Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Consolidate All CHX Order Types, Modifiers, and Related Terms Under One Rule and to Clarify the Basic Requirements of All Orders Sent to the Matching System, 28671-28678 [2013-11453]
Download as PDF
<![CDATA[
Federal Register / Vol. 78, No. 94 / Wednesday, May 15, 2013 / Notices
TKELLEY on DSK3SPTVN1PROD with NOTICES
excessive fees would stand to lose not
only connectivity revenues but also
revenues associated with the execution
of orders routed to it by affected
members, and, to the extent applicable,
market data revenues. The Exchange
believes that this competitive dynamic
imposes powerful restraints on the
ability of any exchange to charge
unreasonable fees for connectivity.
The Exchange believes that the
proposal to increase fees for logical
ports with bulk-quoting capability is
equitably allocated, reasonable, and not
unfairly discriminatory in that the
proposal will help the Exchange to
cover increasing infrastructure costs
associated with offering and continuing
to offer bulk-quoting capabilities to
BATS Options Users. The Exchange
notes that the use of such ports is
optional and that market participants
can continue to access BATS Options
through other logical ports for $400.00
per month. At the same time, the
Exchange believes that its fees for bulkquoting ports are reasonable, given the
benefits and added efficiencies Users of
BATS Options realize through such
ports. In addition, the Exchange believes
that its fees are equitably allocated
among its constituents and not unfairly
discriminatory, as, upon eliminating the
bulk port fee exemption for Market
Makers meeting QIP threshold
requirements, they are uniform in
application to all Users of BATS
Options.
For the same reasons discussed above,
elimination of the bulk port fee waiver
for Market Makers meeting QIP
threshold requirements is reasonable,
equitably allocated, and not unfairly
discriminatory. In addition, elimination
of the bulk port fee waiver is reasonable,
equitably allocated, and not unfairly
discriminatory because it will encourage
those Members that were previously
exempted from paying bulk port fees to
reserve and maintain ports in a more
efficient manner. This will allow the
Exchange to continue to maintain and
improve its infrastructure for all
Exchange customers, while also
encouraging Market Makers to request
and enable only the ports that are
necessary for their operations related to
the Exchange.
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. As discussed
above, the Exchange believes that fees
for connectivity are constrained by the
robust competition for order flow among
VerDate Mar<15>2010
17:16 May 14, 2013
Jkt 229001
exchanges and non-exchange markets.
Further, excessive fees for connectivity,
including logical port fees, would serve
to impair an exchange’s ability to
compete for order flow rather than
burdening competition.
(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 13 and paragraph (f)(2) of Rule
19b–4 thereunder.14 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.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposal 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
• Send an email to rulecomments@sec.gov. Please include File
No. SR–BATS–2013–025 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File No.
SR–BATS–2013–025. 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 changes 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 such
filing will also 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 No. SR–BATS–
2013–025 and should be submitted on
or before June 5, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–11518 Filed 5–14–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69538; File No. SR–CHX–
2013–10]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change to
Consolidate All CHX Order Types,
Modifiers, and Related Terms Under
One Rule and to Clarify the Basic
Requirements of All Orders Sent to the
Matching System
May 8, 2013.
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 May 6,
2013, the Chicago Stock Exchange, Inc.
(‘‘CHX’’ or the ‘‘Exchange’’) 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 self-regulatory
organization. The CHX has filed this
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
13 15
U.S.C. 78s(b)(3)(A).
14 17 CFR 240.19b–4(f)(2).
PO 00000
Frm 00096
Fmt 4703
1 15
Sfmt 4703
28671
E:\FR\FM\15MYN1.SGM
15MYN1
28672
Federal Register / Vol. 78, No. 94 / Wednesday, May 15, 2013 / Notices
proposal pursuant to Rule 19b–4(f)(6)
under the Act,3 which renders the
proposal effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CHX proposes to amend CHX rules,
namely Article 1, Rule 2; Article 17,
Rule 1; Article 20, Rule 1; Article 20,
Rule 2A; Article 20, Rule 4; Article 20,
Rule 5; Article 20, Rule 6; and Article
20, Rule 8 to consolidate all CHX order
types, modifiers, and related terms
(collectively referred to as ‘‘defined
order terms’’) under one rule and to
clarify the basic requirements of all
orders sent to the CHX Matching System
(the ‘‘Matching System’’). The text of
this proposed rule change is available
on the Exchange’s Web site at
(www.chx.com) and in 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
CHX included statements concerning
the purpose of and basis for the
proposed rule changes 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
CHX 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
TKELLEY on DSK3SPTVN1PROD with NOTICES
1. Purpose
The Exchange proposes to amend
certain CHX rules to consolidate all
defined order terms under one rule and
to clarify the basic requirements of all
orders sent to the Matching System.
Proposed Consolidation of Defined
Order Terms Amended Article 1, Rule 2
and Article 20, Rule 4(b)
The Exchange proposes to consolidate
the defined order terms found under
current Article 1, Rule 2 and Article 20,
Rule 4(b) under proposed Article 1, Rule
2, entitled ‘‘Order Types, Modifiers, and
Related Terms’’ (the ‘‘consolidated
list’’). In doing, so, the Exchange
proposes to eliminate subparagraphs
3 17
CFR 240.19b–4(f)(6).
VerDate Mar<15>2010
17:16 May 14, 2013
Jkt 229001
(1)–(25) under current Article 20, Rule
4(b), as they will either be incorporated
into the consolidated list or deleted, as
discussed in detail below.
Moreover, the Exchange proposes to
delete the following defined order terms
from the CHX rules, as they are either
redundant of other defined order terms
or have never been implemented: ‘‘IOC
Market’’ 4; ‘‘ISO Cross’’ 5; ‘‘Non-Regular
Way Cross’’ 6; ‘‘Outbound ISO’’ 7; and
‘‘Post Only ISO.’’ 8 A discussion of each
deletion is detailed below.
4 Current Article 1, Rule 2(n) and Article 20, Rule
4(b)(13) states as follows:
‘‘IOC market’’: a market order that is to be
executed only during the Regular Trading Session,
either in whole or in part, at or better than the
Exchange’s BBO (including any reserve size or other
undisplayed orders at or better than that price),
with any unexecuted balance of the order to be
immediately cancelled. IOC market orders shall not
be accepted until (i) the primary market in a
security has opened trading in that security or (ii)
two senior officers of the Exchange have
determined that it is appropriate for the Exchange
to accept IOC market orders. For purposes of this
rule, another exchange will be considered to have
opened for trading in a security when the first trade
in that security occurs in that market on or after
8:30 a.m.
5 Current Article 1, Rule 2(o) and Article 20, Rule
4(b)(14) states as follows:
‘‘ISO cross’’: any type of cross order marked as
required by SEC Rule 600(b)(30) that is to be
executed without taking any of the actions
described in Rule 5 to prevent an improper tradethrough. These orders shall be executed because the
Participant routing the order to the Matching
System has already satisfied the quotations of other
markets as required by Rule 600(b)(30). (This
provision shall become effective on the Trading
Phase Date of Rule 611 of Reg NMS.)
6 Current Article 1, Rule 2(u) and Article 20, Rule
4(b)(17) states as follows:
‘‘Non-regular way cross’’: an order to buy and sell
the same security that is not for regular way
settlement. A non-regular way cross order may
execute at any price, without regard to the NBBO
or any other orders in the Matching System, and
may represent interest of one or more Participants
of the Exchange. Any non-regular way cross that is
for cash settlement must be received by the
Matching System by 2:00 p.m. or such other time
that may be established by the Exchange and
communicated to Participants from time to time. A
non-regular way cross order may only be executed
in an increment permitted by Article 20, Rule
4(a)(7)(b).
7 Current Article 1, Rule 2(z) and Article 20, Rule
4(b)(19)) states as follows:
‘‘Outbound ISO’’: an order marked as required by
SEC Rule 600(b)(30)(i) that is to be executed at or
better than its limit price as soon as the order is
received by the Matching System, with any
unexecuted balance of the order to be immediately
cancelled, coupled with one or more ISO orders
designed to execute against any protected bids or
offers at other market centers as required by Rule
600(b)(30)(ii). Orders marked outbound ISO shall be
executed against any eligible orders in the Matching
System (including any reserve size or other
undisplayed orders). Other than the routing of ISOs
to other market centers, no action shall be taken to
prevent an improper trade-through.
8 Current Article 20, Rule 4(b)(23) states as
follows:
‘‘Post Only ISO’’: a type of ISO order that will be
immediately cancelled without execution if it is
marketable against a contra-side order in the
PO 00000
Frm 00097
Fmt 4703
Sfmt 4703
In addition, the Exchange proposes to
adopt new definitions for ‘‘Always
Quote’’ and ‘‘Short Exempt,’’ which are
not currently defined in the CHX rules,
but are currently available in the
Matching System. A discussion of
Always Quote and Short Exempt are
detailed below.
With respect to the current defined
order terms that are being incorporated
into the consolidated list, the Exchange
proposes to amend each defined term to
the extent necessary to clarify how the
defined order terms interact with each
other within the context of the Matching
System. In doing so, the Exchange also
proposes to make corresponding
grammatical amendments and technical
amendments to improve logical flow. It
is important to note that the Exchange
does not propose to substantively
modify the operation of any of the
current defined order terms or the
operation of the Matching System.
Thus, the Exchange proposes to
classify each of the amended and
proposed defined order terms into seven
distinct categories, as proposed
paragraphs (a)–(g):
(a) General Order Types;
(b) Order Execution Modifiers;
(c) Order Display Modifiers;
(d) Order Duration Modifiers;
(e) Order Settlement Terms;
(f) Order Size Attributes; and
(g) Special Order Handling.
General Order Types
Proposed Article 1, Rule 2(a) provides
that limit, cross, and market orders are
called ‘‘General Order Types’’ and that
each shall be accepted by the Matching
System, subject to the requirements of
proposed Article 20, Rule 4.9 This is
consistent with proposed Article 20,
Rule 4(a)(1), which provides that any
order entered into the Matching System
must be a limit, cross, or market order.10
Proposed paragraph (a)(1) is
substantively identical to current Article
1, Rule 2(p), which defines a ‘‘limit’’
Matching System when entered. If a Post Only ISO
is not immediately cancelled as described in the
previous sentence, it will be posted on the
Exchange at the entered limit price. By entering a
Post Only ISO, a Participant represents that such
Participant has simultaneously routed one or more
additional limit orders marked ‘‘ISO,’’ as necessary,
to away markets to execute against the full
displayed size of any protected quotation for the
security with a price that is superior or equal to the
limit price of the Post Only ISO entered in the
Matching System. Consequently, a Post Only ISO
order will be displayed by the Exchange regardless
of whether it will lock or cross another market
center’s quote.
9 The Exchange proposes to amend Article 20,
Rule 4 to clarify the basic requirements of all orders
sent to the Matching System. A detailed discussion
of these amendments may be found below.
10 Id.
E:\FR\FM\15MYN1.SGM
15MYN1
Federal Register / Vol. 78, No. 94 / Wednesday, May 15, 2013 / Notices
TKELLEY on DSK3SPTVN1PROD with NOTICES
order. In addition, the Exchange
proposes to adopt additional language
that states that all limit orders, except
for limit orders marked ‘‘PricePenetrating ISO,’’ 11 shall be deemed to
have been received ‘‘Day,’’ 12 if an order
duration modifier is not specified. That
is, if an order sender does not attribute
an order duration modifier to a limit
order, the Matching System will treat
the limit order as Day, by default.
