Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Describe Functionality of and Adopt Fees for a New Front-End Order Entry and Management Platform, 55443-55449 [2017-25144]
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Federal Register / Vol. 82, No. 223 / Tuesday, November 21, 2017 / Notices
asabaliauskas on DSKBBXCHB2PROD with NOTICES
its commitments to provide liquidity.260
As described above in Section II.D.,
FICC would require GSD Netting
Members to attest that they have
accounted for their potential Individual
Total Amount, and FICC has had
discussions with Netting Members
regarding ways Netting Members,
regardless of size or access to bank
affiliates, can meet this requirement.261
Moreover, FICC proposes to conduct
due diligence on a quarterly basis to
assess each Netting Member’s ability to
meet its Individual Total Amount.262
According to FICC, this due diligence
would include a review of all
information that the Netting Member
provided FICC in connection with its
ongoing reporting requirements, as well
as a review of other publicly available
information.263
Ronin’s assertion that certain Netting
Members could merely submit an
attestation declaring that they ‘‘are good
for’’ their CCLF contribution 264 fails to
account for the fact that, as described
above, FICC would conduct its own due
diligence to verify the support for each
Netting Member’s attestation.
Specifically, on a quarterly basis, FICC
would review all of the information that
Netting Members provide in connection
with their ongoing reporting obligations
pursuant to the GSD Rules, and it would
review other publicly available
information.265 Therefore, the
Commission believes that the proposal
is consistent with Rule 17Ad–
22(e)(7)(iv) under the Exchange Act.
Finally, Rule 17Ad–22(e)(7)(v) under
the Exchange Act requires policies and
procedures for maintaining and testing
with each liquidity provider, to the
extent practicable, FICC’s procedures
and operational capacity for accessing
its relevant liquid resources.266 As
described above, under the proposal,
FICC would test its operational
procedures for invoking a CCLF Event
and require Netting Members to
participate in such tests.267 Therefore,
the Commission believes that the
260 17 CFR 240.17Ad–22(e)(7)(iv). As discussed in
the CCA Standards Adopting Release, a key benefit
of the due diligence provisions in Rules 17Ad–
22(e)(7)(iv) and (v) is an increased level of
assurance that liquidity providers would be able to
supply liquidity on demand, while their costs
include costs associated with new or updated
policies and procedures, and with ongoing
monitoring, compliance and testing of liquidity
resources. CCA Standards Adopting Release, 81 FR
at 70873.
261 See FICC Letter I at 9.
262 See Notice, 82 FR at 14407–08.
263 Id.
264 Ronin Letter I at 5.
265 See Notice, 82 FR at 14407–08.
266 17 CFR 240.17Ad–22(e)(7)(v).
267 Notice, 82 FR at 14407–08.
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proposal is consistent with Rule 17Ad–
22(e)(7)(v) under the Exchange Act.
IV. Conclusion
Based on the foregoing, the
Commission finds that the proposal is
consistent with the requirements of the
Exchange Act and in particular with the
requirements of Section 17A of the
Exchange Act and the rules and
regulations thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,268
that proposed rule change SR–FICC–
2017–002 be, and it hereby is,
APPROVED as of the date of this order.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.269
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–25145 Filed 11–20–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82088; File No. SR–CBOE–
2017–068]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Describe Functionality
of and Adopt Fees for a New Front-End
Order Entry and Management Platform
November 15, 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 November
2, 2017, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal as a ‘‘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.
268 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
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).
269 17
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55443
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to describe
the functionality of and adopt fees for
the use of the Silexx trading platform
(‘‘Silexx’’ or the ‘‘platform’’) in
connection with the purchase of assets
from Silexx Financial Systems, LLC
(SFS).
The text of the proposed rule change
is also available on the Exchange’s Web
site (https://www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to
describe the functionality and adopt
fees for the use of Silexx, a new frontend order entry and management
platform. On the date of this filing, Cboe
Silexx, LLC (a wholly owned subsidiary
of Cboe Options’ parent company, Cboe
Global Markets, Inc.) (‘‘Cboe Silexx’’)
entered into a definitive asset purchase
agreement with SFS pursuant to which
Cboe Silexx agreed to purchase Silexx,
a front-end, broker-neutral, multi-asset
class order entry and management
trading platform.
Silexx is an order entry and
management trading platform for listed
stocks and options that support both
simple and complex orders.5 The
platform is a software application that is
installed locally on a user’s desktop.
The platform provides users with the
capability to send option orders to U.S.
5 The platform also permits users to submit orders
for commodity futures, commodity options and
other non-security products to be sent to designated
contract markets, futures commission merchants,
introducing brokers or other applicable destinations
of the users’ choice.
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options exchanges and stock orders to
U.S. stock exchanges (and other trading
centers 6), and allows users to input
parameters to control the size, timing
and other variables of their trades.7
Silexx includes access to real-time
options and stock market data, as well
as access to certain historical data. The
platform provides users with the ability
to maintain an electronic audit trail and
provide detailed trade reporting.8 Use of
Silexx is completely optional.
Silexx is designed so that a user may
enter orders into the platform to send to
the executing broker (including Trading
Permit Holders) of its choice with
connectivity to the platform, which
broker can then send orders to Cboe
Options (if the broker-dealer is a
Trading Permit Holder) or other U.S.
exchanges (and trading centers) in
accordance with the users’
instructions.9 If a user sends an order
6 A ‘‘trading center,’’ as provided under Rule
600(b)(78) of Regulation NMS, 17 CFR
242.600(b)(78), means a national securities
exchange or national securities association that
operates a self-regulatory organization trading
facility, an alternative trading system, an exchange
market-maker, an over-the-counter market-maker, or
any other broker or dealer that executes orders
internally by trading as principal or crossing orders
as agent.
