Self-Regulatory Organizations; OneChicago, LLC; Notice of Filing of Proposed Rule Change To Amend Rules 143 and 417 Relating to Block Trade Reporting, 78459-78460 [2013-30766]

Download as PDF Federal Register / Vol. 78, No. 248 / Thursday, December 26, 2013 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–30762 Filed 12–24–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71145; File No. SR–OC– 2013–03] Self-Regulatory Organizations; OneChicago, LLC; Notice of Filing of Proposed Rule Change To Amend Rules 143 and 417 Relating to Block Trade Reporting December 19, 2013. emcdonald on DSK67QTVN1PROD with NOTICES Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 notice is hereby given that on December 18, 2013, OneChicago, LLC (‘‘OneChicago,’’ ‘‘OCX,’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. OneChicago has also filed this proposed rule change with the Commodity Futures Trading Commission (‘‘CFTC’’). OneChicago filed a written certification with the CFTC under Section 5c(c) of the Commodity Exchange Act (‘‘CEA’’) on September 10, 2012. I. Self-Regulatory Organization’s Description of the Proposed Rule Change On September 10, 2012, OneChicago filed with the CFTC to launch a pilot program to decrease its minimum block size to twenty-five contracts, update its Rule 143, and consolidate its block trade reporting requirements in Rule 417. OneChicago is currently filing identical changes with the SEC as they relate to reporting and recordkeeping; the reporting and recordkeeping changes herein are filed separately from the minimum block size pilot program that OneChicago filed with the CFTC on September 10, 2012. Rule 143 is being amended to clarify that ‘‘OCX.BETS’’ is a trade reporting and trade matching central order book for block trades and EFP (Exchange of Future for Physical) trades. The filing will also amend various sections of Rule 417. Subparagraph (a) 1 15 U.S.C. 78s(b)(7). VerDate Mar<15>2010 18:06 Dec 24, 2013 Jkt 232001 of Rule 417 will be amended to remove the phrase ‘‘outside the OneChicago System,’’ making it clear that market participants may enter block transactions directly on OCX.BETS as well as by privately negotiating the transactions and then reporting them to OCX.BETS. The filing will also amend subparagraph (a)(i) of Rule 417 by codifying in that subparagraph the minimum block size, which had previously been stated in a Notice to Members. Rule 417(d) will be amended to clarify that the reporting and recordkeeping requirements in that rule apply to bilateral block trades. Additional text is being added to subparagraph (d) to establish the reporting and recordkeeping requirements that apply to block trades transacted on OCX.BETS, rather than those block trades bilaterally transacted and merely reported to OCX.BETS. The proposed additions to Rule 417(d) further distinguish between reporting and recordkeeping requirements of trades transacted on OCX.BETS; specifically, Rule 417 will distinguish between the requirements for block orders capable of being immediately entered into OCX.BETS and the requirements for block orders that cannot be immediately entered into OCX.BETS. Finally, subparagraph (h) will be added to Rule 417. Subparagraph (h) will state that block trades can be competitively executed on the OCX.BETS system by placing anonymous bids or offers, or can be privately negotiated and reported as bilateral transactions using the OCX.BETS system. The text of the proposed rule change is attached as Exhibit 4 to the filing submitted by the Exchange but is not attached to the published notice of the filing. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OneChicago 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 self-regulatory organization has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. PO 00000 Frm 00135 Fmt 4703 Sfmt 4703 78459 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of OneChicago’s filing is to consolidate and clarify its block trading reporting and recordkeeping rules, which had previously been listed in a Notice to Members. OneChicago believes that codifying these requirements in the OCX Rulebook, as opposed to a Notice to Members, will help apprise market participants of their reporting and recordkeeping obligations. Rule 143 will be amended to expand the definition of OCX.BETS. Previously OCX.BETS was merely defined as ‘‘the OneChicago Block & EFP Trading System.’’ The filing will expand that definition to explain that OCX.BETS is a trade reporting and trade matching central order book for block trades and EFP trades. Rule 417(a) will be amended to delete the phrase ‘‘outside the OneChicago System’’ because the term ‘‘OneChicago System’’ had been amended in the OCX Rulebook to include OCX.BETS. That amendment was made in Notice to Members 2007–03, which was issued on July 20, 2007, and filed with the CFTC and the SEC. Since OCX.BETS has both block reporting and trading functionality, Rule 417(a) needs to be amended to clarify that block trades will no longer be limited to bilateral transactions that take place outside the OneChicago System, but rather can take place on or off the OneChicago System. Subparagraph (d) of Rule 417 will be amended to specify that the reporting and recordkeeping requirements in that subparagraph apply to bilateral block trades. The purpose of this specification is to allow for the insertions of the second and third paragraph in subparagraph (d), which together identify the reporting and