Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Order Marking, 41626-41628 [2016-15074]
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Federal Register / Vol. 81, No. 123 / Monday, June 27, 2016 / Notices
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2012. On February 22, 2016,
Corporation Finance sent a delinquency
letter to GNBA requesting compliance
with its periodic filing requirements but
GNBA did not receive the delinquency
letter due to its failure to maintain a
valid address on file with the
Commission as required by Commission
Issuer Address Rules. As of June 16,
2016, the common stock of GNBA was
quoted on OTC Link, had five market
makers, and was eligible for the
‘‘piggyback’’ exception of Exchange Act
Rule 15c2–11(f)(3).
It appears to the Commission that
there is a lack of current and accurate
information concerning the securities of
Logic Devices, Incorporated (‘‘LOGC’’)
(CIK No. 802851), a suspended
California corporation located in
Sunnyvale, California with a class of
securities registered with the
Commission pursuant to Exchange Act
Section 12(g) because it is delinquent in
its periodic filings with the
Commission, having not filed any
periodic reports since it filed a Form
10–Q for the period ended June 30,
2012. On November 14, 2013,
Corporation Finance sent a delinquency
letter to LOGC requesting compliance
with its periodic filing requirements but
LOGC did not receive the delinquency
letter due to its failure to maintain a
valid address on file with the
Commission as required by Commission
Issuer Address Rules. As of June 16,
2016, the common stock of LOGC was
quoted on OTC Link, had five market
makers, and was eligible for the
‘‘piggyback’’ exception of Exchange Act
Rule 15c2–11(f)(3).
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
companies. Therefore, it is ordered,
pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that
trading in the securities of the abovelisted companies is suspended for the
period from 9:30 a.m. EDT on June 23,
2016, through 11:59 p.m. EDT on July 7,
2016.
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2016–15214 Filed 6–23–16; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78110; File No. SR–CBOE–
2016–050]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Related to Order Marking
June 21, 2016.
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 June 16,
2016, Chicago Board Options Exchange,
Incorporated (the ‘‘Exchange’’ or
‘‘CBOE’’) filed with the Securities and
Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
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 seeks to update certain
order marking requirements. The text of
the proposed rule change is provided
below.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
Chicago Board Options Exchange,
Incorporated Rules
*
*
*
*
*
Rule 6.9. Solicited Transactions
A Trading Permit Holder or TPH
organization representing an order
respecting an option traded on the
Exchange (an ‘‘original order’’),
including a spread, combination, or
straddle order as defined in Rule 6.53,
a stock-option order as defined in Rule
1.1(ii), a security future-option order as
defined in Rule 1.1(zz), or any other
complex order as defined in Rule 6.53C,
may solicit a Trading Permit Holder or
TPH organization or a non-Trading
Permit Holder customer or broker-dealer
(the ‘‘solicited person’’) to transact inperson or by order (a ‘‘solicited order’’)
with the original order. In addition,
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).
2 17
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whenever a floor broker who is aware
of, but does not represent, an original
order solicits one or more persons or
orders in response to an original order,
the persons solicited and any resulting
orders are solicited persons or solicited
orders subject to this Rule. Original
orders and solicited orders are subject to
the following conditions.
(a)–(e) No change.
(f) All orders initiated as a result of a
solicitation must be marked [‘‘SL.’’] in a
manner and form prescribed by the
Exchange and announced via
Regulatory Circular. [If the solicited
person is on the trading floor and elects
to participate by order, the solicited
person must retain a copy of the
solicited order on the trading floor so
long as the order is active.]
*
*
*
*
*
Rule 6.53. Certain Types of Orders
Defined
One or more of the following order
types may be made available on a classby-class basis. Certain order types may
not be made available for all Exchange
systems. The classes and/or systems for
which the order types shall be available
will be as provided in the Rules, as the
context may indicate, or as otherwise
specified via Regulatory Circular.
(a)–(f) No change.
(g) Not Held Order. A not held order
is an order marked ‘‘not held’’, ‘‘take
time’’ or which bears any qualifying
notation giving discretion as to the price
or time at which such order is to be
executed. An order entrusted to a Floor
Broker will be considered a Not Held
Order, unless otherwise specified by a
Floor Broker’s client or the order was
received by the Exchange electronically
and subsequently routed to a Floor
Broker or PAR Official pursuant to the
order entry firm’s routing instructions.
Not Held Orders and/or ‘‘held’’ orders
must be marked in a manner and form
prescribed by the Exchange and
announced via Regulatory Circular.
