time the program expired (and the Exchange did not request renewal). The Exchange does not impose a surcharge on Market-Maker transactions pursuant to this rule. Any fees and rebates applicable to any Market- Maker transactions are included in the Cboe Options Fees Schedule. Rule 6.2--Trading Rotations. Rule 6.2 states the Exchange may use the procedures described in current Rules 6.2, 6.2A, or 6.2B to conduct trading rotations in all options listed on the Exchange. Currently, the Exchange only uses the procedures set forth in current Rule 6.2B (proposed Rule 6.2) to conduct trading rotations, and no longer conducts trading rotations pursuant to current Rule 6.2. Therefore, this provision no longer applies to trading on the Exchange.\6\ --------------------------------------------------------------------------- \6\ The proposed rule change makes corresponding changes to the following rules to delete references to trading rotations and the rule proposed to be deleted: Rules 6.6, 6.18, 6.25(b)(1), 6.73(c) (no longer applicable because trading rotations pursuant to current Rule 6.2B (proposed Rule 6.2) are fully electronic), 21.11, 22.11, and 24.13 and Interpretation and Policy .01 (the body of proposed Rule 24.13 states opening rotations will be conducted in accordance with Rule 24.13 or proposed Rule 6.2, so there is no need to include a statement in Rule 24.13, Interpretation and Policy .01 that states proposed Rule 6.2 describes procedures for a trading rotation, as it would be redundant). --------------------------------------------------------------------------- Rule 6.2A--Rapid Opening System (``ROS''). The Exchange used ROS to open options prior to implementation of the Exchange's Hybrid Trading System, which includes the Hybrid 3.0 Platform. Currently, all options listed on the Exchange trade on its Exchange's Hybrid Trading System. As stated in Rule 6.2A, ROS does not apply to series trading on the Hybrid Trading System, which open on the Cboe Options Hybrid Opening System (``HOSS'') (pursuant to current Rule 6.2B (proposed Rule 6.2)). Therefore, Rule 6.2A no longer applies to any options listed for trading on the Exchange.\7\ --------------------------------------------------------------------------- \7\ The proposed rule change makes corresponding changes to the following rules to delete references to ROS and the rule proposed to be deleted: Rules 1.1(fff) and (ggg), 6.2, 6.6, 6.18, 6.25(b)(1), 8.60(c)(11) and Interpretation and Policy .02, 22.11, and 24.13. Because the proposed rule change deletes both Rules 6.2 and 6.2A, the proposed rule change also renumbers Rule 6.2B to be Rule 6.2, and makes corresponding changes throughout the Rules, including Rules 6.1A, 6.3A, 6.12, 6.12A, 6.35 [sic] (b)(v)(B)(V), 8.15, 8.85, and 17.50. --------------------------------------------------------------------------- Rules 6.8--RAES Operations and 6.8B--Automatic ORS Order Execution Against Booked Orders. The Exchange's Retail Automatic Execution System (``RAES'') was an automated execution system feature of the Exchange's Order Routing System (``ORS'') operated by the Exchange and that provided automated order execution and reporting services for options. RAES and ORS are no longer used, as all options trading on the Exchange currently occurs on the Hybrid Trading System, which includes Exchange's Order Handling System (``OHS''). Therefore, RAES and ORS no longer apply to any options listed for trading on the Exchange.\8\ --------------------------------------------------------------------------- \8\ The proposed rule change makes corresponding changes to the following rules to delete references to RAES and ORS, change references from ORS to OHS, and the rules proposed to be deleted: Rules 1.1(fff) and (ggg), 6.3, Interpretation and Policy .05, 6.6(b) and (e) and Interpretation and Policy .01, 6.7(b) (the Hybrid System includes OHS and the book), 6.8C (which the proposed rule change renumbers as 6.8), 6.13(a) and (c), 6.18, 8.7(b)(iii) and Interpretations and Policies .07 (which is being deleted in its entirety, as described below) .11(a) (the Exchange deleted the paragraph letter for current paragraph (b), as it will be the only paragraph in that Interpretation and Policy, as well as the introduction to that paragraph regarding its applicability to classes on the Hybrid System, because all classes are on the Hybrid System), 8.13, 8.16, 8.51(c)(1)(a)(iii), 8.60(c)(7) (the proposed rule change renumbers provisions (8) through (10) as (7) through (9)) and Interpretation and Policy .02, 8.85(a)(ix) (current paragraph (a)(ix) no longer applies, as there are no current Exchange sponsored automated programs that require a market participant's participation, and the proposed rule change renumbers subparagraphs (x) and (xi) as (ix) and x), and deletes from current subparagraph (x) (proposed subparagraph (xi) the introduction to that paragraph regarding its applicability to classes on the Hybrid System, because all classes are on the Hybrid System), 23.7, 24.15, 24.17, 24.21(j)(1), and 24B.15. --------------------------------------------------------------------------- Rule 6.10--LOU System Operations. The Large Order Utility (``LOU'') System was a facility of the Exchange that provided order routing, handling, and execution for eligible options orders routed electronically to the Exchange. The LOU System is no longer used, as all options trading on the Exchange trade on the Hybrid Trading System. Therefore, the LOU System no longer applies to any options listed for trading on the Exchange. Rule 6.13B--Penny Price Improvement. Pursuant to Rule 6.13B, the Exchange may designate one or more options trading on the Hybrid Trading System in a Penny Price Improvement Program, which allows Trading Permit Holders to provide price improvement beyond the Exchange's disseminated quote for classes not already quoted in penny increments and for which the simple auction liaison system is not in effect. The Exchange currently has not designated, and has no intention to designate, any options for participation in this program. Therefore, this program no longer applies to any options listed for trading on the Exchange.\9\ --------------------------------------------------------------------------- \9\ The proposed rule change makes corresponding changes to the following rules to delete references to the Penny Price Improvement Program and the rules proposed to be deleted: Rules 1.1(fff) and (ggg), 6.45, Interpretations and Policies .01 and .02, Rule 6.47, Interpretation and Policy .02, and Rule 6.74, Interpretation and Policy .09. --------------------------------------------------------------------------- Rule 6.54(a)--Accommodation Liquidation (Cabinet Trades) for Classes Not Trading on the Cboe Options Hybrid System. Rule 6.54 describes cabinet trading permitted on the Exchange. [[Page 6296]] Paragraph (a) describes cabinet trading for classes not trading on the Hybrid System, while paragraph (b) describes cabinet trading for classes trading on the Hybrid System. All options trading on the Exchange currently trade on the Hybrid Trading System, and thus Rule 6.54(a) no longer applies to any options listed for trading on the Exchange.\10\ --------------------------------------------------------------------------- \10\ The proposed rule change makes a corresponding change to current paragraph (b), eliminates paragraph lettering for paragraph (b) (as that will be the only paragraph in the rule), and reletters subparagraphs (i) and (ii) as (a) and (b), consistent with paragraph lettering throughout the rules. --------------------------------------------------------------------------- Chapter VII--Order Book Officials. Order Book Officials were Exchange employees responsible for maintaining the book with respect to classes assigned to them, effecting proper executions of orders placed with them, displaying bids and offers, and monitoring the market for classes assigned to them. The Exchange currently has no employees designated as, and does not intend to designate any employees as, Order Book Officials, as Order Book Official functions are generally obsolete now that most trading occurs electronically. The proposed rule change deletes Rules 7.1 through 7.3, 7.4 except for subparagraph (a)(1) (which is being moved to Rule 6.11, with some modifications described below), 7.5, 7.7 through 7.10, and Chapter VII, Section B, as they relate solely to responsibilities of Order Book Officials. Rule 7.4(a)(1) states public customer orders in Hybrid and Hybrid 3.0 classes are eligible for entry into the electronic book, and the Exchange may determine on a class-by-class basis other orders that are eligible for entry into the electronic book. Currently, after a class is open for trading (see current Rule 6.2B (proposed Rule 6.2) for a description of orders the System accepts prior to opening), the System accepts for entry into the Book (1) quotes of all Market-Makers and orders of any origin code in Hybrid classes and (2) quotes of Lead Market-Makers (``LMMs'') and orders of priority customers in Hybrid 3.0 classes, while the Exchange continues to have flexibility to permit orders of other origin codes be eligible for book entry. The Exchange proposes to codify this current book eligibility (which is consistent with the Exchange's authority in current Rule 7.4(a)(1)) in Rule 6.11. The proposed rule change also deletes the provision in current Rule 7.4(a)(1) that states Trading Permit Holders submitting orders or quotes for entry in to the book must do so electronically and in the format announced by the Exchange. It is redundant to state orders and quotes for entry in the electronic book must be submitted electronically, and Rule 6.53A describes the types of order formats Trading Permit Holders must use.