7 The platform also provides position and risk
management capabilities. The risk management
functionality allows users to, among other things,
set pre-trade customizable risk controls. Users of
these risk controls set the parameters for the
controls (to the extent an executing broker
sublicenses the platform to its customers (see
below), the executing broker may set risk controls
on behalf of its customers). Users have the option
to instead use other third-party risk control software
or technology. The Exchange notes that executing
broker-dealers (including Trading Permit Holders)
must ensure that any orders that come from the
platform to their systems will be subject to all
applicable pre-trade risk control requirements in
accordance with Rule 15c3–5 of the Securities
Exchange Act of 1934 (the ‘‘Act’’). See 17 CFR
240.15c3–5. Please note that, in the adopting release
for Rule 15c3–5 under the Act, the Securities and
Exchange Commission (the ‘‘Commission’’)
indicated that a broker-dealer relying on risk
management technology developed by third parties
should perform appropriate due diligence to help
assure the controls are reasonably designed,
effective, and otherwise consistent with Rule 15c3–
5. Mere reliance on representations of the thirdparty technology developer, even if an exchange or
other regulated entity, is insufficient to meet this
due diligence standard.
8 The functionality of the platform that formats
users’ stock and option orders entered into it for
users, which then submit those orders to brokerdealers or to exchanges (if the user is a brokerdealer) for execution, is the basis for this rule filing.
Certain versions of the platform (as further
described below) include other functionality,
including additional risk controls and certain data
analysis tools for real-time and historical data,
including market scanners, watchlists and alerts
and other advanced analytical tools, including time
and sales analytics, charting capabilities, alerts,
position analytics, and ‘‘Greek’’ calculations. These
data analysis tools are not subject to this rule filing.
9 Currently, Silexx is not connected directly to
Cboe Options, and thus orders may not be sent
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through the platform to an executing
broker, the broker will route that order
to a market for execution on behalf of
the entering user.10 The executing
broker to which a user chooses to route
an order is entirely within a user’s
discretion.11 Users cannot directly route
orders through the platform to an
exchange or trading center. For users’
convenience, Cboe Silexx will make
available on Cboe Options’ Web site the
list of executing brokers that provide
connectivity to the platform. The
Exchange notes that executing broker’s
decision to connect to Silexx is within
that firm’s sole discretion.12
Certain executing brokers may permit
Silexx users to designate a market to
which the broker is to route an order
received from the platform. Other
executing brokers may employ ‘‘smart
router’’ functionality, which generally
determines where to route an order
based on the brokers’ pre-set algorithmic
logic. Executing brokers may also
provide users with the ability to either
designate a destination market (an
order-by-order basis or by default) or
use the smart router functionality.
Which executing broker a user chooses
to use (and thus which type of routing
permissions are available to a user) is
entirely within a user’s discretion (as
discussed below, addition of such
features to the platform are subject to a
fee).
The Exchange represents Silexx is
merely a new front-end order entry and
management system that interfaces to
the systems of various broker-dealers
that elect to connect to the platform.
The platform is not integrated into and
currently has no connectivity to Cboe
Options’ trading system (or the trading
systems of any other U.S. exchange or
trading center). Cboe Options currently
offers a similar front-end order entry
system, the PULSe workstation, which
permits users to enter orders for
submission to Cboe Options and other
markets. Thus, orders submitted
directly from the platform to Cboe Options. The
Exchange may determine going forward to develop
such a direct connection, which would only be
available to platform users that are Trading Permit
Holders, and would submit any necessary rule
changes related to such platform changes.
10 A user may also be an executing broker if the
user has connectivity to, and is a member of, Cboe
Options or other options and/or stock exchanges (or
trading centers).
11 Currently, there are over 20 executing brokers
with connections to Silexx to which users may
route orders.
12 To the extent a firm sublicenses Silexx to its
customers (see below), the firm will determine
which executing broker to use for platforms used
by the firm and its customers (if the firm is not itself
an executing broker). Users enter into separate
agreements with execution brokers (to which Cboe
Options or Cboe Silexx would not be a party).
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through the platform will ultimately
come to Cboe Options or other
exchanges for execution through thirdparty routing technology. There will be
no change to, or impact on, the
Exchange’s market structure as a result
of offering the platform. As a result, the
Exchange represents the platform does
not require any changes to the
Exchange’s surveillance or
communications rules.
Use of Silexx is completely voluntary.
Cboe Silexx will make the platform
available to users (and in certain cases,
their customers, as further described
below) as a convenience for entering
and managing orders, but the platform
is not an exclusive means for any user
to send orders to Cboe Options or
intermarket. Orders entered into the
platform that are ultimately routed to
Cboe Options for execution will receive
no preferential treatment as compared to
orders electronically sent to Cboe
Options in any other manner. Orders
entered into the platform that get routed
to Cboe Options will be subject to
current trading rules in the same
manner as all other orders sent to the
Exchange, which is the same as orders
that are sent through the system to the
Exchange today. The Cboe Options trade
engine does not distinguish between
orders sent from Silexx and orders sent
in any other manner.
Cboe Silexx will begin making the
system available to users upon the
closing of the acquisition of Silexx.13
Cboe Silexx will grant users licenses to
use Silexx. The Exchange notes that a
firm or individual does not need to be
a Trading Permit Holder to license the
platform, because, as discussed above, a
non-Trading Permit Holder may route
an order through the platform to an
executing broker that is a Trading
Permit Holder, which broker can then
route the order to Cboe Options (or any
other U.S. exchange of which it is a
member). Additionally, the platform is
not currently directly connected to Cboe
Options (or any other U.S. exchange),
and orders submitted into the platform
for execution must be routed through
the connectivity of an executing
broker.14 Cboe Silexx will also provide
technical support, maintenance and
user training for the platform upon the
same terms and conditions for all users.
13 Cboe Silexx intends to close the acquisition on
the signing date (and date of this rule filing). The
proposed rule change will be operative on the
closing date (subject to Commission approval of the
requested operative delay waiver).
14 Rule 6.23A provides that only Trading Permit
Holders and associated persons with authorized
access may directly enter orders into Cboe Options’
trading system.
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The following table sets for the
pricing for the various versions of the
Silexx platform:
Platform version
Platform description
Silexx Basic ..............................................
Order-entry and management system that provides basic
functionality including real-time data, alerts, trade reports, views of exchange books, management of the
customer’s orders and positions, simple and complex
order tickets, and basic risk features.
Same functionality as basic platform plus additional features including an algorithmic order ticket, position analysis, charting, earnings and dividend information, delta
hedging tools, volatility skews, and additional risk features.
Same functionality as Pro platform plus availability of clearing fields in order tickets.
