Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Remove Obsolete Rule Language and To Permit the Exchange To Enable or Disable Trade Adjustment Functionalities Pursuant to Notice, 35206-35208 [2014-14313]

Download as PDF 35206 Federal Register / Vol. 79, No. 118 / Thursday, June 19, 2014 / Notices 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade shares of the Reality Shares DIVS Index ETF (‘‘Fund’’) (formerly, Reality Shares Isolated Dividend Growth Index ETF) under NYSE Arca Equities Rule 5.2(j)(3). The proposed rule change was published for comment in the Federal Register on April 30, 2014.3 On May 6, 2014, the Exchange filed Amendment No. 1 to the proposed rule change, which amended and replaced the proposed rule change in its entirety.4 On June 6, 2014, the Exchange filed Amendment No. 4 to the proposed rule change.5 The Commission received no comment letters on the proposed rule change. The proposed rule change would permit the listing and trading of shares of the Fund, which would seek longterm capital appreciation by tracking the performance of the Reality Shares DIVS Index (‘‘Index’’) (formerly, Reality Shares Isolated Dividend Growth Index). At least 80% of the Fund’s total assets would be invested in the component securities of the Index, which would be calculated using a proprietary, rules-based methodology designed to track market expectations for dividend growth conveyed in realtime using the mid-point of the bid-ask spread on U.S. exchange-listed S&P 500 Index options and U.S. exchange-listed options on exchange traded funds designed to track the S&P 500 Index. Under the proposal, the Fund would buy (i.e., hold a ‘‘long’’ position in) and sell (i.e., hold a ‘‘short’’ position in) put and call options. The strategy of taking both a long position in a security through its ex-dividend date (the last date an investor can own the security and receive dividends paid on the security) and a corresponding short position in the same security immediately thereafter is designed to 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 72015 (Apr. 24, 2014), 79 FR 24475. 4 In Amendment No. 1, the Exchange clarifies the valuation of investments for purposes of calculating net asset value, provides additional details regarding the dissemination of the Disclosed Portfolio, and makes other minor technical edits to the proposed rule change. 5 The Exchange filed Amendment No. 2 on June 4, 2014 and withdrew it on June 5, 2014, and filed Amendment No. 3 on June 5, 2014 and withdrew it on June 6, 2014. Amendment No. 4 supersedes both Amendment Nos. 2 and 3. In Amendment No. 4, the Exchange amends the proposal to reflect a name change to the Fund and the underlying index. Specifically, the Exchange replaces each reference to ‘‘Reality Shares Isolated Dividend Growth Index ETF’’ in the proposal with ‘‘Reality Shares DIVS Index ETF,’’ and replaces each reference to ‘‘Reality Shares Isolated Dividend Growth Index’’ in the proposal with ‘‘Reality Shares DIVS Index.’’ emcdonald on DSK67QTVN1PROD with NOTICES 2 17 VerDate Mar<15>2010 17:25 Jun 18, 2014 Jkt 232001 allow the Fund to isolate its exposure to the growth of the level of dividends expected to be paid on such security while minimizing its exposure to changes in the trading price of such security. Section 19(b)(2) of the Act 6 provides that, within 45 days of the publication of notice of the filing of a proposed rule change, or within such longer period up to 90 days as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or as to which the self-regulatory organization consents, the Commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved. The Commission is extending this 45-day time period. The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the unique nature of the investment strategy of the proposed Fund. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,7 designates July 29, 2014, as the date by which the Commission should either approve or disapprove or institute proceedings to determine whether to disapprove the proposed rule change (File Number SR–NYSEArca–2014–41). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–14316 Filed 6–18–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72387; File No. SR–CHX– 2014–09] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Remove Obsolete Rule Language and To Permit the Exchange To Enable or Disable Trade Adjustment Functionalities Pursuant to Notice June 13, 2014. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 6 15 U.S.C. 78s(b)(2). PO 00000 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CHX proposes to amend Article 1, Rule 1 (Definitions); Article 20, Rule 4 (Eligible Orders); Article 20, Rule 9 (Cancellation or Adjustment of Bona Fide Error Trades); Article 20, Rule 9A (Error Correction Transactions); and Article 20, Rule 11 (Cancellation or Adjustment of Stock Leg Trades) to remove obsolete rule language and to permit the Exchange to enable or disable trade adjustment functionalities pursuant to notice. The Exchange has designated this proposal as noncontroversial and provided the Commission with the notice required by Rule 19b–4(f)(6)(iii) under the Act.3 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 Article 1, Rule 1 (Definitions); Article 20, Rule 4 (Eligible Orders); Article 20, Rule 9 (Cancellation or Adjustment of Bona Fide Error Trades); Article 20, 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6)(iii). 7 Id. 8 17 (‘‘Act’’),1 and Rule 19b–4 2 thereunder, notice is hereby given that on June 10, 2014, 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, 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. 