Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change Relating to Multi-Class Spread Orders, 73211-73214 [2013-29041]
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Federal Register / Vol. 78, No. 234 / Thursday, December 5, 2013 / Notices
cannot guarantee that all requests can be
fulfilled.
Dated: December 2, 2013.
Atitaya C. Rok,
Staff Attorney.
[FR Doc. 2013–29198 Filed 12–3–13; 4:15 pm]
BILLING CODE 7050–01–P
NUCLEAR REGULATORY
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[NRC–2013–0256]
Agency Information Collection
Activities: Proposed Collection;
Comment Request
Nuclear Regulatory
Commission.
ACTION: Proposed collection; request for
comment.
AGENCY:
The U.S. Nuclear Regulatory
Commission (NRC) invites public
comment about our intention to request
the Office of Management and Budget’s
(OMB’s) approval for renewal of an
existing information collection that is
summarized below. We are required to
publish this notice in the Federal
Register under the provisions of the
Paperwork Reduction Act of 1995 (44
U.S.C. Chapter 35).
Information pertaining to the
requirement to be submitted:
1. The title of the information
collection: NRC Nuclear Education
Grantee Survey.
2. Current OMB approval number:
3150–XXXX.
3. How often the collection is
required: Once every 5 years.
4. Who is required or asked to report:
NRC Grantees.
5. The number of annual respondents:
60.
6. The number of hours needed
annually to complete the requirement or
request: 45 hours.
7. Abstract: The NRC seeks to conduct
a survey of grantees funded between
2007 and 2011 under NRC’s Nuclear
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the NRC to collect information that is
not otherwise available from all grantees
to assess the impact of these funds on
grantee programs, their faculty, and
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Submit, by February 3, 2014,
comments that address the following
questions:
1. Is the proposed collection of
information necessary for the NRC to
properly perform its functions? Does the
information have practical utility?
2. Is the burden estimate accurate?
3. Is there a way to enhance the
quality, utility, and clarity of the
information to be collected?
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SUMMARY:
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4. How can the burden of the
information collection be minimized,
including the use of automated
collection techniques or other forms of
information technology?
The public may examine and have
copied, for a fee, publicly available
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supporting statement, at the NRC’s
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requests are available at https://
www.nrc.gov/public-involve/doccomment/omb/. The document will be
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this notice. Comments submitted in
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made available for public inspection.
Because your comments will not be
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submitted should reference Docket ID
NRC–2013–0256. You may submit your
comments by any of the following
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for Docket ID NRC–2013–0256. Mail
comments to NRC Clearance Officer,
Tremaine Donnell (T–5 F53), U.S.
Nuclear Regulatory Commission,
Washington, DC 20555–0001. Questions
about the information collection
requirements may be directed to the
NRC Clearance Officer, Tremaine
Donnell (T–5 F53), U.S. Nuclear
Regulatory Commission, Washington,
DC 20555–0001, by telephone at 301–
415–6258, or by email to
INFOCOLLECTS.Resource@NRC.GOV.
Dated at Rockville, Maryland, this 29th day
of November, 2013.
For the Nuclear Regulatory Commission.
Tremaine Donnell,
NRC Clearance Officer, Office of Information
Services.
[FR Doc. 2013–29048 Filed 12–4–13; 8:45 am]
BILLING CODE 7590–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–70961; File No. SR–CBOE–
2013–113]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing of a
Proposed Rule Change Relating to
Multi-Class Spread Orders
November 29, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
18, 2013, Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
CBOE proposes to amend its rule
related to Multi-Class Broad-Based
Index Option Spread Orders (referred to
herein as ‘‘Multi-Class Spread Orders’’).
The text of the proposed rule change is
available on the Exchange’s Web site
(https://www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1
2
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15 U.S.C. 78s(b)(1).