*
*
*
*
*
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
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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
mstockstill on DSK3G9T082PROD with NOTICES
1. Purpose
The Exchange proposes to update
order marking requirements applicable
to solicited orders under Rule 6.9(f) and
Not Held Orders under Rule 6.53(g).
Rule 6.9 governs the procedures and
priority applicable to the open outcry
execution of an order solicited (a
‘‘solicited order’’) by a Trading Permit
Holder or TPH organization
representing an order respecting an
option traded on the Exchange (an
‘‘original order’’).5 Rule 6.9(f) currently
provides that orders initiated as a result
of a solicitation must be marked ‘‘SL.’’
The requirement to mark an order ‘‘SL’’
was implemented when paper order
tickets were utilized on the floor of the
Exchange, and the marking requirement
has not been updated since paper order
tickets stopped being used. Thus, the
Exchange is proposing to update Rule
6.9(f) by proposing that all orders
initiated as a result of a solicitation
must be marked in a manner and form
prescribed by the Exchange and
announced via Regulatory Circular.6
The Exchange, through a third-party
vendor, is in the process of updating the
Exchange provided Floor Broker
Workstation (‘‘FBW2’’) 7 and has
updated Exchange provided PULSe to
enable TPHs to mark solicited orders
upon systematization. Additionally, the
Exchange is in the process of updating
the Public Automatic Routing System
(‘‘PAR’’) and the Order Management
Terminal (‘‘OMT’’) to allow orders that
are identified as solicited orders to be
captured in the electronic audit trail.
5 Rule 6.9 specifically sets forth rules governing
the priority of a solicited order when the terms of
the original order were either disclosed to the
trading crowd prior to the solicitation (Rule
6.9(a)(b) and (c)) or disclosed to the trading crowd
after the solicitation (Rule 6.9(d)); prohibiting
trading based on knowledge of an imminent
undisclosed solicited transactions (Rule 6.9(e)); and
requiring solicited orders be marked as such (Rule
6.9(f)).
6 The Exchange proposes to remove the
requirement that if the solicited person is on the
trading floor and elects to participate by order, the
solicited person must retain a copy of the solicited
order on the trading floor so long as the order is
active. The requirement is no longer relevant as
orders are captured in the electronic audit trail.
7 See RG16–052.
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The Exchange will not implement any
solicited order marking requirement
changes pursuant to amended Rule
6.9(f) until the enhancements to FBW2,
PULSe, PAR, and OMT are complete.
Rule 6.53(g) defines a ‘‘Not Held
Order’’ as an order marked ‘‘not held’’,
‘‘take time’’ or which bears any
qualifying notation giving discretion as
to the price or time at which such order
is to be executed.8 On June 25, 2015, the
Securities and Exchange Commission
(the ‘‘Commission’’) approved a rule
filing providing that an order entrusted
to a Floor Broker is considered a Not
Held Order, unless otherwise specified
by a Floor Broker’s client or the order
was received by the Exchange
electronically and subsequently routed
to a Floor Broker or PAR Official
pursuant to the order entry firm’s
routing instructions.9
Although SR–CBOE–2015–047
provides that orders entrusted to Floor
Brokers are by default Not Held Orders,
the Exchange currently requires Not
Held Orders to be proactively marked as
Not Held Orders.10 Orders that are not
proactively marked as Not Held Orders
are treated as ‘‘held’’ for regulatory
purposes. However, the Exchange is in
the process of updating PAR and OMT
to instead allow certain orders that are
not proactively marked as ‘‘held’’ to be
considered Not Held Orders, which
reflects the fact that orders entrusted to
Floor Brokers are by default Not Held
Orders. Although it’s reasonably
implied from current Rule 6.53(g) that
an order that is ‘‘held’’ would need to
be marked in a manner to differentiate
them from Not Held Orders, the
Exchange proposes to amend Rule
6.53(g) to explicitly provide that Not
Held Orders and/or ‘‘held’’ orders must
be marked in a manner and form
prescribed by the Exchange and
announced via Regulatory Circular. The
Exchange will not modify the current
Not Held marking requirements 11
pursuant to amended Rule 6.53(g) until
the enhancements to PAR and OMT are
complete.
The Exchange will announce the
implementation date of this rule filing
via Regulatory Circular at least 30 days
prior to the implementation date. The
8 A ‘‘Not Held’’ order generally is one where the
customer gives the Floor Broker discretion in
executing the order, both with respect to the time
of execution and the price (though the customer
may specify a limit price), and the Floor Broker
works the order over a period of time to avoid
market impact while seeking best execution of the
order.