Same functionality as Pro platform plus access to unlimited
customer accounts and customizable risk views.
Same functionality as Pro platform plus functionality package generally used by buy-side investors and
customizable risk views.
Silexx Pro .................................................
Silexx Sell-Side ........................................
Silexx Pro Plus Risk .................................
Silexx Buy-Side Plus Risk ........................
Fee per month per login ID
Additional functionality for platforms
Integrates the platform into users’ other applications
through the Silexx application programming interface
(‘‘API’’).
Availability of crossing order ticket .......................................
Provides access to an executing broker with connectivity to
the Silexx platform for routing.
Ability to receive staged orders, receive ‘‘drop copies’’ of
order fill messages, and route orders to executing brokers.
Ability to receive staged orders, receive ‘‘drop copies’’ of
order fill messages, and route orders to executing brokers through a third-party FIX router.
Crossing ...................................................
Port ...........................................................
Staged Orders, Drop Copies, and Order
Routing Functionality for FIX Connections (sessions).
Staged Orders, Drop Copies, and Order
Routing Functionality for FIX Connections (sessions) Using Third-Party FIX
Router.
Equity Order Reports (paid by the trading
firm).
Domestic Index Data Package ................
Market Data Feeds (excluding feeds included in Domestic Index Data Package).
475.
600.
300.15
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$200/month/ login ID.
300/month/login ID.
100/month/login ID.
250/month/FIX Connection.
500/month/FIX Connection.
250/month/trading firm.
Connection to certain domestic index market data feeds ....
Connections to other market data feeds ..............................
25/user/month.
Actual costs (determined on a time (per
hour) and materials basis) passed
through to user.16
15 Proprietary buy-side firms with 25 or more
login IDs receive a 15% discount on platformrelated fees, excluding firms with dedicated
instances of the platform, which discount
incentives more buy-side investors to use Silexx.
16 The same reasonable hourly and materials rates
will apply to all users based on then-current rates
in line with industry standards, which costs (and
any reasonable, standard mark-up) will be passed
through to users.
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Fee
Daily transmission of equity order reports ............................
The monthly platform fees for the
Silexx platform will allow for Cboe
Silexx’s recoupment of the costs of
maintaining, supporting and enhancing
the platform, as well as for income from
the value-added services being provided
through use of the various versions of
the platform. The Exchange believes the
fee structure represents an equitable
allocation of reasonable fees because the
same monthly log-in ID fees apply to all
users of each version of the Silexx
platform. The Exchange believes these
fees are reasonable and appropriate as
they are competitive with similar
products available throughout the
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400.
Functionality description
API ............................................................
$200.
market and are based on Silexx’s costs
and fee structure currently in place for
the platform. Users can choose to route
orders, including to Cboe Options,
without the use of the platform. Use of
the platform is discretionary and not
compulsory.
The additional functionality will
permit users to add features in
accordance with their use of the Silexx
platform. The API functionality
integrates the platform into users’ other
applications through the Silexx API.
The crossing functionality provides
users who choose to regularly cross
orders with access to a crossing order
ticket. The port fee applies to
connections from users to executing
brokers, which provides users with
access to an executing broker with
connectivity to the Silexx platform for
routing. Financial Information eXchange
(‘‘FIX’’) is an industry-standard, nonproprietary API that permits market
participants to connect to exchanges.
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FIX connectivity provides users with
the ability to receive ‘‘drop copy’’ order
fill messages from their executing
brokers. These fill messages allows
customers to update positions, risk
calculations, and streamline back-office
functions. Additionally, FIX
connections can be updated to permit
the platform to receive orders sent from
another system and then route these
orders through the platform for
execution (staged orders) as well as
provide users with the ability to route
orders in various ways to executing
brokers (such as designation of a market
to which the broker is to route an order
received from the platform and use of a
broker’s ‘‘smart router’’ functionality).
Some users have connections to thirdparty FIX routers, who currently
normalize the format of messages of
their client. To the extent a FIX router
has a connection to the Silexx platform,
users that also have connections to these
routers may elect to receive staged
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orders, drop copies, and order routing
functionality through a fix router.
Connectivity of Silexx into the
technology of third-party FIX routers
causes the monthly fee for this
functionality to be higher than the fee
for users who receive this feature
directly. Additionally, the Silexx
platform permits users to elect to
receive daily transmission of equity
order reports related to order users
submit through the platform. The
proposed monthly fee will allow for the
recoupment of costs of developing,
maintaining, and supporting this
reporting functionality.
The Exchange is offering each type of
additional functionality as a
convenience. The fees for this
additional functionality allow for Cboe
Silexx’s recoupment of the costs of
maintaining, supporting and enhancing
the functionality, as well as for income
from the value-added services being
provided through use of the
functionality in connection with the
platform. The Exchange believes the fee
structure represents an equitable
allocation of reasonable fees because the
same fees apply to all users of each type
of additional functionality. The
Exchange believes these fees are
reasonable and appropriate as they are
competitive with similar products
available throughout the market and are
based on Silexx’s costs and fee structure
currently in place for these features. Use
of each additional functionality is
discretionary and not compulsory.
Except as otherwise set forth above, fees
related to the Silexx platform will be
paid by the user that licenses the
platform directly from Cboe Silexx. The
proposed fees would become effective
on the closing date of the acquisition.17
The Exchange proposes the following
additional fees related to dedicated
instances of the Silexx platform. These
fees are all paid by the client firm with
the dedicated instance.
Dedicated instance functionality
Functionality description
Dedicated Instance .............................................
Deployment of Silexx infrastructure components at a client hosted
site.
Access to and support for domestic and international market centers
and asset classes.
Market data feed handler for third-party market data vendors .............
Integrates Bloomberg backoffice files into master security database
within Silexx.
Dedicated instances of API functionality ..............................................
Connection to CME’s straight through processing facility ....................
FIX connection for multiple asset classes and multiple market centers
Deployment of dedicated instance at a secondary site ........................
Market Center Support .......................................
Dedicated Feed Handler ....................................
Bloomberg Backoffice Integration ......................
Pro Plus API .......................................................
CME STP ...........................................................
FIX International Connection (Session) .............
Additional Site ....................................................
Fee
$20,000/month.