17 CFR 240.19b–4.
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Federal Register / Vol. 78, No. 234 / Thursday, December 5, 2013 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange proposes to make
changes regarding the trading of MultiClass Spread Orders. The proposed
changes to the rule update the definition
of ‘‘Broad-Based Index Option’’ in Rule
24.19 in order to reflect the Broad-Based
Index Options currently eligible to be
used in Multi-Class Spread Orders
under Rule 24.19.3 An updated
definition of ‘‘Broad-Based Index
Option’’ necessarily requires an update
to the definition of Multi-Class Spread
Order to reflect the valid combinations
of Broad-Based Index Options to which
the rule applies.4 The Exchange also
proposes to update the definition of
Multi-Class Spread Order to more
clearly and accurately reflect what such
an order is. Currently, the term MultiClass Spread Order is defined as ‘‘an
order or quote to buy a stated number
of contracts of a Broad-Based Index
Option and to sell an equal number, or
an equivalent number, of contracts of a
different Broad-Based Index Option.’’ 5
However, a Multi-Class Spread Order
can be effected without necessarily
buying contracts and selling other
contracts. The key component of a
Multi-Class Spread Order is really the
establishment of an appropriate hedge
between the two options classes. As
such, a Multi-Class Spread Order could
be effected by buying contracts in two
different classes, without selling any
contracts (or vice versa). For example, a
market participant could buy 100 SPX
calls and buy 200 OEX puts, thereby
establishing an appropriate hedge (since
the first leg creates a long position and
the second leg creates a short position).
Therefore, the Exchange proposes to
amend this statement to replace the
terms ‘‘buy’’ and ‘‘sell’’ with ‘‘transact’’,
and to add the language regarding
3 As such, the Exchange proposes to add options
on the S&P 500 Index PM-Settled (SPXPM), MiniSPX Index (XSP), CBOE Volatility Index (VIX),
CBOE Binary Options on the S&P 500 Index (BSZ),
CBOE Binary Options on the CBOE Volatility Index
(BVZ), S&P 500 Range Options (SRO), and Russell
2000 Index (RUT) to the definition of ‘‘Broad-Based
Index Option’’ described in CBOE Rule 24.19(a)(1)
as well as clarify that the S&P 100 Index includes
both the OEX and XEO classes.
4 As such, the Exchange proposes to amend CBOE
Rule 24.19(a)(2) to state that Multi-Class Spread
Orders may be composed of (i) any combination of
MNX, NDX, or QQQ; (ii) any combination of OEF,
OEX, XEO or SPX; (iii) any combination of SPX
(including SPXW and SPXQ), SPXPM, SPY, XSP,
VIX, VXX, VXZ, BSZ, BVZ or SRO; (iv) any
combination of IWM and RUT; and (v) any other
combination of related Broad-Based Index Options
as determined by the Exchange.
5 See CBOE Rule 24.19(a)(2).
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establishing of an appropriate hedge.
Also, the description of a Multi-Class
Spread Order being ‘‘an order or quote’’
is somewhat misleading, as a quote
cannot be submitted for a Multi-Class
Spread Order unless that quote is
submitted in response to a Multi-Class
Spread Order. As such, the Exchange
proposes to clarify that it is an ‘‘order
or quote in response to an order . . .’’
Going forward a Multi-Class Spread
Order shall be defined as an order or
quote in response to an order to transact
a stated number of contracts of a BroadBased Index Option and to transact an
equal number, or an equivalent number,
of contracts of a different Broad-Based
Index Option to create an appropriate
hedge.
Currently, Multi-Class Spread Orders
are manually created and executed on
the floor of the Exchange and may not
be entered electronically. The Exchange
is in the process of modifying its
electronic order-entry systems to
provide for the electronic entry and
routing of Multi-Class Spread Orders to
the floor of the Exchange. Accordingly,
the Exchange is proposing changes to
Rule 24.19(b) that will state that MultiClass Spread Orders may be entered
from on or off the CBOE floor.
Consistent with the audit trail
requirements that apply to all orders (in
accordance with Rule 6.24), the
proposed rule will require that all
Multi-Class Spread Orders must be
systematized as Multi-Class Spread
Orders prior to representation at a
trading station. An order is systematized
if the order is sent electronically to the
Exchange or the order is sent to the
Exchange non-electronically and input
electronically into the Exchange’s
systems contemporaneously upon
receipt on the Exchange.
Because the rule applies only to
Multi-Class Spread Orders composed of
certain combinations of Broad-Based
Index Options, any Multi-Class Spread
Order received by CBOE that contains
an invalid combination of options will
be rejected by the Exchange’s systems.
