Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Delay Implementation of Tied to Stock Marking Requirement for Certain Orders, 40116-40118 [2015-16980]

Download as PDF 40116 Federal Register / Vol. 80, No. 133 / Monday, July 13, 2015 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–75380; File No. SR–DTC– 2015–003] Self-Regulatory Organizations; The Depository Trust Company; Notice of Withdrawal of Proposed Rule Change Regarding the Acknowledgment of End-of-Day Net-Net Settlement Balances by Settling Banks July 7, 2015. On April 15, 2015, The Depository Trust Company (‘‘DTC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) proposed rule change SR–DTC–2015–003 (‘‘Proposed Rule Change’’) pursuant to Section 19(b)(1) of the Securities Exchange Act of 19341 and Rule 19b-4 thereunder regarding the acknowledgment of End-of-Day Net-Net Settlement Balances by Settling Banks.2 The Proposed Rule Change was published for comment in the Federal Registrar on May 5, 2015.3 The Commission received one comment letter to the Proposed Rule Change.4 On June 5, 2015, DTC extended the date for Commission action on the Proposed Rule Change to August 3, 2015. On July 1, 2015, DTC withdrew the Proposed Rule Change (SR–DTC–2015–003). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.5 Brent J. Fields, Secretary. [FR Doc. 2015–16979 Filed 7–10–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–75378; File No. SR–CBOE– 2015–067] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Delay Implementation of Tied to Stock Marking Requirement for Certain Orders Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the asabaliauskas on DSK5VPTVN1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to delay the implementation of the marking requirement set forth in Rule 6.53(y) with respect to certain orders. 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 Securities and Exchange Commission (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 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 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 2 17 July 7, 2015. 1 15 U.S.C. 78s(b)(1). CFR 240.19b-4. 3 Securities Exchange Act Release No. 74830 (April 29, 2015), 80 FR 25727 (May 5, 2015) (File No. SR–DTC–2015–003). 4 Letter from Suzanne Shatto (May 3, 2015), available at https://www.sec.gov/comments/sr-dtc2015–003/dtc2015003.shtml. 5 17 CFR 200.30–3(a)(12). 2 17 VerDate Sep<11>2014 ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 1, 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 and II 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. 19:27 Jul 10, 2015 Jkt 235001 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 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 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 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 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. 34–74067 (January 15, 2015), 80 FR 3267 (January 22, 2015) (SR–CBOE–2015–004) (notice of immediate effectiveness of rule filing). E:\FR\FM\13JYN1.SGM 13JYN1 Federal Register / Vol. 80, No. 133 / Monday, July 13, 2015 / Notices asabaliauskas on DSK5VPTVN1PROD with NOTICES 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 On May 20, 2015, CBOE submitted a rule filing to further delay the implementation of the reporting requirement set forth in Rule 15.2A in order to evaluate the format of the reports in light of its entry into a Regulatory Services Agreement with the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’).10 In that filing, CBOE announced its intention to proceed with the implementation of the marking requirement set forth in Rule 6.53(y) on July 1, 2015. The Exchange believes it is appropriate to implement on a limited basis the marking requirement on July 1, 2015 with respect to orders sent to the Exchange for nonelectronic processing (i.e., orders received and systematized by floor brokers handling orders on the CBOE trading floor), but proposes to delay the implementation of the marking requirement with respect to all other orders (i.e., orders submitted to the Exchange for electronic processing). While the Exchange continues to believe that there has been sufficient notice, training and circulars provided to Trading Permit Holders on the marking requirement with respect to electronic orders, based on recent feedback from Trading Permit Holders regarding their development efforts related to the marking requirement, CBOE believes it is appropriate to provide Trading Permit Holders with additional time to complete their necessary systems development work to comply with this new marking requirement. However, since CBOE has completed development work to allow floor brokers to mark orders as tied to stock on devices approved by the Exchange that may be used on the trading floor for the systemization of orders represented in open outcry,11 CBOE believes it is appropriate to move forward with implementing the tied to stock marking 9 CBOE Regulatory Circular RG15–056 (April 7, 2015). 10 Securities Exchange Act Release No. 34–75029 (May 21, 2015), 80 FR 30506 (May 28, 2015) (SR– CBOE–2015–051) (notice of immediate effectiveness of rule filing). 11 Currently, the only Exchange-approved devices are the PULSe workstation, the Floor Broker Workstation (‘‘FBW’’) and FBW 2, which CBOE makes available to floor brokers. Pursuant to Rule 6.53(y), Trading Permit Holders representing tied to stock orders on the Exchange must apply the marking at the time of systemization of the order. VerDate Sep<11>2014 19:27 Jul 10, 2015 Jkt 235001 requirement with respect to those orders. CBOE delayed the implementation of Rule 15.2A for 12 to 18 months from the date of the filing that proposed that delay.12 CBOE proposes to similarly delay implementation of the tied to stock marking requirement in Rule 6.53(y) with respect to orders submitted for electronic processing for 6 to 18 months from the date of this filing.13 This will provide Trading Permit Holders with sufficient time to complete their systems development work to comply with the tied to stock marking requirement. During the delay, as part of CBOE’s evaluation it is conducting in connection with the delay of the implementation of the reporting requirement, CBOE will evaluate the number of orders represented in open outcry that are marked as tied to stock, which will permit CBOE to evaluate the number of reports it can expect to receive with respect to those orders and the potential impact of the reports on CBOE’s surveillances. The Exchange will issue a regulatory circular announcing the new implementation date for the reporting requirement as least 180 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.14 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 15 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, 12 See supra note 10. In that filing, CBOE indicated that it planned 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. During the 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) and determine whether this additional information is necessary in order to enhance its ability to effectively monitor and conduct surveillance of the CBOE markets with respect to tied to stock orders whose execution information is not electronically captured by the audit trail. 