\11\ --------------------------------------------------------------------------- \11\ The proposed rule change makes corresponding changes to the following rules to change cross-references to Rule 7.4 to Rule 6.11: Rules 6.13(b)(i)(A)(2) and (iii), 23.3(b), and 24.11A (the proposed rule change also deletes the Interpretations and Policies section of this rule, as there are currently none). --------------------------------------------------------------------------- Rule 7.5, Interpretation and Policy .03 states every Floor Broker who represents a Market-Maker with an order in any options class must, by public outcry at the post, indicate the identity of such Market- Maker at the request of any Trading Permit Holder or Order Book Official. The proposed rule change moves this provision (with the reference to Order Book Official deleted) to Rule 6.73, which relates to responsibilities of Floor Brokers. Rule 7.6 regarding the requirement for PAR Official to report unusual activity is proposed to move to Rule 6.12B(b)(v).\12\ The proposed rule change moves currently applicable provisions in Rule 7.12 (regarding PAR Officials) to Rule 6.12B (with some nonsubstantive changes).\13\ PAR Officials are Exchange employees or independent contractors whom the Exchange may designate as being responsible for operating a PAR workstation and effecting proper executions of orders placed with them. PAR Officials no longer maintain the book with respect to assigned classes, as the electronic book manages electronic orders and quotes. The proposed rule change deletes the provision in current Rule 7.12(b)(i) regarding the definition of customer limit orders, as customer orders are now defined in Rule 1.1(www) and (yyy) (which are proposed to be relettered as (yyy) and (zzz), as described below). The proposed rule change deletes current Rule 7.12(b)(i)(C), which applies to the Intermarket Options Linkage Plan that no longer exists.\14\ Pursuant to the current linkage plan, including the definition of an intermarket sweep order (``ISOs'') in Rule 6.53, ISOs may only be handled electronically (they may only be entered as immediate-or-cancel or for book entry if they do not execute), and thus would never be routed to a PAR workstation under the Rules. Therefore, PAR Officials no longer have responsibilities with respect to routed orders under the current linkage plan. The proposed rule change moves Rule 7.12(b)(i)(E), which relates to orders received during a trading rotation pursuant to current Rule 6.2 or HOSS pursuant to current Rule 6.2B (proposed Rule 6.2), to proposed Rule 6.12B(b)(i)(D). The proposed rule change changes the term immediately to promptly, as under current Rule 7.12 and proposed Rule 6.12(b), the term immediately means as soon as practicable but within 30 seconds. However, proposed Rule 6.12B(b)(i)(D) exempts these orders from being displayed within 30 seconds, so the term immediate did not seem appropriate. The term promptly still requires action as soon as practicable, but may be longer than 30 seconds. The proposed rule change moves current Rule 7.12(b)(ii), (iv), and (v) to proposed Rule 6.12B(b)(ii), (iii), and (iv), respectively, and moves current Rule 7.12(c) and (d) to proposed Rule 6.12B(c) and (d), respectively. The proposed rule change deletes Rule [[Page 6297]] 7.12(b)(iii), as PAR Officials no longer maintain the book (as described above) and do not have the ability to remove orders from the book. The proposed rule change replaces the term ``senior Trading Operations official'' with ``senior Help Desk personnel'' in current Rule 7.12(b)(iv) (proposed Rule 6.12(b)(iii)), which term is used throughout the rules. The proposed rule change deletes Rule 7.12, Interpretation and Policy .01, as it relates to the Exchange's responsibility to appoint PAR Officials to trading stations prior to March 24, 2006. The Exchange currently has PAR Officials appointed to all trading stations on the trading floor. --------------------------------------------------------------------------- \12\ The proposed rule change makes corresponding changes to the following rules to delete references to Order Book Officials and the rules proposed to be deleted: Rules 6.3, Interpretations and Policies .01 and .02, including the related footnote (these interpretations also delete references to post directors, which are no longer used at the Exchange, and only relate to prior circumstances under which Post Directors or Order Book Officials would suspend trading; those functions no longer exist on the Exchange, and the Exchange currently only halts trading in accordance with the remaining provisions of Rule 6.3 and other rules related to trading halts), 6.6(b) and (e) (which also deletes references to post directors, which are no longer used at the Exchange), 6.12A, 6.20(a) and Interpretations and Policies .02 (currently, there are only four PAR Officials on the trading floor, who all float to all trading crowds as necessary and are thus no longer assigned to classes) and .04(ii), 6.43(a), 6.54, Interpretations and Policies .01 and .02 (the proposed rule change replaces references to Order Book Officials to PAR Officials, consistent with Interpretation and Policy .02, which indicates PAR Officials may perform the functions of Order Book Officials for purposes of that rule), 6.73, Interpretation and Policy .01 (which only relates to comparing execution prices to those in displayed by an Order Book Official (pursuant to Rules 6.45(b) and 6.73, Floor Brokers must use due diligence to execute orders at the best price and provide first priority based on price); additionally, bids and offers are made in response to requests from Floor Brokers that represent orders in open outcry (see Rule 6.4(b) [sic] and Rule 6.73 contains other provisions that require a Floor Broker to make sure all persons in the crowd are aware of requests for quotes and use due diligence when handling and executing orders, making Interpretation and Policy .01 redundant and unnecessary), 8.7(c) (the Exchange notes Market-Makers not permitted to enter a trading station in a floor brokerage capacity, as set forth in Rule 8.8) and Interpretation and Policy .09 (changes cross-reference to Rule 7.5 to Rule 8.7(d)(iv), which describes current Market-Maker obligations, including the obligation of Market-Maker to provide a quote upon Exchange request), and 24.13 and Interpretation and Policy .03 (which the proposed rule change renumbers to .02). \13\ The proposed rule change makes corresponding changes to the following rules to change cross-references to Rule 7.12 to Rule 6.12B: Rules 6.12A, 6.18(d)(i), and 6.20(a). \14\ Chapter VI, Section E describes Exchange responsibilities pursuant to the current linkage plan, the Options Order Protection and Locked/Crossed Market Plan. --------------------------------------------------------------------------- Autoquote. Autoquote was an Exchange electronic quotation system that automatically monitored and updated market quotes using a mathematical formula measuring certain characteristics of the option and underlying interest. Rules related to LMMs and DPMs require them to provide continuous electronic quotes in appointed classes using Autoquote or a proprietary automated quotation updating system. Currently, all Market-Makers that submit electronic quotes use a proprietary system, and Autoquote is no longer used. The proposed rule change deletes Rule 8.7, Interpretation and Policy .07, which describes Autoquote, as well as the requirement of LMMs and DPMs to provide electronic quotes, which requirement is included in Rules 8.15 and 8.85, respectively.