Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to AIM and FLEX AIM, 43548-43550 [2015-17889]

Download as PDF 43548 Federal Register / Vol. 80, No. 140 / Wednesday, July 22, 2015 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–75476; File No. SR–CBOE– 2015–068] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to AIM and FLEX AIM July 16, 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 14, 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule changes propose to amend the Exchange’s rules related to its Automated Improvement Mechanism (‘‘AIM’’) and its Automated Improvement Mechanism (‘‘AIM’’) for Flexible Exchange Options (‘‘FLEX Options’’).5 The text of the proposed rule change is provided below. (additions are italicized; deletions are [bracketed]) * * * * * Chicago Board Options Exchange, Incorporated Rules * * * * * Rule 6.74A Automated Improvement Mechanism (‘‘AIM’’) Notwithstanding the provisions of Rule 6.74, a Trading Permit Holder that represents agency orders may electronically execute an order it 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 FLEX Options provide investors with the ability to customize basic option features including size, expiration date, exercise style, and certain exercise prices. The rules governing the trading of FLEX Options on the FLEX Request for Quote (RFQ) System platform are contained in Chapter XXIVA. The rules governing the trading of FLEX Options on the FLEX Hybrid Trading System platform are contained in Chapter XXIVB. tkelley on DSK3SPTVN1PROD with NOTICES 2 17 VerDate Sep<11>2014 19:59 Jul 21, 2015 Jkt 235001 represents as agent (‘‘Agency Order’’) against principal interest or against a solicited order provided it submits the Agency Order for electronic execution into the AIM auction (‘‘Auction’’) pursuant to this Rule. (a)–(b) No change. . . . Interpretations and Policies: .01–.02 No change. .03 Initially, and for at least a Pilot Period expiring on July 18, 201[5]6, there will be no minimum size requirement for orders to be eligible for the Auction. During this Pilot Period, the Exchange will submit certain data, periodically as required by the Commission, to provide supporting evidence that, among other things, there is meaningful competition for all size orders and that there is an active and liquid market functioning on the Exchange outside of the Auction mechanism. Any raw data which is submitted to the Commission will be provided on a confidential basis. .04–.05 No change. .06 Subparagraph (b)(2)(E) of this rule will be effective for a Pilot Period until July 18, 201[5]6. During the Pilot Period, the Exchange will submit certain data, periodically as required by the Commission, relating to the frequency with which early termination of the Auction occurs pursuant to this provision as well as any other provision, and also the frequency with which early termination pursuant to this provision results in favorable pricing for the Agency Order. Any raw data which is submitted to the Commission will be provided on a confidential basis. .07–.08 No change. * * * * * Rule 24B.5A. FLEX Automated Improvement Mechanism Notwithstanding the provisions of Rule 24B.5, a FLEX Trader that represents agency orders may electronically execute an order it represents as agent (‘‘Agency Order’’) against principal interest and/or against solicited orders provided it submits the Agency Order for execution into the automated improvement mechanism auction (‘‘AIM Action’’) pursuant to this Rule. (a)–(b) No change. This rule supersedes Exchange Rule 6.74A. . . . Interpretations and Policies: .01–.02 No change. .03 Initially, and for at least a Pilot Period expiring on July 18, 201[5]6, there will be no minimum size requirement for orders to be eligible for the AIM Auction. During this Pilot Period, the Exchange will submit certain data, periodically as required by the PO 00000 Frm 00163 Fmt 4703 Sfmt 4703 Commission, to provide supporting evidence that, among other things, there is meaningful competition for all size orders and that there is an active and liquid market functioning on the Exchange outside of the AIM Auction. Any raw data which is submitted to the Commission will be provided on a confidential basis. .04–.07 No change. * * * * * The text of the proposed rule change is also 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 In February 2006, CBOE obtained approval from the Securities and Exchange Commission (the ‘‘Commission’’) to adopt the AIM auction process.6 AIM exposes certain orders electronically to an auction process to provide these orders with the opportunity to receive an execution at an improved price. The AIM auction is available only for orders that a Trading Permit Holder represents as agent (‘‘Agency Order’’) and for which a second order of the same size as the Agency Order (and on the opposite side of the market) is also submitted (effectively stopping the Agency Order at a given price). The Commission approved two components of AIM on a pilot basis: (1) That there is no minimum size requirement for orders to be eligible for the auction; and (2) that the auction will conclude prematurely anytime there is a quote lock on the Exchange pursuant to 6 See Securities Exchange Release No. 53222 (February 3, 2006), 71 FR 7089 (February 10, 