Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Accelerated Approval of a Proposed Rule Change To Amend Rule 24.19, 51220-51221 [2014-20340]
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Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Notices
as the Commission may designate, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 21 and Rule 19b–4(f)(6)
thereunder.22
The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange stated that waiver
of this requirement would enable the
Exchange to, as soon as possible, have
the ability to compete with other
exchanges that have incorporated the
proposed rule change to their STOS
Programs and would help eliminate
investor confusion and promote
competition among the option
exchanges. For these reasons, the
Commission believes that the proposed
rule change presents no novel issues
and that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest; and
will allow the Exchange to remain
competitive with other exchanges.
Therefore, the Commission designates
the proposed rule change to be operative
upon filing.23
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 shall institute proceedings
to determine whether the proposed rule
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 (https://www.sec.gov/
rules/sro.shtml); or
21 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with 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.
23 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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• Send an email to rulecomments@sec.gov. Please include File
Number SR–NYSEMKT–2014–70 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–NYSEMKT–2014–70. 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 Web site (https://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 Web site 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;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEMKT–2014–70 and should be
submitted on or before September 17,
2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–20339 Filed 8–26–14; 8:45 am]
BILLING CODE 8011–01–P
24 17
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CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72892; File No. SR–CBOE–
2014–060]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Order Granting
Accelerated Approval of a Proposed
Rule Change To Amend Rule 24.19
August 21, 2014.
I. Introduction
On July 25, 2014, the Chicago Board
Options Exchange, Incorporated (the
‘‘Exchange’’ or ‘‘CBOE’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’), pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (the ‘‘Act’’) 1 and
Rule 19b–4 thereunder,2 a proposed rule
change to amend its rule related to
Multi-Class Broad-Based Index Option
Spread Orders. This proposal was
published for comment in the Federal
Register on August 5, 2014.3 The
Commission received no comments
regarding the proposal. This order
approves the proposed rule change on
an accelerated basis.
II. Description of the Proposed Rule
Change
The Exchange proposes to amend its
Rule 24.19 (Multi-Class Broad-Based
Index Option Spread Orders).4 This
Rule allows Trading Permit Holders
(‘‘TPHs’’) to execute Multi-Class BroadBased Index Option Spread Orders
(‘‘Multi-Class Spread Orders’’) that meet
certain qualifying criteria.
The Exchange represents that
currently not all Multi-Class Spread
Orders may be entered electronically
due to systems constraints, but that it is
in the process of modifying its
electronic order-entry systems to
provide for the electronic entry and
validation of all Multi-Class Spread
Orders to the floor of the Exchange. In
order for the Exchange’s systems to
determine that two separate legs are part
of the same Multi-Class Spread Order
(allowing for treatment as a Multi-Class
Spread Order), both legs must be
entered together on a single order
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 72704
(July 29, 2014), 79 FR 45560 (‘‘Notice’’).
4 A Multi-Class Broad-Based Index Options
Spread Order is generally defined as an order to buy
a stated number of contracts of a broad-based index
option or ETF/ETN option derived from a broadbased index and to sell an equal number, or an
equivalent number of contracts of a different broadbased index option or ETF/ETN option derived
from a broad-based index. See CBOE Rule
24.19(a)(2).
2 17
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Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Notices
ticket.5 Therefore, the Exchange
proposes to amend CBOE Rule 24.19 to
require that Multi-Class Spread Orders
be entered on a single order ticket at
time of systemization to be eligible for
the procedures and relief provided for
in the Rule.6 The Exchange represents
that it will not accept Multi-Class
Spread Orders with invalid
combinations.7 The Exchange also
explains that while the proposed rule
change allows for all Multi-Class Spread
Orders to be entered electronically, all
Multi-Class Spread Orders will still be
executed in open outcry on the
Exchange’s trading floor.8
CBOE Rule 24.19 currently states that
a Multi-Class Spread Order may be
represented at the trading station of
either Broad-Based Index Option
comprising the order, and also provides
that the TPH initiating the order in the
trading crowd must contact an Order
Book Official (‘‘OBO’’), Designated
Primary Market-Maker (‘‘DPM’’), or
appropriate Exchange staff, as
applicable, at the other trading station to
have a notice of such order
disseminated to the other trading crowd.