\15\ --------------------------------------------------------------------------- \15\ The proposed rule change also deletes references to Autoquote in Rules 6.43(b), 8.15(c), 8.51(c)(1)(a)(iii), 8.60 Interpretation and Policy .02. Rules 8.7, Interpretation and Policy .07, 8.15(c), and 8.85(a)(x) provide components of a formula used for automated quoting by Market-Makers using proprietary automated quoting systems will be disclosed unless the Exchange exempts them from disclosing this information. For competitive reasons, the Exchange exempts all Market-Makers from disclosing this information, so the proposed rule change deletes those provisions, as it does not intend to require Market-Makers from disclosing proprietary information going forward. --------------------------------------------------------------------------- S&P 100 Modified Opening Rotation. Rule 24.13, Interpretation and Policy .02 provides a modified opening rotation that the Exchange may use for S&P 100 options, but the rule also provides the Exchange with the authority to open this class using HOSS pursuant to current Rule 6.2B (proposed Rule 6.2). The Exchange currently uses HOSS to open S&P 100 options, and does not intend to use the modified opening in the future. Therefore, this provision no longer applies to the opening of S&P 100 options.\16\ --------------------------------------------------------------------------- \16\ The proposed rule change also renumbers current Interpretation and Policy .03 to .02. --------------------------------------------------------------------------- Rule 8.7(c)--Market-Maker Entry into Trading Station in Unappointed Class other than As Floor Broker. Rule 8.7(c) states whenever a Market-Maker enters the trading station for a class of options contracts in a class in which it is not appointed, in other than a floor brokerage capacity, the Market-Maker must fulfill obligations established in Rule 8.7(b) and, for the rest of the trading day, as well as undertake certain additional obligations. This rule text essentially requires a Market-Maker to act like a Market-Maker when it enters a trading station in the capacity of a Market-Maker in an unappointed class. However, pursuant to Rule 8.3, on the trading floor, Market-Makers have an appointment to trade in all hybrid classes, so if it goes to any trading station on the floor as a Market- Maker, it has an appointment for the classes at that station and is subject to Market-maker obligations. That provision, in conjunction with the restriction on acting as a Market-Maker and Floor Broker on the same day, make the provision in Rule 8.7(c) unnecessary and duplicative. Therefore, the proposed rule change deletes this provision. Market-Maker Exemption from Rule 8.7(b)(iv) Obligations. Rule 8.7, Interpretation and Policy .13 provided Market-Makers with a temporary exemption from requirements set forth in Rule 8.7(d)(iv) on a pilot basis until February 17, 2007. That pilot has expired, and the Exchange did not renew it. Therefore, the proposed rule change deletes Rule 8.7, Interpretation and Policy .03, as it no longer applies to trading on the Exchange. Chapter XXIVA--Flexible Exchange Options (``FLEX Options''). When the Exchange began offering FLEX Options for trading, FLEX Options traded pursuant to Rule XXIVA on the trading floor. The Exchange then developed the FLEX Hybrid Trading System on which FLEX Options could trade both on the trading floor and electronically. Chapter XXIVB describes FLEX Options trading on this system, and provides the Exchange with ability to permit FLEX trading pursuant to Chapter XXIVA or XXIVB. The open outcry rules in Chapter XXIVA are substantially similar to those in Chapter XXIVB. The Exchange has determined all FLEX trading must occur on the FLEX Hybrid Trading System pursuant to Chapter XXIVB. Therefore, Chapter XXIVA no longer applies to the trading of any FLEX Options.\17\ The proposed rule change renumbers Chapter XXIVB and the rules in that chapter to Chapter XXIVA, and updates cross-references throughout the rules. --------------------------------------------------------------------------- \17\ The proposed rule change also deletes references to Chapter XXIVA in the following rules: Rules 3.2(b), 5.9, 6.1A(c), 6.24, Interpretation and Policy .05, 6.49A(c)(6), Introduction to Chapter XX, 20.12, Introduction to Chapter XXII, 22.16, Introduction to current Chapter XXIVB, 28.17, 29.18, and Introduction to Chapter XXIX. --------------------------------------------------------------------------- Chapter XXVI--Market Baskets. Chapter XXVI describes rules applicable to market basket contracts, which are contracts obligating the seller to sell and the purchaser to purchase a designated number of shares of each of the stocks comprising the index on which the market basket is based. The Exchange currently does not list, and does not intend to list in the future, market basket contracts for trading. Therefore, Chapter XXVI no longer applies to any options trading on the Exchange.\18\ --------------------------------------------------------------------------- \18\ The proposed rule change also deletes references to market baskets and the rules proposed to be deleted in: Rules 8.8, Interpretation and Policy .02 and 24B.10 (which is proposed to be renumbered as 24A.10). --------------------------------------------------------------------------- Chapter XXVII--Buy-Write Option Unitary Derivatives (``BOUNDS''). Chapter XXVIII describes rules applicable to BOUNDS, which are securities issued, or subject to issuance, by the Options Clearing Corporation pursuant to its rules, which gives holders and writers thereof such rights and obligations as may be provided in its rules. The Exchange currently does not list, and does not intend to list in the future, BOUNDS for trading. Therefore, Chapter XXVII no longer applies to any options trading on the Exchange. Chapter XXXI--Approval of Securities for Original Listing. Chapter XXXI describes rules pursuant to which the Exchange may list equity securities for listing on the Exchange. The Exchange currently does not list any equity securities on the Exchange. Therefore, Chapter XXXI currently applies to no securities listed on the Exchange.\19\ --------------------------------------------------------------------------- \19\ Options may be listed for trading on the Exchange pursuant to Chapter V and XXIV. The proposed rule change leaves a placeholder in Chapters XXX and XXXI for rules related to listing and trading of equity securities. The Exchange would file a proposed rule change to adopt new rules if it determines to list and trade equity securities in the future. --------------------------------------------------------------------------- Pursuant to Section 957 of the Dodd-Frank Act, Section 6(b)(10) of the Act \20\ requires the rules of each national securities exchange to prohibit any member that is not the beneficial owner of a security registered under Section 12 of the Act \21\ from granting a proxy to vote the security in connection with certain shareholder votes, unless the beneficial owner of the security has instructed the member to vote the proxy in accordance with the voting instructions of the beneficial owner. The [[Page 6298]] shareholder votes covered by Section 957 include any vote with respect to (1) the election of a member of the board of directors of an issuer (except for a vote with respect to the uncontested election of a member of the board of directors of any investment company registered under the Investment Company Act of 1940 (the ``Investment Company Act''), (2) executive compensation, or (3) any other significant matter, as determined by the Commission, by rule.\22\ --------------------------------------------------------------------------- \20\ 15 U.S.C. 78f(b)(10). \21\ 15 U.S.C. 78l. \22\ 15 U.S.C. 78f(b)(10)(B). --------------------------------------------------------------------------- Rules 31.82 through 31.88 currently include provisions that cover these proxy voting requirements with respect to Trading Permit Holders. However, because this proposed rule change deletes Chapter XXXI, the proposed rule change adds Rule 4.25 to retain the provisions required by Section 957. Proposed Rule 4.25 is substantially similar to rules of other options exchanges.\23\ --------------------------------------------------------------------------- \23\ See, e.g., C2 Supplemental Rules to C2 Chapter 4 and Nasdaq ISE Rule 421. --------------------------------------------------------------------------- Chapters XL through XLIX--Screen-Based Trading. Chapters XL through XLIX describe trading on the Exchange's screen-based trading system. The screen-based trading system is no longer used, as all options trading on the Exchange trade on the Hybrid Trading System. Therefore, the screen-based trading rules no longer apply to any options listed for trading on the Exchange.