The market participant who sends such
an error will receive notice of such
rejection.
Because the current order creation
process is a manual, on-floor process,
the current language states that a MultiClass Spread Order may be represented
at the trading station of either BroadBased Index Option involved, and also
requires that the Trading Permit Holder
(‘‘TPH’’) initiating the order in the
trading crowd to contact an Order Book
Official (‘‘OBO’’), Designated Primary
Market-Maker (‘‘DPM’’), or Exchange
staff, as applicable, at the other trading
station to have a notice of such order
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disseminated to the other trading crowd.
The proposed rule change will require
a Multi-Class Spread Order must [sic] be
represented at the primary trading
station, and state that the TPH
representing the order must contact an
OBO, DPM, or Exchange staff (as
applicable) at the other trading station
in order to provide notice of such order
for dissemination to the other trading
crowd. This ensures that all market
participants at both physical trading
locations are aware of the terms of the
order being processed. The proposed
change recognizes that a Multi-Class
Spread Order may be routed from off of
the Exchange floor. Furthermore, the
proposed rule change also makes minor
changes to the text of the rule in order
to enhance reader clarity.
The proposed rule change will
simplify the process of creating and
executing Multi-Class Spread Orders on
the floor of the Exchange, and it will
enhance the Exchange’s audit trail with
respect to such orders. No later than 90
days following the effective date of the
proposed rule change, the Exchange will
announce to TPHs via Regulatory
Circular the implementation date by
which TPHs must be in compliance
with the changes described herein. The
implementation date will be no later
than 180 days following the effective
date of the proposed rule change, and
will be at least 60 days following the
release of the abovementioned
Regulatory Circular (in order to give
TPHs ample time to come into
compliance with the changes described
herein).
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.6 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 7 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
6 15
7 15
E:\FR\FM\05DEN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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Federal Register / Vol. 78, No. 234 / Thursday, December 5, 2013 / Notices
proposed rule change is consistent with
the Section 6(b)(5) 8 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
Automating the Multi-Class Spread
Order creation process and allowing
such orders to be routed from on or off
of the floor of the Exchange serves to
remove impediments to and to perfect
the mechanism for a free and open
market and a national market system by
providing market participants the ability
to route Multi-Class Spread Orders to
the Exchange electronically. More
accurately defining the term ‘‘MultiClass Spread Orders’’ prevents
confusion, thereby to [sic] removing
impediments to and perfecting the
mechanism for a free and open market.
The Exchange believes the proposed
changes, which include increasing the
explicit list of the number of securities
that can be included in Multi-Class
Spread Orders, will increase
opportunities for execution of MultiClass Spread Orders, which will benefit
investors. Finally, the Exchange believes
that the proposed rule change is
designed to not permit unfair
discrimination among market
participants as all market participants
may participate in Multi-Class Spread
Orders. Additionally, enhancing the
audit trail with respect to Multi-Class
Spread Orders promotes transparency
and aids in surveillance, thereby
protecting investors. Further, updating
the definitions of ‘‘Broad-Based Index
Options’’ and ‘‘Multi-Class Spread
Orders’’ will reduce possible confusion
regarding what Multi-Class Spread
Orders are and which Broad-Based
Index Options may be eligible for
representation as a Multi-Class Spread
Order in accordance with Rule 24.19,
thereby removing impediments to and
perfecting the mechanism for a free and
open market and a national market
system
The Exchange also believes the
proposed rule change is consistent with
Section 6(b)(1) of the Act,9 which
provides that the Exchange be organized
and have the capacity to be able to carry
out the purposes of the Act and to
enforce compliance by the Exchange’s
Trading Permit Holders and persons
associated with its Trading Permit
Holders with the Act, the rules and
regulations thereunder, and the rules of
the Exchange. Enhancing the audit trail
with respect to Multi-Class Spread
Orders will allow the Exchange to better
enforce compliance by the Exchange’s
TPHs and persons associated with its
8 Id.
9 15
U.S.C. 78f(b)(1).
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73213
TPHs with the Act, the rules and
regulations thereunder, and the rules of
the Exchange.