13 The Exchange may still implement the reporting requirement and the marking requirement for electronic orders at separate times. 14 15 U.S. C. 78f(b). 15 15 U.S. C. 78f(b)(5). PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 40117 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) 16 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 6.53(y) with respect to orders submitted to the Exchange for electronic processing will provide Trading Permit Holders with sufficient time to perform systems development work that will allow them to comply with the marking requirement for those orders, which will prevent fraudulent and manipulative acts and practices and promote just and equitable principles of trade. Additionally, the proposed delay will provide the Exchange with sufficient time to evaluate the information obtained through the marking requirement with respect to orders submitted for nonelectronic processing, as part of its ongoing evaluation of the related reporting requirement format. The Exchange believes the ability to tie executed non-option legs to the applicable option legs that were separately submitted for execution will assist in the Exchange’s efforts to prevent fraudulent and manipulative acts and practices with respect to tied to stock orders, but only if Trading Permit Holders are able to apply the marking in accordance with the rule. 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 marking requirement with respect to certain orders. The implementation on July 1, 2015 of the marking requirement with respect to orders sent to the Exchange for nonelectronic processing is consistent with previous rule filings and was announced to Trading Permit Holders in regulatory circulars. 16 Id. E:\FR\FM\13JYN1.SGM 13JYN1 40118 Federal Register / Vol. 80, No. 133 / Monday, July 13, 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: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) 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)(ii) of the Act 17 and subparagraph (f)(6) of Rule 19b–4 thereunder.18 A proposed rule change filed under Rule 19b–4(f)(6) 19 normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b–4(f)(6)(iii) 20 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requested that the Commission waive the 30-day operative delay. The Exchange noted this proposed rule change merely further delays implementation of a marking requirement with respect to certain orders. The Exchange also previously indicated it would implement the marking requirement by July 6, 2015, which date is less than 30 days from the date of the filing. According to the Exchange, Trading Permit Holders have provided feedback that they will not be in a position to comply the marking requirement for electronic orders by that date. The Exchange believes the Commission should waive the operative delay to ensure that the Exchange will not be required to implement the marking requirement with respect to those orders prior to Trading Permit Holders having compliant systems ready to apply the marking. The Commission believes that waiving the 30-day operative delay is consistent with the protection of asabaliauskas on DSK5VPTVN1PROD with NOTICES 17 15 U.S. C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires the Exchange to give the Commission written notice of the Exchange’s 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. The Exchange has met this requirement. 19 17 CFR 240.19b–4(f)(6). 20 17 CFR 240.19b–4(f)(6)(iii). 18 17 VerDate Sep<11>2014 19:27 Jul 10, 2015 Jkt 235001 investors and the public interest. Delaying the July 1, 2015 implementation date will allow more time for the Exchange and Trading Permit Holders to work together to ensure that Trading Permit Holder have compliant systems. For this reason, the Commission designates the proposed rule change to be operative on July 1, 2015.21 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: • 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–2015–067 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–2015–067. 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 21 For purposes only of waiving the operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S. C. 78c(f). Frm 00127 Fmt 4703 Sfmt 4703 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Brent J. Fields, Secretary. [FR Doc. 2015–16980 Filed 7–10–15; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE Electronic Comments PO 00000 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– 2015–067 and should be submitted on or before August 3, 2015. [Public Notice: 9186] Overseas Security Advisory Council (OSAC) Meeting Notice; Closed Meeting The Department of State announces a meeting of the U.S. State Department— Overseas Security Advisory Council on August 25–26, 2015. Pursuant to section 10(d) of the Federal Advisory Committee Act (5 U.S.C. Appendix), 5 U.S.C. 552b(c)(4), and 5 U.S.C. 552b(c)(7)(E), it has been determined that the meeting will be closed to the public. The meeting will focus on an examination of corporate security policies and procedures and will involve extensive discussion of trade secrets and proprietary commercial information that is privileged and confidential, and will discuss law enforcement investigative techniques and procedures. The agenda will include updated committee reports, a strategic planning session, and other matters relating to private sector security policies and protective programs and the protection of U.S. business information overseas. For more information, contact Marsha Thurman, Overseas Security Advisory Council, U.S. Department of State, Washington, DC 20522–2008, phone: 571–345–2214. 22 17 E:\FR\FM\13JYN1.SGM CFR 200.30–3(a)(12). 13JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 133 (Monday, July 13, 2015)]
[Notices]
[Pages 40116-40118]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16980]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75378; File No. SR-CBOE-2015-067]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change to Delay Implementation of Tied to Stock Marking
Requirement for Certain Orders