\24\ --------------------------------------------------------------------------- \24\ The proposed rule change makes corresponding changes to the following rules to delete references to screen-based trading and the rules proposed to be deleted: Rules 1.1(fff) and (ggg), 3.2(b), and 3.3. --------------------------------------------------------------------------- Chapters L through LIV--CBOE Stock Exchange (``CBSX''). Chapters L through LIV describe trading on CBSX, which is the Exchange's facility for trading stocks, warrants, IPRs, IPSs, and Trust Issued Receipts (non-options securities). CBSX ceased market operations on April 30, 2014. Therefore, the CBSX rules no longer apply to any trading on the Exchange.\25\ The Exchange would file a proposed rule change to adopt new rules if it determines to list and trade non- options securities in the future. --------------------------------------------------------------------------- \25\ The proposed rule change makes corresponding changes to the following rules to delete references to CBSX and the rules proposed to be deleted: Rules 3.1A, 3.2(b), 3.3, and 6.20A, Interpretation and Policy .01. --------------------------------------------------------------------------- Additional Nonsubstantive Changes In addition to nonsubstantive changes described above, the proposed rule change makes the following nonsubstantive changes: The proposed rule change moves Interpretation and Policy .01 to the definition of Professional in Rule 1.1(ggg) to Interpretation and Policy .06 to Rule 1.1, so that all Interpretations and Policies to Rule 1.1 are in the same place. Currently, there are two paragraphs erroneously lettered as Rule 1.1(mmm) and (ppp). The proposed rule change corrects this lettering and updates the paragraph lettering to reflect these corrections. The proposed rule change makes updates throughout the rules to conform paragraph lettering and numbering to other rules, as well as to reflect deleted rule provisions. Rule 6.2, Interpretation and Policy .01(b) and (c) erroneously refer to LMMs as LLMs. The proposed rule change corrects [sic] those erroneous references. The proposed rule change amends Rule 6.43(b) to indicate it only applies to Hybrid 3.0 classes, which is consistent with the current rule text and current trading practices. 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.\26\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \27\ 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) \28\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \26\ 15 U.S.C. 78f(b). \27\ 15 U.S.C. 78f(b)(5). \28\ Id. --------------------------------------------------------------------------- In particular, by deleting rules that no longer apply to Cboe Options trading (which rules have generally not been applicable in years), and making other nonsubstantive changes to better organize and more consistently number and letter rules, the rules will more clearly identify currently applicable rules, which the Exchange believes removes impediments to and perfects the mechanism of a free and open market. The Exchange believes the proposed rule change will eliminate confusion regarding which rules apply to current trading, which ultimately protects investors and the public interest. The proposed rule change has no impact on current trading on Cboe Options. The proposed rule change regarding proxy voting is substantially similar to C2 Supplemental Rules to C2 Chapter 4 and Nasdaq ISE Rule 421 and consistent with Section 957 of the Dodd-Frank Act. B. Self-Regulatory Organization's Statement on Burden on Competition Cboe Options 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 proposed rule change deletes rules that no longer apply to Cboe Options trading and makes other nonsubstantive changes, and thus has no impact on current trading on Cboe Options. Therefore, the proposed rule change has no impact on competition. The proposed rule change eliminates confusion with respect to rules applicable to current trading on Cboe Options. The proposed rule change regarding proxy voting is substantially similar to C2 Supplemental Rules to C2 Chapter 4 and Nasdaq ISE Rule 421 and consistent with Section 957 of the Dodd-Frank Act. 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 Because the foregoing proposed rule change does not: A. Significantly affect the protection of investors or the public interest; B. impose any significant burden on competition; and C. become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act \29\ and Rule 19b-4(f)(6) \30\ thereunder.\31\ --------------------------------------------------------------------------- \29\ 15 U.S.C. 78s(b)(3)(A). \30\ 17 CFR 240.19b-4(f)(6). \31\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- [[Page 6299]] A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) \32\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requests that the Commission waive the 30-day operative delay. According to the Exchange, the proposed rule change is consistent with the protection of investors and the public interest because it eliminates confusion as to the rules that currently apply to trading on Cboe Options. The Commission believes that deleting obsolete rules will add clarity and transparency to the Exchange's rules. Therefore, the Commission finds that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission waives the 30-day operative delay and designates the proposed rule change operative upon filing.\33\ --------------------------------------------------------------------------- \32\ 17 CFR 240.19b-4(f)(6)(iii). \33\ For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-CBOE-2018-010 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2018-010. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2018-010 and should be submitted on or before March 6, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\34\ --------------------------------------------------------------------------- \34\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-02857 Filed 2-12-18; 8:45 am] BILLING CODE 8011-01-P
![6294 Federal Register / Vol. 83, No. 30 / Tuesday, February 13, 2018 / Notices
and electronic communication networks vendor or subscriber would achieve with respect to the proposed rule
(‘‘ECNs’’). Competition among trading through the purchase. change that are filed with the
platforms can be expected to constrain Commission, and all written
C. Self-Regulatory Organization’s
the aggregate return that each platform communications relating to the
Statement on Comments on the
earns from the sale of its joint products, proposed rule change between the
Proposed Rule Change Received From
but different platforms may choose from Commission and any person, other than
Members, Participants, or Others those that may be withheld from the
a range of possible, and equally
reasonable, pricing strategies as the The Exchange has neither solicited public in accordance with the
means of recovering total costs. For nor received written comments on the provisions of 5 U.S.C. 552, will be
example, some platforms may choose to proposed rule change. available for website viewing and
pay rebates to attract orders, charge III. Date of Effectiveness of the printing in the Commission’s Public
relatively low prices for market data Reference Room, 100 F Street NE,
Proposed Rule Change and Timing for
products (or provide market data Washington, DC 20549, on official
Commission Action
products free of charge), and charge business days between the hours of
relatively high prices for accessing The foregoing rule change has become 10:00 a.m. and 3:00 p.m. Copies of the
posted liquidity. Other platforms may effective pursuant to Section 19(b)(3)(A) filing also will be available for
choose a strategy of paying lower of the Act 25 and paragraph (f) of Rule inspection and copying at the principal
rebates (or no rebates) to attract orders, 19b–4 26 thereunder. At any time within office of the Exchange. All comments
setting relatively high prices for market 60 days of the filing of the proposed rule received will be posted without change.
data products, and setting relatively low change, the Commission summarily may Persons submitting comments are
prices for accessing posted liquidity. In temporarily suspend such rule change if cautioned that we do not redact or edit
this environment, there is no economic it appears to the Commission that such personal identifying information from
basis for regulating maximum prices for action is necessary or appropriate in the comment submissions. You should
one of the joint products in an industry public interest, for the protection of submit only information that you wish
in which suppliers face competitive investors, or otherwise in furtherance of to make available publicly. All
constraints with regard to the joint the purposes of the Act. If the submissions should refer to File
offering. Commission takes such action, the Number SR–CBOE–2018–013 and
The Existence of Alternatives. The Commission will institute proceedings should be submitted on or before March
Exchange is constrained in pricing the to determine whether the proposed rule 6, 2018.