B. institute proceedings to determine
whether the proposed rule change
should be disapproved.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
The Exchange believes that
automating the Multi-Class Spread
Order creation process and allowing
such orders to be routed from on or off
of the floor of the Exchange promotes
fair and orderly markets, as well as
assists the Exchange in its ability to
effectively attract order flow and
liquidity to its market, and ultimately
benefits all CBOE TPHs and all
investors.
The Exchange does not believe that
the proposed rule change will impose
any burden on intramarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because Multi-Class Spread Orders are
available to all market participants
through CBOE TPHs. The Exchange
does not believe that the proposed rule
change will impose any burden on
intermarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because,
again, Multi-Class Spread Orders are
available to all market participants
through CBOE TPHs, which makes
CBOE a more effective marketplace.
Further, the proposed changes only
affect trading on CBOE. To the extent
that the proposed changes make CBOE
more attractive to market participants at
other exchanges, such market
participants may elect to become CBOE
market participants.
IV. Solicitation of Comments
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received from
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the Exchange consents, the Commission
will:
A. By order approve or disapprove
such proposed rule change, or
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Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2013–113 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–CBOE–2013–113. 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 20549–1090 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
offices 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–CBOE–
2013–113, and should be submitted on
or before December 26, 2013.
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Federal Register / Vol. 78, No. 234 / Thursday, December 5, 2013 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–29041 Filed 12–4–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–70962; File No. SR–NYSE–
2013–76]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Its
Rules Concerning Communications
With the Public To Harmonize Them
With Certain Financial Industry
Regulatory Authority, Inc. Rules and
Make Other Conforming Changes
November 29, 2013.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Exchange Act’’) and Rule 19b–4
thereunder,2 notice is hereby given that
on November 15, 2013, New York Stock
Exchange LLC (‘‘NYSE’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been
substantially prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons. The Exchange has designated
the proposed rule change as constituting
a ‘‘non-controversial’’ rule change under
Exchange Act Rule 19b–4(f)(6),3 which
renders the proposal effective upon
receipt of this filing by the Commission.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
rules concerning communications with
the public to harmonize them with
certain Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) rules and
make other conforming changes. The
text of the proposed rule change is
available on the Exchange’s Web site at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
10 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
1 15
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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 those
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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
rules concerning communications with
the public to harmonize them with
certain FINRA rules and make other
conforming changes. Set forth below are
descriptions of the harmonization
process, the current NYSE rules, and the
proposed NYSE rules. Specifically, the
Exchange proposes to (i) delete
paragraphs (a)(1), (d), (i), (j) and (l) of
NYSE Rule 472, Supplementary
Materials 472.10(1), (3), (4) and (5), and
472.90, and Interpretations 472/01 and
472/03 through 472/11; (ii) adopt new
rule text that is substantially similar to
FINRA Rules 2210, 2212, and 9551; and
(iii) make other conforming changes.4
Background
On July 30, 2007, FINRA’s
predecessor, the National Association of
Securities Dealers, Inc. (‘‘NASD’’), and
NYSE Regulation, Inc. (‘‘NYSER’’)
consolidated their member firm
regulation operations into a combined
organization, FINRA. Pursuant to
Exchange Act Rule 17d–2, the
Exchange, NYSER, and FINRA entered
into an agreement (the ‘‘Agreement’’) to
reduce regulatory duplication for their
members by allocating to FINRA certain
regulatory responsibilities for NYSE
rules and rule interpretations (‘‘FINRA
Incorporated NYSE Rules’’). NYSE MKT
LLC (‘‘NYSE MKT’’) became a party to
the Agreement effective December 15,
2008.5
4 References to rules are to NYSE rules unless
otherwise indicated. The remaining provisions of
Rule 472 and supplementary material and
interpretations not addressed in this proposal
concern research and would remain in place
because FINRA and NYSE have not yet harmonized
their research rules.
