Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Amending Rule 6.45 Relating to Disaster Recovery, 68343-68347 [2015-28023]

Download as PDF Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices of Section 6(b) of the Act.4 In particular, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 5 requirements that the rules of an exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and practices, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and to perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes that the change in terminology will protect investors and the public interest by eliminating potential confusion that may exist because of unnecessary differences in terminology between Nasdaq rules and the marketplace. As noted, the Exchange believes that the changes proposed are noncontroversial and technical in nature. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange 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 Exchange believes that the proposed rule change will help align rule terminology with the terminology utilized in the marketplace for these new products and be used uniformly. asabaliauskas on DSK5VPTVN1PROD with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change is filed for immediate effectiveness pursuant to Section 19(b)(3)(A) 6 of the Act and Rule 19b–4(f)(6) thereunder.7 The Exchange asserts that the 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 after its filing date, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. A proposed rule change filed under Rule 19b–4(f)(6) normally does not 4 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 6 15 U.S.C. 78s(b)(3)(A). 7 17 CFR 240.19b–4(f)(6). 5 15 VerDate Sep<11>2014 17:00 Nov 03, 2015 Jkt 238001 become operative prior to 30 days after the date of filing. Rule 19b–4(f)(6)(iii), however, permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the 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– NASDAQ–2015–121 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–NASDAQ–2015–121. 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 such PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 68343 filing also will be available for inspection and copying at the principal offices of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– NASDAQ–2015–121, and should be submitted on or before November 25, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–28021 Filed 11–3–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76300; File No. SR–C2– 2015–030] Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Amending Rule 6.45 Relating to Disaster Recovery October 29, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on October 28, 2015, C2 Options Exchange, Incorporated (‘‘Exchange’’ or ‘‘C2’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 6.45 relating to disaster recovery. The text of the proposed rule change is available on the Exchange’s Web site (https://www.cboe.com/AboutCBOE/ CBOELegalRegulatoryHome.aspx), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 8 1 15 E:\FR\FM\04NON1.SGM 04NON1 68344 Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices 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 C2 proposes to amend Rule 6.45 relating to disaster recovery. Specifically, C2 proposes to update Rule 6.45 to further describe C2’s back-up systems, the circumstances under which they may be used and the testing that C2 may conduct to ensure the availability, functionality and performance of such systems. Additionally, C2 proposes certain updates to Rule 6.45 in response to new disaster recovery regulations and business resumption standards recently adopted by the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) as promulgated in Regulation Systems Compliance and Integrity (‘‘Regulation SCI’’) under the Securities Exchange Act of 1934 (the ‘‘Act’’).3 asabaliauskas on DSK5VPTVN1PROD with NOTICES Background C2 adopted Rule 6.45 in 2012 for the limited purpose of providing alternative means of operation in the event C2’s trading system became inoperable or otherwise unavailable for use due to a disaster or other unusual circumstance. In particular, Rule 6.45, as originally adopted, was intended to allow C2 to operate a Disaster Recovery Facility (‘‘DRF’’) to continue to trade exclusively-listed option classes until C2’s main trading system was again available.4 At that time, C2 intended to utilize hardware located in the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’) building in Chicago, IL for the purposes of operating the DRF. C2’s 3 See Securities Exchange Act Release No. 73639 (November 19, 2014), 79 FR 72252 (December 5, 2014) (Regulation Systems Compliance and Integrity) (File No. S7–01–13). 4 See Securities Exchange Act Release No. 67357 (July 5 2012), 77 FR 40928 (July 11, 2012) (SR–C2– 2012–011). VerDate Sep<11>2014 17:00 Nov 03, 2015 Jkt 238001 main trade engine is located on the east coast. In addition to adding greater detail to C2’s disaster recovery rules in Rule 6.45, C2 proposes to make updates to Rule 6.45 to harmonize its disaster recovery rules with the newly implemented disaster recovery-related regulatory imperatives of Regulation SCI. Regulation SCI supersedes and replaces the SEC’s voluntary Automation Review Policy (‘‘ARP’’), established by the Commission’s two policy statements each titled ‘‘Automated Systems of SelfRegulatory Organizations,’’ issued in 1989 and 1991, expanding existing practices and making them mandatory.5 As part of Regulation SCI, C2 is required to maintain back-up and recovery capabilities with sufficient resiliency and geographical diversity and that are reasonably designed to achieve next business-day resumption of trading and two-hour resumption of critical systems following a wide-scale disruption.6 C2 must also participate in at least annual testing of its business continuity and disaster recovery plans and, to that end, develop and adopt standards to designate which of its TPHs must participate in testing in order to reasonably ensure the maintenance of a fair and orderly market if C2’s disaster recovery plan must be activated.7 Proposed Rule Changes C2 now proposes to make changes to Rule 6.45 to allow for trading in all C2traded option classes on a back-up data center in the event the main trading system is unavailable. The proposed rule will no longer be limited to exclusively-listed options traded on C2. Furthermore, prior to the compliance date of Regulation SCI, C2 will have separate hardware designated for the C2 back-up data center (as opposed to using CBOE hardware). C2 proposes to make changes to Rule 6.45 to provide additional details regarding C2’s back-up trading systems and business continuity and disaster recovery plans activation and testing. As discussed above, C2 also seeks to update its disaster recovery rules to ensure consistency with Regulation SCI. Current Rule 6.45 is divided into four sections, (a) through (d). Rule 6.45(a) authorizes C2 to maintain a DRF to preserve C2’s ability to trade exclusively-listed options in the event C2’s primary data center becomes inoperable or otherwise unavailable for 5 See Securities Exchange Act Release No. 73639 (November 19, 2014), 79 FR at 72252 (December 5, 2014) (Regulation Systems Compliance and Integrity) (File No. S7–01–13). 