Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Market-Maker Reports of Executed Orders, 25030-25031 [2017-11149]

Download as PDF 25030 Federal Register / Vol. 82, No. 103 / Wednesday, May 31, 2017 / Notices Dated: May 25, 2017. Brent J. Fields, Secretary. 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 [FR Doc. 2017–11281 Filed 5–26–17; 11:15 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80760; File No. SR–CBOE– 2017–042] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Market-Maker Reports of Executed Orders May 24, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on May 15, 2017, Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The 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Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to delete and amend outdated rule language contained in Rule 8.9(b) related to Market-Maker reports of executed orders. The text of the proposed rule change is available on the Exchange’s Web site (http://www.cboe.com/About CBOE/CBOELegalRegulatory Home.aspx), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. nlaroche on DSK30NT082PROD with 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 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. VerDate Sep<11>2014 14:54 May 30, 2017 Jkt 241001 1. Purpose CBOE Rule 8.9(b) currently provides that: ‘‘In a manner prescribed by the Exchange, with respect to transactions to be cleared into all accounts carried for Market-Makers who are the subject of a clearing firm Letter of Guarantee issued pursuant to [CBOE] Rule 8.5, each clearing firm shall, on the business day following order entry date, report to the Exchange every executed order entered by the Market-Maker for the purchase or sale of (i) a security underlying options traded on the Exchange or (ii) a security convertible into or exchangeable for such underlying security or (iii) a security traded on the Exchange (including, with respect to multiply listed securities, orders sent to another exchange), as well as opening and closing positions in all such securities held in each such account. If the clearing firm does not report any executed order, upon the request of the Exchange the MarketMaker who entered the order will be responsible for reporting the order information.’’ The Exchange is deleting this rule and replacing it with a rule substantially similar to that of the International Securities Exchange, LLC [sic] (‘‘ISE’’); ISE Gemini, LLC [sic] (‘‘ISE Gemini’’); BATS Options Market (‘‘BZX’’); BOX Options Exchange, LLC (‘‘BOX’’); NASDAQ Options Market (‘‘NOM’’); and NASDAQ OMX BX, Inc. (‘‘BX’’).3 The proposed rule change will result in some specific changes. First of all, Clearing Firms holding accounts for Market-Makers subject to a clearing firm letter of guarantee will no longer be required to submit daily reports of orders entered by those Market-Maker accounts. In addition they will not be required to submit daily position reports. Instead, the proposed rule will provide that orders, entered by MarketMakers for the purchase of (i) a security underlying options traded on the Exchange, or (ii) a security convertible into or exchangeable for such underlying security, as well as opening and closing positions in all such securities shall be provided to the Exchange by Market-Makers upon 3 See ISE Rule 807(b); ISE Gemini Rule 807(b); BZX Rule 22.7(b); BOX Rule 8060(b), NOM Rules Chapter 7, Section 7(b); BX Rules Chapter 7, Section 7(b). PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 request in a form prescribed by the Exchange. The obligation to provide order and position reports will be on the individual Market-Makers (as opposed to the clearing firms) and will only be required on an as needed basis. Previously, Market-Makers were responsible for reporting order information, when requested by the Exchange, if the clearing firm did not report on an executed order. The proposed rule is also eliminating any requirement that either a MarketMaker or clearing firm provide order or positon reports for securities traded on the Exchange. The requirement to provide order or position reports for securities traded on the Exchange has been removed completely and this information will not be required even on an as needed basis pursuant to proposed Rule 8.9(b). ‘‘Securities traded on the Exchange’’ was a reference to when non-options transactions were traded on the CBOE. The CBOE deleted its rules related to non-options transactions on the Exchange in 2008.4 Accordingly, the requirement to provide order or position reports for securities traded on the Exchange is obsolete. Finally, the proposed rule outlines the form of the order reports to be provided by Market-Makers upon request. The proposed rule will require that the reports pertaining to orders must include the terms of each order, identification of the brokerage firms through which the orders were entered, the times of entry or cancellation, the times reports of execution were received and, if all or part of the order was executed, the quantity and execution price. The Exchange believes current Rule 8.9(b) is outdated and operationally obsolete. The Exchange does not currently use the daily order and position reports from clearing firms. The daily order and position reports from clearing firms are no longer needed to conduct any routine regulatory surveillances or examinations or fulfill any other of the Exchange’s regulatory obligations. Any regulatory surveillance or examination that previously used the daily order and position reports can be operated without the information due to the development of effective workarounds. As such, the rule, as currently written, presents an undue burden on clearing firms and MarketMakers. 4 See Securities Exchange Act Release No. 58771 (October 10, 2008), 73 FR 62350 (October 20, 2008) (SR–CBOE–2008–101). E:\FR\FM\31MYN1.SGM 31MYN1 Federal Register / Vol. 82, No. 103 / Wednesday, May 31, 2017 / Notices nlaroche on DSK30NT082PROD with NOTICES 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.5 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 6 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) 7 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. In particular, the Exchange believes the proposed rule change removes impediments and perfects the mechanism of a free and open market by deleting obsolete rule requirements related to daily order and position reports provided to the Exchange by clearing firms. The daily order and position reports are no longer needed in the normal course of the Exchange fulfilling its regulatory responsibilities. In the event order or position information related to Market-Maker activity in securities underlying options traded on the exchange is needed, the proposed rule provides that MarketMakers must provide those reports to the Exchange upon request. The proposed rule also perfects the mechanism of a free and open market by listing information that should be contained in the reports that are to be provided upon request of the Exchange. In addition, the proposed rule change is substantially similar to rules of other options exchanges.8 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 not necessary or appropriate in furtherance of the purposes of the Act. The 5 15 6 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 7 Id. 8 See supra note 1 [sic]. VerDate Sep<11>2014 14:54 May 30, 2017 Jkt 241001 proposed rule raises neither intermarket nor intermarket competition issues, as it relates to the submission of reports to the Exchange for regulatory purposes. The proposed rule deletes obsolete rule language. The daily order and position reports from clearing firms are no longer needed to conduct any routine regulatory surveillances or examinations or fulfill any other of the Exchange’s regulatory obligations. The proposed rule change removes this undue burden on clearing firms and Market-Makers and replaces it with a requirement substantially similar to that of other options exchanges.9 The proposed requirement will apply to equally to all Market-Makers on the Exchange. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 10 and Rule 19b– 4(f)(6) 11 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: 9 Id. 10 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6)(iii). As required under Rule 19b–4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the 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. 11 17 PO 00000 Frm 00098 Fmt 4703 Sfmt 9990 25031 Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CBOE–2017–042 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–2017–042. 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 (http://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– 2017–042 and should be submitted on or before June 21, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–11149 Filed 5–30–17; 8:45 am] BILLING CODE 8011–01–P 12 17 E:\FR\FM\31MYN1.SGM CFR 200.30–3(a)(12). 31MYN1