5 See Exchange Act Release No. 56148 (Jul. 26,
2007), 72 FR 42146 (Aug. 1, 2007) (order approving
the Agreement); Exchange Act Release No. 56147
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As part of its effort to reduce
regulatory duplication and relieve firms
that are members of FINRA, the
Exchange, and NYSE MKT of conflicting
or unnecessary regulatory burdens,
FINRA is now engaged in the process of
reviewing and amending the NASD and
FINRA Incorporated NYSE Rules in
order to create a consolidated FINRA
rulebook.6 FINRA recently harmonized
NASD and FINRA Incorporated NYSE
Rules and interpretations concerning
communications with the public.7 In
that filing, FINRA adopted NASD Rules
2210 and 2211 and NASD Interpretive
Materials 2210–1 and 2210–3 through
2210–8 as FINRA Rules 2210 and 2212
through 2216 and deleted paragraphs
(a)(1), (i), (j) and (l) of FINRA
Incorporated NYSE Rule 472, FINRA
Incorporated NYSE Rule Supplementary
Materials 472.10(1), (3), (4) and (5) and
472.90, and FINRA Incorporated NYSE
Rule Interpretations 472/01 and 472/03
through 472/11. FINRA’s rule change
became effective on February 4, 2013.8
Current Communications With the
Public Rules and Interpretations
Rule 472(a)(1) requires that each
advertisement, sales literature or other
similar type of communication that is
generally distributed or made available
by a member organization to customers
or the public be approved in advance by
an allied member, supervisory analyst,
or qualified person designated under the
provisions of Rule 342(b)(1).
Rule 472(d) requires that
communications with the public be
retained in accordance with Rule 440.
Rule 472(i) provides that no member
organization may use any
communication that contains (i) any
untrue statement or omission of a
material fact or is otherwise false or
misleading; (ii) promises of specific
results, exaggerated or unwarranted
claims; (iii) opinions for which there is
(Jul. 26, 2007), 72 FR 42166 (Aug. 1, 2007) (order
approving the incorporation of certain NYSE Rules
as ‘‘Common Rules’’); Exchange Act Release No.
60409 (July 30, 2009), 74 FR 39353 (Aug. 6, 2009)
(order approving the amended and restated
Agreement, adding NYSE MKT LLC as a party).
Paragraph 2(b) of the Agreement sets forth
procedures regarding proposed changes by FINRA,
NYSE or NYSE MKT to the substance of any of the
Common Rules.
6 FINRA’s rulebook currently has three sets of
rules: (1) NASD Rules, (2) FINRA Incorporated
NYSE Rules, and (3) consolidated FINRA Rules.
The FINRA Incorporated NYSE Rules apply only to
those members of FINRA that are also members of
the NYSE (‘‘Dual Members’’), while the
consolidated FINRA Rules apply to all FINRA
members. For more information about the FINRA
rulebook consolidation process, see FINRA
Information Notice, dated March 12, 2008.
7 See Exchange Act Release No. 66681 (Mar. 29,
2012), 77 FR 20452 (Apr. 4, 2012).
8 See FINRA Regulatory Notice 12–29.
E:\FR\FM\05DEN1.SGM
05DEN1
]]>Agencies
[Federal Register Volume 78, Number 234 (Thursday, December 5, 2013)]
[Notices]
[Pages 73211-73214]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29041]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70961; File No. SR-CBOE-2013-113]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of a Proposed Rule Change Relating to
Multi-Class Spread Orders
November 29, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on November 18, 2013, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
CBOE proposes to amend its rule related to Multi-Class Broad-Based
Index Option Spread Orders (referred to herein as ``Multi-Class Spread
Orders''). The text of the proposed rule change is available on the
Exchange's Web site (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
[[Page 73212]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to make changes regarding the trading of
Multi-Class Spread Orders. The proposed changes to the rule update the
definition of ``Broad-Based Index Option'' in Rule 24.19 in order to
reflect the Broad-Based Index Options currently eligible to be used in
Multi-Class Spread Orders under Rule 24.19.\3\ An updated definition of
``Broad-Based Index Option'' necessarily requires an update to the
definition of Multi-Class Spread Order to reflect the valid
combinations of Broad-Based Index Options to which the rule applies.\4\
The Exchange also proposes to update the definition of Multi-Class
Spread Order to more clearly and accurately reflect what such an order
is. Currently, the term Multi-Class Spread Order is defined as ``an
order or quote to buy a stated number of contracts of a Broad-Based
Index Option and to sell an equal number, or an equivalent number, of
contracts of a different Broad-Based Index Option.'' \5\ However, a
Multi-Class Spread Order can be effected without necessarily buying
contracts and selling other contracts. The key component of a Multi-
Class Spread Order is really the establishment of an appropriate hedge
between the two options classes. As such, a Multi-Class Spread Order
could be effected by buying contracts in two different classes, without
selling any contracts (or vice versa). For example, a market
participant could buy 100 SPX calls and buy 200 OEX puts, thereby
establishing an appropriate hedge (since the first leg creates a long
position and the second leg creates a short position). Therefore, the
Exchange proposes to amend this statement to replace the terms ``buy''
and ``sell'' with ``transact'', and to add the language regarding
establishing of an appropriate hedge. Also, the description of a Multi-
Class Spread Order being ``an order or quote'' is somewhat misleading,
as a quote cannot be submitted for a Multi-Class Spread Order unless
that quote is submitted in response to a Multi-Class Spread Order. As
such, the Exchange proposes to clarify that it is an ``order or quote
in response to an order . . .'' Going forward a Multi-Class Spread
Order shall be defined as an order or quote in response to an order to
transact a stated number of contracts of a Broad-Based Index Option and
to transact an equal number, or an equivalent number, of contracts of a
different Broad-Based Index Option to create an appropriate hedge.