6 17 CFR 242.1001(a)(2)(v). 7 Id. at § 242.1004. PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 use. Current Rule 6.45(b) describes the notice that must be given prior to commencing trading on back-up data center systems. Current Rule 6.45(c) describes the rules that would be in effect if C2 were to switch its trading operations to the DRF. Current Rule 6.45(d) prescribes that Trading Permit Holders (‘‘TPH’’) are required to take appropriate actions as instructed by C2 to accommodate C2’s ability to trade options via the DRF. C2 proposes to make rule changes to Rule 6.45 with detail added to each section of the current rule. Under proposed Rule 6.45(a) (General) C2 would adopt a general statement regarding the purpose of its disaster recovery rules, providing that C2 maintains business continuity and disaster recovery plans that may be effected in the interests of the continued operation of fair and orderly markets in the event of a systems failure, disaster, or other unusual circumstances that might threaten the ability to conduct business on C2. Proposed Rule 6.45(b) (Back-up Data Center) would incorporate parts of the current Rule 6.45(a) in that it includes a statement that C2 maintains a back-up data center (replacing what was formerly referenced as a ‘‘Disaster Recovery Facility’’ or ‘‘DRF’’) in order to preserve C2’s ability to conduct business in the event C2’s primary data center becomes inoperable or otherwise unavailable for use. Proposed Rule 6.45(b) no longer limits the C2 disaster recovery facility to preserving C2’s ability to trade exclusively-listed options. Currently C2 does not trade exclusively-listed options. The proposed Rule would now cover all option classes available for trading on C2. The proposed Rule notes that disaster recovery plans may be effected to ensure the continued operation of a fair and orderly market. C2 is removing the reference to the trading of exclusively-listed options in favor of ‘‘conduct business’’. This proposed rule change reflects the fact that C2 may be engaged in business activities other than just the trading of options, including, but not limited to, the dissemination of market data and certain regulatory functions. Proposed Rule 6.45(b) would add the scenario of a significant systems failure to the list of causes that may trigger an operational switch to C2’s back-up data center. The proposed addition of significant systems failures to the list of scenarios that may trigger an operational switch to C2’s back-up data center is intended to more accurately reflect the realities of electronic trading environments and contemporary threats E:\FR\FM\04NON1.SGM 04NON1 asabaliauskas on DSK5VPTVN1PROD with NOTICES Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices posed to the operation of fair and orderly markets. In addition to the reformulation of the description of C2’s back-up data center, proposed Rule 6.45(b) would also contain subsections similar to the notice, applicable rules, and Trading Permit Holder (‘‘TPH’’) preparations provisions currently contained in Rules 6.45(b) through (d). Proposed Rule 6.45(b)(i) (Back-up Data Center Functionality), would make clear the functional and performance standards that the back-up data center must be reasonably designed to achieve. Specifically, proposed Rule 6.45(b)(i) would provide that C2 maintains a backup data center that C2 has determined is reasonably designed to achieve prompt resumption of systems consistent with Regulation SCI. Proposed Rule 6.45(b)(i) would also provide that nothing in the provisions of proposed Rule 6.45(b) shall be interpreted to require C2 to develop or maintain a back-up data center designed to fully replicate the capacity, latency, and other features of the primary data center. This statement attempts to make clear that in order to preserve C2’s ability to conduct business in the event C2’s primary data center becomes inoperable or otherwise unavailable for use, C2 must maintain a back-up data center that is reasonably designed achieve resumption of systems consistent with Regulation SCI during a significant systems failure, disaster or other unusual circumstances, rather than replicate C2’s primary data center systems. C2 believes that the standards set forth in proposed Rule 6.45(b)(i) are reasonable to help ensure the maintenance of fair and orderly markets in the event of a significant systems failure, disaster or other unusual circumstances and are consistent with provisions in the release language of Regulation SCI.8 Proposed Rule 6.45(b)(ii) (Notice), would be similar to current Rule 6.45(b) and provide that prior to commencing trading on the back-up data center, C2 shall announce publicly the classes that will be available for trading. Proposed Rule 6.45(b)(iii) (Applicable Rules) would provide that in the event the primary data center becomes inoperable, trading will continue using the back-up data center and all trading rules will remain in effect. Consistent with current Rule 6.45(c), the proposed rule would also contain the provisions that all nontrading rules of C2 shall continue to apply. 8 See Securities Exchange Act Release No. 73639 (November 19, 2014), 79 FR at 72353 (December 5, 2014) (Regulation Systems Compliance and Integrity) (File No. S7–01–13). VerDate Sep<11>2014 17:00 Nov 03, 2015 Jkt 238001 Proposed Rule 6.45(b)(iv) (Trading Permit Holder Participation) regarding testing of C2’s back-up data center would contain provisions similar to current Rule 6.45(d) (Trading Permit Holder Preparations), but add subparagraphs to more clearly articulate C2’s authority to conduct testing of its back-up data center systems. Thus, similar to current Rule 6.45(d), proposed Rule 6.45(b)(iv) would provide that TPHs are required to take appropriate actions as instructed by C2 to accommodate C2’s ability to trade options via the back-up data center. C2 also proposes changing the rule text in proposed Rule 6.45(b)(iv) to provide that TPHs are required to take appropriate actions as instructed by C2 to accommodate C2’s ability to conduct business via the back-up data center, rather than solely to accommodate C2’s ability to trade options. Under the proposed rule change, the title of current Rule 6.45(d) (Trading Permit Holder Preparations) would also be changed in proposed Rule 6.45(b)(iv) (Trading Permit Holder Participation) to better describe the purpose of the rule provisions. Subsections (A) through (C) under proposed Rule 6.45(b)(iv) are designed to harmonize C2’s back-up data center testing rules with certain provisions of Regulation SCI. Under proposed Rule 6.45(b)(iv)(A) (Designated BCP/DR Participants), C2 shall designate those Trading Permit Holders that the C2 reasonably determines are, taken as a whole, the minimum necessary for the maintenance of fair and orderly markets in the event of