Proposed paragraph (a)(2) is
substantively identical to current Article
1, Rule 2(e), which defines a ‘‘cross’’
order. In addition, the Exchange
proposes to adopt additional language
that states that all cross orders shall be
deemed to have been received
Immediate Or Cancel (‘‘IOC’’),13 which
cannot be overridden by an order
sender. This is because cross orders do
not rest on the CHX book since the
contra-parties to the transaction are
identified.
Proposed paragraph (a)(3) is
substantively identical to both current
Article 1, Rule 2(n), which defines ‘‘IOC
market’’ 14 and current Article 1, Rule
2(q), which defines ‘‘market’’ 15 orders.
That is, the proposed definition
consolidates these definitions and
adopts additional language that states
that all market orders not marked IOC
will be rejected. This is because all CHX
market orders must be IOC and may not
rest on the CHX book. In light of the
proposed definition of ‘‘market’’ orders,
the Exchange submits that maintaining
a separate definition for ‘‘IOC market’’ is
redundant and unnecessary and
proposes to delete it from the CHX
rules.
Since every order received by the
Matching System is a limit, cross, or
market order, the Exchange submits that
limit, cross, and market orders are the
11 As discussed below, proposed Article 1, Rule
2(b)(1)(E) provides, inter alia, that a limit order
marked ‘‘Price-Penetrating ISO’’ is deemed to have
been received IOC.
12 Proposed Article 1, Rule 2(d)(1) defines ‘‘Day’’
as ‘‘an order that is in effect only for the day on
which it is submitted to the Exchange,’’ which is
substantively identical to current Article 20, Rule
2(i).
13 Proposed Article 1, Rule 2(d)(4) defines ‘‘IOC’’
as, inter alia, an order modifier that requires an
order to be executed, either in whole or in part and
for limit orders, at or better than its limit price, as
soon as the order is received by the Matching
System, with any unexecuted balance of the order
to be immediately cancelled. Orders marked IOC
shall be executed against any orders in the
Matching System at or better than the Exchange’s
BBO (including any Reserve Size or undisplayed
orders at or better than that price). This definition
is substantively identical to current Article 1, Rule
2(m).
14 Supra note 4.
15 Current CHX Article 1, Rule 2(q) defines
‘‘market’’ as an order to buy or sell a specific
amount of a security at the best price available once
the order is presented in the market.
VerDate Mar<15>2010
17:16 May 14, 2013
Jkt 229001
only general order types offered by the
Exchange. This is because limit, cross,
and market orders are the only defined
order terms that primarily relate to the
price of the order. As discussed in detail
below, virtually all of the other defined
order terms listed under proposed
Article 1, Rule 2 modify how an order
is to be treated prior to order execution
being completed (e.g. order execution,
duration, and display modifiers) or set
the terms of how an executed order is
to be settled (e.g. order settlement
terms).
Order Execution Modifiers
Proposed Article 1, Rule 2(b) provides
that one or more order execution
modifiers may be applied to a general
order type, subject to the requirements
of proposed Article 20, Rule 4, so long
as the modifier is compatible with the
general order type and other applicable
order modifiers/terms. Thereunder,
proposed paragraph (b)(1) lists order
execution modifiers that may be
attributed to limit orders only, proposed
paragraph (b)(2) lists order execution
modifiers that may be attributed to cross
orders only, and proposed paragraph
(b)(3) lists order execution modifiers
that may be attributed to multiple
general order types.
With respect to the definition of each
defined order term listed under
proposed Rule 2(b), the Exchange
proposes a global amendment to the
definition of each order execution
modifier so that each defines itself as an
‘‘order modifier’’ and not merely as an
‘‘order,’’ as well as any corresponding
grammatical amendments. The purpose
of this amendment is to clarify that an
order execution modifier is not a
distinct general order type.
Proposed paragraph (b)(1) lists the
order execution modifiers that may be
attributed to limit orders only, as
proposed subparagraphs (A)–(E):
(A) BBO ISO;
(B) Cancel On Halt;
(C) CHX Only;
(D) Post Only; and
(E) Price-Penetrating ISO.
Proposed paragraph (b)(1)(A) is
substantively identical to current Article
1, Rule 2(a), which defines ‘‘BBO ISO,’’
and adopts additional language that
states that a limit order marked BBO
ISO shall be deemed to have been
received ‘‘Do Not Route,’’ 16 which
cannot be overridden by the order
sender. In addition, the Exchange
proposes to omit the word ‘‘order’’ and
16 Proposed Article 1, Rule 2(b)(3)(A) defines ‘‘Do
Not Route’’ as a limit or market order modifier that
requires an order to only be executed or displayed
within the Exchange’s Matching System and not be
routed to another market.
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
28673
replace it with the more accurate ‘‘limit
order modifier.’’
Proposed paragraph (b)(1)(B) is
substantively identical to current Article
1, Rule 2(c), which defines ‘‘Cancel On
Halt.’’ Aside from the amendment to the
definition to refer to itself as a ‘‘limit
order modifier,’’ the Exchange does not
propose to make any other amendments.
Proposed paragraph (b)(1)(C) is
substantively identical to current Article
1, Rule 2(y), which defines ‘‘CHX
Only,’’ and adopts additional language
that states that a limit order marked
CHX Only shall be deemed to have been
received Do Not Route, which cannot be
overridden by the order sender. In
addition, the Exchange proposes to omit
the word ‘‘order’’ and replace it with the
more accurate ‘‘limit order modifier.’’
Proposed paragraph (b)(1)(D) is
substantively identical to current Article
20, Rule 4(b)(18), which defines ‘‘Post
Only,’’ and adopts additional language
that states that a limit order marked Post
Only shall be deemed to have been
received Do Not Route, which cannot be
overridden by the order sender. In
addition, pursuant to the global
amendment discussed above, the
Exchange proposes to omit the word
‘‘order’’ and replace it with the more
accurate ‘‘limit order modifier.’’
In light of this amended definition of
Post Only, the Exchange proposes to
delete ‘‘Post Only ISO’’ 17 from the CHX
rules, because a Post Only ISO is simply
a limit order marked Post Only and BBO
ISO and not a distinct order modifier.
As such, the Exchange submits that
maintaining a separate defined order
term for ‘‘Post Only ISO’’ is redundant
and unnecessary.
Proposed paragraph (b)(1)(E) is
substantively identical to current Article
1, Rule 2(aa), which defines ‘‘PricePenetrating ISO,’’ and adopts additional
language that states that a limit order
marked Price-Penetrating ISO shall be
deemed to have been received IOC,
which cannot be overridden by the
order sender. In addition, the Exchange
proposes to omit the word ‘‘order’’ and
replace it with the more accurate ‘‘limit
order modifier.’’
Proposed paragraph (b)(2) lists the
order execution modifiers that may be
attributed to cross orders only, as
proposed subparagraphs (A)–(E):
(A) Benchmark;
(B) Cross With Satisfy;
(C) Cross With Yield;
(D) Midpoint Cross;
(E) Qualified Contingent Trade.
Proposed paragraph (b)(2)(A) is
substantively identical to current Article
1, Rule 2(b), which defines
17 Supra
E:\FR\FM\15MYN1.SGM
note 8.
15MYN1
TKELLEY on DSK3SPTVN1PROD with NOTICES
28674
Federal Register / Vol. 78, No. 94 / Wednesday, May 15, 2013 / Notices
‘‘Benchmark.’’ Aside from the
amendment to the definition to refer to
itself as a ‘‘cross order modifier,’’ the
Exchange does not propose to make any
other amendments.
Proposed paragraph (b)(2)(B) is
substantively identical to current Article
1, Rule 2(f), which defines ‘‘Cross With
Satisfy.’’ 18 Aside from the amendment
to the definition to refer to itself as a
‘‘cross order modifier,’’ the Exchange
does not propose to make any other
amendments.
Proposed paragraph (b)(2)(C) is
substantively identical to current Article
1, Rule 2(h), which defines ‘‘Cross With
Yield.’’ 19 Aside from the amendment to
the definition to refer to itself as a
‘‘cross order modifier,’’ the Exchange
does not propose to make any other
amendments.
Proposed paragraph (b)(2)(D) is
substantively identical to current Article
1, Rule 2(r), which defines ‘‘Midpoint
Cross.’’ Aside from the amendment to
the definition to refer to itself as a
‘‘cross order modifier,’’ the Exchange
does not propose to make any other
amendments.
Proposed paragraph (b)(2)(E) is
substantively identical to current Article
1, Rule 2(bb), which defines ‘‘Qualified
Contingent Trade.’’ Aside from the
amendment to the definition to refer to
itself as a ‘‘cross order modifier,’’ the
Exchange does not propose to make any
other amendments.
Proposed paragraph (b)(3) lists the
order execution modifiers that may be
attributed to multiple general order
types, as proposed subparagraphs (A)–
(E):
(A) Do Not Route;
(B) ISO;
(C) Not Held;
(D) Sell Short; and
(E) Short Exempt.
Proposed paragraph (b)(3)(A) is
substantively identical to current Article
1, Rule 2(k), which defines ‘‘Do Not
Route,’’ except that the proposed
definition omits reference to IOC and
Fill Or Kill (‘‘FOK’’) orders having to be
marked Do Not Route. As discussed
below, the Exchange proposes to
include such language in the definition
of IOC and FOK, individually. Aside
from the amendment to the definition to
refer to itself as a ‘‘limit or cross order
modifier,’’ the Exchange does not
propose to make any other amendments.
Proposed paragraph (b)(3)(B) is
substantively identical to current Article
18 Cross With Satisfy and Cross With Yield are not
currently enabled. The Exchange anticipates filing
a proposed rule filing pursuant to Rule 19b–4 under
the Act to modify Cross With Satisfy and Cross
With Yield prior to enabling the modifiers.
19 Id.
VerDate Mar<15>2010
17:16 May 14, 2013
Jkt 229001
20, Rule 4(b)(15), which defines
‘‘Intermarket Sweep’’ or ‘‘ISO,’’ and
adopts additional language that states
that orders marked ISO shall be
executed because the Participant routing
the order to the Matching System has
already satisfied the quotations of other
markets as required by Rule 600(b)(30)
and that a limit order marked ISO that
is not marked BBO ISO shall be deemed
to have been received Price-Penetrating
ISO, which cannot be overridden by the
order sender. The main distinction
between BBO ISO and Price-Penetrating
ISO is that the unexecuted portion of a
BBO ISO may post to the CHX book, so
long as it is not marked IOC, whereas
the unexecuted portion of a PricePenetrating ISO will always be
immediately cancelled. That is, this
additional language clarifies that the
Matching System treats all limit orders
marked ISO as Price-Penetrating ISO,
and by extension IOC, unless
specifically marked otherwise. In
addition, the Exchange proposes to omit
the word ‘‘order’’ and replace it with the
more accurate ‘‘limit or cross order
modifier.’’
In light of this amended definition of
ISO, the Exchange proposes to delete
ISO Cross 20 from the CHX rules,
because an ISO Cross is simply a cross
order marked ISO and not a distinct
order modifier. As such, the Exchange
submits that maintaining a separate
defined order term for ‘‘ISO Cross’’ is
redundant and unnecessary.
