Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Delay Implementation of Rule 15.2A, 30506-30508 [2015-12833]
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Federal Register / Vol. 80, No. 102 / Thursday, May 28, 2015 / Notices
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
Written comments relating to the
proposed rule change have not yet been
solicited or received. DTC will notify
the Commission of any written
comments received by DTC.
III. Date of Effectiveness of the
Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A) 8 of the Act and paragraph (f)
of Rule 19b–4 9 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.
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:
asabaliauskas on DSK5VPTVN1PROD with NOTICES
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–
DTC–2015–006 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–DTC–2015–006. 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
8 15
9 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
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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 DTC and on DTCC’s Web site.
(https://dtcc.com/legal/sec-rulefilings.aspx). 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–DTC–
2015–006 and should be submitted on
or before June 18, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–12834 Filed 5–27–15; 8:45 am]
BILLING CODE 8011–01–P
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to delay the
implementation of Rule 15.2A. There is
no proposed change to the rule text.
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
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75029; File No. SR–CBOE–
2015–051]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Delay Implementation
of Rule 15.2A
May 21, 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 May 20,
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 ‘‘noncontroversial’’ 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
10 17
CFR 200.30–3(a)(12).
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).
1 15
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On August 13, 2014, the Commission
approved CBOE Rules 6.53(y) and
15.2A.5 Rule 6.53(y) defines a tied to
stock order 6 and requires the
representing Trading Permit Holder to
include an indicator on each tied to
stock order upon systemization, subject
to certain exceptions. Rule 15.2A
requires, in a manner and form
prescribed by the Exchange, each
Trading Permit Holder (‘‘TPH’’), on the
business day following the order
execution date, to report to the
Exchange certain information regarding
the executed stock or convertible
security legs of qualified contingent
cross (‘‘QCC’’) orders,7 stock-option
5 Securities Exchange Act Release No. 72839
(August 13, 2014), 79 FR 49123 (August 19, 2014)
(SR–CBOE–2014–040) (order approving Rules
6.53(y) and 15.2A).
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 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 A QCC order is an order to buy (sell) at least
1,000 standard option contracts or 10,000 minioption contracts that is identified as being part of
a qualified contingent trade coupled with a contraside order to sell (buy) an equal number of
contracts. These orders may only be entered in the
standard increments applicable to simple orders in
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asabaliauskas on DSK5VPTVN1PROD with NOTICES
orders and other tied to stock orders that
the TPH executed on the Exchange that
trading day. The Exchange stated in rule
filing SR–CBOE–2014–040 that it would
issue a circular announcing the
implementation date for these rules
within 90 days of the date of filing,
which implementation date would be
within 180 days of the date of filing.
On January 7, 2015, CBOE submitted
a rule filing to delay the implementation
of these rules based on feedback it
received from TPHs.8 The Exchange
stated in that rule filing that it would
issue a circular announcing the
implementation date for the rules
within 90 days of the date of the rule
filing, which implementation date
would be within 180 days of the date of
filing. In accordance with that filing, the
Exchange recently issued a regulatory
circular on April 7, 2015, which
announced a July 1, 2015
implementation date for the tied to
stock marking and reporting
requirements.9
While the Exchange believes there has
been sufficient training and circulars
provided to Trading Permit Holders on
the marking requirement to move
forward with implementation of that
requirement on July 1, 2015, the
Exchange believes it is appropriate to
delay the implementation of the
reporting requirement. Therefore, the
the options class under Rule 6.42. For purposes of
this order type, a ‘‘qualified contingent trade’’ is a
transaction consisting of two or more component
orders, executed as agent or principal, where: (a) At
least one component is an NMS stock, as defined
in Rule 600 of Regulation NMS under the Act; (b)
all components are effected with a product or price
contingency that either has been agreed to by all the
respective counterparties or arranged for by a
broker-dealer as principal or agent; (c) the execution
of one component is contingent upon the execution
of all other components at or near the same time;
(d) the specific relationship between the component
orders (e.g., the spread between the prices of the
component orders) is determined by the time the
contingent order is placed; (e) the component
orders bear a derivative relationship to one another,
represent different classes of shares of the same
issuer, or involve the securities of participants in
mergers or with intentions to merge that have been
announced or cancelled; and (f) the transaction is
fully hedged (without regard to any prior existing
position) as a result of other components of the
contingent trade. QCC orders may execute without
exposure provided the execution is not at the same
price as a public customer order resting in the
electronic book and is at or between the national
best bid or offer. A QCC order will be cancelled if
it cannot be executed. See Rule 6.53(u). The
Exchange notes that it deactivated the QCC
functionality effective August 11, 2014 and will
announce any reactivation of QCC functionality by
Regulatory Circular. See Regulatory Circular RG14–
121.