July 7, 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 July 1, 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 and II 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 Substance
of the Proposed Rule Change

The Exchange proposes to delay the implementation of the marking
requirement set forth in Rule 6.53(y) with respect to certain orders.
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 Securities and Exchange Commission (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 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.
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\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

[[Page 40117]]

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\ On May 20, 2015, CBOE submitted a rule filing to
further delay the implementation of the reporting requirement set forth
in Rule 15.2A in order to evaluate the format of the reports in light
of its entry into a Regulatory Services Agreement with the Financial
Industry Regulatory Authority, Inc. (``FINRA'').\10\ In that filing,
CBOE announced its intention to proceed with the implementation of the
marking requirement set forth in Rule 6.53(y) on July 1, 2015.
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\8\ Securities Exchange Act Release No. 34-74067 (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).
\10\ Securities Exchange Act Release No. 34-75029 (May 21,
2015), 80 FR 30506 (May 28, 2015) (SR-CBOE-2015-051) (notice of
immediate effectiveness of rule filing).
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The Exchange believes it is appropriate to implement on a limited
basis the marking requirement on July 1, 2015 with respect to orders
sent to the Exchange for nonelectronic processing (i.e., orders
received and systematized by floor brokers handling orders on the CBOE
trading floor), but proposes to delay the implementation of the marking
requirement with respect to all other orders (i.e., orders submitted to
the Exchange for electronic processing). While the Exchange continues
to believe that there has been sufficient notice, training and
circulars provided to Trading Permit Holders on the marking requirement
with respect to electronic orders, based on recent feedback from
Trading Permit Holders regarding their development efforts related to
the marking requirement, CBOE believes it is appropriate to provide
Trading Permit Holders with additional time to complete their necessary
systems development work to comply with this new marking requirement.
However, since CBOE has completed development work to allow floor
brokers to mark orders as tied to stock on devices approved by the
Exchange that may be used on the trading floor for the systemization of
orders represented in open outcry,\11\ CBOE believes it is appropriate
to move forward with implementing the tied to stock marking requirement
with respect to those orders.
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\11\ Currently, the only Exchange-approved devices are the PULSe
workstation, the Floor Broker Workstation (``FBW'') and FBW 2, which
CBOE makes available to floor brokers. Pursuant to Rule 6.53(y),
Trading Permit Holders representing tied to stock orders on the
Exchange must apply the marking at the time of systemization of the
order.
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CBOE delayed the implementation of Rule 15.2A for 12 to 18 months
from the date of the filing that proposed that delay.\12\ CBOE proposes
to similarly delay implementation of the tied to stock marking
requirement in Rule 6.53(y) with respect to orders submitted for
electronic processing for 6 to 18 months from the date of this
filing.\13\ This will provide Trading Permit Holders with sufficient
time to complete their systems development work to comply with the tied
to stock marking requirement. During the delay, as part of CBOE's
evaluation it is conducting in connection with the delay of the
implementation of the reporting requirement, CBOE will evaluate the
number of orders represented in open outcry that are marked as tied to
stock, which will permit CBOE to evaluate the number of reports it can
expect to receive with respect to those orders and the potential impact
of the reports on CBOE's surveillances. The Exchange will issue a
regulatory circular announcing the new implementation date for the
reporting requirement as least 180 days prior to that date.
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\12\ See supra note 10. In that filing, CBOE indicated that it
planned 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. During the 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) and determine whether this additional information is
necessary in order to enhance its ability to effectively monitor and