Moreover, the Exchange proposes to
delete Outbound ISO 21 from the CHX
rules. The Exchange included Outbound
ISO in its rules as part of its migration
to a new trading model in 2006.22
However, the Exchange never adopted
Outbound ISO, due to the fact that the
Exchange never implemented its routing
functionality.23
Proposed paragraph (b)(3)(C) is
substantively identical to current Article
1, Rule 2(w), which defines ‘‘Not Held,’’
and adopts additional language that
clarifies that the Not Held instruction
may only apply to orders sent by a
customer to an Exchange Participant
and that any order received by the
Matching System marked Not Held shall
be rejected. The Exchange notes that
20 Supra
note 5.
note 7.
22 See Exchange Act Release No. 54550
(September 29, 2006), 71 FR 59563 (October 10,
2006) (SR–CHX–2006–05).
23 The Exchange anticipates filing a proposed rule
change pursuant to Rule 19b–4 under the Act in
connection with its initiative to implement an order
routing functionality. If the Exchange elects to offer
a routing order type, the Exchange will submit a
related rule filing(s) pursuant to Rule 19b–4 under
the Act.
21 Supra
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
this clarification represents the current
operation of the Not Held modifier.
Proposed paragraph (b)(3)(D) is
substantively identical to current Article
1, Rule 2(ff), which defines ‘‘Sell Short.’’
Aside from the amendment to the
definition to refer to itself as an ‘‘order
modifier,’’ the Exchange does not
propose to make other amendments.
Proposed paragraph (b)(3)(E) defines
‘‘Short Exempt’’ similarly to proposed
paragraph (b)(3)(D) as an order modifier
that marks any security ‘‘short exempt’’
under Rule 200(g) of Regulation SHO.
Since the Exchange already requires
order senders to mark sell orders to
comport with Rule 200(g) of Regulation,
the Exchange proposes to adopt ‘‘Short
Exempt’’ as a defined order term.
Order Display Modifiers
Proposed Article 1, Rule 2(c) provides
that one or more display modifiers may
be applied to a limit order, subject to the
requirements of Article 20, Rule 4, so
long as the modifier is compatible with
the general order type and other
applicable order modifiers/terms. Since
market and cross orders are never
posted as they are always IOC, order
display modifiers are not applicable to
those general order types. If an order
display modifier is not selected, the
order is considered to be fullydisplayable.
Similar to the amendments to the
defined order terms under proposed
paragraph (b), the Exchange proposes a
global amendment to the definition of
each order display modifier so that each
defines itself as an ‘‘order modifier’’ and
not merely as an ‘‘order,’’ as well as any
accompanying grammatical
amendments.
Proposed paragraph (c)(1) defines
‘‘Always Quote’’ as a limit order
modifier which will cause the CHX
Matching System to cancel the
unexecuted balance of an otherwise
displayable order, where the
unexecuted balance is an odd lot and
priced at the CHX best bid or best offer
(‘‘CHX BBO’’) 24 and the order cannot be
displayed as part of an aggregated quote
because there are no other orders on the
CHX book with which such an order can
be aggregated, pursuant to Article 20,
Rule 8(d)(3).25 That is, if an odd lot
24 The CHX BBO may be displayed or
undisplayed. For example, a fully-displayable odd
lot order that is not displayed may be at the CHX
BBO.
25 Current Article 20, Rule 8(d)(3) states as
follows:
Odd-lot orders and unexecuted odd-lot
remainders that are unable to be immediately
displayed according to Rule 8(b)(6) above (because
they are at a price that is better than the current
CHX quote) shall either remain in, or be rejected
from, the Exchange’s Matching System according to
E:\FR\FM\15MYN1.SGM
15MYN1
Federal Register / Vol. 78, No. 94 / Wednesday, May 15, 2013 / Notices
TKELLEY on DSK3SPTVN1PROD with NOTICES
remainder of an order meets the above
definition, but the order is not marked
Always Quote, the order will remain on
the CHX book, as a displayable order
that is undisplayed. It is important to
note that although the Exchange does
not currently define ‘‘Always Quote,’’
the ‘‘Participant’s instruction’’
specifically referred to in Article 20,
Rule 8(d)(3) implies the functionality of
the Always Quote modifier under
current CHX rules.
Proposed paragraph (c)(2) is
substantively identical to current Article
1, Rule 2(j), which defines ‘‘Do Not
Display.’’ Aside from the amendment to
the definition to refer to itself as a ‘‘limit
order modifier,’’ the Exchange does not
propose to make any other amendments.
Proposed paragraph (c)(3) is
substantively identical to current Article
1, Rule 2(dd), which defines ‘‘Reserve
Size.’’ Aside from the amendment to the
definition to refer to itself as a ‘‘limit
order modifier,’’ the Exchange does not
propose to make any other amendments.
Order Duration Modifier
Proposed Article 1, Rule 2(d) provides
that an order duration modifier may be
applied to a general order type, subject
to the requirements of proposed Article
20, Rule 4, so long as the modifier is
compatible with the general order type
and other applicable order modifiers/
terms. However, since market and cross
orders are always IOC, such orders may
not be attributed any other order
duration modifier, whereas limit orders
may be marked with any order duration
modifier to the extent compatible.
Similar to the amendments to the
defined order terms under proposed
paragraph (b) and (c), the Exchange
proposes a global amendment to the
definition of each order duration
modifier so that each defines itself as an
‘‘order modifier’’ and not merely as an
‘‘order,’’ as well as any accompanying
grammatical amendments.
Proposed paragraph (d)(1) is
substantively identical to current Article
1, Rule 2(i), which defines ‘‘Day.’’ Aside
from the amendment to the definition to
refer to itself as a ‘‘limit order modifier,’’
the Exchange does not propose to make
any other amendments.
Proposed paragraph (d)(2) is
substantively identical to current Article
1, Rule 2(l), which defines ‘‘Fill Or Kill’’
or ‘‘FOK,’’ and adopts additional
language that states an order marked
each Participant’s instructions. Orders remaining in
the Matching System will continue to be ranked at
the price and time at which they were originally
received. Orders that are rejected from the Matching
System shall be routed away according to Rule 8(h)
below or, if designated ‘‘do not route,’’
automatically cancelled.
VerDate Mar<15>2010
17:16 May 14, 2013
Jkt 229001
FOK shall be deemed to have been
received Do Not Route, which cannot be
overridden by an order sender. In
addition, the Exchange proposes to omit
the word ‘‘order’’ and replace it with the
more accurate ‘‘limit order modifier.’’
Proposed paragraph (d)(3) is
substantively identical to current Article
1, Rule 2(ii), which defines ‘‘Time In
Force.’’ Currently, the CHX rules use the
term ‘‘Time In Force’’ to refer to order
duration modifiers generally 26 and the
specific modifier currently defined
under current Article 1, Rule 2(ii) and
Article 20, Rule 4(b)(24). Thus, for the
sake of clarity, the Exchange proposes to
rename the specific order modifier
‘‘Good ‘Til Date’’ or ‘‘GTD.’’ In addition
to the name change, the Exchange
proposes to omit the word ‘‘order’’ and
replace it with the more accurate ‘‘limit
order modifier.’’
Proposed paragraph (d)(4) is
substantively identical to current Article
1, Rule 2(m), which defines ‘‘Immediate
Or Cancel’’ or ‘‘IOC,’’ and adopts
additional language that states that an
order marked IOC shall be deemed to
have been received Do Not Route, which
cannot be overridden by the order
sender. In addition, the Exchange
proposes to omit the word ‘‘order’’ and
replace it with the more accurate ‘‘order
modifier.’’
Order Settlement Terms
Proposed paragraph (e) provides that
one order settlement term shall be
applied to a general order type, subject
to the requirements of Article 20, Rule
4, so long as the term is compatible with
the general order type and other
applicable order modifiers.
Proposed paragraph (e)(1) is
substantively identical to current Article
1, Rule 2(cc), which defines ‘‘Regular
Way Settlement,’’ and adopts additional
language that states that, by default, all
contracts are subject to Regular Way
Settlement. This is consistent with
current Article 20, Rule 4(a)(3) that
requires all orders to be for Regular Way
Settlement and Article 20, Rule
4(a)(7)(a), which permits only nonregular way cross orders to be marked
for non-regular way settlement.
Proposed paragraph (e)(2), which
defines ‘‘Non-Regular Way Settlement’’
is a consolidation of few current defined
order terms each of which are a subtype
of Non-Regular Way Settlement. The
proposed paragraph is substantively
identical to current Article 1, Rule 2(v),
which defines ‘‘Non-Regular Way
Settlement.’’ Moreover, the proposed
26 See
Article 11, Rule 3(b)(14); see also paragraph
.01(13) of the Interpretations and Policies of Article
11, Rule 4.
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
28675
paragraph clarifies that only cross
orders are eligible for Non-Regular Way
Settlement, which is consistent with
current Article 20, Rule 4(a)(7)(a), and
that cross orders marked for NonRegular Way Settlement may execute at
any price, without regard to the NBBO
or any other orders in the Matching
System, which is substantively identical
to similar language in current Article 1,
Rule 2(u), which defines ‘‘non-regular
way cross.’’
Thereunder, proposed paragraph
(e)(2)(A) is substantively identical to
current Article 1, Rule 2(d), which
defines ‘‘Cash Settlement,’’ with
additional language that incorporates
current Article 1, Rule 2(u), which
defines ‘‘Non-Regular Way Cross.’’
Specifically, the additional language
provides that any cross order that is for
Cash Settlement must be received by the
Matching System by 2:00 p.m.27 or such
other time that may be established by
the Exchange and communicated to
Participants from time to time. Given
the fact that the proposed definitions of
‘‘cross,’’ ‘‘Non-Regular Way
Settlement,’’ and ‘‘Cash Settlement’’
fully incorporate the current definition
of ‘‘non-regular way cross,’’ 28 the
Exchange proposes to omit ‘‘non-regular
way cross’’ from the CHX rules. Similar
to IOC market, Post Only ISO, and ISO
Cross, a ‘‘non-regular way cross’’ is not
a distinct order type, as it is simply a
cross order marked for Non-Regular
Way Settlement. As such, the Exchange
submits that maintaining a separate
defined order term for ‘‘non-regular way
cross’’ is redundant and unnecessary.
Proposed paragraph (e)(2)(B) is
substantively identical to current Article
1, Rule 2(t), which defines ‘‘Next Day,’’
whereas proposed paragraph (e)(2)(C) is
substantively identical to current Article
1, Rule 2(gg), which defines ‘‘Seller’s
Option.’’
Order Size Attributes
Proposed paragraph (f) lists defined
order terms related to order size.
Specifically, proposed paragraph (f)(1)
is substantively identical to current
Article 1, Rule 2(j), which defines
‘‘Mixed Lot;’’ proposed paragraph (f)(2)
is substantively identical to current
Article 1, Rule 2(x), which defines ‘‘Odd
Lot;’’ and proposed paragraph (f)(3) is
substantively identical to current Article
1, Rule 2(ee), which defines ‘‘Round
Lot.’’
It is important to note that these order
size attributes are not modifiers or terms
27 All times referred to in the CHX rules are in
Central Standard Time, unless explicitly stated
otherwise.