recordkeeping requirements for trades entered directly into OCX.BETS, and not just those trades reported to OCX.BETS. The reporting requirements had previously been described in Notice to Members 2010–13, which was reissued as Notice to Members 2012–25. Those insertions are further divided to clarify the requirements for block orders that are capable of being immediately entered into OCX.BETs, as opposed to block orders which cannot be immediately entered into OCX.BETS. Specifically, for block orders capable of being immediately entered into OCX.BETS, each authorized trade reporter entering the order must input for each block order the price, quantity, product, expiration month, account E:\FR\FM\26DEN1.SGM 26DEN1 78460 Federal Register / Vol. 78, No. 248 / Thursday, December 26, 2013 / Notices origin code, and account designation. On the other hand, an authorized trade reporter handling a block order which cannot be immediately entered into OCX.BETS must prepare a written order ticket that includes the account designation, date, time of receipt, buy or sell, the contract and expiration month, the quantity of contracts, and the requested price. Such orders must be entered into OCX.BETS when it becomes executable or when it has been privately negotiated. Finally, Rule 417(h) will be added to clarify the two methods by which block trades can be traded. First, block trades can be competitively executed on OCX.BETS by placing anonymous bids or offers (utilizing the central limit order book functionality of OCX.BETS). Block trades can also be privately negotiated and reported to the OCX.BETS system as bilateral trades. emcdonald on DSK67QTVN1PROD with NOTICES 2. Statutory Basis OneChicago believes that the proposed rule change is consistent with Section 6(b) of the Act,2 in general, and furthers the objectives of Section 6(b)(5) of the Act,3 in particular, in that it is designed to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and remove impediments to and perfect the mechanism of a free and open market and national market system. OneChicago believes that clarifying and consolidating its reporting and recordkeeping requirements for parties to block trades will foster cooperation and coordination with persons engaged in block trades because block participants will more easily locate and identify their reporting and recordkeeping requirements. B. Self-Regulatory Organization’s Statement on Burden on Competition OneChicago does not believe that the rule changes will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed rule change is equitable and not unfairly discriminatory because it merely consolidates and clarifies the obligations of parties to block trades, and does not impose any new, material requirements on market participants. OneChicago believes the rule change enhances competition on our marketplace, as market participants can choose whether to execute blocks directly on OCX.BETS or to privately negotiate blocks and then report them to 2 15 U.S.C. 78f(b). 3 15 U.S.C. 78(f)(b)(5). VerDate Mar<15>2010 18:06 Dec 24, 2013 Jkt 232001 OCX.BETS. Additionally, market participants may also choose to execute block size transactions in our CBOEdirect based Central Order Book. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Comments on the OneChicago proposed rule change have not been solicited and none have been received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action OneChicago filed the proposed rule change with the CFTC on September 10, 2012, and the proposed rule change became effective with the CFTC on September 25, 2012. OneChicago did not file the proposed rule changes concurrently with the SEC. Instead, OneChicago filed the proposed rule change on December 18, 2013.4 At any time within 60 days of the date of effectiveness 5 of the proposed rule change, the Commission, after consultation with the CFTC, may summarily abrogate the proposed rule change and require that the proposed rule change be refiled in accordance with the provisions of Section 19(b)(1) 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: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– OC–2013–03 on the subject line. All submissions should refer to File Number SR–OC–2013–03. 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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 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–OC– 2013–03, and should be submitted on or before January 16, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–30766 Filed 12–24–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Paper Comments [Release No. 34–71140; File No. SR–BATS– 2013–063] • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc. 4 Section 19(b)(7)(B) of the Act provides that a proposed rule change filed with the SEC pursuant to section 19(b)(7)(A) of the Act shall be filed concurrently with the CFTC. 5 Section 19(b)(7)(C) of the Act provides, inter alia, that ‘‘[a]ny proposed rule change of a selfregulatory organization that has taken effect pursuant to [Section 19(b)(7)(B) of the Act] may be enforced by such self-regulatory organization to the extent such rule is not inconsistent with the provisions of this title, the rules and regulations thereunder, and applicable Federal law.’’ PO 00000 Frm 00136 Fmt 4703 Sfmt 4703 December 19, 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 December 9, 2013, BATS Exchange, Inc. (the 6 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\26DEN1.SGM 26DEN1