1,000/market center/
month.
2,000/handler/month.
1,000/month.
250/user/month.
1,500/month.
1,500/month.
6,500/month.
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A dedicated instance is local
installation of the Silexx platform
within a client’s system and hosted
infrastructure, essentially permitting a
more customized experience for firms
and their customers. A dedicated
instance permits the firm to determine
which market centers it wants its
instance to access (and receive support
for that access), handle data from widely
used third-party market-data vendors
(e.g. Bloomberg), integrate commonly
used Bloomberg back office files into a
master security database, provide API
functionality for users, connect to the
Chicago Mercantile Exchange’s straightthrough processing facility, provide FIX
connectivity for multiple asset classes
and multiple market centers around the
world, and add the platform
functionality to a second hosted site.
Additionally, the dedicated instance
permits firms to elect to receive various
market data feeds from throughout the
industry. The dedicated instance fees
for the Silexx platform will allow for
Cboe Silexx’s recoupment of the costs of
installing, maintaining, supporting and
enhancing dedicated instances of the
platform, as well as for income from the
value-added services being provided
through use of a dedicated instance and
each type of added functionality. The
Exchange believes the fee structure
represents an equitable allocation of
reasonable fees because the same fees
apply to all client firms with dedicated
instances. The Exchange believes these
fees are reasonable and appropriate as
they are competitive with similar
products available throughout the
market and are based on Silexx’s costs
and fee structure currently in place for
the platform. Use of a dedicated
instance is discretionary and not
compulsory.
The Exchange notes that Cboe Silexx
may provide additional technology
products and services and may in the
future engage in other business
activities, which may include the
provision of other technology products
and services to broker-dealers and nonbroker-dealers in addition to the Silexx
platform.18 In this regard:
• There will be procedures and
internal controls in place that are
reasonably designed so that Cboe Silexx
will not unfairly take advantage of
confidential information it receives as a
result of its relationship with Cboe
Options in connection with the platform
or any other business activities.
The books, records, premises, officers,
directors, agents and employees of Cboe
Silexx, with respect to the products that
may be deemed facilities of Cboe
Options, will be deemed to be those of
17 The Exchange generally invoices firms for fees
in arrears on a monthly basis and intends to do so
following the closing of the acquisition with respect
to all fees related to the Silexx platform, as
proposed in this filing. The Exchange understands
certain Silexx customers pay fees upfront at the
beginning of the month. Therefore, to avoid any
double-charging of customers, Cboe Silexx will not
invoice any user for the proposed fees for the month
in which the closing date falls to the extent the user
paid fees for such month to Silexx at the beginning
of such calendar month.
18 Cboe Silexx is not and, at least initially, will
not be registered as a broker-dealer under Section
15(a) of the Act. In this regard, the Exchange notes
the following: (a) Cboe Options and Cboe Silexx
will be responsible for the marketing of the
platform. Cboe Silexx will be the party to any
agreements with customers for the platform. (b)
Cboe Options and Cboe Silexx will be responsible
for providing, supporting and maintaining the
technology for the platform. Cboe Options will be
responsible for ensuring that Cboe Silexx’s
provision of the platform, to the extent it is deemed
a facility of Cboe Options, meets Cboe Options’ selfregulatory organization obligations. (c) Unless it
registers as a broker-dealer under Section 15(a) of
the Act, Cboe Silexx will not hold itself out as a
broker-dealer, provide advice related to securities
transactions, match orders, make decisions about
routing orders, facilitate the clearance and
settlement of executed trades, prepare or send
transaction confirmations, screen counterparties for
creditworthiness, hold funds or securities, open,
maintain, administer or close brokerage accounts, or
provide assistance in resolving problems,
discrepancies or disputes related to brokerage
accounts. Should Cboe Silexx seek to register as a
broker-dealer in the future, the Exchange represents
that the broker-dealer would not perform any
operations without first discussing with the
Commission staff whether any of the broker-dealer’s
operations should be subject to an Exchange rule
filing required under the Act.
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Cboe Options for purposes of and
subject to oversight pursuant to the Act.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.19 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 20 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) 21 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
Additionally, the Exchange also believes
the proposed rule change is consistent
with Section 6(b)(4) of the Act,22 which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Trading Permit Holders and other
persons using its facilities.
In particular, the Exchange believes
that offering the platform and all other
functionality to market participants
protects investors and is in the public
interest, because it will allow the
Exchange to directly offer users an order
entry and management system in
addition to the technology products it
currently offers (such as the PULSe
workstation). The Silexx platform is
currently offered and used in the
marketplace and competes with similar
products offered by other technology
providers as well as other exchanges.23
Additionally, firms can create their own
proprietary front-end order entry
software and routing technology.
The Exchange believes the proposed
rule change does not discriminate
among market participants because use
19 15
20 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
21 Id.
22 15
U.S.C. 78f(b)(4).
example, International Securities
Exchange, LLC (‘‘ISE’’) offers a front-end order entry
workstation called PrecISE to its customers, which
the Exchange believes has similar functionality as
the system.
23 For
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of the platform and all other
functionality is completely voluntary.
Users can choose to route orders,
including to Cboe Options, without the
use of the platform. The Exchange is
making the platform and all other
functionality available as a convenience
to market participants, who will
continue to have the option to use any
order entry and management system
available in the marketplace to send
orders to the Exchange and other
exchanges; the platform is merely an
alternative that will be offered by the
Exchange rather than its current owner.
The Silexx platform is not an exclusive
means available to market participants
to send orders to Cboe Options or other
markets. Any orders sent through the
platform to Cboe Options for execution
will receive no preferential treatment.
Additionally, the platform will be
available to all market participants, and
the Exchange will license the platform
to market participants pursuant to the
same terms and conditions.