28 Supra note 6.
E:\FR\FM\15MYN1.SGM
15MYN1
28676
Federal Register / Vol. 78, No. 94 / Wednesday, May 15, 2013 / Notices
TKELLEY on DSK3SPTVN1PROD with NOTICES
in the same sense as the defined order
terms listed under proposed paragraphs
(a)–(e). Rather, they are defined order
terms that describe the size of an order
received by the Matching System, which
are most notably useful in the context of
order aggregation for order display
purposes, pursuant to current Article
20, Rule 8.
Special Order Handling
Proposed paragraph (g) provides that
an order may be subject to special
handling under certain circumstances.
Thereunder, proposed paragraph (g)(1)
is substantively identical to current
Article 1, Rule 2(g), which defines
‘‘Cross With Size,’’ with organizational
amendments to improve logical flow
and deletions to update the language to
comport with the current operation of
the Matching System.
Specifically, the proposed paragraph
(g)(1) provides that a cross order (except
a Cross With Yield, any cross order
subject to Non-Regular Way Settlement
or a cross order marked ISO) to buy and
sell at least 5,000 shares of the same
security with a total value of at least
$100,000 will execute, notwithstanding
resting orders in the CHX book at the
same price, where (A) the order is at a
price equal to or better than the best bid
or offer displayed in the Matching
System and would not constitute a
trade-through under Regulation NMS
(including all applicable exceptions and
exemptions); and (B) the size of the
order must be larger than the largest
order displayed in the Matching System
at that price. Moreover, the Matching
System will execute any cross order or
modified cross order (except a Cross
With Yield, any cross order subject to
Non-Regular Way Settlement or a cross
order marked ISO) as a Cross With Size
if the order meets the requirements for
a Cross With Size. A Cross With Size
may represent interest of one or more
Participants of the Exchange. A Cross
With Size order may only be executed
in an increment permitted by Article 20,
Rule 4(a)(7)(b).
Aside from various amendments to
replace the term ‘‘Non-Regular Way
Cross,’’ with the more accurate ‘‘cross
order subject to Non-Regular Way
Settlement,’’ the Exchange proposes to
delete from the proposed paragraph
(g)(1)(B) language that requires the cross
order to be of a size that is one round
lot larger than the aggregate size of all
interest displayed at that price. Since
the Exchange now provides a constant
book feed, the distinction between order
size prior to and after dissemination of
a feed of all displayable orders is moot.
Thus, the Exchange submits that the
remaining language requiring, inter alia,
VerDate Mar<15>2010
17:16 May 14, 2013
Jkt 229001
the size of the Cross With Size order to
be larger than the largest order
displayed in the Matching System at
that price, is sufficient to ensure orders
handled as Cross With Size meet the
requisite size requirement.
Proposed Basic Requirements of Orders
Sent to the Matching System Amended
Article 20, Rule 4(a)
The Exchange proposes to amend
Article 20, Rule 4(a) to clearly enunciate
the basic requirements of orders sent to
the Matching System. The following
amendments clarify what is already
required or implied by current CHX
rules and does not substantively modify
the operation of the Matching System.
The Exchange proposes to amend
Article 20, Rule 4(a)(1) to provide that
an order sent to the Matching System
must be a limit, cross, or market order
and that these eligible general order
types are listed and defined under
proposed Article 1, Rule 2(a). This
requirement may be currently found via
three separate provisions read together.
Specifically, current Article 20, Rule
4(a)(1) provides that all orders must be
limit orders; current Article 20, Rule
4(a)(7)(b) provides that cross orders may
be submitted; and current Article 20,
Rule 4(a)(7)(c) provides that IOC market
orders may be submitted. Given this
lack of clarity in the current rules, the
Exchange submits that the amendment
to Rule 4(a)(1) is appropriate.
The Exchange also proposes to amend
Article 20, Rule 4(a)(2) to provide that
all orders must be attributed an order
duration modifier and that these order
duration modifiers are listed under
proposed Article 1, Rule 2(d). This
amendment is necessary because
current Rule 4(a)(2) states that all order
must be Day orders, which is partially
accurate and incomplete. That is, the
current language is accurate to the
extent that orders resting on the CHX
book will not be carried over to the
following trading day and that all limit
orders are defaulted to Day, pursuant to
proposed Article 1, Rule 2(a)(1).
However, the current rule does not
make clear that an order may be
attributed a more a restrictive order
duration modifier, such as IOC or FOK.
Given this lack of clarity in the current
rules, the Exchange submits that the
amendment to Rule 4(a)(2) is also
appropriate.
The Exchange proposes to make
various amendments throughout the rest
of Article 20, Rule 4 to update citations
and references to certain amended/
omitted defined order terms. Notably,
the Exchange proposes to amend Article
20, Rule 4(a)(3) to insert a citation to
proposed Article 1, Rule 2(e)(1),
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
discussed in detail below, which
defines ‘‘Regular Way Settlement.’’ The
Exchange also proposes to amend
Article 20, Rule 4(a)(7)(a) to replace the
term ‘‘non-regular way cross’’ with
‘‘cross.’’ As discussed in detail above,
the term ‘‘non-regular way cross’’ is
redundant and, as such, the Exchange
proposes to omit that term from the
consolidated list. Similarly, the
Exchange proposes to amend Rule
4(a)(7)(b) to remove the term ‘‘nonregular way cross’’ and replace it with
the more accurate phrase, ‘‘cross order
designated for Non-Regular Way
Settlement.’’ Moreover, the Exchange
propose to amend Rule 4(a)(7)(c) to
remove the term ‘‘IOC market’’ and to
clarify that market orders must be
marked IOC. As discussed above, the
term ‘‘IOC market’’ is redundant and, as
such, the Exchange proposes to omit
that term from the consolidated list.
Given the consolidated list, the
Exchange proposes to delete all of the
defined order terms listed under current
Article 1, Rule 4(b) as current
subparagraphs (1)–(25). In addition, the
Exchange proposes to amend current
Rule 4(b) to provide that as designated
by the Exchange, the general order
types, modifiers, and related terms
listed under proposed Article 1, Rule 2
may be eligible for entry to and
acceptance by the Matching System, at
the discretion of the Exchange.
Proposed Rule 4(b) further provides that
announcements regarding order
eligibility under this paragraph shall be
made by the Exchange via Regulatory
Circular and will be provided in a
manner to give reasonable advance
notice to its market participants.
Various Other Updates
Given the numerous changes to
citations and deletions and/or
consolidation of some current defined
order terms, the Exchange proposes the
following amendments throughout the
CHX rules.
The Exchange proposes to amend
paragraph .02 of the Interpretations and
Policies of Article 17, Rule 1 to update
the citation for ‘‘Benchmark’’ orders to
proposed Article 1, Rule 2(b)(2)(A).
The Exchange proposes to amend
paragraph .03 of the Interpretations and
Policies of Article 20, Rule 1 to replace
‘‘non-regular way cross’’ with ‘‘cross
orders marked for Non-Regular Way
Settlement,’’ given the proposed
deletion of ‘‘non-regular way cross’’
from the CHX rules, discussed in detail
above.
The Exchange proposes to amend
Article 20, Rule 2A(a)(4)(A) to update
the citations for ‘‘limit,’’ ‘‘market,’’ and
‘‘cross’’ orders to Article 1 Rule 2(a)(1),
E:\FR\FM\15MYN1.SGM
15MYN1
Federal Register / Vol. 78, No. 94 / Wednesday, May 15, 2013 / Notices
Rule 2(a)(3), and Rule 2(a)(2),
respectively. The Exchange proposes to
amend paragraph (b)(1) to update
citations to ‘‘Reserve Size’’ and ‘‘Do Not
Display’’ to Article 1, Rule 2(c)(3) and
Article 1, Rule 2(c)(2), respectively. The
Exchange proposes to amend paragraph
(b)(2) to update the citation for ‘‘CHX
Only’’ to Article 1, Rule 2(b)(1)(C).
The Exchange proposes to delete the
substance of paragraph .01(e) of the
Interpretations and Policies of Article
20, Rule 5 and replace it with a
‘‘Reserved’’ marker. As discussed above,
the Exchange proposes to delete the
order execution modifier ‘‘Outbound
ISO’’ from the CHX rules because the
modifier has never been adopted since
it was included in the CHX rules in
2006. For the same reason, the Exchange
proposes to amend paragraph .03(a) of
the Interpretations and Policies of
Article 20, Rule 5 to omit reference to
‘‘Outbound ISO.’’ 29
The Exchange proposes to amend
paragraph .01(h) of the Interpretations
and Policies of Article 20, Rule 5 to
update the citation for the definition of
‘‘Qualified Contingent Trades’’ to
proposed Article 1, Rule 2(b)(2)(E).
The Exchange proposes to amend
Article 20, Rule 6(d) to update the
citation for ‘‘CHX Only’’ to Article 1,
Rule 2(b)(1)(C).
The Exchange proposes to amend
Article 20, Rule 8(e)(1) to update the
citations for ‘‘cross’’ and ‘‘Cross With
Satisfy’’ to Article 1, Rule 2(a)(2) and
Rule 2(g)(1), respectively. The Exchange
also proposes to amend Rule 8(e)(3) to
update the citation for ‘‘Non-Regular
Way Settlement’’ to Article 1, Rule
2(e)(2).
The Exchange proposes to amend
paragraph .02 of Article 20, Rule 8 to
update the citation for ‘‘Cross With
Satisfy’’ to Article 1, Rule 2(b)(2)(B).
TKELLEY on DSK3SPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposal to consolidate all defined order
terms and to clarify the basic
requirements of all orders sent to the
Matching System is consistent with the
requirements of the Act and the rules
and regulations thereunder that are
applicable to a national securities
exchange, and, in particular, with the
requirements of Section 6(b) of the
Act.30 In particular, the proposal is
consistent with Section 6(b)(5) of the
29 The Exchange anticipates filing a proposed rule
change pursuant to Rule 19b–4 under the Act in
connection with its initiative to implement an order
routing functionality. In submitting such a filing,
the Exchange will propose a new order modifier(s)
to replace ‘‘Outbound ISO’’ and will propose a new
corresponding paragraph .01(e) and .03(a).
30 15 U.S.C. 78f(b).
VerDate Mar<15>2010
17:16 May 14, 2013
Jkt 229001
Act,31 because it would promote just
and equitable principles of trade,
remove impediments to, and perfect the
mechanism of, a free and open market
and a national market system. The
Exchange believes that the consolidated
list of defined order terms and the
clarification of the basic requirement of
order sent to the Matching System
promote just and equitable principles of
trade by enhancing transparency
concerning the structure of order types
utilized by the Exchange. For the same
reasons, the Exchange believes that the
proposed amendments will contribute
to the protection of investors and the
public interest by making the CHX rules
easier to understand.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed changes to consolidate all
defined order terms under one rule and
to clarify the basic requirements of all
orders sent to the Matching System
contribute to the protection of investors
and the public interest by making the
CHX rules easier to understand. Since
the Exchange does not propose to
substantively modify the operation of
the Matching System, the proposed
changes will not impose any burden on
competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change
does not: (i) Significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative prior to 30 days from the date
on which it was filed, or such shorter
time as the Commission may designate,
if consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 32 and Rule 19b–4(f)(6)
thereunder.33
31 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(3)(A).