9 See Securities Exchange Act Release No. 75299
(June 25, 2015), 80 FR 37700 (July 1, 2015) (SR–
CBOE–2015–047) (Approval Order).
10 See Regulatory Circular RG15–136.
11 Id.
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41627
implementation date will be within 180
days of the effective date of this filing.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.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.
In particular, the proposed
amendment to Rule 6.9(f) would
promote just and equitable principles of
trading by enhancing the Exchange’s
audit trail. An enhanced audit trail will
help the Exchange to regulate these
kinds of orders more thoroughly, which
should serve to promote just and
equitable trading of solicited orders on
the Exchange. The Exchange also
believes the proposed rule change is
consistent with Section 6(b)(1) of the
Act,15 which provides that the Exchange
be organized and have the capacity to be
able to carry out the purposes of the Act
and to enforce compliance by the
Exchange’s TPHs and persons
associated with its TPHs with the Act,
the rules and regulations thereunder,
and the rules of the Exchange. With an
enhanced audit trail of solicited orders,
the Exchange believes it will be able to
more comprehensively monitor the
trading of solicited orders on the
Exchange.
The proposed addition to Rule 6.53(g)
removes impediments to and perfects
the mechanism of a free and open
market and a national market system,
and, in general, protects investors and
the public interest by eliminating any
12 15
13 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
14 Id.
15 15
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U.S.C. 78f(b)(1).
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41628
Federal Register / Vol. 81, No. 123 / Monday, June 27, 2016 / Notices
potential confusion as to whether TPHs
must proactively mark certain orders as
‘‘held’’ instead of proactively marking
certain orders as Not Held Orders,
which reflects the fact that orders
entrusted to Floor Brokers are by default
Not Held Orders.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. In particular,
the proposed rule change will not
impose any burden on any intramarket
competition as it will be applied to
similarly situated groups trading on the
Exchange equally. The Exchange does
not believe the proposed rule change
will impose any burden on intermarket
competition as the proposed changes
merely amends existing TPH obligations
related to the marking of solicited
orders, ‘‘held’’ orders, and Not Held
Orders.
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.
mstockstill on DSK3G9T082PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
A. Significantly affect the protection
of investors or the public interest;
B. impose any significant burden on
competition; and
C. become operative for 30 days from
the date on which it was filed, or such
shorter time as the Commission may
designate, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 16 and Rule 19b–4(f)(6) 17
thereunder. At any time within 60 days
of the filing of the proposed rule change,
the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
16 15
17 17
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:
18:52 Jun 24, 2016
[FR Doc. 2016–15074 Filed 6–24–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–CBOE–2016–050 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–2016–050. 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–
2016–050 and should be submitted on
or before July 18, 2016.
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
VerDate Sep<11>2014
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Robert W. Errett,
Deputy Secretary.
[Release Nos. 33–10102; 34–78127; File No.
265–28]
Investor Advisory Committee Meeting
Securities and Exchange
Commission.
ACTION: Notice of meeting of Securities
and Exchange Commission Dodd-Frank
Investor Advisory Committee.
AGENCY:
The Securities and Exchange
Commission Investor Advisory
Committee, established pursuant to
Section 911 of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act of 2010, is providing notice that it
will hold a public meeting. The public
is invited to submit written statements
to the Committee.
DATES: The meeting will be held on
Thursday, July 14, 2016 from 9:00 a.m.
until 3:30 p.m. (ET). Written statements
should be received on or before July 14,
2016.
ADDRESSES: The meeting will be held in
Multi-Purpose Room LL–006 at the
Commission’s headquarters, 100 F
Street NE., Washington, DC 20549. The
meeting will be webcast on the
Commission’s Web site at www.sec.gov.
Written statements may be submitted by
any of the following methods:
SUMMARY:
Electronic Statements
D Use the Commission’s Internet
submission form (https://www.sec.gov/
rules/other.shtml); or
D Send an email message to rulescomments@sec.gov. Please include File
No. 265–28 on the subject line; or
Paper Statements
D Send paper statements to Brent J.
Fields, Secretary, Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File No.
265–28. This file number should be
included on the subject line if email is
used. To help us process and review
your statement more efficiently, please
use only one method.
Statements also will be available for
Web site viewing and printing in the
Commission’s Public Reference Room,
18 17
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CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 81, Number 123 (Monday, June 27, 2016)]
[Notices]
[Pages 41626-41628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15074]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78110; File No. SR-CBOE-2016-050]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Related to Order Marking
June 21, 2016.