2006) (SR–CBOE–2005–60). E:\FR\FM\22JYN1.SGM 22JYN1 Federal Register / Vol. 80, No. 140 / Wednesday, July 22, 2015 / Notices tkelley on DSK3SPTVN1PROD with NOTICES Rule 6.45A(d).7 In connection with the pilot programs, the Exchange has submitted to the Commission reports providing detailed AIM auction and order execution data. The Exchange will provide the Commission six months of additional AIM auction and order execution data for the period of January 1, 2015 to June 30, 2015 no later than January 18, 2016. The raw data provided will be submitted on a confidential basis. In addition, the Exchange will submit tables summarizing AIM price improvement statistics for each month of the January 1, 2015 to June 30, 2015 period. The summary tables will be made available to the public. Finally, the Exchange will submit data, for the period of January 1, 2015 to June 30, 2015, to the Commission with respect to situations in which the AIM is terminated prematurely and an analysis of the impact of unrelated orders on early auction terminations. The impact analysis will be made available to the public. Nine one-year extensions to the pilot programs have previously become effective.8 The proposed rule change merely extends the duration of the pilot programs until July 18, 2016. Extending the pilots for an additional year will allow the Commission more time to consider the impact of the pilot programs on AIM order executions. Additionally, in March 2012, CBOE obtained approval from the Commission to adopt the AIM auction process for FLEX Options.9 AIM for FLEX Options exposes certain FLEX Options orders electronically to an auction process to provide these orders with the opportunity to receive an execution at an improved price. The FLEX AIM auction is available only for Agency Orders and for which a second order of 7 A quote lock occurs when a CBOE MarketMaker’s quote interacts with the quote of another CBOE Market-Maker (i.e. when internal quotes lock). 8 See Securities Exchange Act Release Nos. 54147 (July 14, 2006), 71 FR 41487 (July 21, 2006) (SR– CBOE–2006–64); 56094 (July 18, 2007), 72 FR 40910 (July 25, 2007) (SR–CBOE–2007–80); 58196 (July 18, 2008), 73 FR 43803 (July 28, 2008) (SR– CBOE–2008–76) (in this filing, the Exchange agreed to provide to the Commission additional information relating to the AIM auctions each month in order to aid the Commission in its evaluation of the pilot program, which the Exchange will continue to do); 60338 (July 17, 2009), 74 FR 36803 (July 24, 2009) (SR–CBOE– 2009–051); 62522 (July 16, 2010), 75 FR 43596 (July 26, 2010) (SR–CBOE–2010–067); 64930 (July 20, 2011), 76 FR 44636 (July 26, 2011) (SR–CBOE– 2011–066); 67302 (June 28, 2012), 77 FR 39779 (July 5, 2012) (SR–CBOE–2012–061); 69867 (June 27, 2013), 78 FR 40230 (July 3, 2013) (SR–CBOE–2013– 066); and 72570 (July 9, 2014), 79 FR 41337 (July 15, 2014) (SR–CBOE–2014–054). 9 See Securities Exchange Release No. 66702 (March 30, 2012), 77 FR 20675 (April 5, 2012) (SR– CBOE–2011–123). VerDate Sep<11>2014 19:59 Jul 21, 2015 Jkt 235001 the same size as the Agency Order (and on the opposite side of the market) is also submitted (effectively stopping the Agency Order at a given price). The Commission approved on a pilot basis the component of AIM for FLEX Options that there is no minimum size requirement for orders to be eligible for the auction.10 In connection with the pilot program, the Exchange has submitted to the Commission reports providing detailed FLEX AIM auction and order execution data. The Exchange will provide the Commission six months of additional FLEX AIM auction and order execution data for the period of January 1, 2015 to June 30, 2015 no later than January 18, 2016. The raw data provided will be submitted on a confidential basis. In addition, the Exchange will submit tables summarizing FLEX AIM price improvement statistics for each month of the January 1, 2015 to June 30, 2015 period. The summary tables will be made available to the public. Three oneyear extensions to the pilot program have previously become effective.11 The proposed rule change merely extends the duration of the pilot program until July 18, 2016. Extending the pilot for an additional year will allow the Commission more time to consider the impact of the pilot program on AIM order executions for FLEX Options. 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.12 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 13 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 10 The pilot for the FLEX AIM auction process was modeled after the pilot for non-FLEX Options described above, and included an initial expiration date of July 18, 2012 so that the FLEX pilot would coincide with the existing non-FLEX pilot. 11 See Securities Exchange Act Release No. 67302 (June 28, 2012), 77 FR 39779 (July 5, 2012) (SR– CBOE–2012–061); 69938 (July 5, 2013), 78 FR 41481 (July 10, 2013) (SR–CBOE–2013–069); and 72570 (July 9, 2014), 79 FR 41337 (July 15, 2014) (SR–CBOE–2014–054). 