the activation of the C2’s business continuity and disaster recovery plans (‘‘Designated BCP/DR Participants’’). Designated BCP/DR Participants will include: (1) All C2 Market-Makers and; (2) all C2 Trading Permit Holders connected to the C2 primary data center and transacting non-Participant customer business, unless a C2 Trading Permit Holder, other than a C2 Market-Maker, can demonstrate ready access to the back-up data center through another C2 Trading Permit Holder that is a designated participant. C2 has reasonably determined that a C2 TPH, other than a C2 Market-Maker, who can demonstrate ready-access to the back-up data center through another C2 Trading Permit Holder, that is a designated participant, is not necessary for the maintenance of fair and orderly markets in the event of the activation of the C2’s business continuity and disaster recovery plans. Criteria for designating BCP/DR participants will be announced prior via Regulatory Circular. Any changes to the PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 68345 standards by which a market participant might be determined to be a Designated BCP/DR Participant would be applied prospectively with reasonable advance notice as announced via Regulatory Circular. C2 would first announce the criteria by which market participants would be determined to be Designated BCP/DR Participants by November 1, 2015. C2 has attempted to model the provisions of proposed Rule 6.45(b)(iv)(A) based on provisions of Regulation SCI, which require C2 to establish standards for the designation of those members or participants that C2 reasonably determines are, taken as a whole, the minimum number of members or participants necessary for the maintenance of fair and orderly markets in the event of the activation of its business continuity and disaster recovery plans.9 Also consistent with Regulation SCI, proposed Rule 6.45(b)(iv)(B) (Fair and Orderly Market Conditions) would make clear that nothing in proposed Rule 6.45(b) would require C2 to assume that average levels of liquidity, depth, or other characteristics of a usual trading session must be present in order to achieve a fair and orderly market in the event of the activation of C2’s business continuity and disaster recovery plans.10 Proposed Rule 6.45(b)(iv)(C) (Business Continuity and Disaster Recovery Plans Testing), would provide that C2 shall require Designated BCP/DR Participants and may require other market participants to participate in scheduled business continuity and disaster recovery plans tests in the manner and frequency prescribed by C2. Proposed Rule 6.45(b)(iv)(C) would set forth C2’s authority to conduct testing of its business continuity and disaster recovery plans and obtain assistance from Designated BCP/DR Participants and other market participants in conducting such tests. C2 notes that the provisions of proposed Rule 6.45(b)(iv)(C) are consistent with C2’s current rules 11 as well as provisions of Regulation SCI pertaining to business continuity and disaster recovery plan testing.12 Proposed Rule 6.45(b)(iv)(C)(1) (Documentation and Reports), would provide that C2 may require Designated BCP/DR Participants 9 See 17 CFR 242.1004(a)–(b). Securities Exchange Act Release No. 73639 (November 19, 2014), 79 FR at 72353 (December 5, 2014) (Regulation Systems Compliance and Integrity) (File No. S7–01–13). 11 See Rules 6.34 (Participant Electronic Connectivity); 6.45(d) (Trading Permit Holder Preparations). 12 See 17 CFR 242.1004(a)–(b). 10 See E:\FR\FM\04NON1.SGM 04NON1 68346 Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices asabaliauskas on DSK5VPTVN1PROD with NOTICES and/or other market participants to provide documentation and reports regarding tests conducted pursuant to Rule 6.45, including related data and information, as may be requested by C2, and in the manner and frequency prescribed by C2. Proposed Rule 6.45(b)(iv)(C)(2) (Notice), would provide that C2 will provide reasonable prior notice of scheduled business continuity and disaster recovery plans tests to Trading Permit Holders, which notice shall describe the general nature of the test(s) and identify the Trading Permit Holders required to participate and shall be announced via Regulatory Circular. 2. Statutory Basis C2 believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to C2 and, in particular, the requirements of Section 6(b) of the Act 13 and Regulation SCI.14 Specifically, C2 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, C2 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 proposed rule change is designed to promote C2’s ability to ensure the continued operation of a fair and orderly market in the event of a systems failure, disaster, or other unusual circumstances that might threaten the ability to conduct business on C2. C2 recognizes that switching operations to the back-up data center may occur in times of uncertainty or great volatility in the markets. It is at these times that the investors may have the greatest need for viable, trustworthy marketplaces. The proposed rule changes seek to ensure that such a marketplace will exist when most needed. Accordingly, C2 believes that the proposed rule protects investors in 13 15 U.S.C. 78f(b). 17 CFR 242.1001(a) and 1004. 15 15 U.S.C. 78f(b)(5). 16 Id. 14 See VerDate Sep<11>2014 17:00 Nov 03, 2015 Jkt 238001 the most fundamental sense by helping to ensure that a fair and orderly market will exist at a time when such a market may be most needed. C2 also believes that the proposed rule change promotes just and equitable principles of trade by adding detail and clarity to the Rules. The proposed rule change seeks to provide additional clarity to C2’s disaster recovery rules, putting all market participants on notice as to how C2 will function in case of significant systems disruption or other disaster situation. C2 is continuously updating the Rules to provide additional detail, clarity, and transparency regarding its operations and trading systems and regulatory authority. C2 believes that the adoption of detailed, clear, and transparent rules reduces burdens on competition and promotes just and equitable principles of trade. C2 also believes that adding greater detail to the Rules regarding C2’s ability to ensure the continuous operation of the market and preserve the ability to conduct business on C2 will increase confidence in the markets and encourage wider participation in the markets and greater investment. Finally, C2 notes that proposed Rule 6.45 is designed to harmonize C2’s disaster recovery rules with Regulation SCI under the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition C2 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. Rather, the proposed rule change will help ensure that competitive markets remain operative in the event of a systems failure or other disaster event. C2 notes that the proposed rule change is designed to clarify C2’s authority to require market participants to participate in, and provide necessary liquidity to ensure fair and orderly markets. C2 further notes that the proposed rule change is designed to ensure competitive markets in that it is designed around the mandates of Regulation SCI, which each of the national securities exchanges is required to satisfy. 