CBOE is proposing to modify the Rule
to require that a Multi-Class Spread
Order be represented at the primary
trading station,9 and require the TPH
representing the order to contact the
DPM or Exchange staff 10 (as applicable)
at the other trading station in order to
provide notice of such order for
dissemination to the other trading
crowd.11
CBOE Rule 24.19 requires that notice
of a Multi-Class Spread Order ‘‘shall be
disseminated by the Recipient who shall
verbalize the terms of the order to the
other trading crowd.’’ The Exchange
proposes to replace the word
‘‘verbalize’’ with the word ‘‘announce,’’
as the Exchange is currently
contemplating changes that will allow
such notice to be posted on screens
electronically to the other trading crowd
(which could be a more efficient method
of posting such order information).12
5 See
Notice, supra note 3, at 45660.
proposed CBOE Rule 24.19(b).
7 See Notice, supra note 3, at 45560.
8 See id.
9 CBOE Rule 24.19(a)(3) defines the ‘‘primary
trading station’’ as ‘‘the trading station where a
particular Multi-Class Spread Order is first
represented.’’ The Exchange states that the floor
broker representing the Multi-Class Spread Order
may determine which trading station should be the
primary trading station. See Notice, supra note 3,
at 45560.
10 The Exchange proposes to remove the reference
to contacting an OBO, as the Exchange no longer
has OBOs.
11 See proposed CBOE Rule 24.19(c).
12 See Notice, supra note 3, at 45560.
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CBOE represents that no later than 90
days following the effective date of the
proposed rule change, the Exchange will
announce to TPHs via Regulatory
Circular the implementation date by
which TPHs must be in compliance
with the changes described herein, and
that the implementation date will be no
later than 180 days following the
effective date of the proposed rule
change, and will be at least 30 days
following the release of the
abovementioned Regulatory Circular (in
order to give TPHs ample time to come
into compliance with the changes
described herein).13
III. Discussion and Findings
After careful review, the Commission
finds that the proposed change to
amend CBOE Rule 24.19 is consistent
with the requirements of the Act and the
rules and regulations thereunder
applicable to the Exchange.14 In
particular, the Commission finds that
the proposed rule change is consistent
with the Section 6(b)(5) 15 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. The Commission
believes that CBOE’s proposal to require
that all Multi-Class Spread Orders be
entered on a single order ticket should
enhance CBOE’s audit trail and
automated surveillance program with
regard to these order types, thereby
enhancing the integrity of the market to
the benefit of investors.
The Commission also believes that the
proposed rule change is consistent with
Section 6(b)(1) of the Act,16 which
provides that the Exchange be organized
and have the capacity to be able to carry
out the purposes of the Act and to
enforce compliance by the Exchange’s
TPHs and persons associated with its
TPHs with the Act, the rules and
regulations thereunder, and the rules of
the Exchange. The Commission believes
that by enhancing the audit trail with
respect to Multi-Class Spread Orders the
13 See
id.
approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
15 15 U.S.C. 78f(b)(5).
16 15 U.S.C. 78f(b)(1).
14 In
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51221
Exchange should be better able to
ensure that TPHs’ orders submitted as
Multi-Class Spread Orders meet the
requirements of CBOE Rule 24.19.
In addition, the Commission finds
good cause, pursuant to Section 19(b)(2)
of the Act,17 for approving the proposed
rule change prior to the 45th day after
publication of notice in the Federal
Register. The Commission notes that the
substance of this proposal was noticed
for comment as part of changes
proposed in a prior CBOE proposed rule
change, which CBOE withdrew.18 The
prior CBOE proposed rule change was
published for the entire 21 day
comment period, and no comments
were received.19 In addition, the instant
proposed rule change was published for
a 15 day comment period to ensure that
the public had an opportunity to review
the proposal in its current form and no
comments were received on the instant
filing. The Commission believes that
there has been ample notice provided
for the public to comment on this
proposed rule change if they had
concerns. Moreover, the Commission
does not believe that this proposed rule
change raises any material or novel
issues. Accordingly, the Commission
finds that good cause exists for
approving the proposed rule change on
an accelerated basis.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,20 that the
proposed rule change (File No. SR–
CBOE–2014–060) be, and hereby is,
approved on an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–20340 Filed 8–26–14; 8:45 am]
BILLING CODE P
17 15
U.S.C. 78s(b)(2).