33 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
32 15
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
28677
A proposed rule change filed under
Rule 19b–4(f)(6) 34 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),35 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay and allow the proposed
rule change to be immediately
operative, noting that doing so would
allow the Exchange to immediately offer
Participants a more organized CHX
rulebook and clarity with respect to the
basic requirements of orders sent to the
Matching System. The Exchange further
notes that the proposed clarification to
the basic requirements of an order sent
to the Matching System and the
consolidation of all general order types,
modifiers, and related terms offered by
the Exchange under one list will make
the operation of the Matching System
more transparent to Participants and
will, in turn, encourage market
participants to utilize the Exchange’s
services over its competitors. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest 36 because it will allow
the Exchange to immediately provide
increased transparency regarding the
operation of the Matching System. The
Commission believes that this increased
transparency will benefit CHX market
participants and therefore waives the
30-day operative delay and designates
the proposal operative upon filing.
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.
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:
description and 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.
34 17 CFR 240.19b–4(f)(6).
35 17 CFR 240.19b–4(f)(6)(iii).
36 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).
E:\FR\FM\15MYN1.SGM
15MYN1
28678
Federal Register / Vol. 78, No. 94 / Wednesday, May 15, 2013 / Notices
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–CHX–2013–10 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
TKELLEY on DSK3SPTVN1PROD with NOTICES
All submissions should refer to File
Number SR–CHX–2013–10. 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-CHX–2013–10 and should
be submitted on or before June 5, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.37
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–11453 Filed 5–14–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69549; File No. SR–BX–
2013–035]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Correct BX
Rule 2140(c)
May 9, 2013.
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 May 6,
2013, NASDAQ OMX BX, Inc. (the
‘‘Exchange’’ or ‘‘BX’’) 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 Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to correct BX
Rule 2140(c) to reference NASDAQ
Options Services LLC (‘‘NOS’’).
The text of the proposed rule change
is below; proposed new language is in
italics.
*
*
*
*
*
NASDAQ OMX BX
Equity Rules
*
*
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
17:16 May 14, 2013
*
(a)–(b) No change.
(c) The NASDAQ OMX Group, Inc.,
which is the holding company owning
[both] the Exchange, [and] NASDAQ
Execution Services, LLC, and NASDAQ
Options Services LLC, shall establish
and maintain procedures and internal
controls reasonably designed to ensure
that neither NASDAQ Execution
Services, LLC nor NASDAQ Options
Services LLC [does not] develops or
implements changes to its system on the
basis of non-public information
regarding planned changes to Exchange
systems, obtained as a result of its
affiliation with the Exchange, until such
information is available generally to
similarly situated members of the
Exchange in connection with the
provision of inbound routing to the
Exchange.
*
*
*
*
*
2 17
Jkt 229001
*
2140. Restrictions on Affiliation
1 15
37 17
*
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00103
Fmt 4703
Sfmt 4703
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 the proposal is to
correct Rule 2140(c) to refer to NOS, in
addition to NASDAQ Execution
Services, LLC (‘‘NES’’).
NOS is owned by The NASDAQ OMX
Group, Inc., which also owns three
registered securities exchanges—the
Exchange, The NASDAQ Stock Market
LLC (‘‘NASDAQ’’) (and its facility, the
NASDAQ Options Market), and
NASDAQ OMX PHLX LLC (‘‘PHLX’’).3
Therefore, NOS is an affiliate of these
exchanges. The Exchange adopted Rule
2140(c) to prevent potential
informational advantages resulting from
the affiliation between BX and NES, as
related to NES’s authority to route
equities orders from PHLX’s PSX facility
and NASDAQ. The Exchange intended
to add NOS to this rule, as related to
NOS’ authority to route options orders
from PHLX and NOM to BX Options.
This intention was expressed in the
proposed rule change where BX
received approval to permit BX Options
to receive inbound routes of options
orders by NOS in its capacity as an
order routing facility of PHLX and
NOM, as part of the approval of the
proposed rule change establishing BX
Options, but the rule text was
inadvertently not amended
accordingly.4 In that proposed rule
change, BX agreed to certain conditions
and obligations, which it has adopted.
Specifically, it stated that the Exchange
3 See Securities Exchange Act Release Nos. 58324
(August 7, 2008), 73 FR 46936 (August 12, 2008)
(SR–BSE–2008–02; SR–BSE–2008–23; SR–BSE–
2008–25; SR–BSECC–2008–01) (order approving
NASDAQ OMX’s acquisition of BX); and 58179
(July 17, 2008) (SR–PHLX–2008–31), 73 FR 42874
(July 23, 2008) (order approving NASDAQ OMX’s
acquisition of PHLX).
4 Securities Exchange Act Release No. 67256
(June 26, 2012), 77 FR 39277 (July 2, 2012) (SR–BX–
2012–030).
E:\FR\FM\15MYN1.SGM
15MYN1
]]>Agencies
[Federal Register Volume 78, Number 94 (Wednesday, May 15, 2013)]
[Notices]
[Pages 28671-28678]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-11453]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69538; File No. SR-CHX-2013-10]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
to Consolidate All CHX Order Types, Modifiers, and Related Terms Under
One Rule and to Clarify the Basic Requirements of All Orders Sent to
the Matching System
May 8, 2013.
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 May 6, 2013, the Chicago Stock Exchange, Inc. (``CHX'' or the
``Exchange'') 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 self-regulatory
organization. The CHX has filed this
[[Page 28672]]
proposal pursuant to Rule 19b-4(f)(6) under the Act,\3\ which renders
the proposal effective upon filing with the Commission. 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\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CHX proposes to amend CHX rules, namely Article 1, Rule 2; Article
17, Rule 1; Article 20, Rule 1; Article 20, Rule 2A; Article 20, Rule
4; Article 20, Rule 5; Article 20, Rule 6; and Article 20, Rule 8 to
consolidate all CHX order types, modifiers, and related terms
(collectively referred to as ``defined order terms'') under one rule
and to clarify the basic requirements of all orders sent to the CHX
Matching System (the ``Matching System''). The text of this proposed
rule change is available on the Exchange's Web site at (www.chx.com)
and in 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 CHX included statements
concerning the purpose of and basis for the proposed rule changes 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 CHX has prepared summaries, set forth in sections A,
B and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend certain CHX rules to consolidate all
defined order terms under one rule and to clarify the basic
requirements of all orders sent to the Matching System.
Proposed Consolidation of Defined Order Terms Amended Article 1, Rule 2
and Article 20, Rule 4(b)
The Exchange proposes to consolidate the defined order terms found
under current Article 1, Rule 2 and Article 20, Rule 4(b) under
proposed Article 1, Rule 2, entitled ``Order Types, Modifiers, and
Related Terms'' (the ``consolidated list''). In doing, so, the Exchange
proposes to eliminate subparagraphs (1)-(25) under current Article 20,
Rule 4(b), as they will either be incorporated into the consolidated
list or deleted, as discussed in detail below.
Moreover, the Exchange proposes to delete the following defined
order terms from the CHX rules, as they are either redundant of other
defined order terms or have never been implemented: ``IOC Market'' \4\;
``ISO Cross'' \5\; ``Non-Regular Way Cross'' \6\; ``Outbound ISO'' \7\;
and ``Post Only ISO.'' \8\ A discussion of each deletion is detailed
below.
---------------------------------------------------------------------------
\4\ Current Article 1, Rule 2(n) and Article 20, Rule 4(b)(13)
states as follows:
``IOC market'': a market order that is to be executed only
during the Regular Trading Session, either in whole or in part, at
or better than the Exchange's BBO (including any reserve size or
other undisplayed orders at or better than that price), with any
unexecuted balance of the order to be immediately cancelled. IOC
market orders shall not be accepted until (i) the primary market in
a security has opened trading in that security or (ii) two senior
officers of the Exchange have determined that it is appropriate for
the Exchange to accept IOC market orders. For purposes of this rule,
another exchange will be considered to have opened for trading in a
security when the first trade in that security occurs in that market
on or after 8:30 a.m.
\5\ Current Article 1, Rule 2(o) and Article 20, Rule 4(b)(14)
states as follows:
``ISO cross'': any type of cross order marked as required by SEC
Rule 600(b)(30) that is to be executed without taking any of the
actions described in Rule 5 to prevent an improper trade-through.
These orders shall be executed because the Participant routing the
order to the Matching System has already satisfied the quotations of
other markets as required by Rule 600(b)(30). (This provision shall
become effective on the Trading Phase Date of Rule 611 of Reg NMS.)
\6\ Current Article 1, Rule 2(u) and Article 20, Rule 4(b)(17)
states as follows:
``Non-regular way cross'': an order to buy and sell the same
security that is not for regular way settlement. A non-regular way
cross order may execute at any price, without regard to the NBBO or
any other orders in the Matching System, and may represent interest
of one or more Participants of the Exchange. Any non-regular way
cross that is for cash settlement must be received by the Matching
System by 2:00 p.m. or such other time that may be established by
the Exchange and communicated to Participants from time to time. A
non-regular way cross order may only be executed in an increment
permitted by Article 20, Rule 4(a)(7)(b).
\7\ Current Article 1, Rule 2(z) and Article 20, Rule 4(b)(19))
states as follows:
``Outbound ISO'': an order marked as required by SEC Rule
600(b)(30)(i) that is to be executed at or better than its limit
price as soon as the order is received by the Matching System, with
any unexecuted balance of the order to be immediately cancelled,
coupled with one or more ISO orders designed to execute against any
protected bids or offers at other market centers as required by Rule
600(b)(30)(ii). Orders marked outbound ISO shall be executed against
any eligible orders in the Matching System (including any reserve
size or other undisplayed orders). Other than the routing of ISOs to
other market centers, no action shall be taken to prevent an
improper trade-through.
\8\ Current Article 20, Rule 4(b)(23) states as follows:
``Post Only ISO'': a type of ISO order that will be immediately
cancelled without execution if it is marketable against a contra-
side order in the Matching System when entered. If a Post Only ISO
is not immediately cancelled as described in the previous sentence,
it will be posted on the Exchange at the entered limit price. By
entering a Post Only ISO, a Participant represents that such
Participant has simultaneously routed one or more additional limit
orders marked ``ISO,'' as necessary, to away markets to execute
against the full displayed size of any protected quotation for the
security with a price that is superior or equal to the limit price
of the Post Only ISO entered in the Matching System. Consequently, a
Post Only ISO order will be displayed by the Exchange regardless of
whether it will lock or cross another market center's quote.
---------------------------------------------------------------------------
In addition, the Exchange proposes to adopt new definitions for
``Always Quote'' and ``Short Exempt,'' which are not currently defined
in the CHX rules, but are currently available in the Matching System. A
discussion of Always Quote and Short Exempt are detailed below.
With respect to the current defined order terms that are being
incorporated into the consolidated list, the Exchange proposes to amend
each defined term to the extent necessary to clarify how the defined
order terms interact with each other within the context of the Matching
System. In doing so, the Exchange also proposes to make corresponding
grammatical amendments and technical amendments to improve logical
flow. It is important to note that the Exchange does not propose to
substantively modify the operation of any of the current defined order
terms or the operation of the Matching System.
Thus, the Exchange proposes to classify each of the amended and
proposed defined order terms into seven distinct categories, as
proposed paragraphs (a)-(g):
(a) General Order Types;
(b) Order Execution Modifiers;
(c) Order Display Modifiers;
(d) Order Duration Modifiers;
(e) Order Settlement Terms;
(f) Order Size Attributes; and
(g) Special Order Handling.