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. PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the 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 if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 17 and Rule 19b–4(f)(6) 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 has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. According to the Exchange, the proposed rule change does not present any novel or substantive issues. The proposed rule change is substantially the same as CBOE Rule 6.18,21 except for provisions relating to the loss of a trading floor and the specific factors for designating BCP/DR Participants. The Commission notes that C2 does not have a trading floor and further, that the factors proposed by C2 are those that C2 reasonably determined are, taken as a whole, the minimum necessary for the maintenance of fair and orderly markets in the event of the activation of the Exchange’s business continuity and disaster recovery plans. These factors are designed to harmonize C2’s rule with Regulation SCI. Accordingly, the 17 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) 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 Commission deems this requirement to have been met. 19 17 CFR 240.19b–4(f)(6). 20 17 CFR 240.19b–4(f)(6)(iii). 21 CBOE Rule 6.18 was recently amended in CBOE–2015–088, which was filed on October 8, 2015, and effective upon filing. See Securities Exchange Act Release No. 76203 (October 20, 2015), 80 FR 65258 (October 26, 2015). In CBOE–2015– 088, CBOE amended CBOE Rule 6.18 to further describe CBOE’s back-up systems, the circumstances under which they may be used, and the testing that CBOE may conduct to ensure the availability, functionality and performance of such systems, as well incorporate provisions for Regulation SCI. 18 17 E:\FR\FM\04NON1.SGM 04NON1 Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices 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 Exchange to incorporate changes required under Regulation SCI, such as establishing standards for designating BCP/DR Participants, prior to the November 3, 2015 compliance date. Therefore, the Commission designates the proposed rule change to be operative upon filing.22 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– C2–2015–030 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–C2–2015–030. 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 such 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–C2– 2015–030, and should be submitted on or before November 25, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–28023 Filed 11–3–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76301; File No. SR–BX– 2015–032] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1 and 2, To Adopt a New Price Improvement Auction, BX PRISM October 29, 2015. I. Introduction On August 19, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to establish an options price improvement mechanism (‘‘PRISM’’). On September 2, 2015, BX filed Amendment No. 1 to the proposal. The proposed rule change, as modified by Amendment No. 1, was published for comment in the Federal Register on September 10, 2015.3 The Commission received no substantive comments regarding the proposal.4 On October 22, 23 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 75827 (September 3, 2015), 80 FR 54601 (‘‘Notice’’). 4 See infra note 5 (noting that when BX submitted Amendment No. 2, it also submitted the document 1 15 22 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). VerDate Sep<11>2014 17:00 Nov 03, 2015 Jkt 238001 2 17 PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 68347 2015, BX granted an extension of time for Commission action until October 30, 2015. On October 23, 2015, BX filed Amendment No. 2 to the proposal.5 The Commission is publishing this notice to solicit comment on Amendment No. 2 from interested persons and is approving the proposed rule change, as modified by Amendment Nos. 1 and 2, on an accelerated basis, with certain provisions subject to a pilot period scheduled to expire on July 18, 2016. II. Description of the Proposal BX proposes to establish a priceimprovement mechanism, ‘‘PRISM,’’ on the Exchange’s options platform, in which a BX Participant (an ‘‘Initiating Participant’’) may electronically submit for execution a two-sided paired order, where one side is an order it represents as agent on behalf of a Public Customer,6 Professional customer, broker-dealer, or any other entity (‘‘PRISM Order’’) and the other side is principal interest or any other order it represents as agent (an ‘‘Initiating Order’’) provided that the member first exposes the PRISM Order in the PRISM Auction (‘‘Auction’’) pursuant to the proposed Rule. as a comment letter to the file to promote the public dissemination of its Amendment). 5 In Amendment No. 2, BX makes certain technical and clarifying changes to the proposal, which BX believes does not result in any material differences over its original filing as modified by Amendment No. 1. Specifically, BX proposes to: (i) Remove the term ‘‘displayed’’; (ii) describe ‘‘rejected’’ orders more accurately as ‘‘immediately cancelled’’ in certain circumstances; (iii) provide more specificity as to the amounts of allocations for which an Initiating Participant is entitled to be allocated; (iv) remove an incorrect reference to ‘‘orders’’ and define interest more specifically; (v) add more specificity related to Customer-toCustomer orders; (vi) correct a citation error; and (vii) correct typographical errors. Amendment 2 amends and replaces the original filing, as modified by Amendment 1, in its entirety. To promote transparency of its proposed amendment, when BX filed Amendment No. 2 with the Commission, it also submitted Amendment No. 2 as a comment letter to the file, which the Commission posted on its Web site and placed in the public comment file for SR–BX–2015–032. The Exchange also posted a copy of its Amendment No. 2 on its Web site when it filed the amendment with the Commission. 6 For purposes of this Rule, a Public Customer order does not include a Professional order, and therefore a Professional would not be entitled to Public Customer priority as described herein. A Public Customer means a person that is not a broker or dealer in securities. See BX Chapter I, Section 1(a)(50). A Public Customer order does not include a Professional order for purposes of BX Chapter VI, Section 10(a)(C)(1)(a), which governs allocation priority. A ‘‘Professional’’ means any person or entity that (i) is not a broker or dealer in securities, and (ii) places more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). A Participant or a Public Customer may, without limitation, be a Professional. All Professional orders shall be appropriately marked by Participants. See BX Chapter I, Section 1(a)(49). E:\FR\FM\04NON1.SGM 04NON1