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). PO 00000 Frm 00164 Fmt 4703 Sfmt 4703 43549 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) 14 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. In particular, the proposed rule change protects investors and the public interest by allowing for an extension of the AIM and FLEX AIM pilot programs, and thus allowing additional time for the Commission to evaluate the pilot programs. The pilot programs will continue to allow (1) smaller non-FLEX option and FLEX Option orders to receive the opportunity for price improvement pursuant to the AIM auction, and (2) with respect to nonFLEX options, Agency Orders in AIM auctions that are concluded early because of quote lock on the Exchange to receive the benefit of the lock price. The additional data provided will help the Commission determine if there is evidence of meaningful competition for all size orders, significant price improvement for orders going through the AIM and FLEX AIM and an active and liquid market functioning on the Exchange outside of the AIM and FLEX AIM auctions. B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule changes will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe the proposed rule changes impose any burden on intramarket competition because it applies to all Trading Permit Holders. All Trading Permit Holders that submit orders into an AIM or FLEX AIM auction are still subject to the same requirements. In addition, the Exchange does not believe the proposed rule changes will impose any burden on intermarket competition, as they merely extend the duration of an existing pilot programs, which are available to all market participants through Trading Permit Holders. AIM and FLEX AIM will continue to function in the same manner as they currently function for an extended period of time. 14 Id. E:\FR\FM\22JYN1.SGM 22JYN1 43550 Federal Register / Vol. 80, No. 140 / Wednesday, July 22, 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) of the Act 15 and subparagraph (f)(6) of Rule 19b–4 thereunder.16 A proposed rule change filed under Rule 19b–4(f)(6) 17 normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b–4(f)(6)(iii),18 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 that waiver of the 30-day operative delay will allow the Exchange to extend the pilot programs prior to their expiration on July 18, 2015. In addition, the Exchange believes that waiver of the operative delay is also consistent with the protection of investors and the public interest because it will allow for the least amount of market disruption, as the pilot programs will continue as they currently do, maintaining the status quo. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest, as it will allow the pilot programs to continue uninterrupted, thereby avoiding any potential investor confusion that could result from a temporary interruption in the pilot programs. Therefore, the Commission 15 15 U.S.C. 78s(b)(3)(A). 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 satisfied this requirement. 17 17 CFR 240.19b–4(f)(6). 18 17 CFR 240.19b–4(f)(6)(iii). tkelley on DSK3SPTVN1PROD with NOTICES 16 17 VerDate Sep<11>2014 19:59 Jul 21, 2015 Jkt 235001 designates the proposed rule change to be operative on July 18, 2015.19 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: 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– 2015–068 and should be submitted on or before August 12, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–17889 Filed 7–21–15; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF TRANSPORTATION Electronic Comments Federal Aviation Administration • 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–2015–068 on the subject line. Notice of Intent To Rule on the Change of Use of Aeronautical Property at Coastal Carolina Regional Airport, New Bern, NC 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–2015–068. 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 19 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). PO 00000 Frm 00165 Fmt 4703 Sfmt 4703 Federal Aviation Administration (FAA), DOT. ACTION: Request for public comment. AGENCY: The Federal Aviation Administration is requesting public comment on a request by the Coastal Carolina Regional Airport to change the use of a portion of airport property at the Coastal Carolina Regional Airport. The request consists of approximately 11.7 acres for use as a future nonaeronautical development area. This action is taken under the provisions of Section 125 of the Wendell H. Ford Aviation Investment Reform Act for the 21st Century (AIR 21). DATES: Comments must be received on or before August 21, 2015. ADDRESSES: Documents are available for review at the Coastal Carolina Regional Airport, 200 Terminal Drive, New Bern, NC 28564; and the FAA Memphis Airports District Office, 2600 Thousand Oaks Boulevard, Suite 2250, Memphis, TN 38118–2482. Written comments on the Sponsor’s request must be delivered or mailed to: Mr. Phillip J. Braden, Manager, Memphis Airports District Office, 2600 Thousand Oaks Boulevard, Suite 2250, Memphis, TN 38118–2482. In addition, a copy of any comments submitted to the FAA must be mailed or delivered to Mr. Tom Braaten, Airport Director, Coastal Carolina Regional Airport Authority, 200 Terminal Drive, P.O. Box 3258, New Bern, NC 28564. FOR FURTHER INFORMATION CONTACT: Mr. Michael L. Thompson, Program SUMMARY: 20 17 E:\FR\FM\22JYN1.SGM CFR 200.30–3(a)(12). 22JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 140 (Wednesday, July 22, 2015)]
[Notices]
[Pages 43548-43550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17889]