General Order Types
Proposed Article 1, Rule 2(a) provides that limit, cross, and
market orders are called ``General Order Types'' and that each shall be
accepted by the Matching System, subject to the requirements of
proposed Article 20, Rule 4.\9\ This is consistent with proposed
Article 20, Rule 4(a)(1), which provides that any order entered into
the Matching System must be a limit, cross, or market order.\10\
---------------------------------------------------------------------------
\9\ The Exchange proposes to amend Article 20, Rule 4 to clarify
the basic requirements of all orders sent to the Matching System. A
detailed discussion of these amendments may be found below.
\10\ Id.
---------------------------------------------------------------------------
Proposed paragraph (a)(1) is substantively identical to current
Article 1, Rule 2(p), which defines a ``limit''
[[Page 28673]]
order. In addition, the Exchange proposes to adopt additional language
that states that all limit orders, except for limit orders marked
``Price-Penetrating ISO,'' \11\ shall be deemed to have been received
``Day,'' \12\ if an order duration modifier is not specified. That is,
if an order sender does not attribute an order duration modifier to a
limit order, the Matching System will treat the limit order as Day, by
default.
---------------------------------------------------------------------------
\11\ As discussed below, proposed Article 1, Rule 2(b)(1)(E)
provides, inter alia, that a limit order marked ``Price-Penetrating
ISO'' is deemed to have been received IOC.
\12\ Proposed Article 1, Rule 2(d)(1) defines ``Day'' as ``an
order that is in effect only for the day on which it is submitted to
the Exchange,'' which is substantively identical to current Article
20, Rule 2(i).
---------------------------------------------------------------------------
Proposed paragraph (a)(2) is substantively identical to current
Article 1, Rule 2(e), which defines a ``cross'' order. In addition, the
Exchange proposes to adopt additional language that states that all
cross orders shall be deemed to have been received Immediate Or Cancel
(``IOC''),\13\ which cannot be overridden by an order sender. This is
because cross orders do not rest on the CHX book since the contra-
parties to the transaction are identified.
---------------------------------------------------------------------------
\13\ Proposed Article 1, Rule 2(d)(4) defines ``IOC'' as, inter
alia, an order modifier that requires an order to be executed,
either in whole or in part and for limit orders, at or better than
its limit price, as soon as the order is received by the Matching
System, with any unexecuted balance of the order to be immediately
cancelled. Orders marked IOC shall be executed against any orders in
the Matching System at or better than the Exchange's BBO (including
any Reserve Size or undisplayed orders at or better than that
price). This definition is substantively identical to current
Article 1, Rule 2(m).
---------------------------------------------------------------------------
Proposed paragraph (a)(3) is substantively identical to both
current Article 1, Rule 2(n), which defines ``IOC market'' \14\ and
current Article 1, Rule 2(q), which defines ``market'' \15\ orders.
That is, the proposed definition consolidates these definitions and
adopts additional language that states that all market orders not
marked IOC will be rejected. This is because all CHX market orders must
be IOC and may not rest on the CHX book. In light of the proposed
definition of ``market'' orders, the Exchange submits that maintaining
a separate definition for ``IOC market'' is redundant and unnecessary
and proposes to delete it from the CHX rules.
---------------------------------------------------------------------------
\14\ Supra note 4.
\15\ Current CHX Article 1, Rule 2(q) defines ``market'' as an
order to buy or sell a specific amount of a security at the best
price available once the order is presented in the market.
---------------------------------------------------------------------------
Since every order received by the Matching System is a limit,
cross, or market order, the Exchange submits that limit, cross, and
market orders are the only general order types offered by the Exchange.
This is because limit, cross, and market orders are the only defined
order terms that primarily relate to the price of the order. As
discussed in detail below, virtually all of the other defined order
terms listed under proposed Article 1, Rule 2 modify how an order is to
be treated prior to order execution being completed (e.g. order
execution, duration, and display modifiers) or set the terms of how an
executed order is to be settled (e.g. order settlement terms).
Order Execution Modifiers
Proposed Article 1, Rule 2(b) provides that one or more order
execution modifiers may be applied to a general order type, subject to
the requirements of proposed Article 20, Rule 4, so long as the
modifier is compatible with the general order type and other applicable
order modifiers/terms. Thereunder, proposed paragraph (b)(1) lists
order execution modifiers that may be attributed to limit orders only,
proposed paragraph (b)(2) lists order execution modifiers that may be
attributed to cross orders only, and proposed paragraph (b)(3) lists
order execution modifiers that may be attributed to multiple general
order types.
With respect to the definition of each defined order term listed
under proposed Rule 2(b), the Exchange proposes a global amendment to
the definition of each order execution modifier so that each defines
itself as an ``order modifier'' and not merely as an ``order,'' as well
as any corresponding grammatical amendments. The purpose of this
amendment is to clarify that an order execution modifier is not a
distinct general order type.
Proposed paragraph (b)(1) lists the order execution modifiers that
may be attributed to limit orders only, as proposed subparagraphs (A)-
(E):
(A) BBO ISO;
(B) Cancel On Halt;
(C) CHX Only;
(D) Post Only; and
(E) Price-Penetrating ISO.
Proposed paragraph (b)(1)(A) is substantively identical to current
Article 1, Rule 2(a), which defines ``BBO ISO,'' and adopts additional
language that states that a limit order marked BBO ISO shall be deemed
to have been received ``Do Not Route,'' \16\ which cannot be overridden
by the order sender. In addition, the Exchange proposes to omit the
word ``order'' and replace it with the more accurate ``limit order
modifier.''
---------------------------------------------------------------------------
\16\ Proposed Article 1, Rule 2(b)(3)(A) defines ``Do Not
Route'' as a limit or market order modifier that requires an order
to only be executed or displayed within the Exchange's Matching
System and not be routed to another market.
---------------------------------------------------------------------------
Proposed paragraph (b)(1)(B) is substantively identical to current
Article 1, Rule 2(c), which defines ``Cancel On Halt.'' Aside from the
amendment to the definition to refer to itself as a ``limit order
modifier,'' the Exchange does not propose to make any other amendments.
Proposed paragraph (b)(1)(C) is substantively identical to current
Article 1, Rule 2(y), which defines ``CHX Only,'' and adopts additional
language that states that a limit order marked CHX Only shall be deemed
to have been received Do Not Route, which cannot be overridden by the
order sender. In addition, the Exchange proposes to omit the word
``order'' and replace it with the more accurate ``limit order
modifier.''
Proposed paragraph (b)(1)(D) is substantively identical to current
Article 20, Rule 4(b)(18), which defines ``Post Only,'' and adopts
additional language that states that a limit order marked Post Only
shall be deemed to have been received Do Not Route, which cannot be
overridden by the order sender. In addition, pursuant to the global
amendment discussed above, the Exchange proposes to omit the word
``order'' and replace it with the more accurate ``limit order
modifier.''
In light of this amended definition of Post Only, the Exchange
proposes to delete ``Post Only ISO'' \17\ from the CHX rules, because a
Post Only ISO is simply a limit order marked Post Only and BBO ISO and
not a distinct order modifier. As such, the Exchange submits that
maintaining a separate defined order term for ``Post Only ISO'' is
redundant and unnecessary.
---------------------------------------------------------------------------
\17\ Supra note 8.
---------------------------------------------------------------------------
Proposed paragraph (b)(1)(E) is substantively identical to current
Article 1, Rule 2(aa), which defines ``Price-Penetrating ISO,'' and
adopts additional language that states that a limit order marked Price-
Penetrating ISO shall be deemed to have been received IOC, which cannot
be overridden by the order sender. In addition, the Exchange proposes
to omit the word ``order'' and replace it with the more accurate
``limit order modifier.''
Proposed paragraph (b)(2) lists the order execution modifiers that
may be attributed to cross orders only, as proposed subparagraphs (A)-
(E):
(A) Benchmark;
(B) Cross With Satisfy;
(C) Cross With Yield;
(D) Midpoint Cross;
(E) Qualified Contingent Trade.
Proposed paragraph (b)(2)(A) is substantively identical to current
Article 1, Rule 2(b), which defines
[[Page 28674]]
``Benchmark.'' Aside from the amendment to the definition to refer to
itself as a ``cross order modifier,'' the Exchange does not propose to
make any other amendments.
Proposed paragraph (b)(2)(B) is substantively identical to current
Article 1, Rule 2(f), which defines ``Cross With Satisfy.'' \18\ Aside
from the amendment to the definition to refer to itself as a ``cross
order modifier,'' the Exchange does not propose to make any other
amendments.
---------------------------------------------------------------------------
\18\ Cross With Satisfy and Cross With Yield are not currently
enabled. The Exchange anticipates filing a proposed rule filing
pursuant to Rule 19b-4 under the Act to modify Cross With Satisfy
and Cross With Yield prior to enabling the modifiers.
---------------------------------------------------------------------------
Proposed paragraph (b)(2)(C) is substantively identical to current
Article 1, Rule 2(h), which defines ``Cross With Yield.'' \19\ Aside
from the amendment to the definition to refer to itself as a ``cross
order modifier,'' the Exchange does not propose to make any other
amendments.
---------------------------------------------------------------------------
\19\ Id.
---------------------------------------------------------------------------
Proposed paragraph (b)(2)(D) is substantively identical to current
Article 1, Rule 2(r), which defines ``Midpoint Cross.'' Aside from the
amendment to the definition to refer to itself as a ``cross order
modifier,'' the Exchange does not propose to make any other amendments.
Proposed paragraph (b)(2)(E) is substantively identical to current
Article 1, Rule 2(bb), which defines ``Qualified Contingent Trade.''
Aside from the amendment to the definition to refer to itself as a
``cross order modifier,'' the Exchange does not propose to make any
other amendments.
Proposed paragraph (b)(3) lists the order execution modifiers that
may be attributed to multiple general order types, as proposed
subparagraphs (A)-(E):
(A) Do Not Route;
(B) ISO;
(C) Not Held;
(D) Sell Short; and
(E) Short Exempt.
Proposed paragraph (b)(3)(A) is substantively identical to current
Article 1, Rule 2(k), which defines ``Do Not Route,'' except that the
proposed definition omits reference to IOC and Fill Or Kill (``FOK'')
orders having to be marked Do Not Route. As discussed below, the
Exchange proposes to include such language in the definition of IOC and
FOK, individually. Aside from the amendment to the definition to refer
to itself as a ``limit or cross order modifier,'' the Exchange does not
propose to make any other amendments.
Proposed paragraph (b)(3)(B) is substantively identical to current
Article 20, Rule 4(b)(15), which defines ``Intermarket Sweep'' or
``ISO,'' and adopts additional language that states that orders marked
ISO shall be executed because the Participant routing the order to the
Matching System has already satisfied the quotations of other markets
as required by Rule 600(b)(30) and that a limit order marked ISO that
is not marked BBO ISO shall be deemed to have been received Price-
Penetrating ISO, which cannot be overridden by the order sender. The
main distinction between BBO ISO and Price-Penetrating ISO is that the
unexecuted portion of a BBO ISO may post to the CHX book, so long as it
is not marked IOC, whereas the unexecuted portion of a Price-
Penetrating ISO will always be immediately cancelled. That is, this
additional language clarifies that the Matching System treats all limit
orders marked ISO as Price-Penetrating ISO, and by extension IOC,
unless specifically marked otherwise. In addition, the Exchange
proposes to omit the word ``order'' and replace it with the more
accurate ``limit or cross order modifier.''