BBO, Book Depth and COB Data Feeds change should be approved or For the Commission, by the Division of
by the availability to market participants disapproved. Trading and Markets, pursuant to delegated
of alternatives to purchasing these authority.27
IV. Solicitation of Comments
products. The Exchange must consider Eduardo A. Aleman,
Interested persons are invited to Assistant Secretary.
the extent to which market participants
submit written data, views, and
would choose one or more alternatives [FR Doc. 2018–02861 Filed 2–12–18; 8:45 am]
arguments concerning the foregoing,
instead of purchasing the exchange’s BILLING CODE 8011–01–P
including whether the proposed rule
data. Other options exchanges can and
change is consistent with the Act.
have produced their own top-of-book,
Comments may be submitted by any of SECURITIES AND EXCHANGE
book depth and complex strategies
the following methods: COMMISSION
market data products, and thus are
sources of potential competition for Electronic Comments [Release No. 34–82646; File No. SR–CBOE–
CDS. For example, as noted above, ISE • Use the Commission’s internet 2018–010]
and PHLX offer market data products comment form (http://www.sec.gov/
that compete with the BBO, Book Depth rules/sro.shtml); or Self-Regulatory Organizations; Cboe
and COB Data Feeds. The large number • Send an email to rule-comments@ Exchange, Inc.; Notice of Filing and
of SROs, BDs, and ATSs that currently sec.gov. Please include File Number SR– Immediate Effectiveness of a Proposed
produce proprietary data or are CBOE–2018–013 on the subject line. Rule Change To Delete Obsolete Rules
currently capable of producing it
Paper Comments February 7, 2018.
provides further pricing discipline for
Pursuant to Section 19(b)(1) of the
proprietary data products. Each SRO, • Send paper comments in triplicate Securities Exchange Act of 1934
ATS, and BD is currently permitted to to Secretary, Securities and Exchange (‘‘Act’’),1 and Rule 19b–4 thereunder,2
produce proprietary data products, and Commission, 100 F Street NE, notice is hereby given that on January
many currently do. In addition, the Washington, DC 20549–1090. 25, 2018, Cboe Exchange, Inc.
OPRA data feed is a significant All submissions should refer to File (‘‘Exchange’’ or ‘‘Cboe Options’’) filed
competitive alternative to the BBO and Number SR–CBOE–2018–013. This file with the Securities and Exchange
last sale data included in the BBO and number should be included on the Commission (‘‘Commission’’) the
Book Depth Data Feeds. subject line if email is used. To help the proposed rule change as described in
The existence of numerous Commission process and review your Items I and II below, which Items have
alternatives to the Exchange’s products, comments more efficiently, please use been prepared by the Exchange. The
including proprietary data from other only one method. The Commission will Exchange filed the proposal as a ‘‘non-
sources, ensures that the Exchange
sradovich on DSK3GMQ082PROD with NOTICES
post all comments on the Commission’s controversial’’ proposed rule change
cannot set unreasonable fees, or fees internet website (http://www.sec.gov/ pursuant to Section 19(b)(3)(A)(iii) of
that are unreasonably discriminatory, rules/sro.shtml). Copies of the the Act 3 and Rule 19b–4(f)(6)
when vendors and subscribers can elect submission, all subsequent
these alternatives or choose not to amendments, all written statements 27 17 CFR 200.30–3(a)(12).
purchase a specific proprietary data 1 15 U.S.C. 78s(b)(1).
product if its cost to purchase is not 25 15 U.S.C. 78s(b)(3)(A). 2 17 CFR 240.19b–4.
justified by the returns any particular 26 17 CFR 240.19b–4(f). 3 15 U.S.C. 78s(b)(3)(A)(iii).
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![Federal Register / Vol. 83, No. 30 / Tuesday, February 13, 2018 / Notices 6295
thereunder.4 The Commission is Market-Maker transactions are included options listed for trading on the
publishing this notice to solicit in the Cboe Options Fees Schedule. Exchange.8
comments on the proposed rule change • Rule 6.2—Trading Rotations. Rule • Rule 6.10—LOU System Operations.
from interested persons. 6.2 states the Exchange may use the The Large Order Utility (‘‘LOU’’) System
procedures described in current Rules was a facility of the Exchange that
I. Self-Regulatory Organization’s 6.2, 6.2A, or 6.2B to conduct trading provided order routing, handling, and
Statement of the Terms of Substance of rotations in all options listed on the execution for eligible options orders
the Proposed Rule Change Exchange. Currently, the Exchange only routed electronically to the Exchange.
The Exchange proposes to delete uses the procedures set forth in current The LOU System is no longer used, as
Rules that no longer apply to the Rule 6.2B (proposed Rule 6.2) to all options trading on the Exchange
Exchange and make other conduct trading rotations, and no longer trade on the Hybrid Trading System.
nonsubstantive changes to the Rules. conducts trading rotations pursuant to Therefore, the LOU System no longer
The text of the proposed rule change current Rule 6.2. Therefore, this applies to any options listed for trading
is also available on the Exchange’s provision no longer applies to trading on the Exchange.
website (http://www.cboe.com/About on the Exchange.6 • Rule 6.13B—Penny Price
CBOE/CBOELegal • Rule 6.2A—Rapid Opening System Improvement. Pursuant to Rule 6.13B,
RegulatoryHome.aspx), at the (‘‘ROS’’). The Exchange used ROS to the Exchange may designate one or
Exchange’s Office of the Secretary, and open options prior to implementation of more options trading on the Hybrid
at the Commission’s Public Reference the Exchange’s Hybrid Trading System, Trading System in a Penny Price
Room. which includes the Hybrid 3.0 Platform. Improvement Program, which allows
Currently, all options listed on the Trading Permit Holders to provide price
II. Self-Regulatory Organization’s
Exchange trade on its Exchange’s improvement beyond the Exchange’s
Statement of the Purpose of, and Hybrid Trading System. As stated in disseminated quote for classes not
Statutory Basis for, the Proposed Rule Rule 6.2A, ROS does not apply to series already quoted in penny increments and
Change trading on the Hybrid Trading System, for which the simple auction liaison
In its filing with the Commission, the which open on the Cboe Options Hybrid system is not in effect. The Exchange
Exchange included statements Opening System (‘‘HOSS’’) (pursuant to currently has not designated, and has no
concerning the purpose of and basis for current Rule 6.2B (proposed Rule 6.2)). intention to designate, any options for
the proposed rule change and discussed Therefore, Rule 6.2A no longer applies participation in this program. Therefore,
any comments it received on the to any options listed for trading on the this program no longer applies to any
proposed rule change. The text of these Exchange.7 options listed for trading on the
statements may be examined at the • Rules 6.8—RAES Operations and Exchange.9
places specified in Item IV below. The 6.8B—Automatic ORS Order Execution • Rule 6.54(a)—Accommodation
Exchange has prepared summaries, set Against Booked Orders. The Exchange’s Liquidation (Cabinet Trades) for Classes
forth in sections A, B, and C below, of Retail Automatic Execution System Not Trading on the Cboe Options Hybrid
the most significant aspects of such (‘‘RAES’’) was an automated execution System. Rule 6.54 describes cabinet
statements. system feature of the Exchange’s Order trading permitted on the Exchange.