Agencies

[Federal Register Volume 82, Number 103 (Wednesday, May 31, 2017)]
[Notices]
[Pages 25030-25031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11149]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80760; File No. SR-CBOE-2017-042]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to Market-Maker Reports of Executed 
Orders

May 24, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on May 15, 2017, Chicago Board Options Exchange, Incorporated (the 
``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I and II below, which Items have been prepared by the 
Exchange. The 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 delete and amend outdated rule language 
contained in Rule 8.9(b) related to Market-Maker reports of executed 
orders. The text of the proposed rule change is available on the 
Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    CBOE Rule 8.9(b) currently provides that:
    ``In a manner prescribed by the Exchange, with respect to 
transactions to be cleared into all accounts carried for Market-Makers 
who are the subject of a clearing firm Letter of Guarantee issued 
pursuant to [CBOE] Rule 8.5, each clearing firm shall, on the business 
day following order entry date, report to the Exchange every executed 
order entered by the Market-Maker for the purchase or sale of (i) a 
security underlying options traded on the Exchange or (ii) a security 
convertible into or exchangeable for such underlying security or (iii) 
a security traded on the Exchange (including, with respect to multiply 
listed securities, orders sent to another exchange), as well as opening 
and closing positions in all such securities held in each such account. 
If the clearing firm does not report any executed order, upon the 
request of the Exchange the Market-Maker who entered the order will be 
responsible for reporting the order information.''
    The Exchange is deleting this rule and replacing it with a rule 
substantially similar to that of the International Securities Exchange, 
LLC [sic] (``ISE''); ISE Gemini, LLC [sic] (``ISE Gemini''); BATS 
Options Market (``BZX''); BOX Options Exchange, LLC (``BOX''); NASDAQ 
Options Market (``NOM''); and NASDAQ OMX BX, Inc. (``BX'').\3\
---------------------------------------------------------------------------

    \3\ See ISE Rule 807(b); ISE Gemini Rule 807(b); BZX Rule 
22.7(b); BOX Rule 8060(b), NOM Rules Chapter 7, Section 7(b); BX 
Rules Chapter 7, Section 7(b).
---------------------------------------------------------------------------