Agencies

[Federal Register Volume 78, Number 248 (Thursday, December 26, 2013)]
[Notices]
[Pages 78459-78460]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-30766]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71145; File No. SR-OC-2013-03]


Self-Regulatory Organizations; OneChicago, LLC; Notice of Filing 
of Proposed Rule Change To Amend Rules 143 and 417 Relating to Block 
Trade Reporting

December 19, 2013.
    Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ notice is hereby given that on December 18, 2013, 
OneChicago, LLC (``OneChicago,'' ``OCX,'' or the ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change described in Items I and II below, which Items 
have been prepared by the self-regulatory organization. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons. OneChicago has also filed this proposed 
rule change with the Commodity Futures Trading Commission (``CFTC''). 
OneChicago filed a written certification with the CFTC under Section 
5c(c) of the Commodity Exchange Act (``CEA'') on September 10, 2012.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(7).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    On September 10, 2012, OneChicago filed with the CFTC to launch a 
pilot program to decrease its minimum block size to twenty-five 
contracts, update its Rule 143, and consolidate its block trade 
reporting requirements in Rule 417. OneChicago is currently filing 
identical changes with the SEC as they relate to reporting and 
recordkeeping; the reporting and recordkeeping changes herein are filed 
separately from the minimum block size pilot program that OneChicago 
filed with the CFTC on September 10, 2012.
    Rule 143 is being amended to clarify that ``OCX.BETS'' is a trade 
reporting and trade matching central order book for block trades and 
EFP (Exchange of Future for Physical) trades.
    The filing will also amend various sections of Rule 417. 
Subparagraph (a) of Rule 417 will be amended to remove the phrase 
``outside the OneChicago System,'' making it clear that market 
participants may enter block transactions directly on OCX.BETS as well 
as by privately negotiating the transactions and then reporting them to 
OCX.BETS. The filing will also amend subparagraph (a)(i) of Rule 417 by 
codifying in that subparagraph the minimum block size, which had 
previously been stated in a Notice to Members.
    Rule 417(d) will be amended to clarify that the reporting and 
recordkeeping requirements in that rule apply to bilateral block 
trades. Additional text is being added to subparagraph (d) to establish 
the reporting and recordkeeping requirements that apply to block trades 
transacted on OCX.BETS, rather than those block trades bilaterally 
transacted and merely reported to OCX.BETS. The proposed additions to 
Rule 417(d) further distinguish between reporting and recordkeeping 
requirements of trades transacted on OCX.BETS; specifically, Rule 417 
will distinguish between the requirements for block orders capable of 
being immediately entered into OCX.BETS and the requirements for block 
orders that cannot be immediately entered into OCX.BETS.
    Finally, subparagraph (h) will be added to Rule 417. Subparagraph 
(h) will state that block trades can be competitively executed on the 
OCX.BETS system by placing anonymous bids or offers, or can be 
privately negotiated and reported as bilateral transactions using the 
OCX.BETS system.
    The text of the proposed rule change is attached as Exhibit 4 to 
the filing submitted by the Exchange but is not attached to the 
published notice of the filing.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, OneChicago 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 self-regulatory organization 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 OneChicago's filing is to consolidate and clarify 
its block trading reporting and recordkeeping rules, which had 
previously been listed in a Notice to Members. OneChicago believes that 
codifying these requirements in the OCX Rulebook, as opposed to a 
Notice to Members, will help apprise market participants of their 
reporting and recordkeeping obligations.
    Rule 143 will be amended to expand the definition of OCX.BETS. 
Previously OCX.BETS was merely defined as ``the OneChicago Block & EFP 
Trading System.'' The filing will expand that definition to explain 
that OCX.BETS is a trade reporting and trade matching central order 
book for block trades and EFP trades.
    Rule 417(a) will be amended to delete the phrase ``outside the 
OneChicago System'' because the term ``OneChicago System'' had been 
amended in the OCX Rulebook to include OCX.BETS. That amendment was 
made in Notice to Members 2007-03, which was issued on July 20, 2007, 
and filed with the CFTC and the SEC. Since OCX.BETS has both block 
reporting and trading functionality, Rule 417(a) needs to be amended to 
clarify that block trades will no longer be limited to bilateral 
transactions that take place outside the OneChicago System, but rather 
can take place on or off the OneChicago System.
    Subparagraph (d) of Rule 417 will be amended to specify that the 
reporting and recordkeeping requirements in that subparagraph apply to 
bilateral block trades. The purpose of this specification is to allow 
for the insertions of the second and third paragraph in subparagraph 
(d), which together identify the reporting and recordkeeping 
requirements for trades entered directly into OCX.BETS, and not just 
those trades reported to OCX.BETS. The reporting requirements had 
previously been described in Notice to Members 2010-13, which was 
reissued as Notice to Members 2012-25. Those insertions are further 
divided to clarify the requirements for block orders that are capable 
of being immediately entered into OCX.BETs, as opposed to block orders 
which cannot be immediately entered into OCX.BETS.
    Specifically, for block orders capable of being immediately entered 
into OCX.BETS, each authorized trade reporter entering the order must 
input for each block order the price, quantity, product, expiration 
month, account