[[Page 43548]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75476; File No. SR-CBOE-2015-068]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to AIM and FLEX AIM

July 16, 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 14, 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 proposed rule changes propose to amend the Exchange's rules
related to its Automated Improvement Mechanism (``AIM'') and its
Automated Improvement Mechanism (``AIM'') for Flexible Exchange Options
(``FLEX Options'').\5\ The text of the proposed rule change is provided
below.
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\5\ FLEX Options provide investors with the ability to customize
basic option features including size, expiration date, exercise
style, and certain exercise prices. The rules governing the trading
of FLEX Options on the FLEX Request for Quote (RFQ) System platform
are contained in Chapter XXIVA. The rules governing the trading of
FLEX Options on the FLEX Hybrid Trading System platform are
contained in Chapter XXIVB.
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(additions are italicized; deletions are [bracketed])
* * * * *
Chicago Board Options Exchange, Incorporated Rules
* * * * *
Rule 6.74A Automated Improvement Mechanism (``AIM'')
Notwithstanding the provisions of Rule 6.74, a Trading Permit
Holder that represents agency orders may electronically execute an
order it represents as agent (``Agency Order'') against principal
interest or against a solicited order provided it submits the Agency
Order for electronic execution into the AIM auction (``Auction'')
pursuant to this Rule.
(a)-(b) No change.
. . . Interpretations and Policies:
.01-.02 No change.
.03 Initially, and for at least a Pilot Period expiring on July 18,
201[5]6, there will be no minimum size requirement for orders to be
eligible for the Auction. During this Pilot Period, the Exchange will
submit certain data, periodically as required by the Commission, to
provide supporting evidence that, among other things, there is
meaningful competition for all size orders and that there is an active
and liquid market functioning on the Exchange outside of the Auction
mechanism. Any raw data which is submitted to the Commission will be
provided on a confidential basis.
.04-.05 No change.
.06 Subparagraph (b)(2)(E) of this rule will be effective for a
Pilot Period until July 18, 201[5]6. During the Pilot Period, the
Exchange will submit certain data, periodically as required by the
Commission, relating to the frequency with which early termination of
the Auction occurs pursuant to this provision as well as any other
provision, and also the frequency with which early termination pursuant
to this provision results in favorable pricing for the Agency Order.
Any raw data which is submitted to the Commission will be provided on a
confidential basis.
.07-.08 No change.
* * * * *
Rule 24B.5A. FLEX Automated Improvement Mechanism
Notwithstanding the provisions of Rule 24B.5, a FLEX Trader that
represents agency orders may electronically execute an order it
represents as agent (``Agency Order'') against principal interest and/
or against solicited orders provided it submits the Agency Order for
execution into the automated improvement mechanism auction (``AIM
Action'') pursuant to this Rule.
(a)-(b) No change.
This rule supersedes Exchange Rule 6.74A.
. . . Interpretations and Policies:
.01-.02 No change.
.03 Initially, and for at least a Pilot Period expiring on July 18,
201[5]6, there will be no minimum size requirement for orders to be
eligible for the AIM Auction. During this Pilot Period, the Exchange
will submit certain data, periodically as required by the Commission,
to provide supporting evidence that, among other things, there is
meaningful competition for all size orders and that there is an active
and liquid market functioning on the Exchange outside of the AIM
Auction. Any raw data which is submitted to the Commission will be
provided on a confidential basis.
.04-.07 No change.
* * * * *
The text of the proposed rule change is also 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
In February 2006, CBOE obtained approval from the Securities and
Exchange Commission (the ``Commission'') to adopt the AIM auction
process.\6\ AIM exposes certain orders electronically to an auction
process to provide these orders with the opportunity to receive an
execution at an improved price. The AIM auction is available only for
orders that a Trading Permit Holder represents as agent (``Agency
Order'') and for which a second order of the same size as the Agency
Order (and on the opposite side of the market) is also submitted
(effectively stopping the Agency Order at a given price).
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\6\ See Securities Exchange Release No. 53222 (February 3,
2006), 71 FR 7089 (February 10, 2006) (SR-CBOE-2005-60).
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The Commission approved two components of AIM on a pilot basis: (1)
That there is no minimum size requirement for orders to be eligible for
the auction; and (2) that the auction will conclude prematurely anytime
there is a quote lock on the Exchange pursuant to