8 Securities Exchange Act Release No. 74067
(January 15, 2015), 80 FR 3267 (January 22, 2015)
(SR–CBOE–2015–004) (notice of immediate
effectiveness of rule filing).
9 CBOE Regulatory Circular RG15–056 (April 7,
2015).
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Exchange proposes to further delay the
implementation date of the tied to stock
reporting requirement for tied to stock
orders.10 During this time, the Exchange
plans to evaluate the information
obtained via the marking requirement
under Rule 6.53(y) in conjunction with
information available through other
sources and further consider the
reporting requirement format. In that
regard, the Exchange notes that CBOE
recently entered into a Regulatory
Services Agreement with the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’). As a result, CBOE plans to
evaluate the format of the reports with
FINRA to ensure that the information to
be provided in the reports can be
incorporated into surveillances in an
efficient and effective manner.11
Therefore, the Exchange seeks to extend
the implementation date of Rule 15.2A
until the Exchange can conclude
whether or not this additional
information is necessary in order to
enhance its ability to effectively monitor
and conduct surveillance of the CBOE
markets with respect to orders that are
tied to stock whose execution
information is not electronically
captured by the audit trail.12
The Exchange expects its evaluation
to be completed and to implement the
reporting requirement within 12 to 18
months of the date of this filing. This
will provide CBOE with sufficient time
to conduct this evaluation and TPHs
with sufficient time to implement any
potential changes to the reporting
requirement format. The Exchange will
issue a regulatory circular announcing
the new implementation date for the
10 Pursuant to Regulatory Circular RG13–102,
CBOE imposed a reporting requirement with
respect to QCC orders prior to the adoption of Rule
15.2A. Once the Exchange implements Rule 15.2A,
the reporting requirement in that rule will
supersede the current QCC order reporting
requirement described in that circular. As noted
above, QCC functionality is currently not active.
However, if the Exchange reactivates the
functionality prior to implementation of Rule
15.2A, then the reporting requirement for QCC
orders described in Regulatory Circular RG13–102
will continue to be in effect until the
implementation of Rule 15.2A.
11 During this delay, CBOE intends to review the
number of tied to stock orders for which
information regarding the stock or convertible
security leg is not available from CBOE’s internal
data, which will permit CBOE to evaluate the
number of reports it can expect to receive and the
potential impact of the reports on CBOE’s
surveillances.
12 The Exchange notes that Rule 15.2A,
Interpretation .03 provides that a Market-Maker (or
its clearing firm) may include the information
required by Rule 15.2A in the equity reported
submitted to CBOE pursuant to Rule 8.9(b). Because
the proposed rule change is delaying the
implementation of Rule 15.2A, Market-Makers (or
their clearing firms) will continue to submit reports
pursuant to Rule 8.9(b) in the same manner they do
today.
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30507
reporting requirement as least 90 days
prior to that date.
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.13 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 14 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) 15 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
the delayed implementation of Rule
15.2A will provide the Exchange with
sufficient time to evaluate the
information obtained through the
marking requirement and the related
reporting requirement format to ensure
that the Exchange receives reports from
TPHs in a manner that can be
incorporated into surveillance systems
in an efficient and effective manner.