The Exchange believes the platform
and additional functionality removes
impediments to and perfects the
mechanism of a free and open market
and a national market system because
users have discretion to determine to
which broker-dealer they will route
orders from the platform, and, for
certain versions of the platform, what
type of routing parameters will be
available to them (whether it is the
ability to designate a destination market
or use smart router functionality). Nonbroker-dealer users may separately enter
into an agreement with a broker-dealer
(the Exchange will have no involvement
with the entry into such agreements),
which can provide for routing to U.S.
options and stock exchanges (and
trading centers). Only Trading Permit
Holders will continue to be permitted to
directly route orders received from the
platform to Cboe Options, and only
members of other U.S. exchanges will be
able to enter orders for execution at
those exchanges that they receive from
the platform. The Exchange also notes
that broker-dealers must continue to
ensure that orders they receive from the
platform will be subject to applicable
pre-trade risk control requirements of
the broker-dealer that directly submits
the orders to an exchange in accordance
with Rule 15c3–5 under the Act.24
The monthly log-in ID fees, API fee,
crossing fee, and port fee for the Silexx
platform will allow for Cboe Silexx’s
recoupment of the costs of developing,
maintaining, supporting and enhancing
the platform, the API and crossing
functionality, and connections from
24 See
PO 00000
17 CFR 240.15c3–5.
Frm 00104
Fmt 4703
Sfmt 4703
55447
users to executing brokers, as well as for
income from the value-added services
being provided through use of the
various versions of the platform and
these additional services. The Exchange
believes the fee structure represents an
equitable allocation of reasonable fees
because the same monthly log-in ID fees
apply to all users of each version of the
Silexx platform, and because varying
fees for different versions of the
platform reflect the additional
functionality available in the versions.
The Exchange believes these fees are
reasonable and appropriate as they are
competitive with similar products
available throughout the market and are
substantially similar to Silexx’s costs
and fee structure currently in place for
the platform. Use of the platform, and
other functionality, is discretionary and
not compulsory.
The monthly fees related to FIX
connectivity services will allow for the
recoupment of costs of maintaining and
supporting this functionality as well as
for income from the value-added
services being provided from use of this
functionality. The Exchange believes the
fee is reasonable because the Exchange
incurs costs to monitor, develop, and
implement upgrades, maintain, and
customize the platform to ensure
availability of this functionality to
customers. The Exchange believes the
fee is equitable and non-discriminatory
because the monthly fee is assessed to
any user electing to use this
functionality. Connectivity of Silexx
into the technology of third-party FIX
routers causes the monthly fee for this
functionality to be higher than the fee
for users who receive this feature
directly. Use of the FIX connectivity
services by a user is voluntary.
The proposed monthly fee related to
equity order reports will allow for the
recoupment of costs of developing,
maintaining, and supporting this
reporting functionality. The Exchange
believes the monthly fee for
transmission of equity order reports is
reasonable because the Exchange incurs
costs to monitor, develop, and
implement upgrades, maintain, and
customize the platform to allow sending
and receiving of equity order reports.
The Exchange believes the fee is
equitable and not unfairly
discriminatory as it is assessed to all
executing brokers electing to receive
equity order reports. Receipt of the
reports is completely voluntary.
A dedicated instance is local
installation of the Silexx pro platform
within a client’s system and hosted Web
site benefits investors, as it permits a
more customized experience for firms
and their customers. The Exchange
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believes the fees are reasonable because
the Exchange incurs costs to customize
dedicated instances of the platform. The
dedicated instance fees for the Silexx
platform will allow for Cboe Silexx’s
recoupment of the costs of installing,
maintaining, supporting and enhancing
dedicated instances of the platform, as
well as for income from the value-added
services being provided through use of
a dedicated instance and each type of
added functionality. The Exchange
believes the fee structure represents an
equitable allocation of reasonable fees
because the same fees apply to all client
firms with dedicated instances. The
Exchange believes these fees are
reasonable and appropriate as they are
competitive with similar products
available throughout the market and are
based on Silexx’s costs and fee structure
currently in place for the platform. Use
of a dedicated instance is discretionary
and not compulsory.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Cboe Options 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 will make each version of the
platform and additional functionality
available to market participants on the
same terms and conditions, and use of
the platform will be completely
voluntary. Users have discretion to
determine which version of the platform
to use, if any, and to which executing
broker-dealer to route orders through
the platform. Market participants will
continue to have the flexibility to use
any order entry and management
technology they choose. The Exchange
will merely be directly offering the
platform as an alternative to a product
that the Exchange currently makes
available in the market (PULSe). If
market participants believe that other
products available in the marketplace
are more beneficial than the Silexx
platform, they will simply use those
products instead. Orders sent to the
Exchange through the platform for
execution will receive no preferential
treatment. The Cboe Options trade
engine does not distinguish between
orders sent from Silexx and orders sent
in any other manner. Use of the
platform provides users with no
additional access to the Exchange than
is available through the use of any other
front-end order entry system. The
Exchange notes that the platform and
additional functionality are already
available and used in the marketplace
today. This acquisition merely changes
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the party that will own and license them
to users going forward.
The proposed fees related to
additional functionality will not impose
any burden on competition, because the
fees relate to optional functionality and
are assessed equally on users or firms
electing to use the functionality. Use of
such functionality is completely
voluntary. Access to Silexx
functionality, and the proposed Silexx
fees, are unrelated to trading activity on
the Exchange.
The proposed fees related to
dedicated instances of the platform will
not impose any burden on competition,
because the fees relate to optional
functionality and are assessed equally
on firms electing to obtain a dedicated
instance. Use of a dedicated instance is
completely voluntary.
Cboe Options believes that the
proposed rule change will relieve any
burden on, or otherwise promote,
competition. Cboe Options will be
offering a type of product that is widely
available throughout the industry,
including from some exchanges. Market
participants can also develop their own
proprietary products with the same
functionality. ISE currently offers a
similar front-end order entry
application. Cboe Options believes that
the platform will be an addition to its
current suite of technology products it
offers to market participants to enter
and manage orders for routing to U.S.
exchanges. Any market participant will
be able to use the platform. Cboe
Silexx’s ownership of Silexx will not
provide a competitive advantage over
competing products as a result of its
affiliation with Cboe.
The Exchange notes that when
Congress charged the Commission with
supervising the development of a
‘‘national market system’’ for securities,
a premise of its action was that prices,
products and services ordinarily would
be determined by market forces.25
Consistent with this purpose, Congress
and the Commission have repeatedly
stated their preference for competition,
rather than regulatory intervention, to
determine prices, products and services
in the securities markets.26 Many
25 See, e.g., H.R. Rep. No. 94–229, at 92 (1975)
(Conf. Rep.) (stating Congress’s intent that the
‘‘national market system evolve through the
interplay of competitive forces as unnecessary
regulatory restrictions are removed’’).