2 17 CFR 200.30–3(a)(31). Frm 00059 Fmt 4703 Sfmt 4703 E:\FR\FM\19JNN1.SGM 19JNN1 Federal Register / Vol. 79, No. 118 / Thursday, June 19, 2014 / Notices Rule 9A (Error Correction Transactions); and Article 20, Rule 11 (Cancellation or Adjustment of Stock Leg Trades) to remove obsolete rule language and to permit the Exchange to enable or disable trade adjustment functionalities pursuant to notice. Aside from these amendments, the Exchange does not propose to modify the operation of any of the foregoing rules. Background On October 31, 2013, the Securities and Exchange Commission (‘‘Commission’’) approved a proposed rule change to amend Article 20, Rule 9 to adopt new and modified rules for the cancellation and adjustment of trades based on Bona Fide Error; to adopt Article 20, Rule 9A to detail the Exchange’s then-current requirements for Error Correction Transactions; and to adopt Article 20, Rule 11 to adopt new and modified rules for the cancellation or adjustment of the stock leg trade of Stock-Option or Stock-Future orders.4 Subsequently, on November 12, 2013, the Exchange filed a proposed rule change to, inter alia, adopt an operative date of December 2, 2013 for all changes approved under 34–70791 and to readopt the previous version of Article 20, Rule 9 (Cancellation of Transactions), so that it would remain operative through December 1, 2013.5 Proposed Deletion of Obsolete Rule Language Given that the rule amendments approved under 34–70791 are all currently operative, the Exchange proposes to delete the previous version of Article 20, Rule 9, as it ceased to be operative as of December 2, 2013. The Exchange also proposes to delete language under current Article 1, Rule 1 and Article 20, Rules 9, 9A and 11 that provide that these rules ‘‘shall be operative as of December 2, 2013,’’ as all of these rules are currently operative. Proposed Amendments to Article 20, Rules 9(b) and 11(c)(3) emcdonald on DSK67QTVN1PROD with NOTICES Current Article 20, Rule 9(b) permits a Participant to request an adjustment of trades made in Bona Fide Error to the extent necessary to correct Bona Fide 4 See Securities Exchange Act Release No. 70791 (October 31, 2013), 78 FR 66791 (November 6, 2013) (Order Approving a Proposed Rule Change to Adopt Standards for the Cancellation or Adjustment of Bona Fide Error Trades, the Submission of Error Correction Transactions, and the Cancellation or Adjustment of Stock Leg Trades of Stock-Option or Stock-Future Orders). 5 See Securities Exchange Act Release No. 70894 (November 18, 2013), 78 FR 70085 (November 22, 2013) (SR–CHX–2013–19). VerDate Mar<15>2010 17:25 Jun 18, 2014 Jkt 232001 Errors.6 Moreover, current Article 20, Rule 11(c)(3) permits the Participant that submitted the stock leg trade to request an adjustment of the stock leg trade, pursuant to one of the options enumerated under subparagraphs (A)– (C), per Stock-Option or Stock-Future order.7 While current Article 20, Rules 9 and 11 provide that Exchange operations personnel shall decide whether or not the requirements for trade cancellations or adjustments have been met, the rules do not, however, explicitly provide that the adjustment functionalities described therein shall be made available to Participants at the discretion of the Exchange. The Exchange submits that this discretion is necessary to provide the Exchange with rule-based authority to disable certain adjustment functionalities for all Participants when, for example, the Exchange decides to upgrade tools used to receive and verify a specific adjustment option, so as to better ensure compliance with CHX rules and securities laws. If the Exchange deactivates certain adjustment functionalities pursuant to the proposed rule, the Participant seeking a trade adjustment would still be permitted to cancel Bona Fide Error trades pursuant to Article 20, Rule 9(b) and stock leg trades pursuant to Article 20, Rule 11(b). As such, the Exchange now proposes adopt the following language within current Article 20, Rule 9(b): Bona Fide Error trade adjustments shall be available to Participants at the discretion of 6 CHX Article 1, Rule 1(ii) defines ‘‘Bona Fide Error’’ as follows: ‘‘Bona Fide Error’’ means: (1) The inaccurate conveyance or execution of any term of an order, including, but not limited to, price, number of shares or other unit of trading; identification of the security; identification of the account for which securities are purchased or sold; lost or otherwise misplaced order tickets; or the execution of an order on the wrong side of a market; (2) the unauthorized or unintended purchase, sale, or allocation of securities, or the failure to follow specific client instructions; (3) the incorrect entry of data into relevant systems, including reliance on incorrect cash positions, withdrawals, or securities positions reflected in an account; or (4) a delay, outage, or failure of a communication system used to transmit market data prices or to facilitate the delivery or execution of an order. 7 Under CHX Article 20, Rule 11(c)(3), assuming that the other requirements of Article 20, Rule 11 are met, a Participant may request to adjust (A) the price of a stock leg trade to maintain the originallyagreed aggregate cash flow of all components of the related Stock-Option or Stock-Future order; (B) the quantity of a stock leg trade to maintain the originally-agreed hedge ratio between all components of the related Stock-Option or StockFuture order; or (C) the quantity of a stock leg trade to maintain the originally-agreed delta-based hedge ratio of all components of the related Stock-Option order. PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 35207 the Exchange. Announcements regarding the availability of Bona Fide Error trade adjustments shall be made by the Exchange via Information Memorandum and will be provided in a manner to give reasonable advance notice to its Participants. In addition, the Exchange proposes to adopt the similar language within current Article 20, Rule 11(c)(3): The following adjustment options under subparagraphs (A)–(C) shall