This will ultimately improve the
Exchange’s ability to tie executed nonoption legs to the applicable option legs
that were separately submitted for
execution, which will assist in the
Exchange’s efforts to prevent fraudulent
and manipulative acts and practices
with respect to tied to stock orders.
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
proposed change does not impose any
burden on competition, as it is simply
seeking to delay the implementation of
the tied to stock reporting requirement.
13 15
14 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
15 Id.
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Federal Register / Vol. 80, No. 102 / Thursday, May 28, 2015 / Notices
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 16 and Rule 19b–4(f)(6) 17
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.
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:
asabaliauskas on DSK5VPTVN1PROD with NOTICES
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–2015–051 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-2015–051. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–CBOE2015–051 and should be submitted on
or before June 18, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–12833 Filed 5–27–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75031; File No. SR–
NASDAQ–2015–023]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Order
Approving a Proposed Rule Change,
as Modified by Amendment No. 1, To
List and Trade the Shares of the Tuttle
Tactical Management Multi-Strategy
Income ETF of ETFis Series Trust I
May 21, 2015.
I. Introduction
On March 25, 2015, The NASDAQ
Stock Market LLC (‘‘Exchange’’ or
‘‘Nasdaq’’) filed with the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (‘‘Act’’
or ‘‘Exchange Act’’) 2 and Rule 19b–4
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
16 15
U.S.C. 78s(b)(3)(A).
17 17 CFR 240.19b–4(f)(6).
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thereunder,3 a proposed rule change to
list and trade shares (‘‘Shares’’) of the
Tuttle Tactical Management MultiStrategy Income ETF (‘‘Fund’’), a series
of ETFis Series Trust I (‘‘Trust’’) under
NASDAQ Rule 5735. The proposed rule
change was published for comment in
the Federal Register on April 10, 2015.4
On May 20, 2015, the Exchange filed
Amendment No. 1 to the proposed rule
change.5 The Commission received no
comments on the proposed rule change.
This order approves the proposed rule
change, as modified by Amendment No.
1.
II. Description of the Proposal
The Exchange proposes to list and
trade the Shares under Nasdaq Rule
5735, which governs the listing and
trading of Managed Fund Shares on the
Exchange. The Fund will be an activelymanaged exchange-traded fund (‘‘ETF’’).
The Shares will be offered by the Trust.6
The Trust is registered with the
Commission as an investment company
and has filed a registration statement on
Form N–1A (‘‘Registration Statement’’)
with the Commission.7 The Fund is a
series of the Trust.
Etfis Capital LLC will be the
investment adviser (‘‘Adviser’’) to the
Fund. Tuttle Tactical Management, LLC
will be the investment sub-adviser
(‘‘Sub-Adviser’’) to the Fund. ETF
Distributors LLC will be the principal
underwriter and distributor of the
Fund’s Shares. The Bank of New York
Mellon will act as the administrator,
accounting agent, custodian, and
transfer agent to the Fund. The
Exchange states that the Adviser and
Sub-Adviser are not registered as
broker-dealers but that the Adviser is
affiliated with a broker-dealer.8 In
addition, the Exchange states that the
Adviser has implemented a fire wall
with respect to its broker-dealer affiliate
regarding access to information
concerning the composition and/or
changes to the portfolio, and will be
3 17
CFR 240.19b–4.
Securities Exchange Act Release No. 74653
(April 6, 2015), 80 FR 19371 (‘‘Notice’’).
5 In Amendment No. 1, the Exchange clarified
that under normal market conditions, the Fund will
invest only in those assets listed under the
‘‘Principal Investments’’ section of the Notice.
Amendment No. 1 is not subject to notice and
comment because it is a technical amendment that
does not materially alter the substance of the
proposed rule change or raise any novel regulatory
issues.
6 The Commission has issued an order granting
certain exemptive relief to the Trust under the 1940
Act. See Investment Company Act Release No.
30607 (July 23, 2013).