In light of this amended definition of ISO, the Exchange proposes
to delete ISO Cross \20\ from the CHX rules, because an ISO Cross is
simply a cross order marked ISO and not a distinct order modifier. As
such, the Exchange submits that maintaining a separate defined order
term for ``ISO Cross'' is redundant and unnecessary.
---------------------------------------------------------------------------
\20\ Supra note 5.
---------------------------------------------------------------------------
Moreover, the Exchange proposes to delete Outbound ISO \21\ from
the CHX rules. The Exchange included Outbound ISO in its rules as part
of its migration to a new trading model in 2006.\22\ However, the
Exchange never adopted Outbound ISO, due to the fact that the Exchange
never implemented its routing functionality.\23\
---------------------------------------------------------------------------
\21\ Supra note 7.
\22\ See Exchange Act Release No. 54550 (September 29, 2006), 71
FR 59563 (October 10, 2006) (SR-CHX-2006-05).
\23\ The Exchange anticipates filing a proposed rule change
pursuant to Rule 19b-4 under the Act in connection with its
initiative to implement an order routing functionality. If the
Exchange elects to offer a routing order type, the Exchange will
submit a related rule filing(s) pursuant to Rule 19b-4 under the
Act.
---------------------------------------------------------------------------
Proposed paragraph (b)(3)(C) is substantively identical to current
Article 1, Rule 2(w), which defines ``Not Held,'' and adopts additional
language that clarifies that the Not Held instruction may only apply to
orders sent by a customer to an Exchange Participant and that any order
received by the Matching System marked Not Held shall be rejected. The
Exchange notes that this clarification represents the current operation
of the Not Held modifier.
Proposed paragraph (b)(3)(D) is substantively identical to current
Article 1, Rule 2(ff), which defines ``Sell Short.'' Aside from the
amendment to the definition to refer to itself as an ``order
modifier,'' the Exchange does not propose to make other amendments.
Proposed paragraph (b)(3)(E) defines ``Short Exempt'' similarly to
proposed paragraph (b)(3)(D) as an order modifier that marks any
security ``short exempt'' under Rule 200(g) of Regulation SHO. Since
the Exchange already requires order senders to mark sell orders to
comport with Rule 200(g) of Regulation, the Exchange proposes to adopt
``Short Exempt'' as a defined order term.
Order Display Modifiers
Proposed Article 1, Rule 2(c) provides that one or more display
modifiers may be applied to a limit order, subject to the requirements
of Article 20, Rule 4, so long as the modifier is compatible with the
general order type and other applicable order modifiers/terms. Since
market and cross orders are never posted as they are always IOC, order
display modifiers are not applicable to those general order types. If
an order display modifier is not selected, the order is considered to
be fully-displayable.
Similar to the amendments to the defined order terms under proposed
paragraph (b), the Exchange proposes a global amendment to the
definition of each order display modifier so that each defines itself
as an ``order modifier'' and not merely as an ``order,'' as well as any
accompanying grammatical amendments.
Proposed paragraph (c)(1) defines ``Always Quote'' as a limit order
modifier which will cause the CHX Matching System to cancel the
unexecuted balance of an otherwise displayable order, where the
unexecuted balance is an odd lot and priced at the CHX best bid or best
offer (``CHX BBO'') \24\ and the order cannot be displayed as part of
an aggregated quote because there are no other orders on the CHX book
with which such an order can be aggregated, pursuant to Article 20,
Rule 8(d)(3).\25\ That is, if an odd lot
[[Page 28675]]
remainder of an order meets the above definition, but the order is not
marked Always Quote, the order will remain on the CHX book, as a
displayable order that is undisplayed. It is important to note that
although the Exchange does not currently define ``Always Quote,'' the
``Participant's instruction'' specifically referred to in Article 20,
Rule 8(d)(3) implies the functionality of the Always Quote modifier
under current CHX rules.
---------------------------------------------------------------------------
\24\ The CHX BBO may be displayed or undisplayed. For example, a
fully-displayable odd lot order that is not displayed may be at the
CHX BBO.
\25\ Current Article 20, Rule 8(d)(3) states as follows:
Odd-lot orders and unexecuted odd-lot remainders that are unable
to be immediately displayed according to Rule 8(b)(6) above (because
they are at a price that is better than the current CHX quote) shall
either remain in, or be rejected from, the Exchange's Matching
System according to each Participant's instructions. Orders
remaining in the Matching System will continue to be ranked at the
price and time at which they were originally received. Orders that
are rejected from the Matching System shall be routed away according
to Rule 8(h) below or, if designated ``do not route,'' automatically
cancelled.
---------------------------------------------------------------------------
Proposed paragraph (c)(2) is substantively identical to current
Article 1, Rule 2(j), which defines ``Do Not Display.'' Aside from the
amendment to the definition to refer to itself as a ``limit order
modifier,'' the Exchange does not propose to make any other amendments.
Proposed paragraph (c)(3) is substantively identical to current
Article 1, Rule 2(dd), which defines ``Reserve Size.'' Aside from the
amendment to the definition to refer to itself as a ``limit order
modifier,'' the Exchange does not propose to make any other amendments.
Order Duration Modifier
Proposed Article 1, Rule 2(d) provides that an order duration
modifier may be applied to a general order type, subject to the
requirements of proposed Article 20, Rule 4, so long as the modifier is
compatible with the general order type and other applicable order
modifiers/terms. However, since market and cross orders are always IOC,
such orders may not be attributed any other order duration modifier,
whereas limit orders may be marked with any order duration modifier to
the extent compatible.
Similar to the amendments to the defined order terms under proposed
paragraph (b) and (c), the Exchange proposes a global amendment to the
definition of each order duration modifier so that each defines itself
as an ``order modifier'' and not merely as an ``order,'' as well as any
accompanying grammatical amendments.
Proposed paragraph (d)(1) is substantively identical to current
Article 1, Rule 2(i), which defines ``Day.'' Aside from the amendment
to the definition to refer to itself as a ``limit order modifier,'' the
Exchange does not propose to make any other amendments.
Proposed paragraph (d)(2) is substantively identical to current
Article 1, Rule 2(l), which defines ``Fill Or Kill'' or ``FOK,'' and
adopts additional language that states an order marked FOK shall be
deemed to have been received Do Not Route, which cannot be overridden
by an order sender. In addition, the Exchange proposes to omit the word
``order'' and replace it with the more accurate ``limit order
modifier.''
Proposed paragraph (d)(3) is substantively identical to current
Article 1, Rule 2(ii), which defines ``Time In Force.'' Currently, the
CHX rules use the term ``Time In Force'' to refer to order duration
modifiers generally \26\ and the specific modifier currently defined
under current Article 1, Rule 2(ii) and Article 20, Rule 4(b)(24).
Thus, for the sake of clarity, the Exchange proposes to rename the
specific order modifier ``Good `Til Date'' or ``GTD.'' In addition to
the name change, the Exchange proposes to omit the word ``order'' and
replace it with the more accurate ``limit order modifier.''
---------------------------------------------------------------------------
\26\ See Article 11, Rule 3(b)(14); see also paragraph .01(13)
of the Interpretations and Policies of Article 11, Rule 4.
---------------------------------------------------------------------------
Proposed paragraph (d)(4) is substantively identical to current
Article 1, Rule 2(m), which defines ``Immediate Or Cancel'' or ``IOC,''
and adopts additional language that states that an order marked IOC
shall be deemed to have been received Do Not Route, which cannot be
overridden by the order sender. In addition, the Exchange proposes to
omit the word ``order'' and replace it with the more accurate ``order
modifier.''
Order Settlement Terms
Proposed paragraph (e) provides that one order settlement term
shall be applied to a general order type, subject to the requirements
of Article 20, Rule 4, so long as the term is compatible with the
general order type and other applicable order modifiers.
Proposed paragraph (e)(1) is substantively identical to current
Article 1, Rule 2(cc), which defines ``Regular Way Settlement,'' and
adopts additional language that states that, by default, all contracts
are subject to Regular Way Settlement. This is consistent with current
Article 20, Rule 4(a)(3) that requires all orders to be for Regular Way
Settlement and Article 20, Rule 4(a)(7)(a), which permits only non-
regular way cross orders to be marked for non-regular way settlement.
Proposed paragraph (e)(2), which defines ``Non-Regular Way
Settlement'' is a consolidation of few current defined order terms each
of which are a subtype of Non-Regular Way Settlement. The proposed
paragraph is substantively identical to current Article 1, Rule 2(v),
which defines ``Non-Regular Way Settlement.'' Moreover, the proposed
paragraph clarifies that only cross orders are eligible for Non-Regular
Way Settlement, which is consistent with current Article 20, Rule
4(a)(7)(a), and that cross orders marked for Non-Regular Way Settlement
may execute at any price, without regard to the NBBO or any other
orders in the Matching System, which is substantively identical to
similar language in current Article 1, Rule 2(u), which defines ``non-
regular way cross.''
Thereunder, proposed paragraph (e)(2)(A) is substantively identical
to current Article 1, Rule 2(d), which defines ``Cash Settlement,''
with additional language that incorporates current Article 1, Rule
2(u), which defines ``Non-Regular Way Cross.'' Specifically, the
additional language provides that any cross order that is for Cash
Settlement must be received by the Matching System by 2:00 p.m.\27\ or
such other time that may be established by the Exchange and
communicated to Participants from time to time. Given the fact that the
proposed definitions of ``cross,'' ``Non-Regular Way Settlement,'' and
``Cash Settlement'' fully incorporate the current definition of ``non-
regular way cross,'' \28\ the Exchange proposes to omit ``non-regular
way cross'' from the CHX rules. Similar to IOC market, Post Only ISO,
and ISO Cross, a ``non-regular way cross'' is not a distinct order
type, as it is simply a cross order marked for Non-Regular Way
Settlement. As such, the Exchange submits that maintaining a separate
defined order term for ``non-regular way cross'' is redundant and
unnecessary.
---------------------------------------------------------------------------
\27\ All times referred to in the CHX rules are in Central
Standard Time, unless explicitly stated otherwise.
\28\ Supra note 6.
---------------------------------------------------------------------------
Proposed paragraph (e)(2)(B) is substantively identical to current
Article 1, Rule 2(t), which defines ``Next Day,'' whereas proposed
paragraph (e)(2)(C) is substantively identical to current Article 1,
Rule 2(gg), which defines ``Seller's Option.''
Order Size Attributes
Proposed paragraph (f) lists defined order terms related to order
size. Specifically, proposed paragraph (f)(1) is substantively
identical to current Article 1, Rule 2(j), which defines ``Mixed Lot;''
proposed paragraph (f)(2) is substantively identical to current Article
1, Rule 2(x), which defines ``Odd Lot;'' and proposed paragraph (f)(3)
is substantively identical to current Article 1, Rule 2(ee), which
defines ``Round Lot.''
It is important to note that these order size attributes are not
modifiers or terms
[[Page 28676]]
in the same sense as the defined order terms listed under proposed
paragraphs (a)-(e). Rather, they are defined order terms that describe
the size of an order received by the Matching System, which are most
notably useful in the context of order aggregation for order display
purposes, pursuant to current Article 20, Rule 8.