be available to Participants at the discretion of the Exchange. Announcements regarding the availability of the adjustment options shall be made by the Exchange via Information Memorandum and will be provided in a manner to give reasonable advance notice to its Participants. Both proposed paragraphs are similar to current Article 20, Rule 4(b), which permits the Exchange to designate which general order types, modifiers, and related terms listed under Article 1, Rule 2 may be eligible for entry to and acceptance by the Matching System, with notice via Regulatory Circular to its market participants. Incidentally, the Exchange proposes to amend Article 20, Rule 4(b) to replace the term ‘‘Regulatory Circular’’ with the more accurate ‘‘Information Memorandum’’ and replace the term ‘‘market participants,’’ with the more accurate ‘‘Participants,’’ which is a defined term under Article 1, Rule 1(s). 2. Statutory Basis The Exchange believes that the proposed rule change 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.8 Specifically, the proposal is also consistent with Section 6(b)(1) of the Act,9 which requires that an exchange be so organized and have the capacity to be able to carry out the purposes of 15 U.S.C. 78a et seq. and to comply, and to enforce compliance by its members and persons associated with its members, with the provisions of 15 U.S.C. 78a et seq., the rules and regulations thereunder, and the rules of the exchange. The proposal is also consistent with Section 6(b)(5) of the Act,10 which requires exchange rules to 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, and, in general, protect investors and the public interest. The Exchange believes that the proposed deletion of obsolete rule 8 15 U.S.C. 78f(b). U.S.C. 78f(b)(1). 10 15 U.S.C. 78f(b)(5). 9 15 E:\FR\FM\19JNN1.SGM 19JNN1 35208 Federal Register / Vol. 79, No. 118 / Thursday, June 19, 2014 / Notices language is consistent with Sections 6(b)(1) and 6(b)(5) of the Act because it promotes clarity of CHX rules by removing unnecessary and/or redundant language. This will, in turn, provide clear CHX rules for Participants to follow and the Exchange to enforce. The Exchange also believes the proposed amendment to provide the Exchange with the discretion to enable or disable certain trade adjustment functionalities will prevent Participants from utilizing adjustment functionalities that are in the process of being optimized by Exchange operations personnel (e.g., systems upgrade for verifying adjustment parameters).11 Moreover, the notice requirements will provide Participants with reasonable notice as to the availability of such adjustment options. As such, the proposed rule change is also consistent with the requirements of Sections 6(b)(1) and 6(b)(5) of the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes the proposal is consistent with Section 6(b)(8) of the Act 12 in that it does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change either deletes obsolete non-substantive language or provides the Exchange with operational flexibility concerning the availability of certain trade adjustment functionalities that are already codified under CHX rules. emcdonald on DSK67QTVN1PROD with NOTICES 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 Pursuant to Section 19(b)(3)(A) of the Act 13 and Rule 19b–4(f) thereunder,14 CHX has designated this proposal as one that effects a change that (A) does not significantly affect the protection of investors or the public interest; (B) does not impose any significant burden on competition; and (C) by its terms, does not become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. The 11 Any substantive changes to adjustment options will only be effected through a Rule 19b–4 filing. 12 15 U.S.C. 78(f)(b)(8) [sic]. 13 15 U.S.C. 78s(b)(3)(A). 14 17 CFR 240.19b–4(f)(6). VerDate Mar<15>2010 17:25 Jun 18, 2014 Jkt 232001 Exchange has also provided 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.15 The Exchange notes that this proposal does not propose any new policies or provisions that are unique or unproven, as all changes proposed herein correct non-substantive taxonomy issues and set an operative date for functionality that has already been approved by the Commission. Given these factors, this rule filing qualifies for immediate effectiveness as a ‘‘non-controversial’’ rule change under paragraph (f)(6) of Rule 19b–4.16 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the 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 rule-comments@ sec.gov. Please include File No. SR– CHX–2014–09 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549. All submissions should refer to File No. SR–CHX–2014–09. 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 15 17 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–14313 Filed 6–18–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [File No. 500–1] In the Matter of Applied NeuroSolutions, Inc., Cowlitz Bancorporation, First Place Financial Corp., and Kedem Pharmaceuticals, Inc.; Order of Suspension of Trading June 17, 2014. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Applied NeuroSolutions, Inc. because it has not filed any periodic reports since the period ended March 31, 2010. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Cowlitz Bancorporation because it has not filed any periodic reports since the period ended March 31, 2010. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information CFR 240.19b–4(f)(6)(iii). 16 Id. PO 00000 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 the filing also will be available for inspection and copying at the principal office of the CHX. 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–CHX–2014– 09 and should be submitted on or before July 10, 2014. Frm 00061 17 17 Fmt 4703 Sfmt 4703 E:\FR\FM\19JNN1.SGM CFR 200.30–3(a)(12). 19JNN1