7 See Registration Statement on Form N–1A for
the Trust filed on January 30, 2015 (File Nos. 333–
187668 and 811–22819).
8 See Notice, supra note 4, 80 FR at 19372.
4 See
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]]>Agencies
[Federal Register Volume 80, Number 102 (Thursday, May 28, 2015)]
[Notices]
[Pages 30506-30508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12833]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75029; File No. SR-CBOE-2015-051]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Delay Implementation of Rule 15.2A
May 21, 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 May 20, 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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to delay the implementation of Rule 15.2A.
There is no proposed change to the rule text.
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, the Commission approved CBOE Rules 6.53(y) and
15.2A.\5\ Rule 6.53(y) defines a tied to stock order \6\ and requires
the representing Trading Permit Holder to include an indicator on each
tied to stock order upon systemization, subject to certain exceptions.
Rule 15.2A requires, in a manner and form prescribed by the Exchange,
each Trading Permit Holder (``TPH''), on the business day following the
order execution date, to report to the Exchange certain information
regarding the executed stock or convertible security legs of qualified
contingent cross (``QCC'') orders,\7\ stock-option
[[Page 30507]]
orders and other tied to stock orders that the TPH executed on the
Exchange that trading day. The Exchange stated in rule filing SR-CBOE-
2014-040 that it would issue a circular announcing the implementation
date for these rules within 90 days of the date of filing, which
implementation date would be within 180 days of the date of filing.
---------------------------------------------------------------------------
\5\ Securities Exchange Act Release No. 72839 (August 13, 2014),
79 FR 49123 (August 19, 2014) (SR-CBOE-2014-040) (order approving
Rules 6.53(y) and 15.2A).
\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 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\ A QCC order is an order to buy (sell) at least 1,000
standard option contracts or 10,000 mini-option contracts that is
identified as being part of a qualified contingent trade coupled
with a contra-side order to sell (buy) an equal number of contracts.
These orders may only be entered in the standard increments
applicable to simple orders in the options class under Rule 6.42.
For purposes of this order type, a ``qualified contingent trade'' is
a transaction consisting of two or more component orders, executed
as agent or principal, where: (a) At least one component is an NMS
stock, as defined in Rule 600 of Regulation NMS under the Act; (b)
all components are effected with a product or price contingency that
either has been agreed to by all the respective counterparties or
arranged for by a broker-dealer as principal or agent; (c) the
execution of one component is contingent upon the execution of all
other components at or near the same time; (d) the specific
relationship between the component orders (e.g., the spread between
the prices of the component orders) is determined by the time the
contingent order is placed; (e) the component orders bear a
derivative relationship to one another, represent different classes
of shares of the same issuer, or involve the securities of
participants in mergers or with intentions to merge that have been
announced or cancelled; and (f) the transaction is fully hedged
(without regard to any prior existing position) as a result of other
components of the contingent trade. QCC orders may execute without
exposure provided the execution is not at the same price as a public
customer order resting in the electronic book and is at or between
the national best bid or offer. A QCC order will be cancelled if it
cannot be executed. See Rule 6.53(u). The Exchange notes that it
deactivated the QCC functionality effective August 11, 2014 and will
announce any reactivation of QCC functionality by Regulatory
Circular. See Regulatory Circular RG14-121.
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On January 7, 2015, CBOE submitted a rule filing to delay the
implementation of these rules based on feedback it received from
TPHs.\8\ The Exchange stated in that rule filing that it would issue a
circular announcing the implementation date for the rules within 90
days of the date of the rule filing, which implementation date would be
within 180 days of the date of filing. In accordance with that filing,
the Exchange recently issued a regulatory circular on April 7, 2015,
which announced a July 1, 2015 implementation date for the tied to
stock marking and reporting requirements.\9\
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\8\ Securities Exchange Act Release No. 74067 (January 15,
2015), 80 FR 3267 (January 22, 2015) (SR-CBOE-2015-004) (notice of
immediate effectiveness of rule filing).