26 See S. Rep. No. 94–75, 94th Cong., 1st Sess. 8
(1975) (‘‘The objective [in enacting the 1975
amendments to the Exchange Act] would be to
enhance competition and to allow economic forces,
interacting within a fair regulatory field, to arrive
at appropriate variations in practices and
services.’’); Order Approving Proposed Rule Change
Relating to NYSE Arca Data, Securities Exchange
Act Release No. 59039 (December 2, 2008), 73 FR
PO 00000
Frm 00105
Fmt 4703
Sfmt 4703
exchanges and other market participants
make technology products, including
products similar to the Silexx platform,
available to the industry. Other market
participants that offer these products
can adjust pricing or add functionality
to attract users to their products to
compete with the Exchange-offered
products based on all competitive forces
in the marketplace, as the Exchange
expects these other market participants
currently do. The Exchange believes
that other market participants that offer
these products will continue to remain
competitive in the market for orderentry, management and routing
products, as they currently are in this
market in which at least two exchanges
(including Cboe Options) offer similar
technology products. For example, Cboe
Options currently offers PULSe, and ISE
currently offers PrecISE. The Exchange
believes that many investors will
continue to elect to use competing
products available from non-exchange
technology providers.
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)(iii) of the Act 27 and
subparagraph (f)(6) of Rule 19b–4
thereunder.28
74770 (Dec. 9, 2008) at 74781 (‘‘The Exchange Act
and its legislative history strongly support the
Commission’s reliance on competition, whenever
possible, in meeting its regulatory responsibilities
for overseeing the SROs and the national market
system. Indeed, competition among multiple
markets and market participants trading the same
products is the hallmark of the national market
system.’’) (SR–NYSEArca–2006–21); Regulation
NMS, 70 FR at 37499 (observing that NMS
regulation ‘‘has been remarkably successful in
promoting market competition in [the] forms that
are most important to investors and listed
companies’’).
27 15 U.S.C. 78s(b)(3)(A)(iii).
28 17 CFR 240.19b–4(f)(6). 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
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A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative for 30 days after the
date of its filing. However, Rule 19b–
4(f)(6)(iii) 29 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
Exchange has requested that the
Commission waive the 30-day operative
delay so that the proposed rule change
will become operative upon filing. The
Exchange states that such waiver will
enable continuous access to the
platform by users and a seamless
transition of ownership of Silexx. The
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest because the proposal
does not raise any novel issues and
waiver will allow current users of Silexx
to continue to use the platform without
interruption. Therefore, the Commission
hereby waives the operative delay and
designates the proposed rule change
operative upon filing.30
At any time within 60 days of the
filing of such 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 shall institute proceedings
to determine whether the proposed rule
change 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:
asabaliauskas on DSKBBXCHB2PROD 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–
CBOE–2017–068 on the subject line.
of filing of the proposed rule change, or such
shorter time as designated by the Commission.
29 17 CFR 240.19b–4(f)(6)(iii).
30 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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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–2017–068. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CBOE–2017–068, and
should be submitted on or before
December 12, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–25144 Filed 11–20–17; 8:45 am]
BILLING CODE 8011–01–P
31 17
PO 00000
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82080; File No. SR–
NYSEArca–2017–86]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Granting Approval of
a Proposed Rule Change, as Modified
by Amendment Nos. 1 and 2, To List
and Trade Shares of the JPMorgan
Managed Futures ETF Under NYSE
Arca Rule 8.600–E
November 15, 2017.
I. Introduction
On September 14, 2017, NYSE Arca,
Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) 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 list and trade shares
(‘‘Shares’’) of the JPMorgan Managed
Futures ETF (‘‘Fund’’) under NYSE Arca
Rule 8.600–E. The proposed rule change
was published for comment in the
Federal Register on October 5, 2017.3
On October 25, 2017, the Exchange filed
Amendment No. 1 to the proposed rule
change.4 On November 9, 2017, the
Exchange filed Amendment No. 2 to the
proposed rule change.5 The Commission
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 81766
(September 29, 2017), 82 FR 46566 (‘‘Notice’’).
4 Amendment No. 1 to the proposed rule change
replaced and superseded the original filing in its
entirety. In Amendment No. 1, the Exchange
clarified (i) the circumstances under which the
Fund reserves the right to honor a redemption
request by delivering a basket of securities or cash
that differs from the Redemption Instruments (as
defined in the Notice); and (ii) that quotation and
last sale information for the Shares and for portfolio
holdings of the Fund that are U.S. exchange-listed,
including preferred stocks and REITs, will be
available via the Consolidated Tape Association
(‘‘CTA’’) high speed line. Amendment No. 1 is
available at: https://www.sec.gov/comments/srnysearca-2017-86/nysearca201786-2655573161380.pdf. Amendment No. 1 is not subject to
notice and comment because it is a technical
amendment that does not materially alter the
substance of the proposed rule change or raise any
novel regulatory issues.
5 Amendment No. 2 to the proposed rule change
replaces and supersedes the original filing, as
modified by Amendment No. 1, in its entirety. In
Amendment No. 2, the Exchange represented that:
(i) Information regarding market price and trading
volume for the Shares will be continually available
on a real-time basis throughout the day on brokers’
computer screens and other electronic services, and
(ii) information regarding the previous day’s closing
price and trading volume information for the Shares
will be published daily in the financial section of
newspapers. Amendment No. 2 is available at:
https://www.sec.gov/comments/sr-nysearca-2017–
86/nysearca201786–2678501–161480.pdf.
Amendment No. 2 is not subject to notice and
comment because it is a technical amendment that
2 17
CFR 200.30–3(a)(12).
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Continued
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]]>Agencies
[Federal Register Volume 82, Number 223 (Tuesday, November 21, 2017)]
[Notices]
[Pages 55443-55449]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25144]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82088; File No. SR-CBOE-2017-068]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Describe Functionality of and Adopt Fees for a New Front-End Order
Entry and Management Platform
November 15, 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 November 2, 2017, Cboe Exchange, Inc. (the ``Exchange'' or
``Cboe Options'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II below, which Items have been prepared by the Exchange. The
Exchange filed the proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule
19b-4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\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 proposes to describe the functionality of and adopt
fees for the use of the Silexx trading platform (``Silexx'' or the
``platform'') in connection with the purchase of assets from Silexx
Financial Systems, LLC (SFS).