Special Order Handling
Proposed paragraph (g) provides that an order may be subject to
special handling under certain circumstances. Thereunder, proposed
paragraph (g)(1) is substantively identical to current Article 1, Rule
2(g), which defines ``Cross With Size,'' with organizational amendments
to improve logical flow and deletions to update the language to comport
with the current operation of the Matching System.
Specifically, the proposed paragraph (g)(1) provides that a cross
order (except a Cross With Yield, any cross order subject to Non-
Regular Way Settlement or a cross order marked ISO) to buy and sell at
least 5,000 shares of the same security with a total value of at least
$100,000 will execute, notwithstanding resting orders in the CHX book
at the same price, where (A) the order is at a price equal to or better
than the best bid or offer displayed in the Matching System and would
not constitute a trade-through under Regulation NMS (including all
applicable exceptions and exemptions); and (B) the size of the order
must be larger than the largest order displayed in the Matching System
at that price. Moreover, the Matching System will execute any cross
order or modified cross order (except a Cross With Yield, any cross
order subject to Non-Regular Way Settlement or a cross order marked
ISO) as a Cross With Size if the order meets the requirements for a
Cross With Size. A Cross With Size may represent interest of one or
more Participants of the Exchange. A Cross With Size order may only be
executed in an increment permitted by Article 20, Rule 4(a)(7)(b).
Aside from various amendments to replace the term ``Non-Regular Way
Cross,'' with the more accurate ``cross order subject to Non-Regular
Way Settlement,'' the Exchange proposes to delete from the proposed
paragraph (g)(1)(B) language that requires the cross order to be of a
size that is one round lot larger than the aggregate size of all
interest displayed at that price. Since the Exchange now provides a
constant book feed, the distinction between order size prior to and
after dissemination of a feed of all displayable orders is moot. Thus,
the Exchange submits that the remaining language requiring, inter alia,
the size of the Cross With Size order to be larger than the largest
order displayed in the Matching System at that price, is sufficient to
ensure orders handled as Cross With Size meet the requisite size
requirement.
Proposed Basic Requirements of Orders Sent to the Matching System
Amended Article 20, Rule 4(a)
The Exchange proposes to amend Article 20, Rule 4(a) to clearly
enunciate the basic requirements of orders sent to the Matching System.
The following amendments clarify what is already required or implied by
current CHX rules and does not substantively modify the operation of
the Matching System.
The Exchange proposes to amend Article 20, Rule 4(a)(1) to provide
that an order sent to the Matching System must be a limit, cross, or
market order and that these eligible general order types are listed and
defined under proposed Article 1, Rule 2(a). This requirement may be
currently found via three separate provisions read together.
Specifically, current Article 20, Rule 4(a)(1) provides that all orders
must be limit orders; current Article 20, Rule 4(a)(7)(b) provides that
cross orders may be submitted; and current Article 20, Rule 4(a)(7)(c)
provides that IOC market orders may be submitted. Given this lack of
clarity in the current rules, the Exchange submits that the amendment
to Rule 4(a)(1) is appropriate.
The Exchange also proposes to amend Article 20, Rule 4(a)(2) to
provide that all orders must be attributed an order duration modifier
and that these order duration modifiers are listed under proposed
Article 1, Rule 2(d). This amendment is necessary because current Rule
4(a)(2) states that all order must be Day orders, which is partially
accurate and incomplete. That is, the current language is accurate to
the extent that orders resting on the CHX book will not be carried over
to the following trading day and that all limit orders are defaulted to
Day, pursuant to proposed Article 1, Rule 2(a)(1). However, the current
rule does not make clear that an order may be attributed a more a
restrictive order duration modifier, such as IOC or FOK. Given this
lack of clarity in the current rules, the Exchange submits that the
amendment to Rule 4(a)(2) is also appropriate.
The Exchange proposes to make various amendments throughout the
rest of Article 20, Rule 4 to update citations and references to
certain amended/omitted defined order terms. Notably, the Exchange
proposes to amend Article 20, Rule 4(a)(3) to insert a citation to
proposed Article 1, Rule 2(e)(1), discussed in detail below, which
defines ``Regular Way Settlement.'' The Exchange also proposes to amend
Article 20, Rule 4(a)(7)(a) to replace the term ``non-regular way
cross'' with ``cross.'' As discussed in detail above, the term ``non-
regular way cross'' is redundant and, as such, the Exchange proposes to
omit that term from the consolidated list. Similarly, the Exchange
proposes to amend Rule 4(a)(7)(b) to remove the term ``non-regular way
cross'' and replace it with the more accurate phrase, ``cross order
designated for Non-Regular Way Settlement.'' Moreover, the Exchange
propose to amend Rule 4(a)(7)(c) to remove the term ``IOC market'' and
to clarify that market orders must be marked IOC. As discussed above,
the term ``IOC market'' is redundant and, as such, the Exchange
proposes to omit that term from the consolidated list.
Given the consolidated list, the Exchange proposes to delete all of
the defined order terms listed under current Article 1, Rule 4(b) as
current subparagraphs (1)-(25). In addition, the Exchange proposes to
amend current Rule 4(b) to provide that as designated by the Exchange,
the general order types, modifiers, and related terms listed under
proposed Article 1, Rule 2 may be eligible for entry to and acceptance
by the Matching System, at the discretion of the Exchange. Proposed
Rule 4(b) further provides that announcements regarding order
eligibility under this paragraph shall be made by the Exchange via
Regulatory Circular and will be provided in a manner to give reasonable
advance notice to its market participants.
Various Other Updates
Given the numerous changes to citations and deletions and/or
consolidation of some current defined order terms, the Exchange
proposes the following amendments throughout the CHX rules.
The Exchange proposes to amend paragraph .02 of the Interpretations
and Policies of Article 17, Rule 1 to update the citation for
``Benchmark'' orders to proposed Article 1, Rule 2(b)(2)(A).
The Exchange proposes to amend paragraph .03 of the Interpretations
and Policies of Article 20, Rule 1 to replace ``non-regular way cross''
with ``cross orders marked for Non-Regular Way Settlement,'' given the
proposed deletion of ``non-regular way cross'' from the CHX rules,
discussed in detail above.
The Exchange proposes to amend Article 20, Rule 2A(a)(4)(A) to
update the citations for ``limit,'' ``market,'' and ``cross'' orders to
Article 1 Rule 2(a)(1),
[[Page 28677]]
Rule 2(a)(3), and Rule 2(a)(2), respectively. The Exchange proposes to
amend paragraph (b)(1) to update citations to ``Reserve Size'' and ``Do
Not Display'' to Article 1, Rule 2(c)(3) and Article 1, Rule 2(c)(2),
respectively. The Exchange proposes to amend paragraph (b)(2) to update
the citation for ``CHX Only'' to Article 1, Rule 2(b)(1)(C).
The Exchange proposes to delete the substance of paragraph .01(e)
of the Interpretations and Policies of Article 20, Rule 5 and replace
it with a ``Reserved'' marker. As discussed above, the Exchange
proposes to delete the order execution modifier ``Outbound ISO'' from
the CHX rules because the modifier has never been adopted since it was
included in the CHX rules in 2006. For the same reason, the Exchange
proposes to amend paragraph .03(a) of the Interpretations and Policies
of Article 20, Rule 5 to omit reference to ``Outbound ISO.'' \29\
---------------------------------------------------------------------------
\29\ The Exchange anticipates filing a proposed rule change
pursuant to Rule 19b-4 under the Act in connection with its
initiative to implement an order routing functionality. In
submitting such a filing, the Exchange will propose a new order
modifier(s) to replace ``Outbound ISO'' and will propose a new
corresponding paragraph .01(e) and .03(a).
---------------------------------------------------------------------------
The Exchange proposes to amend paragraph .01(h) of the
Interpretations and Policies of Article 20, Rule 5 to update the
citation for the definition of ``Qualified Contingent Trades'' to
proposed Article 1, Rule 2(b)(2)(E).
The Exchange proposes to amend Article 20, Rule 6(d) to update the
citation for ``CHX Only'' to Article 1, Rule 2(b)(1)(C).
The Exchange proposes to amend Article 20, Rule 8(e)(1) to update
the citations for ``cross'' and ``Cross With Satisfy'' to Article 1,
Rule 2(a)(2) and Rule 2(g)(1), respectively. The Exchange also proposes
to amend Rule 8(e)(3) to update the citation for ``Non-Regular Way
Settlement'' to Article 1, Rule 2(e)(2).
The Exchange proposes to amend paragraph .02 of Article 20, Rule 8
to update the citation for ``Cross With Satisfy'' to Article 1, Rule
2(b)(2)(B).
2. Statutory Basis
The Exchange believes that its proposal to consolidate all defined
order terms and to clarify the basic requirements of all orders sent to
the Matching System is consistent with the requirements of the Act and
the rules and regulations thereunder that are applicable to a national
securities exchange, and, in particular, with the requirements of
Section 6(b) of the Act.\30\ In particular, the proposal is consistent
with Section 6(b)(5) of the Act,\31\ because it would promote just and
equitable principles of trade, remove impediments to, and perfect the
mechanism of, a free and open market and a national market system. The
Exchange believes that the consolidated list of defined order terms and
the clarification of the basic requirement of order sent to the
Matching System promote just and equitable principles of trade by
enhancing transparency concerning the structure of order types utilized
by the Exchange. For the same reasons, the Exchange believes that the
proposed amendments will contribute to the protection of investors and
the public interest by making the CHX rules easier to understand.
---------------------------------------------------------------------------
\30\ 15 U.S.C. 78f(b).
\31\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed changes to
consolidate all defined order terms under one rule and to clarify the
basic requirements of all orders sent to the Matching System contribute
to the protection of investors and the public interest by making the
CHX rules easier to understand. Since the Exchange does not propose to
substantively modify the operation of the Matching System, the proposed
changes will not impose any burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change does not: (i) Significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \32\ and Rule 19b-
4(f)(6) thereunder.\33\
---------------------------------------------------------------------------
\32\ 15 U.S.C. 78s(b)(3)(A).
\33\ 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 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.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \34\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\35\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay and allow the
proposed rule change to be immediately operative, noting that doing so
would allow the Exchange to immediately offer Participants a more
organized CHX rulebook and clarity with respect to the basic
requirements of orders sent to the Matching System. The Exchange
further notes that the proposed clarification to the basic requirements
of an order sent to the Matching System and the consolidation of all
general order types, modifiers, and related terms offered by the
Exchange under one list will make the operation of the Matching System
more transparent to Participants and will, in turn, encourage market
participants to utilize the Exchange's services over its competitors.
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
\36\ because it will allow the Exchange to immediately provide
increased transparency regarding the operation of the Matching System.
The Commission believes that this increased transparency will benefit
CHX market participants and therefore waives the 30-day operative delay
and designates the proposal operative upon filing.
---------------------------------------------------------------------------
\34\ 17 CFR 240.19b-4(f)(6).
\35\ 17 CFR 240.19b-4(f)(6)(iii).
\36\ 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.
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:
[[Page 28678]]
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-CHX-2013-10 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CHX-2013-10. 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-CHX-2013-10 and
should be submitted on or before June 5, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
---------------------------------------------------------------------------
\37\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-11453 Filed 5-14-13; 8:45 am]
BILLING CODE 8011-01-P