Routing System (‘‘ORS’’) operated by
A. Self-Regulatory Organization’s the Exchange and that provided 8 The proposed rule change makes corresponding
Statement of the Purpose of, and automated order execution and changes to the following rules to delete references
Statutory Basis for, the Proposed Rule reporting services for options. RAES and to RAES and ORS, change references from ORS to
Change ORS are no longer used, as all options
OHS, and the rules proposed to be deleted: Rules
1.1(fff) and (ggg), 6.3, Interpretation and Policy .05,
1. Purpose trading on the Exchange currently 6.6(b) and (e) and Interpretation and Policy .01,
occurs on the Hybrid Trading System, 6.7(b) (the Hybrid System includes OHS and the
The purpose of this rule change is to book), 6.8C (which the proposed rule change
which includes Exchange’s Order
delete Rules that no longer apply to the renumbers as 6.8), 6.13(a) and (c), 6.18, 8.7(b)(iii)
Handling System (‘‘OHS’’). Therefore,
Exchange and to make other and Interpretations and Policies .07 (which is being
RAES and ORS no longer apply to any deleted in its entirety, as described below) .11(a)
nonsubstantive changes to the Rules.5
(the Exchange deleted the paragraph letter for
Deletion of Rules 6 The proposed rule change makes corresponding current paragraph (b), as it will be the only
changes to the following rules to delete references paragraph in that Interpretation and Policy, as well
The Exchange proposes to delete the to trading rotations and the rule proposed to be as the introduction to that paragraph regarding its
following rules and chapters from its deleted: Rules 6.6, 6.18, 6.25(b)(1), 6.73(c) (no applicability to classes on the Hybrid System,
rulebook: longer applicable because trading rotations because all classes are on the Hybrid System), 8.13,
8.16, 8.51(c)(1)(a)(iii), 8.60(c)(7) (the proposed rule
• Rule 2.40—Market-Maker pursuant to current Rule 6.2B (proposed Rule 6.2)
change renumbers provisions (8) through (10) as (7)
are fully electronic), 21.11, 22.11, and 24.13 and
Surcharge for Brokerage. Rule 2.40 Interpretation and Policy .01 (the body of proposed through (9)) and Interpretation and Policy .02,
operated as a pilot program until March Rule 24.13 states opening rotations will be 8.85(a)(ix) (current paragraph (a)(ix) no longer
30, 2000, at which time the program conducted in accordance with Rule 24.13 or applies, as there are no current Exchange sponsored
proposed Rule 6.2, so there is no need to include automated programs that require a market
expired (and the Exchange did not a statement in Rule 24.13, Interpretation and Policy participant’s participation, and the proposed rule
request renewal). The Exchange does .01 that states proposed Rule 6.2 describes change renumbers subparagraphs (x) and (xi) as (ix)
not impose a surcharge on Market- procedures for a trading rotation, as it would be and x), and deletes from current subparagraph (x)
Maker transactions pursuant to this rule. redundant). (proposed subparagraph (xi) the introduction to that
7 The proposed rule change makes corresponding paragraph regarding its applicability to classes on
Any fees and rebates applicable to any the Hybrid System, because all classes are on the
changes to the following rules to delete references
sradovich on DSK3GMQ082PROD with NOTICES
to ROS and the rule proposed to be deleted: Rules Hybrid System), 23.7, 24.15, 24.17, 24.21(j)(1), and
4 17 CFR 240.19b–4(f)(6). 24B.15.
1.1(fff) and (ggg), 6.2, 6.6, 6.18, 6.25(b)(1),
5 The Exchange initially filed the proposed rule 8.60(c)(11) and Interpretation and Policy .02, 22.11, 9 The proposed rule change makes corresponding
change on January 3, 2018 (SR–CBOE–2018–003). and 24.13. Because the proposed rule change changes to the following rules to delete references
On January 25, 2018 the Exchange withdrew SR– deletes both Rules 6.2 and 6.2A, the proposed rule to the Penny Price Improvement Program and the
CBOE–2018–003 and refiled as SR–CBOE–2018– change also renumbers Rule 6.2B to be Rule 6.2, rules proposed to be deleted: Rules 1.1(fff) and
009. On business date January 25, 2018, the and makes corresponding changes throughout the (ggg), 6.45, Interpretations and Policies .01 and .02,
Exchange subsequently withdrew SR–CBOE–108– Rules, including Rules 6.1A, 6.3A, 6.12, 6.12A, 6.35 Rule 6.47, Interpretation and Policy .02, and Rule
009 [sic] and submitted this filing. [sic] (b)(v)(B)(V), 8.15, 8.85, and 17.50. 6.74, Interpretation and Policy .09.
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![6296 Federal Register / Vol. 83, No. 30 / Tuesday, February 13, 2018 / Notices
Paragraph (a) describes cabinet trading redundant to state orders and quotes for moves currently applicable provisions
for classes not trading on the Hybrid entry in the electronic book must be in Rule 7.12 (regarding PAR Officials) to
System, while paragraph (b) describes submitted electronically, and Rule Rule 6.12B (with some nonsubstantive
cabinet trading for classes trading on the 6.53A describes the types of order changes).13 PAR Officials are Exchange
Hybrid System. All options trading on formats Trading Permit Holders must employees or independent contractors
the Exchange currently trade on the use.11 whom the Exchange may designate as
Hybrid Trading System, and thus Rule Rule 7.5, Interpretation and Policy .03 being responsible for operating a PAR
6.54(a) no longer applies to any options states every Floor Broker who represents workstation and effecting proper
listed for trading on the Exchange.10 a Market-Maker with an order in any executions of orders placed with them.
• Chapter VII—Order Book Officials. options class must, by public outcry at PAR Officials no longer maintain the
Order Book Officials were Exchange the post, indicate the identity of such book with respect to assigned classes, as
employees responsible for maintaining Market-Maker at the request of any the electronic book manages electronic
the book with respect to classes Trading Permit Holder or Order Book orders and quotes. The proposed rule
assigned to them, effecting proper Official. The proposed rule change change deletes the provision in current
executions of orders placed with them, moves this provision (with the reference Rule 7.12(b)(i) regarding the definition
displaying bids and offers, and to Order Book Official deleted) to Rule of customer limit orders, as customer
monitoring the market for classes 6.73, which relates to responsibilities of orders are now defined in Rule
assigned to them. The Exchange Floor Brokers. 1.1(www) and (yyy) (which are
currently has no employees designated Rule 7.6 regarding the requirement for proposed to be relettered as (yyy) and
as, and does not intend to designate any PAR Official to report unusual activity (zzz), as described below). The proposed
employees as, Order Book Officials, as is proposed to move to Rule rule change deletes current Rule
Order Book Official functions are 6.12B(b)(v).12 The proposed rule change 7.12(b)(i)(C), which applies to the
generally obsolete now that most trading Intermarket Options Linkage Plan that
occurs electronically. 11 The proposed rule change makes
no longer exists.14 Pursuant to the
The proposed rule change deletes corresponding changes to the following rules to
change cross-references to Rule 7.4 to Rule 6.11:
current linkage plan, including the
Rules 7.1 through 7.3, 7.4 except for Rules 6.13(b)(i)(A)(2) and (iii), 23.3(b), and 24.11A definition of an intermarket sweep order
subparagraph (a)(1) (which is being (the proposed rule change also deletes the (‘‘ISOs’’) in Rule 6.53, ISOs may only be
moved to Rule 6.11, with some Interpretations and Policies section of this rule, as handled electronically (they may only
modifications described below), 7.5, 7.7 there are currently none).
12 The proposed rule change makes
be entered as immediate-or-cancel or for
through 7.10, and Chapter VII, Section corresponding changes to the following rules to book entry if they do not execute), and
B, as they relate solely to delete references to Order Book Officials and the thus would never be routed to a PAR
responsibilities of Order Book Officials. rules proposed to be deleted: Rules 6.3, workstation under the Rules. Therefore,
Rule 7.4(a)(1) states public customer Interpretations and Policies .01 and .02, including PAR Officials no longer have
orders in Hybrid and Hybrid 3.0 classes the related footnote (these interpretations also
delete references to post directors, which are no responsibilities with respect to routed
are eligible for entry into the electronic longer used at the Exchange, and only relate to prior orders under the current linkage plan.
book, and the Exchange may determine circumstances under which Post Directors or Order The proposed rule change moves Rule
on a class-by-class basis other orders Book Officials would suspend trading; those 7.12(b)(i)(E), which relates to orders
that are eligible for entry into the functions no longer exist on the Exchange, and the
Exchange currently only halts trading in accordance received during a trading rotation
electronic book. Currently, after a class with the remaining provisions of Rule 6.3 and other pursuant to current Rule 6.2 or HOSS
is open for trading (see current Rule rules related to trading halts), 6.6(b) and (e) (which pursuant to current Rule 6.2B (proposed
6.2B (proposed Rule 6.2) for a also deletes references to post directors, which are Rule 6.2), to proposed Rule
no longer used at the Exchange), 6.12A, 6.20(a) and
description of orders the System accepts Interpretations and Policies .02 (currently, there are 6.12B(b)(i)(D). The proposed rule
prior to opening), the System accepts for only four PAR Officials on the trading floor, who change changes the term immediately to
entry into the Book (1) quotes of all all float to all trading crowds as necessary and are promptly, as under current Rule 7.12
Market-Makers and orders of any origin thus no longer assigned to classes) and .04(ii), and proposed Rule 6.12(b), the term
6.43(a), 6.54, Interpretations and Policies .01 and
code in Hybrid classes and (2) quotes of .02 (the proposed rule change replaces references to immediately means as soon as
Lead Market-Makers (‘‘LMMs’’) and Order Book Officials to PAR Officials, consistent practicable but within 30 seconds.