\9\ CBOE Regulatory Circular RG15-056 (April 7, 2015).
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While the Exchange believes there has been sufficient training and
circulars provided to Trading Permit Holders on the marking requirement
to move forward with implementation of that requirement on July 1,
2015, the Exchange believes it is appropriate to delay the
implementation of the reporting requirement. Therefore, the Exchange
proposes to further delay the implementation date of the tied to stock
reporting requirement for tied to stock orders.\10\ During this time,
the Exchange plans to evaluate the information obtained via the marking
requirement under Rule 6.53(y) in conjunction with information
available through other sources and further consider the reporting
requirement format. In that regard, the Exchange notes that CBOE
recently entered into a Regulatory Services Agreement with the
Financial Industry Regulatory Authority, Inc. (``FINRA''). As a result,
CBOE plans to evaluate the format of the reports with FINRA to ensure
that the information to be provided in the reports can be incorporated
into surveillances in an efficient and effective manner.\11\ Therefore,
the Exchange seeks to extend the implementation date of Rule 15.2A
until the Exchange can conclude whether or not this additional
information is necessary in order to enhance its ability to effectively
monitor and conduct surveillance of the CBOE markets with respect to
orders that are tied to stock whose execution information is not
electronically captured by the audit trail.\12\
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\10\ Pursuant to Regulatory Circular RG13-102, CBOE imposed a
reporting requirement with respect to QCC orders prior to the
adoption of Rule 15.2A. Once the Exchange implements Rule 15.2A, the
reporting requirement in that rule will supersede the current QCC
order reporting requirement described in that circular. As noted
above, QCC functionality is currently not active. However, if the
Exchange reactivates the functionality prior to implementation of
Rule 15.2A, then the reporting requirement for QCC orders described
in Regulatory Circular RG13-102 will continue to be in effect until
the implementation of Rule 15.2A.
\11\ During this delay, CBOE intends to review the number of
tied to stock orders for which information regarding the stock or
convertible security leg is not available from CBOE's internal data,
which will permit CBOE to evaluate the number of reports it can
expect to receive and the potential impact of the reports on CBOE's
surveillances.
\12\ The Exchange notes that Rule 15.2A, Interpretation .03
provides that a Market-Maker (or its clearing firm) may include the
information required by Rule 15.2A in the equity reported submitted
to CBOE pursuant to Rule 8.9(b). Because the proposed rule change is
delaying the implementation of Rule 15.2A, Market-Makers (or their
clearing firms) will continue to submit reports pursuant to Rule
8.9(b) in the same manner they do today.
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The Exchange expects its evaluation to be completed and to
implement the reporting requirement within 12 to 18 months of the date
of this filing. This will provide CBOE with sufficient time to conduct
this evaluation and TPHs with sufficient time to implement any
potential changes to the reporting requirement format. The Exchange
will issue a regulatory circular announcing the new implementation date
for the reporting requirement as least 90 days prior to that date.
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.\13\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \14\ 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) \15\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ Id.
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In particular, the Exchange believes the delayed implementation of
Rule 15.2A will provide the Exchange with sufficient time to evaluate
the information obtained through the marking requirement and the
related reporting requirement format to ensure that the Exchange
receives reports from TPHs in a manner that can be incorporated into
surveillance systems in an efficient and effective manner. This will
ultimately improve the Exchange's ability to tie executed non-option
legs to the applicable option legs that were separately submitted for
execution, which will assist in the Exchange's efforts to prevent
fraudulent and manipulative acts and practices with respect to tied to
stock orders.
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 proposed change does not
impose any burden on competition, as it is simply seeking to delay the
implementation of the tied to stock reporting requirement.
[[Page 30508]]
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 \16\ and
Rule 19b-4(f)(6) \17\ 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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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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-2015-051 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-2015-051. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2015-051 and should be
submitted on or before June 18, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-12833 Filed 5-27-15; 8:45 am]
BILLING CODE 8011-01-P