Securities Exchange Act Release No. 72495
(June 27, 2014), 79 FR 38080 (July 3, 2014) (Notice
of Withdrawal of SR–CBOE–2014–026).
19 The prior CBOE proposal provided for several
changes to Rule 24.19; this proposal specifically
relates to the electronic entry and validation of
Multi-Class Spread Orders. See Securities Exchange
Act Release No. 71872 (April 4, 2014), 79 FR 19940
(April 10, 2014) (SR–CBOE–2014–026).
20 15 U.S.C. 78s(b)(2).
21 17 CFR 200.30–3(a)(12).
18 See
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]]>Agencies
[Federal Register Volume 79, Number 166 (Wednesday, August 27, 2014)]
[Notices]
[Pages 51220-51221]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-20340]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72892; File No. SR-CBOE-2014-060]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Order Granting Accelerated Approval of a Proposed Rule
Change To Amend Rule 24.19
August 21, 2014.
I. Introduction
On July 25, 2014, the Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the ``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend its rule related to
Multi-Class Broad-Based Index Option Spread Orders. This proposal was
published for comment in the Federal Register on August 5, 2014.\3\ The
Commission received no comments regarding the proposal. This order
approves the proposed rule change on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 72704 (July 29,
2014), 79 FR 45560 (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
The Exchange proposes to amend its Rule 24.19 (Multi-Class Broad-
Based Index Option Spread Orders).\4\ This Rule allows Trading Permit
Holders (``TPHs'') to execute Multi-Class Broad-Based Index Option
Spread Orders (``Multi-Class Spread Orders'') that meet certain
qualifying criteria.
---------------------------------------------------------------------------
\4\ A Multi-Class Broad-Based Index Options Spread Order is
generally defined as an order to buy a stated number of contracts of
a broad-based index option or ETF/ETN option derived from a broad-
based index and to sell an equal number, or an equivalent number of
contracts of a different broad-based index option or ETF/ETN option
derived from a broad-based index. See CBOE Rule 24.19(a)(2).
---------------------------------------------------------------------------
The Exchange represents that currently not all Multi-Class Spread
Orders may be entered electronically due to systems constraints, but
that it is in the process of modifying its electronic order-entry
systems to provide for the electronic entry and validation of all
Multi-Class Spread Orders to the floor of the Exchange. In order for
the Exchange's systems to determine that two separate legs are part of
the same Multi-Class Spread Order (allowing for treatment as a Multi-
Class Spread Order), both legs must be entered together on a single
order
[[Page 51221]]
ticket.\5\ Therefore, the Exchange proposes to amend CBOE Rule 24.19 to
require that Multi-Class Spread Orders be entered on a single order
ticket at time of systemization to be eligible for the procedures and
relief provided for in the Rule.\6\ The Exchange represents that it
will not accept Multi-Class Spread Orders with invalid combinations.\7\
The Exchange also explains that while the proposed rule change allows
for all Multi-Class Spread Orders to be entered electronically, all
Multi-Class Spread Orders will still be executed in open outcry on the
Exchange's trading floor.\8\
---------------------------------------------------------------------------
\5\ See Notice, supra note 3, at 45660.
\6\ See proposed CBOE Rule 24.19(b).
\7\ See Notice, supra note 3, at 45560.
\8\ See id.
---------------------------------------------------------------------------
CBOE Rule 24.19 currently states that a Multi-Class Spread Order
may be represented at the trading station of either Broad-Based Index
Option comprising the order, and also provides that the TPH initiating
the order in the trading crowd must contact an Order Book Official
(``OBO''), Designated Primary Market-Maker (``DPM''), or appropriate
Exchange staff, as applicable, at the other trading station to have a
notice of such order disseminated to the other trading crowd. CBOE is
proposing to modify the Rule to require that a Multi-Class Spread Order
be represented at the primary trading station,\9\ and require the TPH
representing the order to contact the DPM or Exchange staff \10\ (as
applicable) at the other trading station in order to provide notice of
such order for dissemination to the other trading crowd.\11\
---------------------------------------------------------------------------
\9\ CBOE Rule 24.19(a)(3) defines the ``primary trading
station'' as ``the trading station where a particular Multi-Class
Spread Order is first represented.'' The Exchange states that the
floor broker representing the Multi-Class Spread Order may determine
which trading station should be the primary trading station. See
Notice, supra note 3, at 45560.