Agencies

[Federal Register Volume 80, Number 213 (Wednesday, November 4, 2015)]
[Notices]
[Pages 68343-68347]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28023]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76300; File No. SR-C2-2015-030]


Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Amending Rule 6.45 Relating to Disaster Recovery

October 29, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 28, 2015, C2 Options Exchange, Incorporated (``Exchange'' or 
``C2'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to amend Rule 6.45 relating to disaster 
recovery. The text of the proposed rule change is available on the 
Exchange's Web site (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

[[Page 68344]]

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
    C2 proposes to amend Rule 6.45 relating to disaster recovery. 
Specifically, C2 proposes to update Rule 6.45 to further describe C2's 
back-up systems, the circumstances under which they may be used and the 
testing that C2 may conduct to ensure the availability, functionality 
and performance of such systems. Additionally, C2 proposes certain 
updates to Rule 6.45 in response to new disaster recovery regulations 
and business resumption standards recently adopted by the Securities 
and Exchange Commission (``SEC'' or ``Commission'') as promulgated in 
Regulation Systems Compliance and Integrity (``Regulation SCI'') under 
the Securities Exchange Act of 1934 (the ``Act'').\3\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR 72252 (December 5, 2014) (Regulation Systems Compliance 
and Integrity) (File No. S7-01-13).
---------------------------------------------------------------------------

Background
    C2 adopted Rule 6.45 in 2012 for the limited purpose of providing 
alternative means of operation in the event C2's trading system became 
inoperable or otherwise unavailable for use due to a disaster or other 
unusual circumstance. In particular, Rule 6.45, as originally adopted, 
was intended to allow C2 to operate a Disaster Recovery Facility 
(``DRF'') to continue to trade exclusively-listed option classes until 
C2's main trading system was again available.\4\ At that time, C2 
intended to utilize hardware located in the Chicago Board Options 
Exchange, Incorporated (``CBOE'') building in Chicago, IL for the 
purposes of operating the DRF. C2's main trade engine is located on the 
east coast.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 67357 (July 5 2012), 
77 FR 40928 (July 11, 2012) (SR-C2-2012-011).
---------------------------------------------------------------------------

    In addition to adding greater detail to C2's disaster recovery 
rules in Rule 6.45, C2 proposes to make updates to Rule 6.45 to 
harmonize its disaster recovery rules with the newly implemented 
disaster recovery-related regulatory imperatives of Regulation SCI. 
Regulation SCI supersedes and replaces the SEC's voluntary Automation 
Review Policy (``ARP''), established by the Commission's two policy 
statements each titled ``Automated Systems of Self-Regulatory 
Organizations,'' issued in 1989 and 1991, expanding existing practices 
and making them mandatory.\5\ As part of Regulation SCI, C2 is required 
to maintain back-up and recovery capabilities with sufficient 
resiliency and geographical diversity and that are reasonably designed 
to achieve next business-day resumption of trading and two-hour 
resumption of critical systems following a wide-scale disruption.\6\ C2 
must also participate in at least annual testing of its business 
continuity and disaster recovery plans and, to that end, develop and 
adopt standards to designate which of its TPHs must participate in 
testing in order to reasonably ensure the maintenance of a fair and 
orderly market if C2's disaster recovery plan must be activated.\7\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR at 72252 (December 5, 2014) (Regulation Systems 
Compliance and Integrity) (File No. S7-01-13).
    \6\ 17 CFR 242.1001(a)(2)(v).
    \7\ Id. at Sec.  242.1004.
---------------------------------------------------------------------------