    The proposed rule change will result in some specific changes. 
First of all, Clearing Firms holding accounts for Market-Makers subject 
to a clearing firm letter of guarantee will no longer be required to 
submit daily reports of orders entered by those Market-Maker accounts. 
In addition they will not be required to submit daily position reports. 
Instead, the proposed rule will provide that orders, entered by Market-
Makers for the purchase of (i) a security underlying options traded on 
the Exchange, or (ii) a security convertible into or exchangeable for 
such underlying security, as well as opening and closing positions in 
all such securities shall be provided to the Exchange by Market-Makers 
upon request in a form prescribed by the Exchange. The obligation to 
provide order and position reports will be on the individual Market-
Makers (as opposed to the clearing firms) and will only be required on 
an as needed basis. Previously, Market-Makers were responsible for 
reporting order information, when requested by the Exchange, if the 
clearing firm did not report on an executed order.
    The proposed rule is also eliminating any requirement that either a 
Market-Maker or clearing firm provide order or positon reports for 
securities traded on the Exchange. The requirement to provide order or 
position reports for securities traded on the Exchange has been removed 
completely and this information will not be required even on an as 
needed basis pursuant to proposed Rule 8.9(b). ``Securities traded on 
the Exchange'' was a reference to when non-options transactions were 
traded on the CBOE. The CBOE deleted its rules related to non-options 
transactions on the Exchange in 2008.\4\ Accordingly, the requirement 
to provide order or position reports for securities traded on the 
Exchange is obsolete.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 58771 (October 10, 
2008), 73 FR 62350 (October 20, 2008) (SR-CBOE-2008-101).
---------------------------------------------------------------------------

    Finally, the proposed rule outlines the form of the order reports 
to be provided by Market-Makers upon request. The proposed rule will 
require that the reports pertaining to orders must include the terms of 
each order, identification of the brokerage firms through which the 
orders were entered, the times of entry or cancellation, the times 
reports of execution were received and, if all or part of the order was 
executed, the quantity and execution price.
    The Exchange believes current Rule 8.9(b) is outdated and 
operationally obsolete. The Exchange does not currently use the daily 
order and position reports from clearing firms. The daily order and 
position reports from clearing firms are no longer needed to conduct 
any routine regulatory surveillances or examinations or fulfill any 
other of the Exchange's regulatory obligations. Any regulatory 
surveillance or examination that previously used the daily order and 
position reports can be operated without the information due to the 
development of effective workarounds. As such, the rule, as currently 
written, presents an undue burden on clearing firms and Market-Makers.

[[Page 25031]]

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.\5\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \6\ 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) \7\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes the proposed rule change 
removes impediments and perfects the mechanism of a free and open 
market by deleting obsolete rule requirements related to daily order 
and position reports provided to the Exchange by clearing firms. The 
daily order and position reports are no longer needed in the normal 
course of the Exchange fulfilling its regulatory responsibilities. In 
the event order or position information related to Market-Maker 
activity in securities underlying options traded on the exchange is 
needed, the proposed rule provides that Market-Makers must provide 
those reports to the Exchange upon request. The proposed rule also 
perfects the mechanism of a free and open market by listing information 
that should be contained in the reports that are to be provided upon 
request of the Exchange. In addition, the proposed rule change is 
substantially similar to rules of other options exchanges.\8\
---------------------------------------------------------------------------

    \8\ See supra note 1 [sic].
---------------------------------------------------------------------------

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 not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule raises 
neither intermarket nor intermarket competition issues, as it relates 
to the submission of reports to the Exchange for regulatory purposes. 
The proposed rule deletes obsolete rule language. The daily order and 
position reports from clearing firms are no longer needed to conduct 
any routine regulatory surveillances or examinations or fulfill any 
other of the Exchange's regulatory obligations. The proposed rule 
change removes this undue burden on clearing firms and Market-Makers 
and replaces it with a requirement substantially similar to that of 
other options exchanges.\9\ The proposed requirement will apply to 
equally to all Market-Makers on the Exchange.
---------------------------------------------------------------------------

    \9\ Id.
---------------------------------------------------------------------------

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action
    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) \11\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
---------------------------------------------------------------------------

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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2017-042 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-2017-042. 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 (http://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-2017-042 and should be 
submitted on or before June 21, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11149 Filed 5-30-17; 8:45 am]
 BILLING CODE 8011-01-P