[[Page 43549]]

Rule 6.45A(d).\7\ In connection with the pilot programs, the Exchange
has submitted to the Commission reports providing detailed AIM auction
and order execution data. The Exchange will provide the Commission six
months of additional AIM auction and order execution data for the
period of January 1, 2015 to June 30, 2015 no later than January 18,
2016. The raw data provided will be submitted on a confidential basis.
In addition, the Exchange will submit tables summarizing AIM price
improvement statistics for each month of the January 1, 2015 to June
30, 2015 period. The summary tables will be made available to the
public. Finally, the Exchange will submit data, for the period of
January 1, 2015 to June 30, 2015, to the Commission with respect to
situations in which the AIM is terminated prematurely and an analysis
of the impact of unrelated orders on early auction terminations. The
impact analysis will be made available to the public.
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\7\ A quote lock occurs when a CBOE Market-Maker's quote
interacts with the quote of another CBOE Market-Maker (i.e. when
internal quotes lock).
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Nine one-year extensions to the pilot programs have previously
become effective.\8\ The proposed rule change merely extends the
duration of the pilot programs until July 18, 2016. Extending the
pilots for an additional year will allow the Commission more time to
consider the impact of the pilot programs on AIM order executions.
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\8\ See Securities Exchange Act Release Nos. 54147 (July 14,
2006), 71 FR 41487 (July 21, 2006) (SR-CBOE-2006-64); 56094 (July
18, 2007), 72 FR 40910 (July 25, 2007) (SR-CBOE-2007-80); 58196
(July 18, 2008), 73 FR 43803 (July 28, 2008) (SR-CBOE-2008-76) (in
this filing, the Exchange agreed to provide to the Commission
additional information relating to the AIM auctions each month in
order to aid the Commission in its evaluation of the pilot program,
which the Exchange will continue to do); 60338 (July 17, 2009), 74
FR 36803 (July 24, 2009) (SR-CBOE-2009-051); 62522 (July 16, 2010),
75 FR 43596 (July 26, 2010) (SR-CBOE-2010-067); 64930 (July 20,
2011), 76 FR 44636 (July 26, 2011) (SR-CBOE-2011-066); 67302 (June
28, 2012), 77 FR 39779 (July 5, 2012) (SR-CBOE-2012-061); 69867
(June 27, 2013), 78 FR 40230 (July 3, 2013) (SR-CBOE-2013-066); and
72570 (July 9, 2014), 79 FR 41337 (July 15, 2014) (SR-CBOE-2014-
054).
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Additionally, in March 2012, CBOE obtained approval from the
Commission to adopt the AIM auction process for FLEX Options.\9\ AIM
for FLEX Options exposes certain FLEX Options orders electronically to
an auction process to provide these orders with the opportunity to
receive an execution at an improved price. The FLEX AIM auction is
available only for Agency Orders and for which a second order of the
same size as the Agency Order (and on the opposite side of the market)
is also submitted (effectively stopping the Agency Order at a given
price).
---------------------------------------------------------------------------