The text of the proposed rule change is also available on the
Exchange's Web site (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to describe the functionality and
adopt fees for the use of Silexx, a new front-end order entry and
management platform. On the date of this filing, Cboe Silexx, LLC (a
wholly owned subsidiary of Cboe Options' parent company, Cboe Global
Markets, Inc.) (``Cboe Silexx'') entered into a definitive asset
purchase agreement with SFS pursuant to which Cboe Silexx agreed to
purchase Silexx, a front-end, broker-neutral, multi-asset class order
entry and management trading platform.
Silexx is an order entry and management trading platform for listed
stocks and options that support both simple and complex orders.\5\ The
platform is a software application that is installed locally on a
user's desktop. The platform provides users with the capability to send
option orders to U.S.
[[Page 55444]]
options exchanges and stock orders to U.S. stock exchanges (and other
trading centers \6\), and allows users to input parameters to control
the size, timing and other variables of their trades.\7\ Silexx
includes access to real-time options and stock market data, as well as
access to certain historical data. The platform provides users with the
ability to maintain an electronic audit trail and provide detailed
trade reporting.\8\ Use of Silexx is completely optional.
---------------------------------------------------------------------------
\5\ The platform also permits users to submit orders for
commodity futures, commodity options and other non-security products
to be sent to designated contract markets, futures commission
merchants, introducing brokers or other applicable destinations of
the users' choice.
\6\ A ``trading center,'' as provided under Rule 600(b)(78) of
Regulation NMS, 17 CFR 242.600(b)(78), means a national securities
exchange or national securities association that operates a self-
regulatory organization trading facility, an alternative trading
system, an exchange market-maker, an over-the-counter market-maker,
or any other broker or dealer that executes orders internally by
trading as principal or crossing orders as agent.
\7\ The platform also provides position and risk management
capabilities. The risk management functionality allows users to,
among other things, set pre-trade customizable risk controls. Users
of these risk controls set the parameters for the controls (to the
extent an executing broker sublicenses the platform to its customers
(see below), the executing broker may set risk controls on behalf of
its customers). Users have the option to instead use other third-
party risk control software or technology. The Exchange notes that
executing broker-dealers (including Trading Permit Holders) must
ensure that any orders that come from the platform to their systems
will be subject to all applicable pre-trade risk control
requirements in accordance with Rule 15c3-5 of the Securities
Exchange Act of 1934 (the ``Act''). See 17 CFR 240.15c3-5. Please
note that, in the adopting release for Rule 15c3-5 under the Act,
the Securities and Exchange Commission (the ``Commission'')
indicated that a broker-dealer relying on risk management technology
developed by third parties should perform appropriate due diligence
to help assure the controls are reasonably designed, effective, and
otherwise consistent with Rule 15c3-5. Mere reliance on
representations of the third-party technology developer, even if an
exchange or other regulated entity, is insufficient to meet this due
diligence standard.
\8\ The functionality of the platform that formats users' stock
and option orders entered into it for users, which then submit those
orders to broker-dealers or to exchanges (if the user is a broker-
dealer) for execution, is the basis for this rule filing. Certain
versions of the platform (as further described below) include other
functionality, including additional risk controls and certain data
analysis tools for real-time and historical data, including market
scanners, watchlists and alerts and other advanced analytical tools,
including time and sales analytics, charting capabilities, alerts,
position analytics, and ``Greek'' calculations. These data analysis
tools are not subject to this rule filing.
---------------------------------------------------------------------------
Silexx is designed so that a user may enter orders into the
platform to send to the executing broker (including Trading Permit
Holders) of its choice with connectivity to the platform, which broker
can then send orders to Cboe Options (if the broker-dealer is a Trading
Permit Holder) or other U.S. exchanges (and trading centers) in
accordance with the users' instructions.\9\ If a user sends an order
through the platform to an executing broker, the broker will route that
order to a market for execution on behalf of the entering user.\10\ The
executing broker to which a user chooses to route an order is entirely
within a user's discretion.\11\ Users cannot directly route orders
through the platform to an exchange or trading center. For users'
convenience, Cboe Silexx will make available on Cboe Options' Web site
the list of executing brokers that provide connectivity to the
platform. The Exchange notes that executing broker's decision to
connect to Silexx is within that firm's sole discretion.\12\
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\9\ Currently, Silexx is not connected directly to Cboe Options,
and thus orders may not be sent directly from the platform to Cboe
Options. The Exchange may determine going forward to develop such a
direct connection, which would only be available to platform users
that are Trading Permit Holders, and would submit any necessary rule
changes related to such platform changes.
\10\ A user may also be an executing broker if the user has
connectivity to, and is a member of, Cboe Options or other options
and/or stock exchanges (or trading centers).
\11\ Currently, there are over 20 executing brokers with
connections to Silexx to which users may route orders.
\12\ To the extent a firm sublicenses Silexx to its customers
(see below), the firm will determine which executing broker to use
for platforms used by the firm and its customers (if the firm is not
itself an executing broker). Users enter into separate agreements
with execution brokers (to which Cboe Options or Cboe Silexx would
not be a party).
---------------------------------------------------------------------------
Certain executing brokers may permit Silexx users to designate a
market to which the broker is to route an order received from the
platform. Other executing brokers may employ ``smart router''
functionality, which generally determines where to route an order based
on the brokers' pre-set algorithmic logic. Executing brokers may also
provide users with the ability to either designate a destination market
(an order-by-order basis or by default) or use the smart router
functionality. Which executing broker a user chooses to use (and thus
which type of routing permissions are available to a user) is entirely
within a user's discretion (as discussed below, addition of such
features to the platform are subject to a fee).