[[Page 78460]]

origin code, and account designation. On the other hand, an authorized 
trade reporter handling a block order which cannot be immediately 
entered into OCX.BETS must prepare a written order ticket that includes 
the account designation, date, time of receipt, buy or sell, the 
contract and expiration month, the quantity of contracts, and the 
requested price. Such orders must be entered into OCX.BETS when it 
becomes executable or when it has been privately negotiated.
    Finally, Rule 417(h) will be added to clarify the two methods by 
which block trades can be traded. First, block trades can be 
competitively executed on OCX.BETS by placing anonymous bids or offers 
(utilizing the central limit order book functionality of OCX.BETS). 
Block trades can also be privately negotiated and reported to the 
OCX.BETS system as bilateral trades.
2. Statutory Basis
    OneChicago believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\2\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\3\ in particular, in that it 
is designed to foster cooperation and coordination with persons engaged 
in facilitating transactions in securities, and remove impediments to 
and perfect the mechanism of a free and open market and national market 
system. OneChicago believes that clarifying and consolidating its 
reporting and recordkeeping requirements for parties to block trades 
will foster cooperation and coordination with persons engaged in block 
trades because block participants will more easily locate and identify 
their reporting and recordkeeping requirements.
---------------------------------------------------------------------------

    \2\ 15 U.S.C. 78f(b).
    \3\ 15 U.S.C. 78(f)(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    OneChicago does not believe that the rule changes will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act. The Exchange believes that the proposed rule 
change is equitable and not unfairly discriminatory because it merely 
consolidates and clarifies the obligations of parties to block trades, 
and does not impose any new, material requirements on market 
participants. OneChicago believes the rule change enhances competition 
on our marketplace, as market participants can choose whether to 
execute blocks directly on OCX.BETS or to privately negotiate blocks 
and then report them to OCX.BETS. Additionally, market participants may 
also choose to execute block size transactions in our CBOEdirect based 
Central Order Book.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Comments on the OneChicago proposed rule change have not been 
solicited and none have been received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    OneChicago filed the proposed rule change with the CFTC on 
September 10, 2012, and the proposed rule change became effective with 
the CFTC on September 25, 2012. OneChicago did not file the proposed 
rule changes concurrently with the SEC. Instead, OneChicago filed the 
proposed rule change on December 18, 2013.\4\
---------------------------------------------------------------------------

    \4\ Section 19(b)(7)(B) of the Act provides that a proposed rule 
change filed with the SEC pursuant to section 19(b)(7)(A) of the Act 
shall be filed concurrently with the CFTC.
---------------------------------------------------------------------------

    At any time within 60 days of the date of effectiveness \5\ of the 
proposed rule change, the Commission, after consultation with the CFTC, 
may summarily abrogate the proposed rule change and require that the 
proposed rule change be refiled in accordance with the provisions of 
Section 19(b)(1) of the Act.
---------------------------------------------------------------------------

    \5\ Section 19(b)(7)(C) of the Act provides, inter alia, that 
``[a]ny proposed rule change of a self-regulatory organization that 
has taken effect pursuant to [Section 19(b)(7)(B) of the Act] may be 
enforced by such self-regulatory organization to the extent such 
rule is not inconsistent with the provisions of this title, the 
rules and regulations thereunder, and applicable Federal law.''
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-OC-2013-03 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-OC-2013-03. 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 (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for 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 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-OC-2013-03, 
and should be submitted on or before January 16, 2014.
---------------------------------------------------------------------------

    \6\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-30766 Filed 12-24-13; 8:45 am]
BILLING CODE 8011-01-P