Agencies

[Federal Register Volume 79, Number 118 (Thursday, June 19, 2014)]
[Notices]
[Pages 35206-35208]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-14313]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72387; File No. SR-CHX-2014-09]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Remove Obsolete Rule Language and To Permit the Exchange To Enable or 
Disable Trade Adjustment Functionalities Pursuant to Notice

June 13, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on June 10, 2014, 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, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CHX proposes to amend Article 1, Rule 1 (Definitions); Article 20, 
Rule 4 (Eligible Orders); Article 20, Rule 9 (Cancellation or 
Adjustment of Bona Fide Error Trades); Article 20, Rule 9A (Error 
Correction Transactions); and Article 20, Rule 11 (Cancellation or 
Adjustment of Stock Leg Trades) to remove obsolete rule language and to 
permit the Exchange to enable or disable trade adjustment 
functionalities pursuant to notice. The Exchange has designated this 
proposal as non-controversial and provided the Commission with the 
notice required by Rule 19b-4(f)(6)(iii) under the Act.\3\
---------------------------------------------------------------------------

    \3\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    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 Article 1, Rule 1 (Definitions); 
Article 20, Rule 4 (Eligible Orders); Article 20, Rule 9 (Cancellation 
or Adjustment of Bona Fide Error Trades); Article 20,

[[Page 35207]]

Rule 9A (Error Correction Transactions); and Article 20, Rule 11 
(Cancellation or Adjustment of Stock Leg Trades) to remove obsolete 
rule language and to permit the Exchange to enable or disable trade 
adjustment functionalities pursuant to notice. Aside from these 
amendments, the Exchange does not propose to modify the operation of 
any of the foregoing rules.
Background
    On October 31, 2013, the Securities and Exchange Commission 
(``Commission'') approved a proposed rule change to amend Article 20, 
Rule 9 to adopt new and modified rules for the cancellation and 
adjustment of trades based on Bona Fide Error; to adopt Article 20, 
Rule 9A to detail the Exchange's then-current requirements for Error 
Correction Transactions; and to adopt Article 20, Rule 11 to adopt new 
and modified rules for the cancellation or adjustment of the stock leg 
trade of Stock-Option or Stock-Future orders.\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 70791 (October 31, 
2013), 78 FR 66791 (November 6, 2013) (Order Approving a Proposed 
Rule Change to Adopt Standards for the Cancellation or Adjustment of 
Bona Fide Error Trades, the Submission of Error Correction 
Transactions, and the Cancellation or Adjustment of Stock Leg Trades 
of Stock-Option or Stock-Future Orders).
---------------------------------------------------------------------------