orders of priority customers in Hybrid with Interpretation and Policy .02, which indicates However, proposed Rule 6.12B(b)(i)(D)
3.0 classes, while the Exchange PAR Officials may perform the functions of Order
Book Officials for purposes of that rule), 6.73,
exempts these orders from being
continues to have flexibility to permit Interpretation and Policy .01 (which only relates to displayed within 30 seconds, so the
orders of other origin codes be eligible comparing execution prices to those in displayed by term immediate did not seem
for book entry. The Exchange proposes an Order Book Official (pursuant to Rules 6.45(b) appropriate. The term promptly still
to codify this current book eligibility and 6.73, Floor Brokers must use due diligence to
execute orders at the best price and provide first
requires action as soon as practicable,
(which is consistent with the priority based on price); additionally, bids and but may be longer than 30 seconds. The
Exchange’s authority in current Rule offers are made in response to requests from Floor proposed rule change moves current
7.4(a)(1)) in Rule 6.11. The proposed Brokers that represent orders in open outcry (see Rule 7.12(b)(ii), (iv), and (v) to proposed
rule change also deletes the provision in Rule 6.4(b) [sic] and Rule 6.73 contains other
provisions that require a Floor Broker to make sure
Rule 6.12B(b)(ii), (iii), and (iv),
current Rule 7.4(a)(1) that states Trading all persons in the crowd are aware of requests for respectively, and moves current Rule
Permit Holders submitting orders or quotes and use due diligence when handling and 7.12(c) and (d) to proposed Rule
quotes for entry in to the book must do executing orders, making Interpretation and Policy 6.12B(c) and (d), respectively. The
so electronically and in the format .01 redundant and unnecessary), 8.7(c) (the
proposed rule change deletes Rule
Exchange notes Market-Makers not permitted to
sradovich on DSK3GMQ082PROD with NOTICES
announced by the Exchange. It is enter a trading station in a floor brokerage capacity,
13 The proposed rule change makes
as set forth in Rule 8.8) and Interpretation and
10 The proposed rule change makes a Policy .09 (changes cross-reference to Rule 7.5 to corresponding changes to the following rules to
corresponding change to current paragraph (b), Rule 8.7(d)(iv), which describes current Market- change cross-references to Rule 7.12 to Rule 6.12B:
eliminates paragraph lettering for paragraph (b) (as Maker obligations, including the obligation of Rules 6.12A, 6.18(d)(i), and 6.20(a).
that will be the only paragraph in the rule), and Market-Maker to provide a quote upon Exchange 14 Chapter VI, Section E describes Exchange
reletters subparagraphs (i) and (ii) as (a) and (b), request), and 24.13 and Interpretation and Policy responsibilities pursuant to the current linkage
consistent with paragraph lettering throughout the .03 (which the proposed rule change renumbers to plan, the Options Order Protection and Locked/
rules. .02). Crossed Market Plan.
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![6298 Federal Register / Vol. 83, No. 30 / Tuesday, February 13, 2018 / Notices
shareholder votes covered by Section 1.1(ggg) to Interpretation and Policy .06 the mechanism of a free and open
957 include any vote with respect to (1) to Rule 1.1, so that all Interpretations market. The Exchange believes the
the election of a member of the board of and Policies to Rule 1.1 are in the same proposed rule change will eliminate
directors of an issuer (except for a vote place. confusion regarding which rules apply
with respect to the uncontested election • Currently, there are two paragraphs to current trading, which ultimately
of a member of the board of directors of erroneously lettered as Rule 1.1(mmm) protects investors and the public
any investment company registered and (ppp). The proposed rule change interest. The proposed rule change has
under the Investment Company Act of corrects this lettering and updates the no impact on current trading on Cboe
1940 (the ‘‘Investment Company Act’’), paragraph lettering to reflect these Options.
(2) executive compensation, or (3) any corrections. The proposed rule change regarding
other significant matter, as determined • The proposed rule change makes proxy voting is substantially similar to
by the Commission, by rule.22 updates throughout the rules to conform C2 Supplemental Rules to C2 Chapter 4
Rules 31.82 through 31.88 currently paragraph lettering and numbering to and Nasdaq ISE Rule 421 and consistent
include provisions that cover these other rules, as well as to reflect deleted with Section 957 of the Dodd-Frank Act.
proxy voting requirements with respect rule provisions.
to Trading Permit Holders. However, • Rule 6.2, Interpretation and Policy B. Self-Regulatory Organization’s
because this proposed rule change .01(b) and (c) erroneously refer to LMMs Statement on Burden on Competition
deletes Chapter XXXI, the proposed rule as LLMs. The proposed rule change Cboe Options does not believe that
change adds Rule 4.25 to retain the corrects [sic] those erroneous references. the proposed rule change will impose
provisions required by Section 957. The proposed rule change amends any burden on competition that is not
Proposed Rule 4.25 is substantially Rule 6.43(b) to indicate it only applies necessary or appropriate in furtherance
similar to rules of other options to Hybrid 3.0 classes, which is of the purposes of the Act. The
exchanges.23 consistent with the current rule text and proposed rule change deletes rules that
• Chapters XL through XLIX—Screen- current trading practices. no longer apply to Cboe Options trading
Based Trading. Chapters XL through and makes other nonsubstantive
2. Statutory Basis
XLIX describe trading on the Exchange’s changes, and thus has no impact on
screen-based trading system. The The Exchange believes the proposed current trading on Cboe Options.
screen-based trading system is no longer rule change is consistent with the Therefore, the proposed rule change has
used, as all options trading on the Securities Exchange Act of 1934 (the no impact on competition. The
Exchange trade on the Hybrid Trading ‘‘Act’’) and the rules and regulations proposed rule change eliminates
System. Therefore, the screen-based thereunder applicable to the Exchange confusion with respect to rules
trading rules no longer apply to any and, in particular, the requirements of applicable to current trading on Cboe
options listed for trading on the Section 6(b) of the Act.26 Specifically, Options.
Exchange.24 the Exchange believes the proposed rule The proposed rule change regarding
• Chapters L through LIV—CBOE change is consistent with the Section proxy voting is substantially similar to
Stock Exchange (‘‘CBSX’’). Chapters L 6(b)(5) 27 requirements that the rules of C2 Supplemental Rules to C2 Chapter 4
through LIV describe trading on CBSX, an exchange be designed to prevent and Nasdaq ISE Rule 421 and consistent
which is the Exchange’s facility for fraudulent and manipulative acts and with Section 957 of the Dodd-Frank Act.
trading stocks, warrants, IPRs, IPSs, and practices, to promote just and equitable
principles of trade, to foster cooperation C. Self-Regulatory Organization’s
Trust Issued Receipts (non-options
and coordination with persons engaged Statement on Comments on the
securities). CBSX ceased market
in regulating, clearing, settling, Proposed Rule Change Received From
operations on April 30, 2014. Therefore,
processing information with respect to, Members, Participants, or Others
the CBSX rules no longer apply to any
trading on the Exchange.25 The and facilitating transactions in The Exchange neither solicited nor
Exchange would file a proposed rule securities, to remove impediments to received comments on the proposed
change to adopt new rules if it and perfect the mechanism of a free and rule change.
determines to list and trade non-options open market and a national market
III. Date of Effectiveness of the
securities in the future. system, and, in general, to protect
Proposed Rule Change and Timing for
investors and the public interest.