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\3\ As such, the Exchange proposes to add options on the S&P 500
Index PM-Settled (SPXPM), Mini-SPX Index (XSP), CBOE Volatility
Index (VIX), CBOE Binary Options on the S&P 500 Index (BSZ), CBOE
Binary Options on the CBOE Volatility Index (BVZ), S&P 500 Range
Options (SRO), and Russell 2000 Index (RUT) to the definition of
``Broad-Based Index Option'' described in CBOE Rule 24.19(a)(1) as
well as clarify that the S&P 100 Index includes both the OEX and XEO
classes.
\4\ As such, the Exchange proposes to amend CBOE Rule
24.19(a)(2) to state that Multi-Class Spread Orders may be composed
of (i) any combination of MNX, NDX, or QQQ; (ii) any combination of
OEF, OEX, XEO or SPX; (iii) any combination of SPX (including SPXW
and SPXQ), SPXPM, SPY, XSP, VIX, VXX, VXZ, BSZ, BVZ or SRO; (iv) any
combination of IWM and RUT; and (v) any other combination of related
Broad-Based Index Options as determined by the Exchange.
\5\ See CBOE Rule 24.19(a)(2).
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Currently, Multi-Class Spread Orders are manually created and
executed on the floor of the Exchange and may not be entered
electronically. The Exchange is in the process of modifying its
electronic order-entry systems to provide for the electronic entry and
routing of Multi-Class Spread Orders to the floor of the Exchange.
Accordingly, the Exchange is proposing changes to Rule 24.19(b) that
will state that Multi-Class Spread Orders may be entered from on or off
the CBOE floor. Consistent with the audit trail requirements that apply
to all orders (in accordance with Rule 6.24), the proposed rule will
require that all Multi-Class Spread Orders must be systematized as
Multi-Class Spread Orders prior to representation at a trading station.
An order is systematized if the order is sent electronically to the
Exchange or the order is sent to the Exchange non-electronically and
input electronically into the Exchange's systems contemporaneously upon
receipt on the Exchange.
Because the rule applies only to Multi-Class Spread Orders composed
of certain combinations of Broad-Based Index Options, any Multi-Class
Spread Order received by CBOE that contains an invalid combination of
options will be rejected by the Exchange's systems. The market
participant who sends such an error will receive notice of such
rejection.
Because the current order creation process is a manual, on-floor
process, the current language states that a Multi-Class Spread Order
may be represented at the trading station of either Broad-Based Index
Option involved, and also requires that the Trading Permit Holder
(``TPH'') initiating the order in the trading crowd to contact an Order
Book Official (``OBO''), Designated Primary Market-Maker (``DPM''), or
Exchange staff, as applicable, at the other trading station to have a
notice of such order disseminated to the other trading crowd. The
proposed rule change will require a Multi-Class Spread Order must [sic]
be represented at the primary trading station, and state that the TPH
representing the order must contact an OBO, DPM, or Exchange staff (as
applicable) at the other trading station in order to provide notice of
such order for dissemination to the other trading crowd. This ensures
that all market participants at both physical trading locations are
aware of the terms of the order being processed. The proposed change
recognizes that a Multi-Class Spread Order may be routed from off of
the Exchange floor. Furthermore, the proposed rule change also makes
minor changes to the text of the rule in order to enhance reader
clarity.