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 June 16, 2016, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III below, which Items have been prepared by the
Exchange. The Exchange filed the proposal as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
\3\ and Rule 19b-4(f)(6) thereunder.\4\ The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange seeks to update certain order marking requirements.
The text of the proposed rule change is provided below.
(additions are italicized; deletions are [bracketed])
* * * * *
Chicago Board Options Exchange, Incorporated Rules
* * * * *
Rule 6.9. Solicited Transactions
A Trading Permit Holder or TPH organization representing an order
respecting an option traded on the Exchange (an ``original order''),
including a spread, combination, or straddle order as defined in Rule
6.53, a stock-option order as defined in Rule 1.1(ii), a security
future-option order as defined in Rule 1.1(zz), or any other complex
order as defined in Rule 6.53C, may solicit a Trading Permit Holder or
TPH organization or a non-Trading Permit Holder customer or broker-
dealer (the ``solicited person'') to transact in-person or by order (a
``solicited order'') with the original order. In addition, whenever a
floor broker who is aware of, but does not represent, an original order
solicits one or more persons or orders in response to an original
order, the persons solicited and any resulting orders are solicited
persons or solicited orders subject to this Rule. Original orders and
solicited orders are subject to the following conditions.
(a)-(e) No change.
(f) All orders initiated as a result of a solicitation must be
marked [``SL.''] in a manner and form prescribed by the Exchange and
announced via Regulatory Circular. [If the solicited person is on the
trading floor and elects to participate by order, the solicited person
must retain a copy of the solicited order on the trading floor so long
as the order is active.]
* * * * *
Rule 6.53. Certain Types of Orders Defined
One or more of the following order types may be made available on a
class-by-class basis. Certain order types may not be made available for
all Exchange systems. The classes and/or systems for which the order
types shall be available will be as provided in the Rules, as the
context may indicate, or as otherwise specified via Regulatory
Circular.
(a)-(f) No change.
(g) Not Held Order. A not held order is an order marked ``not
held'', ``take time'' or which bears any qualifying notation giving
discretion as to the price or time at which such order is to be
executed. An order entrusted to a Floor Broker will be considered a Not
Held Order, unless otherwise specified by a Floor Broker's client or
the order was received by the Exchange electronically and subsequently
routed to a Floor Broker or PAR Official pursuant to the order entry
firm's routing instructions. Not Held Orders and/or ``held'' orders
must be marked in a manner and form prescribed by the Exchange and
announced via Regulatory Circular.
* * * * *
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
[[Page 41627]]
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
The Exchange proposes to update order marking requirements
applicable to solicited orders under Rule 6.9(f) and Not Held Orders
under Rule 6.53(g).
Rule 6.9 governs the procedures and priority applicable to the open
outcry execution of an order solicited (a ``solicited order'') by a
Trading Permit Holder or TPH organization representing an order
respecting an option traded on the Exchange (an ``original order'').\5\
Rule 6.9(f) currently provides that orders initiated as a result of a
solicitation must be marked ``SL.'' The requirement to mark an order
``SL'' was implemented when paper order tickets were utilized on the
floor of the Exchange, and the marking requirement has not been updated
since paper order tickets stopped being used. Thus, the Exchange is
proposing to update Rule 6.9(f) by proposing that all orders initiated
as a result of a solicitation must be marked in a manner and form
prescribed by the Exchange and announced via Regulatory Circular.\6\
---------------------------------------------------------------------------
\5\ Rule 6.9 specifically sets forth rules governing the
priority of a solicited order when the terms of the original order
were either disclosed to the trading crowd prior to the solicitation
(Rule 6.9(a)(b) and (c)) or disclosed to the trading crowd after the
solicitation (Rule 6.9(d)); prohibiting trading based on knowledge
of an imminent undisclosed solicited transactions (Rule 6.9(e)); and
requiring solicited orders be marked as such (Rule 6.9(f)).
\6\ The Exchange proposes to remove the requirement that if the
solicited person is on the trading floor and elects to participate
by order, the solicited person must retain a copy of the solicited
order on the trading floor so long as the order is active. The
requirement is no longer relevant as orders are captured in the
electronic audit trail.
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The Exchange, through a third-party vendor, is in the process of
updating the Exchange provided Floor Broker Workstation (``FBW2'') \7\
and has updated Exchange provided PULSe to enable TPHs to mark
solicited orders upon systematization. Additionally, the Exchange is in
the process of updating the Public Automatic Routing System (``PAR'')
and the Order Management Terminal (``OMT'') to allow orders that are
identified as solicited orders to be captured in the electronic audit
trail. The Exchange will not implement any solicited order marking
requirement changes pursuant to amended Rule 6.9(f) until the
enhancements to FBW2, PULSe, PAR, and OMT are complete.