Additional Nonsubstantive Changes Commission Action
Additionally, the Exchange believes the
In addition to nonsubstantive changes proposed rule change is consistent with Because the foregoing proposed rule
described above, the proposed rule the Section 6(b)(5) 28 requirement that change does not:
change makes the following the rules of an exchange not be designed A. Significantly affect the protection
nonsubstantive changes: to permit unfair discrimination between of investors or the public interest;
• The proposed rule change moves customers, issuers, brokers, or dealers. B. impose any significant burden on
Interpretation and Policy .01 to the In particular, by deleting rules that no competition; and
definition of Professional in Rule longer apply to Cboe Options trading C. become operative for 30 days from
(which rules have generally not been the date on which it was filed, or such
22 15 U.S.C. 78f(b)(10)(B). applicable in years), and making other shorter time as the Commission may
23 See, e.g., C2 Supplemental Rules to C2 Chapter nonsubstantive changes to better designate, it has become effective
4 and Nasdaq ISE Rule 421.
organize and more consistently number pursuant to Section 19(b)(3)(A) of the
24 The proposed rule change makes
Act 29 and Rule 19b–4(f)(6) 30
sradovich on DSK3GMQ082PROD with NOTICES
corresponding changes to the following rules to and letter rules, the rules will more
delete references to screen-based trading and the clearly identify currently applicable thereunder.31
rules proposed to be deleted: Rules 1.1(fff) and rules, which the Exchange believes 29 15 U.S.C. 78s(b)(3)(A).
(ggg), 3.2(b), and 3.3.
25 The proposed rule change makes
removes impediments to and perfects 30 17 CFR 240.19b–4(f)(6).
corresponding changes to the following rules to 31 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
26 15 U.S.C. 78f(b).
delete references to CBSX and the rules proposed 4(f)(6)(iii) requires a self-regulatory organization to
27 15 U.S.C. 78f(b)(5).
to be deleted: Rules 3.1A, 3.2(b), 3.3, and 6.20A, give the Commission written notice of its intent to
Interpretation and Policy .01. 28 Id. file the proposed rule change, along with a brief
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![Federal Register / Vol. 83, No. 30 / Tuesday, February 13, 2018 / Notices 6299
A proposed rule change filed under Paper Comments SECURITIES AND EXCHANGE
Rule 19b–4(f)(6) normally does not COMMISSION
become operative for 30 days after the • Send paper comments in triplicate
to Secretary, Securities and Exchange [Release No. 34–82653; File No. SR–Phlx–
date of filing. However, Rule 19b– 2018–13]
4(f)(6)(iii) 32 permits the Commission to Commission, 100 F Street NE,
designate a shorter time if such action Washington, DC 20549–1090. Self-Regulatory Organizations; Nasdaq
is consistent with the protection of All submissions should refer to File PHLX LLC; Notice of Filing and
investors and the public interest. The Number SR–CBOE–2018–010. This file Immediate Effectiveness of Proposed
Exchange requests that the Commission number should be included on the Rule Change To Amend the
waive the 30-day operative delay. Exchange’s Pricing Schedule To
subject line if email is used. To help the
According to the Exchange, the Exclude NDX and NDXP Options From
Commission process and review your
proposed rule change is consistent with the Strategy Caps and From Special
the protection of investors and the comments more efficiently, please use
only one method. The Commission will Pricing for FLEX Transactions
public interest because it eliminates
confusion as to the rules that currently post all comments on the Commission’s February 7, 2018.
apply to trading on Cboe Options. The internet website (http://www.sec.gov/ Pursuant to Section 19(b)(1) of the
Commission believes that deleting rules/sro.shtml). Copies of the Securities Exchange Act of 1934
obsolete rules will add clarity and submission, all subsequent (‘‘Act’’),1 and Rule 19b–4 thereunder,2
transparency to the Exchange’s rules. amendments, all written statements notice is hereby given that on January
Therefore, the Commission finds that with respect to the proposed rule 26, 2018, Nasdaq PHLX LLC (‘‘Phlx’’ or
waiving the 30-day operative delay is change that are filed with the ‘‘Exchange’’) filed with the Securities
consistent with the protection of Commission, and all written and Exchange Commission (‘‘SEC’’ or
investors and the public interest. communications relating to the ‘‘Commission’’) the proposed rule
Accordingly, the Commission waives proposed rule change between the change as described in Items I, II, and
the 30-day operative delay and Commission and any person, other than III, below, which Items have been
designates the proposed rule change those that may be withheld from the prepared by the Exchange. The
operative upon filing.33 public in accordance with the Commission is publishing this notice to
At any time within 60 days of the provisions of 5 U.S.C. 552, will be solicit comments on the proposed rule
filing of the proposed rule change, the available for website viewing and change from interested persons.
Commission summarily may printing in the Commission’s Public I. Self-Regulatory Organization’s
temporarily suspend such rule change if Reference Room, 100 F Street NE, Statement of the Terms of Substance of
it appears to the Commission that such Washington, DC 20549 on official the Proposed Rule Change
action is necessary or appropriate in the business days between the hours of The Exchange proposes to amend the
public interest, for the protection of 10:00 a.m. and 3:00 p.m. Copies of the Exchange’s Pricing Schedule to exclude
investors, or otherwise in furtherance of filing also will be available for A.M. and P.M.-settled options on broad-
the purposes of the Act. If the inspection and copying at the principal based indexes with nonstandard
Commission takes such action, the office of the Exchange. All comments expiration dates from its pricing for
Commission will institute proceedings received will be posted without change. Strategy Caps and for FLEX
to determine whether the proposed rule Persons submitting comments are transactions.
change should be approved or cautioned that we do not redact or edit While changes to the Pricing
disapproved. Schedule pursuant to this proposal are
personal identifying information from
IV. Solicitation of Comments comment submissions. You should effective upon filing, the Exchange has
submit only information that you wish designated these changes to be operative
Interested persons are invited to on February 1, 2018.
to make available publicly. All
submit written data, views, and The text of the proposed rule change
submissions should refer to File
arguments concerning the foregoing, is available on the Exchange’s website at
Number SR–CBOE–2018–010 and
including whether the proposed rule http://nasdaqphlx.cchwallstreet.com/,
change is consistent with the Act. should be submitted on or before March
at the principal office of the Exchange,
Comments may be submitted by any of 6, 2018.
and at the Commission’s Public
the following methods: For the Commission, by the Division of Reference Room.
Trading and Markets, pursuant to delegated
Electronic Comments authority.34 II. Self-Regulatory Organization’s
Statement of the Purpose of, and
• Use the Commission’s internet Eduardo A. Aleman,
Statutory Basis for, the Proposed Rule
comment form (http://www.sec.gov/ Assistant Secretary. Change
rules/sro.shtml); or [FR Doc. 2018–02857 Filed 2–12–18; 8:45 am]
• Send an email to rule-comments@ In its filing with the Commission, the
BILLING CODE 8011–01–P
sec.gov. Please include File Number SR– Exchange included statements
CBOE–2018–010 on the subject line. concerning the purpose of and basis for
the proposed rule change and discussed
description and the text of the proposed rule
any comments it received on the
sradovich on DSK3GMQ082PROD with NOTICES
change, at least five business days prior to the date proposed rule change. The text of these
of filing of the proposed rule change, or such statements may be examined at the
shorter time as designated by the Commission. The places specified in Item IV below. The
Exchange has satisfied this requirement.
32 17 CFR 240.19b–4(f)(6)(iii).
Exchange has prepared summaries, set
33 For purposes only of waiving the 30-day
forth in sections A, B, and C below, of
operative delay, the Commission has considered the
1 15 U.S.C. 78s(b)(1).
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f). 34 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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Document Created: 2018-02-13 02:32:28
Document Modified: 2018-02-13 02:32:28
| 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 6294 |
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