Proposed Rule Changes
    C2 now proposes to make changes to Rule 6.45 to allow for trading 
in all C2-traded option classes on a back-up data center in the event 
the main trading system is unavailable. The proposed rule will no 
longer be limited to exclusively-listed options traded on C2. 
Furthermore, prior to the compliance date of Regulation SCI, C2 will 
have separate hardware designated for the C2 back-up data center (as 
opposed to using CBOE hardware).
    C2 proposes to make changes to Rule 6.45 to provide additional 
details regarding C2's back-up trading systems and business continuity 
and disaster recovery plans activation and testing. As discussed above, 
C2 also seeks to update its disaster recovery rules to ensure 
consistency with Regulation SCI.
    Current Rule 6.45 is divided into four sections, (a) through (d). 
Rule 6.45(a) authorizes C2 to maintain a DRF to preserve C2's ability 
to trade exclusively-listed options in the event C2's primary data 
center becomes inoperable or otherwise unavailable for use. Current 
Rule 6.45(b) describes the notice that must be given prior to 
commencing trading on back-up data center systems. Current Rule 6.45(c) 
describes the rules that would be in effect if C2 were to switch its 
trading operations to the DRF. Current Rule 6.45(d) prescribes that 
Trading Permit Holders (``TPH'') are required to take appropriate 
actions as instructed by C2 to accommodate C2's ability to trade 
options via the DRF.
    C2 proposes to make rule changes to Rule 6.45 with detail added to 
each section of the current rule. Under proposed Rule 6.45(a) (General) 
C2 would adopt a general statement regarding the purpose of its 
disaster recovery rules, providing that C2 maintains business 
continuity and disaster recovery plans that may be effected in the 
interests of the continued operation of fair and orderly markets in the 
event of a systems failure, disaster, or other unusual circumstances 
that might threaten the ability to conduct business on C2.
    Proposed Rule 6.45(b) (Back-up Data Center) would incorporate parts 
of the current Rule 6.45(a) in that it includes a statement that C2 
maintains a back-up data center (replacing what was formerly referenced 
as a ``Disaster Recovery Facility'' or ``DRF'') in order to preserve 
C2's ability to conduct business in the event C2's primary data center 
becomes inoperable or otherwise unavailable for use. Proposed Rule 
6.45(b) no longer limits the C2 disaster recovery facility to 
preserving C2's ability to trade exclusively-listed options. Currently 
C2 does not trade exclusively-listed options. The proposed Rule would 
now cover all option classes available for trading on C2. The proposed 
Rule notes that disaster recovery plans may be effected to ensure the 
continued operation of a fair and orderly market. C2 is removing the 
reference to the trading of exclusively-listed options in favor of 
``conduct business''. This proposed rule change reflects the fact that 
C2 may be engaged in business activities other than just the trading of 
options, including, but not limited to, the dissemination of market 
data and certain regulatory functions.
    Proposed Rule 6.45(b) would add the scenario of a significant 
systems failure to the list of causes that may trigger an operational 
switch to C2's back-up data center. The proposed addition of 
significant systems failures to the list of scenarios that may trigger 
an operational switch to C2's back-up data center is intended to more 
accurately reflect the realities of electronic trading environments and 
contemporary threats

[[Page 68345]]

posed to the operation of fair and orderly markets. In addition to the 
reformulation of the description of C2's back-up data center, proposed 
Rule 6.45(b) would also contain subsections similar to the notice, 
applicable rules, and Trading Permit Holder (``TPH'') preparations 
provisions currently contained in Rules 6.45(b) through (d).
    Proposed Rule 6.45(b)(i) (Back-up Data Center Functionality), would 
make clear the functional and performance standards that the back-up 
data center must be reasonably designed to achieve. Specifically, 
proposed Rule 6.45(b)(i) would provide that C2 maintains a back-up data 
center that C2 has determined is reasonably designed to achieve prompt 
resumption of systems consistent with Regulation SCI. Proposed Rule 
6.45(b)(i) would also provide that nothing in the provisions of 
proposed Rule 6.45(b) shall be interpreted to require C2 to develop or 
maintain a back-up data center designed to fully replicate the 
capacity, latency, and other features of the primary data center. This 
statement attempts to make clear that in order to preserve C2's ability 
to conduct business in the event C2's primary data center becomes 
inoperable or otherwise unavailable for use, C2 must maintain a back-up 
data center that is reasonably designed achieve resumption of systems 
consistent with Regulation SCI during a significant systems failure, 
disaster or other unusual circumstances, rather than replicate C2's 
primary data center systems. C2 believes that the standards set forth 
in proposed Rule 6.45(b)(i) are reasonable to help ensure the 
maintenance of fair and orderly markets in the event of a significant 
systems failure, disaster or other unusual circumstances and are 
consistent with provisions in the release language of Regulation 
SCI.\8\
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR at 72353 (December 5, 2014) (Regulation Systems 
Compliance and Integrity) (File No. S7-01-13).
---------------------------------------------------------------------------