\10\ The Exchange proposes to remove the reference to contacting
an OBO, as the Exchange no longer has OBOs.
\11\ See proposed CBOE Rule 24.19(c).
---------------------------------------------------------------------------
CBOE Rule 24.19 requires that notice of a Multi-Class Spread Order
``shall be disseminated by the Recipient who shall verbalize the terms
of the order to the other trading crowd.'' The Exchange proposes to
replace the word ``verbalize'' with the word ``announce,'' as the
Exchange is currently contemplating changes that will allow such notice
to be posted on screens electronically to the other trading crowd
(which could be a more efficient method of posting such order
information).\12\
---------------------------------------------------------------------------
\12\ See Notice, supra note 3, at 45560.
---------------------------------------------------------------------------
CBOE represents that no later than 90 days following the effective
date of the proposed rule change, the Exchange will announce to TPHs
via Regulatory Circular the implementation date by which TPHs must be
in compliance with the changes described herein, and that the
implementation date will be no later than 180 days following the
effective date of the proposed rule change, and will be at least 30
days following the release of the abovementioned Regulatory Circular
(in order to give TPHs ample time to come into compliance with the
changes described herein).\13\
---------------------------------------------------------------------------
\13\ See id.
---------------------------------------------------------------------------
III. Discussion and Findings
After careful review, the Commission finds that the proposed change
to amend CBOE Rule 24.19 is consistent with the requirements of the Act
and the rules and regulations thereunder applicable to the
Exchange.\14\ In particular, the Commission finds that the proposed
rule change is consistent with the Section 6(b)(5) \15\ 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. The Commission believes that
CBOE's proposal to require that all Multi-Class Spread Orders be
entered on a single order ticket should enhance CBOE's audit trail and
automated surveillance program with regard to these order types,
thereby enhancing the integrity of the market to the benefit of
investors.
---------------------------------------------------------------------------
\14\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission also believes that the proposed rule change is
consistent with Section 6(b)(1) of the Act,\16\ which provides that the
Exchange be organized and have the capacity to be able to carry out the
purposes of the Act and to enforce compliance by the Exchange's TPHs
and persons associated with its TPHs with the Act, the rules and
regulations thereunder, and the rules of the Exchange. The Commission
believes that by enhancing the audit trail with respect to Multi-Class
Spread Orders the Exchange should be better able to ensure that TPHs'
orders submitted as Multi-Class Spread Orders meet the requirements of
CBOE Rule 24.19.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------
In addition, the Commission finds good cause, pursuant to Section
19(b)(2) of the Act,\17\ for approving the proposed rule change prior
to the 45th day after publication of notice in the Federal Register.
The Commission notes that the substance of this proposal was noticed
for comment as part of changes proposed in a prior CBOE proposed rule
change, which CBOE withdrew.\18\ The prior CBOE proposed rule change
was published for the entire 21 day comment period, and no comments
were received.\19\ In addition, the instant proposed rule change was
published for a 15 day comment period to ensure that the public had an
opportunity to review the proposal in its current form and no comments
were received on the instant filing. The Commission believes that there
has been ample notice provided for the public to comment on this
proposed rule change if they had concerns. Moreover, the Commission
does not believe that this proposed rule change raises any material or
novel issues. Accordingly, the Commission finds that good cause exists
for approving the proposed rule change on an accelerated basis.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78s(b)(2).
\18\ See Securities Exchange Act Release No. 72495 (June 27,
2014), 79 FR 38080 (July 3, 2014) (Notice of Withdrawal of SR-CBOE-
2014-026).
\19\ The prior CBOE proposal provided for several changes to
Rule 24.19; this proposal specifically relates to the electronic
entry and validation of Multi-Class Spread Orders. See Securities
Exchange Act Release No. 71872 (April 4, 2014), 79 FR 19940 (April
10, 2014) (SR-CBOE-2014-026).
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\20\ that the proposed rule change (File No. SR-CBOE-2014-060) be,
and hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
---------------------------------------------------------------------------
\21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-20340 Filed 8-26-14; 8:45 am]
BILLING CODE P