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\7\ See RG16-052.
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Rule 6.53(g) defines a ``Not Held Order'' as an order marked ``not
held'', ``take time'' or which bears any qualifying notation giving
discretion as to the price or time at which such order is to be
executed.\8\ On June 25, 2015, the Securities and Exchange Commission
(the ``Commission'') approved a rule filing providing that an order
entrusted to a Floor Broker is considered a Not Held Order, unless
otherwise specified by a Floor Broker's client or the order was
received by the Exchange electronically and subsequently routed to a
Floor Broker or PAR Official pursuant to the order entry firm's routing
instructions.\9\
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\8\ A ``Not Held'' order generally is one where the customer
gives the Floor Broker discretion in executing the order, both with
respect to the time of execution and the price (though the customer
may specify a limit price), and the Floor Broker works the order
over a period of time to avoid market impact while seeking best
execution of the order.
\9\ See Securities Exchange Act Release No. 75299 (June 25,
2015), 80 FR 37700 (July 1, 2015) (SR-CBOE-2015-047) (Approval
Order).
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Although SR-CBOE-2015-047 provides that orders entrusted to Floor
Brokers are by default Not Held Orders, the Exchange currently requires
Not Held Orders to be proactively marked as Not Held Orders.\10\ Orders
that are not proactively marked as Not Held Orders are treated as
``held'' for regulatory purposes. However, the Exchange is in the
process of updating PAR and OMT to instead allow certain orders that
are not proactively marked as ``held'' to be considered Not Held
Orders, which reflects the fact that orders entrusted to Floor Brokers
are by default Not Held Orders. Although it's reasonably implied from
current Rule 6.53(g) that an order that is ``held'' would need to be
marked in a manner to differentiate them from Not Held Orders, the
Exchange proposes to amend Rule 6.53(g) to explicitly provide that Not
Held Orders and/or ``held'' orders must be marked in a manner and form
prescribed by the Exchange and announced via Regulatory Circular. The
Exchange will not modify the current Not Held marking requirements \11\
pursuant to amended Rule 6.53(g) until the enhancements to PAR and OMT
are complete.
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\10\ See Regulatory Circular RG15-136.
\11\ Id.
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The Exchange will announce the implementation date of this rule
filing via Regulatory Circular at least 30 days prior to the
implementation date. The implementation date will be within 180 days of
the effective date of this filing.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\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 amendment to Rule 6.9(f) would promote
just and equitable principles of trading by enhancing the Exchange's
audit trail. An enhanced audit trail will help the Exchange to regulate
these kinds of orders more thoroughly, which should serve to promote
just and equitable trading of solicited orders on the Exchange. The
Exchange also believes the proposed rule change is consistent with
Section 6(b)(1) of the Act,\15\ which provides that the Exchange be
organized and have the capacity to be able to carry out the purposes of
the Act and to enforce compliance by the Exchange's TPHs and persons
associated with its TPHs with the Act, the rules and regulations
thereunder, and the rules of the Exchange. With an enhanced audit trail
of solicited orders, the Exchange believes it will be able to more
comprehensively monitor the trading of solicited orders on the
Exchange.
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\15\ 15 U.S.C. 78f(b)(1).
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The proposed addition to Rule 6.53(g) removes impediments to and
perfects the mechanism of a free and open market and a national market
system, and, in general, protects investors and the public interest by
eliminating any
[[Page 41628]]
potential confusion as to whether TPHs must proactively mark certain
orders as ``held'' instead of proactively marking certain orders as Not
Held Orders, which reflects the fact that orders entrusted to Floor
Brokers are by default Not Held Orders.
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. In particular, the proposed
rule change will not impose any burden on any intramarket competition
as it will be applied to similarly situated groups trading on the
Exchange equally. The Exchange does not believe the proposed rule
change will impose any burden on intermarket competition as the
proposed changes merely amends existing TPH obligations related to the
marking of solicited orders, ``held'' orders, and Not Held Orders.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not:
A. Significantly affect the protection of investors or the public
interest;
B. impose any significant burden on competition; and
C. become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \16\ and
Rule 19b-4(f)(6) \17\ thereunder. At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission will institute proceedings to determine whether the proposed
rule change should be approved or disapproved.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(6).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-CBOE-2016-050 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-2016-050. 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-2016-050 and should be
submitted on or before July 18, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-15074 Filed 6-24-16; 8:45 am]
BILLING CODE 8011-01-P