    Proposed Rule 6.45(b)(ii) (Notice), would be similar to current 
Rule 6.45(b) and provide that prior to commencing trading on the back-
up data center, C2 shall announce publicly the classes that will be 
available for trading. Proposed Rule 6.45(b)(iii) (Applicable Rules) 
would provide that in the event the primary data center becomes 
inoperable, trading will continue using the back-up data center and all 
trading rules will remain in effect. Consistent with current Rule 
6.45(c), the proposed rule would also contain the provisions that all 
non-trading rules of C2 shall continue to apply.
    Proposed Rule 6.45(b)(iv) (Trading Permit Holder Participation) 
regarding testing of C2's back-up data center would contain provisions 
similar to current Rule 6.45(d) (Trading Permit Holder Preparations), 
but add subparagraphs to more clearly articulate C2's authority to 
conduct testing of its back-up data center systems. Thus, similar to 
current Rule 6.45(d), proposed Rule 6.45(b)(iv) would provide that TPHs 
are required to take appropriate actions as instructed by C2 to 
accommodate C2's ability to trade options via the back-up data center. 
C2 also proposes changing the rule text in proposed Rule 6.45(b)(iv) to 
provide that TPHs are required to take appropriate actions as 
instructed by C2 to accommodate C2's ability to conduct business via 
the back-up data center, rather than solely to accommodate C2's ability 
to trade options. Under the proposed rule change, the title of current 
Rule 6.45(d) (Trading Permit Holder Preparations) would also be changed 
in proposed Rule 6.45(b)(iv) (Trading Permit Holder Participation) to 
better describe the purpose of the rule provisions.
    Subsections (A) through (C) under proposed Rule 6.45(b)(iv) are 
designed to harmonize C2's back-up data center testing rules with 
certain provisions of Regulation SCI. Under proposed Rule 
6.45(b)(iv)(A) (Designated BCP/DR Participants), C2 shall designate 
those Trading Permit Holders that the C2 reasonably determines are, 
taken as a whole, the minimum necessary for the maintenance of fair and 
orderly markets in the event of the activation of the C2's business 
continuity and disaster recovery plans (``Designated BCP/DR 
Participants''). Designated BCP/DR Participants will include: (1) All 
C2 Market-Makers and; (2) all C2 Trading Permit Holders connected to 
the C2 primary data center and transacting non-Participant customer 
business, unless a C2 Trading Permit Holder, other than a C2 Market-
Maker, can demonstrate ready access to the back-up data center through 
another C2 Trading Permit Holder that is a designated participant. C2 
has reasonably determined that a C2 TPH, other than a C2 Market-Maker, 
who can demonstrate ready-access to the back-up data center through 
another C2 Trading Permit Holder, that is a designated participant, is 
not necessary for the maintenance of fair and orderly markets in the 
event of the activation of the C2's business continuity and disaster 
recovery plans. Criteria for designating BCP/DR participants will be 
announced prior via Regulatory Circular. Any changes to the standards 
by which a market participant might be determined to be a Designated 
BCP/DR Participant would be applied prospectively with reasonable 
advance notice as announced via Regulatory Circular. C2 would first 
announce the criteria by which market participants would be determined 
to be Designated BCP/DR Participants by November 1, 2015.
    C2 has attempted to model the provisions of proposed Rule 
6.45(b)(iv)(A) based on provisions of Regulation SCI, which require C2 
to establish standards for the designation of those members or 
participants that C2 reasonably determines are, taken as a whole, the 
minimum number of members or participants necessary for the maintenance 
of fair and orderly markets in the event of the activation of its 
business continuity and disaster recovery plans.\9\ Also consistent 
with Regulation SCI, proposed Rule 6.45(b)(iv)(B) (Fair and Orderly 
Market Conditions) would make clear that nothing in proposed Rule 
6.45(b) would require C2 to assume that average levels of liquidity, 
depth, or other characteristics of a usual trading session must be 
present in order to achieve a fair and orderly market in the event of 
the activation of C2's business continuity and disaster recovery 
plans.\10\
---------------------------------------------------------------------------

    \9\ See 17 CFR 242.1004(a)-(b).
    \10\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR at 72353 (December 5, 2014) (Regulation Systems 
Compliance and Integrity) (File No. S7-01-13).
---------------------------------------------------------------------------

    Proposed Rule 6.45(b)(iv)(C) (Business Continuity and Disaster 
Recovery Plans Testing), would provide that C2 shall require Designated 
BCP/DR Participants and may require other market participants to 
participate in scheduled business continuity and disaster recovery 
plans tests in the manner and frequency prescribed by C2. Proposed Rule 
6.45(b)(iv)(C) would set forth C2's authority to conduct testing of its 
business continuity and disaster recovery plans and obtain assistance 
from Designated BCP/DR Participants and other market participants in 
conducting such tests. C2 notes that the provisions of proposed Rule 
6.45(b)(iv)(C) are consistent with C2's current rules \11\ as well as 
provisions of Regulation SCI pertaining to business continuity and 
disaster recovery plan testing.\12\ Proposed Rule 6.45(b)(iv)(C)(1) 
(Documentation and Reports), would provide that C2 may require 
Designated BCP/DR Participants