conduct surveillance of the CBOE markets with respect to tied to
stock orders whose execution information is not electronically
captured by the audit trail.
\13\ The Exchange may still implement the reporting requirement
and the marking requirement for electronic orders at separate times.
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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.\14\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \15\ 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) \16\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\14\ 15 U.S. C. 78f(b).
\15\ 15 U.S. C. 78f(b)(5).
\16\ Id.
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In particular, the Exchange believes the delayed implementation of
Rule 6.53(y) with respect to orders submitted to the Exchange for
electronic processing will provide Trading Permit Holders with
sufficient time to perform systems development work that will allow
them to comply with the marking requirement for those orders, which
will prevent fraudulent and manipulative acts and practices and promote
just and equitable principles of trade. Additionally, the proposed
delay will provide the Exchange with sufficient time to evaluate the
information obtained through the marking requirement with respect to
orders submitted for nonelectronic processing, as part of its ongoing
evaluation of the related reporting requirement format. The Exchange
believes the ability to tie executed non-option legs to the applicable
option legs that were separately submitted for execution will assist in
the Exchange's efforts to prevent fraudulent and manipulative acts and
practices with respect to tied to stock orders, but only if Trading
Permit Holders are able to apply the marking in accordance with the
rule.

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 marking requirement with respect to
certain orders. The implementation on July 1, 2015 of the marking
requirement with respect to orders sent to the Exchange for
nonelectronic processing is consistent with previous rule filings and
was announced to Trading Permit Holders in regulatory circulars.

[[Page 40118]]

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: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
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)(ii) of the Act \17\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\18\
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\17\ 15 U.S. C. 78s(b)(3)(A)(ii).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange to give the Commission written notice of the
Exchange's 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. The
Exchange has met this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \19\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii) \20\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange requested
that the Commission waive the 30-day operative delay. The Exchange
noted this proposed rule change merely further delays implementation of
a marking requirement with respect to certain orders. The Exchange also
previously indicated it would implement the marking requirement by July
6, 2015, which date is less than 30 days from the date of the filing.
According to the Exchange, Trading Permit Holders have provided
feedback that they will not be in a position to comply the marking
requirement for electronic orders by that date. The Exchange believes
the Commission should waive the operative delay to ensure that the
Exchange will not be required to implement the marking requirement with
respect to those orders prior to Trading Permit Holders having
compliant systems ready to apply the marking.
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\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
Delaying the July 1, 2015 implementation date will allow more time for
the Exchange and Trading Permit Holders to work together to ensure that
Trading Permit Holder have compliant systems. For this reason, the
Commission designates the proposed rule change to be operative on July
1, 2015.\21\
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\21\ For purposes only of waiving the operative delay, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S. C. 78c(f).
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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.

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-2015-067 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-2015-067. 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-2015-067 and should be
submitted on or before August 3, 2015.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-16980 Filed 7-10-15; 8:45 am]
BILLING CODE 8011-01-P

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