    Subsequently, on November 12, 2013, the Exchange filed a proposed 
rule change to, inter alia, adopt an operative date of December 2, 2013 
for all changes approved under 34-70791 and to readopt the previous 
version of Article 20, Rule 9 (Cancellation of Transactions), so that 
it would remain operative through December 1, 2013.\5\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 70894 (November 18, 
2013), 78 FR 70085 (November 22, 2013) (SR-CHX-2013-19).
---------------------------------------------------------------------------

Proposed Deletion of Obsolete Rule Language
    Given that the rule amendments approved under 34-70791 are all 
currently operative, the Exchange proposes to delete the previous 
version of Article 20, Rule 9, as it ceased to be operative as of 
December 2, 2013. The Exchange also proposes to delete language under 
current Article 1, Rule 1 and Article 20, Rules 9, 9A and 11 that 
provide that these rules ``shall be operative as of December 2, 2013,'' 
as all of these rules are currently operative.
Proposed Amendments to Article 20, Rules 9(b) and 11(c)(3)
    Current Article 20, Rule 9(b) permits a Participant to request an 
adjustment of trades made in Bona Fide Error to the extent necessary to 
correct Bona Fide Errors.\6\ Moreover, current Article 20, Rule 
11(c)(3) permits the Participant that submitted the stock leg trade to 
request an adjustment of the stock leg trade, pursuant to one of the 
options enumerated under subparagraphs (A)-(C), per Stock-Option or 
Stock-Future order.\7\
---------------------------------------------------------------------------

    \6\ CHX Article 1, Rule 1(ii) defines ``Bona Fide Error'' as 
follows:
    ``Bona Fide Error'' means:
    (1) The inaccurate conveyance or execution of any term of an 
order, including, but not limited to, price, number of shares or 
other unit of trading; identification of the security; 
identification of the account for which securities are purchased or 
sold; lost or otherwise misplaced order tickets; or the execution of 
an order on the wrong side of a market;
    (2) the unauthorized or unintended purchase, sale, or allocation 
of securities, or the failure to follow specific client 
instructions;
    (3) the incorrect entry of data into relevant systems, including 
reliance on incorrect cash positions, withdrawals, or securities 
positions reflected in an account; or
    (4) a delay, outage, or failure of a communication system used 
to transmit market data prices or to facilitate the delivery or 
execution of an order.

    \7\ Under CHX Article 20, Rule 11(c)(3), assuming that the other 
requirements of Article 20, Rule 11 are met, a Participant may 
request to adjust (A) the price of a stock leg trade to maintain the 
originally-agreed aggregate cash flow of all components of the 
related Stock-Option or Stock-Future order; (B) the quantity of a 
stock leg trade to maintain the originally-agreed hedge ratio 
between all components of the related Stock-Option or Stock-Future 
order; or (C) the quantity of a stock leg trade to maintain the 
originally-agreed delta-based hedge ratio of all components of the 
related Stock-Option order.
---------------------------------------------------------------------------

    While current Article 20, Rules 9 and 11 provide that Exchange 
operations personnel shall decide whether or not the requirements for 
trade cancellations or adjustments have been met, the rules do not, 
however, explicitly provide that the adjustment functionalities 
described therein shall be made available to Participants at the 
discretion of the Exchange. The Exchange submits that this discretion 
is necessary to provide the Exchange with rule-based authority to 
disable certain adjustment functionalities for all Participants when, 
for example, the Exchange decides to upgrade tools used to receive and 
verify a specific adjustment option, so as to better ensure compliance 
with CHX rules and securities laws. If the Exchange deactivates certain 
adjustment functionalities pursuant to the proposed rule, the 
Participant seeking a trade adjustment would still be permitted to 
cancel Bona Fide Error trades pursuant to Article 20, Rule 9(b) and 
stock leg trades pursuant to Article 20, Rule 11(b).
    As such, the Exchange now proposes adopt the following language 
within current Article 20, Rule 9(b):

    Bona Fide Error trade adjustments shall be available to 
Participants at the discretion of the Exchange. Announcements 
regarding the availability of Bona Fide Error trade adjustments 
shall be made by the Exchange via Information Memorandum and will be 
provided in a manner to give reasonable advance notice to its 
Participants.