\9\ See Securities Exchange Release No. 66702 (March 30, 2012),
77 FR 20675 (April 5, 2012) (SR-CBOE-2011-123).
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The Commission approved on a pilot basis the component of AIM for
FLEX Options that there is no minimum size requirement for orders to be
eligible for the auction.\10\ In connection with the pilot program, the
Exchange has submitted to the Commission reports providing detailed
FLEX AIM auction and order execution data. The Exchange will provide
the Commission six months of additional FLEX AIM auction and order
execution data for the period of January 1, 2015 to June 30, 2015 no
later than January 18, 2016. The raw data provided will be submitted on
a confidential basis. In addition, the Exchange will submit tables
summarizing FLEX AIM price improvement statistics for each month of the
January 1, 2015 to June 30, 2015 period. The summary tables will be
made available to the public. Three one-year extensions to the pilot
program have previously become effective.\11\ The proposed rule change
merely extends the duration of the pilot program until July 18, 2016.
Extending the pilot for an additional year will allow the Commission
more time to consider the impact of the pilot program on AIM order
executions for FLEX Options.
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\10\ The pilot for the FLEX AIM auction process was modeled
after the pilot for non-FLEX Options described above, and included
an initial expiration date of July 18, 2012 so that the FLEX pilot
would coincide with the existing non-FLEX pilot.
\11\ See Securities Exchange Act Release No. 67302 (June 28,
2012), 77 FR 39779 (July 5, 2012) (SR-CBOE-2012-061); 69938 (July 5,
2013), 78 FR 41481 (July 10, 2013) (SR-CBOE-2013-069); and 72570
(July 9, 2014), 79 FR 41337 (July 15, 2014) (SR-CBOE-2014-054).
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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.\12\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \13\ 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) \14\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ Id.
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In particular, the proposed rule change protects investors and the
public interest by allowing for an extension of the AIM and FLEX AIM
pilot programs, and thus allowing additional time for the Commission to
evaluate the pilot programs. The pilot programs will continue to allow
(1) smaller non-FLEX option and FLEX Option orders to receive the
opportunity for price improvement pursuant to the AIM auction, and (2)
with respect to non-FLEX options, Agency Orders in AIM auctions that
are concluded early because of quote lock on the Exchange to receive
the benefit of the lock price. The additional data provided will help
the Commission determine if there is evidence of meaningful competition
for all size orders, significant price improvement for orders going
through the AIM and FLEX AIM and an active and liquid market
functioning on the Exchange outside of the AIM and FLEX AIM auctions.

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

CBOE does not believe that the proposed rule changes will impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange does not believe
the proposed rule changes impose any burden on intramarket competition
because it applies to all Trading Permit Holders. All Trading Permit
Holders that submit orders into an AIM or FLEX AIM auction are still
subject to the same requirements. In addition, the Exchange does not
believe the proposed rule changes will impose any burden on intermarket
competition, as they merely extend the duration of an existing pilot
programs, which are available to all market participants through
Trading Permit Holders. AIM and FLEX AIM will continue to function in
the same manner as they currently function for an extended period of
time.

[[Page 43550]]

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) of the Act \15\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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 satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\18\ 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 that waiver of the 30-day operative delay will allow the Exchange
to extend the pilot programs prior to their expiration on July 18,
2015. In addition, the Exchange believes that waiver of the operative
delay is also consistent with the protection of investors and the
public interest because it will allow for the least amount of market
disruption, as the pilot programs will continue as they currently do,
maintaining the status quo.
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 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, as
it will allow the pilot programs to continue uninterrupted, thereby
avoiding any potential investor confusion that could result from a
temporary interruption in the pilot programs. Therefore, the Commission
designates the proposed rule change to be operative on July 18,
2015.\19\
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\19\ 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-2015-068 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-2015-068. 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-2015-068 and should be
submitted on or before August 12, 2015.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-17889 Filed 7-21-15; 8:45 am]
BILLING CODE 8011-01-P

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