Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Delay the Implementation Date of Rule Change SR-CBOE-2014-040, 3267-3268 [2015-00968]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 14 (Thursday, January 22, 2015)]
[Notices]
[Pages 3267-3268]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-00968]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74067; File No. SR-CBOE-2015-004]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Delay the Implementation Date of Rule Change 
SR-CBOE-2014-040

January 15, 2015.
    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 January 7, 2015, 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 Exchange filed the proposal as a ``non-controversial'' 
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 
\3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to delay the implementation date of rule 
change SR-CBOE-2014-040. There is no proposed change to the rule 
language.
    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.

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

1. Purpose
    On August 13, 2014, CBOE Rules 6.53(y) and 15.2A were approved by 
the Securities Exchange Commission (SR-CBOE-2014-040).\5\ Rule 6.53(y) 
added a definition of a tied to stock order.\6\ Rule 15.2A requires, 
among other things, that each Trading Permit Holder, (``TPH''), on the 
business day following the order execution date, report to the Exchange 
certain information regarding the executed stock or convertible 
security legs of Qualified Contingent Cross (``QCC'') orders, stock-
option orders and other Tied to Stock Orders that the TPH executed on 
the Exchange that trading day. CBOE stated that it would consider 
feedback from TPHs regarding the timing of the implementation date of 
SR-CBOE-2014-040.\7\ Based on that feedback, the Exchange seeks to 
extend the implementation date of SR-CBOE-2014-040.
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    \5\ Securities Exchange Act Release No. 34-72839 (August 13, 
2014), 79 FR 49123 (August 19, 2014) (Approval Order) (SR-CBOE-2014-
040).
    \6\ Rule 6.53(y) provides that an order is tied to stock if, at 
the time the Trading Permit Holder representing the order on the 
Exchange receives the order (if the order is a customer order) or 
initiates the order (if the order is a proprietary order), has 
knowledge that the order is coupled with an order(s) for the 
underlying stock or a security convertible into the underlying stock 
(``convertible security'' and, together with underlying stock, 
``non-option'').
    \7\ See letter to Elizabeth M. Murphy, Secretary, Commission, 
from Laura G. Dickman, Senior Attorney, CBOE, dated August 6, 2014 
(``CBOE Letter II'') at 2.
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    Pursuant to SR-CBOE-2014-040, the Exchange issued CBOE Regulatory 
Circular RG14-171 on December 10, 2014, to announce the implementation 
date of Rules 6.53(y) and 15.2A. However, SR-CBOE-2014-040 required the 
Exchange to announce the implementation date no later than 90 days 
following the effective date of the filing (i.e., by November 12, 
2014).\8\ Therefore, even though the rule filing was approved on August 
13, 2014, TPHs were unable to fully assess the impact of the rule 
filing until RG14-171 was issued on December 10, 2014. In addition, the 
CBOE Regulatory Division held a session with TPHs on December 19, 2014, 
to discuss the implementation of Rules 6.53(y) and 15.2A.\9\ TPHs 
requested clarity regarding several aspects of Rules 6.53(y) and 15.2A; 
however, several issues remain outstanding. Furthermore, TPHs expressed 
their inability to plan technological modifications without further 
clarity. Although the Exchange plans to hold future training sessions, 
the Exchange does not believe TPHs are in a position to comply with the 
requirements of Rules 6.53(y) and 15.2A by the current implementation 
date of February 9, 2015. Therefore, the Exchange seeks to extend the

[[Page 3268]]

implementation date of SR-CBOE-2014-040.
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    \8\ SR-CBOE-2014-040 was approved on August 13, 2014, but the 
implementation date was not announced until December 10, 2014.
    \9\ See CBOE Regulatory Circular RG14-185--Session on December 
19, 2014 Regarding Tied to Stock Order Marking and Reporting 
Requirements (December 17, 2014).
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    The Exchange will announce the implementation date of the proposed 
rule in a Regulatory Circular to be published no later than 90 days 
following the effective date of this filing. The implementation date 
will be no later than 180 days following the effective date of this 
filing.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\10\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \11\ 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 proposed rule change is consistent with the 
Section 6(b)(5) \12\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ Id.
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    In particular, the Exchange believes Rules 6.53(y) and 15.2A will 
aid the Exchange's efforts to prevent fraudulent and manipulate acts 
and practice with respect to tied to stock orders, because it will 
improve the Exchange's ability to tie executed non-option legs to the 
applicable option orders that were separately submitted for execution. 
Additionally, the Exchange believes the data provided pursuant to Rules 
6.53(y) and 15.2A will help to remove impediments to and perfect the 
mechanism of a free and open market, but only if TPHs have a better 
understanding of their obligations because a better understanding is 
likely to lead to more accurate data, which will permit CBOE to more 
efficiently and effectively conduct its regulatory surveillance. 
Therefore, the Exchange believes that if Rules 6.53(y) and 15.2A is 
implemented on February 9, 2015, TPHs and CBOE will be negatively 
impacted.

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.

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

    Because the foregoing proposed rule change does not:
    A. Significantly affect the protection of investors or the public 
interest;
    B. impose any significant burden on competition; and
    C. become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \13\ and 
Rule 19b-4(f)(6) \14\ thereunder. 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 will institute proceedings to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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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-2015-004 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2015-004. 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 a.m. and 3 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-2015-004, and should be 
submitted on or before February 12, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-00968 Filed 1-21-15; 8:45 am]
BILLING CODE 8011-01-P