The proposed rule change will simplify the process of creating and
executing Multi-Class Spread Orders on the floor of the Exchange, and
it will enhance the Exchange's audit trail with respect to such orders.
No later than 90 days following the effective date of the proposed rule
change, the Exchange will announce to TPHs via Regulatory Circular the
implementation date by which TPHs must be in compliance with the
changes described herein. The implementation date will be no later than
180 days following the effective date of the proposed rule change, and
will be at least 60 days following the release of the abovementioned
Regulatory Circular (in order to give TPHs ample time to come into
compliance with the changes described herein).
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\6\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \7\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the
[[Page 73213]]
proposed rule change is consistent with the Section 6(b)(5) \8\
requirement that the rules of an exchange not be designed to permit
unfair discrimination between customers, issuers, brokers, or dealers.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
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Automating the Multi-Class Spread Order creation process and
allowing such orders to be routed from on or off of the floor of the
Exchange serves to remove impediments to and to perfect the mechanism
for a free and open market and a national market system by providing
market participants the ability to route Multi-Class Spread Orders to
the Exchange electronically. More accurately defining the term ``Multi-
Class Spread Orders'' prevents confusion, thereby to [sic] removing
impediments to and perfecting the mechanism for a free and open market.
The Exchange believes the proposed changes, which include increasing
the explicit list of the number of securities that can be included in
Multi-Class Spread Orders, will increase opportunities for execution of
Multi-Class Spread Orders, which will benefit investors. Finally, the
Exchange believes that the proposed rule change is designed to not
permit unfair discrimination among market participants as all market
participants may participate in Multi-Class Spread Orders.
Additionally, enhancing the audit trail with respect to Multi-Class
Spread Orders promotes transparency and aids in surveillance, thereby
protecting investors. Further, updating the definitions of ``Broad-
Based Index Options'' and ``Multi-Class Spread Orders'' will reduce
possible confusion regarding what Multi-Class Spread Orders are and
which Broad-Based Index Options may be eligible for representation as a
Multi-Class Spread Order in accordance with Rule 24.19, thereby
removing impediments to and perfecting the mechanism for a free and
open market and a national market system
The Exchange also believes the proposed rule change is consistent
with Section 6(b)(1) of the Act,\9\ which provides that the Exchange be
organized and have the capacity to be able to carry out the purposes of
the Act and to enforce compliance by the Exchange's Trading Permit
Holders and persons associated with its Trading Permit Holders with the
Act, the rules and regulations thereunder, and the rules of the
Exchange. Enhancing the audit trail with respect to Multi-Class Spread
Orders will allow the Exchange to better enforce compliance by the
Exchange's TPHs and persons associated with its TPHs with the Act, the
rules and regulations thereunder, and the rules of the Exchange.
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\9\ 15 U.S.C. 78f(b)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange believes that automating the Multi-Class Spread Order
creation process and allowing such orders to be routed from on or off
of the floor of the Exchange promotes fair and orderly markets, as well
as assists the Exchange in its ability to effectively attract order
flow and liquidity to its market, and ultimately benefits all CBOE TPHs
and all investors.
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because Multi-
Class Spread Orders are available to all market participants through
CBOE TPHs. The Exchange does not believe that the proposed rule change
will impose any burden on intermarket competition that is not necessary
or appropriate in furtherance of the purposes of the Act because,
again, Multi-Class Spread Orders are available to all market
participants through CBOE TPHs, which makes CBOE a more effective
marketplace. Further, the proposed changes only affect trading on CBOE.
To the extent that the proposed changes make CBOE more attractive to
market participants at other exchanges, such market participants may
elect to become CBOE market participants.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
A. By order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-CBOE-2013-113 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-CBOE-2013-113. 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 20549-1090 on official business days between the hours
of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be
available for inspection and copying at the principal offices 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-
CBOE-2013-113, and should be submitted on or before December 26, 2013.
[[Page 73214]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29041 Filed 12-4-13; 8:45 am]
BILLING CODE 8011-01-P