[[Page 68346]]

and/or other market participants to provide documentation and reports 
regarding tests conducted pursuant to Rule 6.45, including related data 
and information, as may be requested by C2, and in the manner and 
frequency prescribed by C2. Proposed Rule 6.45(b)(iv)(C)(2) (Notice), 
would provide that C2 will provide reasonable prior notice of scheduled 
business continuity and disaster recovery plans tests to Trading Permit 
Holders, which notice shall describe the general nature of the test(s) 
and identify the Trading Permit Holders required to participate and 
shall be announced via Regulatory Circular.
---------------------------------------------------------------------------

    \11\ See Rules 6.34 (Participant Electronic Connectivity); 
6.45(d) (Trading Permit Holder Preparations).
    \12\ See 17 CFR 242.1004(a)-(b).
---------------------------------------------------------------------------

2. Statutory Basis
    C2 believes the proposed rule change is consistent with the Act and 
the rules and regulations thereunder applicable to C2 and, in 
particular, the requirements of Section 6(b) of the Act \13\ and 
Regulation SCI.\14\ Specifically, C2 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, C2 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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ See 17 CFR 242.1001(a) and 1004.
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ Id.
---------------------------------------------------------------------------

    In particular, the proposed rule change is designed to promote C2's 
ability to ensure the continued operation of a fair and orderly market 
in the event of a systems failure, disaster, or other unusual 
circumstances that might threaten the ability to conduct business on 
C2. C2 recognizes that switching operations to the back-up data center 
may occur in times of uncertainty or great volatility in the markets. 
It is at these times that the investors may have the greatest need for 
viable, trustworthy marketplaces. The proposed rule changes seek to 
ensure that such a marketplace will exist when most needed. 
Accordingly, C2 believes that the proposed rule protects investors in 
the most fundamental sense by helping to ensure that a fair and orderly 
market will exist at a time when such a market may be most needed.
    C2 also believes that the proposed rule change promotes just and 
equitable principles of trade by adding detail and clarity to the 
Rules. The proposed rule change seeks to provide additional clarity to 
C2's disaster recovery rules, putting all market participants on notice 
as to how C2 will function in case of significant systems disruption or 
other disaster situation. C2 is continuously updating the Rules to 
provide additional detail, clarity, and transparency regarding its 
operations and trading systems and regulatory authority. C2 believes 
that the adoption of detailed, clear, and transparent rules reduces 
burdens on competition and promotes just and equitable principles of 
trade. C2 also believes that adding greater detail to the Rules 
regarding C2's ability to ensure the continuous operation of the market 
and preserve the ability to conduct business on C2 will increase 
confidence in the markets and encourage wider participation in the 
markets and greater investment. Finally, C2 notes that proposed Rule 
6.45 is designed to harmonize C2's disaster recovery rules with 
Regulation SCI under the Act.

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

    C2 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. Rather, the proposed rule 
change will help ensure that competitive markets remain operative in 
the event of a systems failure or other disaster event. C2 notes that 
the proposed rule change is designed to clarify C2's authority to 
require market participants to participate in, and provide necessary 
liquidity to ensure fair and orderly markets. C2 further notes that the 
proposed rule change is designed to ensure competitive markets in that 
it is designed around the mandates of Regulation SCI, which each of the 
national securities exchanges is required to satisfy.

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 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 if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \17\ and Rule 19b-4(f)(6) 
thereunder.\18\
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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 
Commission deems this requirement to have been met.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \19\ 17 CFR 240.19b-4(f)(6).
    \20\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. According to the Exchange, the proposed rule change does not 
present any novel or substantive issues. The proposed rule change is 
substantially the same as CBOE Rule 6.18,\21\ except for provisions 
relating to the loss of a trading floor and the specific factors for 
designating BCP/DR Participants. The Commission notes that C2 does not 
have a trading floor and further, that the factors proposed by C2 are 
those that C2 reasonably determined are, taken as a whole, the minimum 
necessary for the maintenance of fair and orderly markets in the event 
of the activation of the Exchange's business continuity and disaster 
recovery plans. These factors are designed to harmonize C2's rule with 
Regulation SCI. Accordingly, the

[[Page 68347]]

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 Exchange to incorporate changes required under 
Regulation SCI, such as establishing standards for designating BCP/DR 
Participants, prior to the November 3, 2015 compliance date. Therefore, 
the Commission designates the proposed rule change to be operative upon 
filing.\22\
---------------------------------------------------------------------------

    \21\ CBOE Rule 6.18 was recently amended in CBOE-2015-088, which 
was filed on October 8, 2015, and effective upon filing. See 
Securities Exchange Act Release No. 76203 (October 20, 2015), 80 FR 
65258 (October 26, 2015). In CBOE-2015-088, CBOE amended CBOE Rule 
6.18 to further describe CBOE's back-up systems, the circumstances 
under which they may be used, and the testing that CBOE may conduct 
to ensure the availability, functionality and performance of such 
systems, as well incorporate provisions for Regulation SCI.
    \22\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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-C2-2015-030 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-C2-2015-030. 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 such 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-C2-2015-030, and should be 
submitted on or before November 25, 2015.
---------------------------------------------------------------------------

    \23\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-28023 Filed 11-3-15; 8:45 am]
 BILLING CODE 8011-01-P
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