In addition, the Exchange proposes to adopt the similar language within 
current Article 20, Rule 11(c)(3):

    The following adjustment options under subparagraphs (A)-(C) 
shall be available to Participants at the discretion of the 
Exchange. Announcements regarding the availability of the adjustment 
options shall be made by the Exchange via Information Memorandum and 
will be provided in a manner to give reasonable advance notice to 
its Participants.

Both proposed paragraphs are similar to current Article 20, Rule 4(b), 
which permits the Exchange to designate which general order types, 
modifiers, and related terms listed under Article 1, Rule 2 may be 
eligible for entry to and acceptance by the Matching System, with 
notice via Regulatory Circular to its market participants.
    Incidentally, the Exchange proposes to amend Article 20, Rule 4(b) 
to replace the term ``Regulatory Circular'' with the more accurate 
``Information Memorandum'' and replace the term ``market 
participants,'' with the more accurate ``Participants,'' which is a 
defined term under Article 1, Rule 1(s).
2. Statutory Basis
    The Exchange believes that the proposed rule change 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.\8\ 
Specifically, the proposal is also consistent with Section 6(b)(1) of 
the Act,\9\ which requires that an exchange be so organized and have 
the capacity to be able to carry out the purposes of 15 U.S.C. 78a et 
seq. and to comply, and to enforce compliance by its members and 
persons associated with its members, with the provisions of 15 U.S.C. 
78a et seq., the rules and regulations thereunder, and the rules of the 
exchange. The proposal is also consistent with Section 6(b)(5) of the 
Act,\10\ which requires exchange rules to 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, and, in 
general, protect investors and the public interest.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(1).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed deletion of obsolete rule

[[Page 35208]]

language is consistent with Sections 6(b)(1) and 6(b)(5) of the Act 
because it promotes clarity of CHX rules by removing unnecessary and/or 
redundant language. This will, in turn, provide clear CHX rules for 
Participants to follow and the Exchange to enforce.
    The Exchange also believes the proposed amendment to provide the 
Exchange with the discretion to enable or disable certain trade 
adjustment functionalities will prevent Participants from utilizing 
adjustment functionalities that are in the process of being optimized 
by Exchange operations personnel (e.g., systems upgrade for verifying 
adjustment parameters).\11\ Moreover, the notice requirements will 
provide Participants with reasonable notice as to the availability of 
such adjustment options. As such, the proposed rule change is also 
consistent with the requirements of Sections 6(b)(1) and 6(b)(5) of the 
Act.
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    \11\ Any substantive changes to adjustment options will only be 
effected through a Rule 19b-4 filing.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes the proposal is consistent with Section 
6(b)(8) of the Act \12\ in that it does not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The proposed rule change either deletes obsolete 
non-substantive language or provides the Exchange with operational 
flexibility concerning the availability of certain trade adjustment 
functionalities that are already codified under CHX rules.
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    \12\ 15 U.S.C. 78(f)(b)(8) [sic].
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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

    Pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-4(f) 
thereunder,\14\ CHX has designated this proposal as one that effects a 
change that (A) does not significantly affect the protection of 
investors or the public interest; (B) does not impose any significant 
burden on competition; and (C) by its terms, does not become operative 
for 30 days after the date of the filing, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest. The Exchange has also provided 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.\15\ The 
Exchange notes that this proposal does not propose any new policies or 
provisions that are unique or unproven, as all changes proposed herein 
correct non-substantive taxonomy issues and set an operative date for 
functionality that has already been approved by the Commission. Given 
these factors, this rule filing qualifies for immediate effectiveness 
as a ``non-controversial'' rule change under paragraph (f)(6) of Rule 
19b-4.\16\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ Id.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the 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 rule-comments@sec.gov. Please include 
File No. SR-CHX-2014-09 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549.

All submissions should refer to File No. SR-CHX-2014-09. 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 the filing also will be available 
for inspection and copying at the principal office of the CHX. 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-CHX-2014-09 and should be 
submitted on or before July 10, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-14313 Filed 6-18-14; 8:45 am]
BILLING CODE 8011-01-P
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