The Exchange represents Silexx is merely a new front-end order
entry and management system that interfaces to the systems of various
broker-dealers that elect to connect to the platform. The platform is
not integrated into and currently has no connectivity to Cboe Options'
trading system (or the trading systems of any other U.S. exchange or
trading center). Cboe Options currently offers a similar front-end
order entry system, the PULSe workstation, which permits users to enter
orders for submission to Cboe Options and other markets. Thus, orders
submitted through the platform will ultimately come to Cboe Options or
other exchanges for execution through third-party routing technology.
There will be no change to, or impact on, the Exchange's market
structure as a result of offering the platform. As a result, the
Exchange represents the platform does not require any changes to the
Exchange's surveillance or communications rules.
Use of Silexx is completely voluntary. Cboe Silexx will make the
platform available to users (and in certain cases, their customers, as
further described below) as a convenience for entering and managing
orders, but the platform is not an exclusive means for any user to send
orders to Cboe Options or intermarket. Orders entered into the platform
that are ultimately routed to Cboe Options for execution will receive
no preferential treatment as compared to orders electronically sent to
Cboe Options in any other manner. Orders entered into the platform that
get routed to Cboe Options will be subject to current trading rules in
the same manner as all other orders sent to the Exchange, which is the
same as orders that are sent through the system to the Exchange today.
The Cboe Options trade engine does not distinguish between orders sent
from Silexx and orders sent in any other manner.
Cboe Silexx will begin making the system available to users upon
the closing of the acquisition of Silexx.\13\ Cboe Silexx will grant
users licenses to use Silexx. The Exchange notes that a firm or
individual does not need to be a Trading Permit Holder to license the
platform, because, as discussed above, a non-Trading Permit Holder may
route an order through the platform to an executing broker that is a
Trading Permit Holder, which broker can then route the order to Cboe
Options (or any other U.S. exchange of which it is a member).
Additionally, the platform is not currently directly connected to Cboe
Options (or any other U.S. exchange), and orders submitted into the
platform for execution must be routed through the connectivity of an
executing broker.\14\ Cboe Silexx will also provide technical support,
maintenance and user training for the platform upon the same terms and
conditions for all users.
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\13\ Cboe Silexx intends to close the acquisition on the signing
date (and date of this rule filing). The proposed rule change will
be operative on the closing date (subject to Commission approval of
the requested operative delay waiver).
\14\ Rule 6.23A provides that only Trading Permit Holders and
associated persons with authorized access may directly enter orders
into Cboe Options' trading system.
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[[Page 55445]]
The following table sets for the pricing for the various versions
of the Silexx platform:
----------------------------------------------------------------------------------------------------------------
Platform version Platform description Fee per month per login ID
----------------------------------------------------------------------------------------------------------------
Silexx Basic.......................... Order-entry and management system that $200.
provides basic functionality including
real-time data, alerts, trade reports,
views of exchange books, management of
the customer's orders and positions,
simple and complex order tickets, and
basic risk features.
Silexx Pro............................ Same functionality as basic platform 400.
plus additional features including an
algorithmic order ticket, position
analysis, charting, earnings and
dividend information, delta hedging
tools, volatility skews, and additional
risk features.
Silexx Sell-Side...................... Same functionality as Pro platform plus 475.
availability of clearing fields in
order tickets.
Silexx Pro Plus Risk.................. Same functionality as Pro platform plus 600.
access to unlimited customer accounts
and customizable risk views.
Silexx Buy-Side Plus Risk............. Same functionality as Pro platform plus 300.\15\
functionality package generally used by
buy-side investors and customizable
risk views.
----------------------------------------------------------------------------------------------------------------
Additional functionality for platforms Functionality description Fee
----------------------------------------------------------------------------------------------------------------
API................................... Integrates the platform into users' $200/month/ login ID.
other applications through the Silexx
application programming interface
(``API'').
Crossing.............................. Availability of crossing order ticket... 300/month/login ID.
Port.................................. Provides access to an executing broker 100/month/login ID.
with connectivity to the Silexx
platform for routing.
Staged Orders, Drop Copies, and Order Ability to receive staged orders, 250/month/FIX Connection.
Routing Functionality for FIX receive ``drop copies'' of order fill
Connections (sessions). messages, and route orders to executing
brokers.
Staged Orders, Drop Copies, and Order Ability to receive staged orders, 500/month/FIX Connection.
Routing Functionality for FIX receive ``drop copies'' of order fill
Connections (sessions) Using Third- messages, and route orders to executing
Party FIX Router. brokers through a third-party FIX
router.
Equity Order Reports (paid by the Daily transmission of equity order 250/month/trading firm.
trading firm). reports.
Domestic Index Data Package........... Connection to certain domestic index 25/user/month.
market data feeds.
Market Data Feeds (excluding feeds Connections to other market data feeds.. Actual costs (determined on a
included in Domestic Index Data time (per hour) and materials
Package). basis) passed through to
user.\16\
----------------------------------------------------------------------------------------------------------------
The monthly platform fees for the Silexx platform will allow for
Cboe Silexx's recoupment of the costs of maintaining, supporting and
enhancing the platform, as well as for income from the value-added
services being provided through use of the various versions of the
platform. The Exchange believes the fee structure represents an
equitable allocation of reasonable fees because the same monthly log-in
ID fees apply to all users of each version of the Silexx platform. The
Exchange believes these fees are reasonable and appropriate as they are
competitive with similar products available throughout the market and
are based on Silexx's costs and fee structure currently in place for
the platform. Users can choose to route orders, including to Cboe
Options, without the use of the platform. Use of the platform is
discretionary and not compulsory.
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\15\ Proprietary buy-side firms with 25 or more login IDs
receive a 15% discount on platform-related fees, excluding firms
with dedicated instances of the platform, which discount incentives
more buy-side investors to use Silexx.
\16\ The same reasonable hourly and materials rates will apply
to all users based on then-current rates in line with industry
standards, which costs (and any reasonable, standard mark-up) will
be passed through to users.
---------------------------------------------------------------------------
The additional functionality will permit users to add features in
accordance with their use of the Silexx platform. The API functionality
integrates the platform into users' other applications through the
Silexx API. The crossing functionality provides users who choose to
regularly cross orders with access to a crossing order ticket. The port
fee applies to connections from users to executing brokers, which
provides users with access to an executing broker with connectivity to
the Silexx platform for routing. Financial Information eXchange
(``FIX'') is an industry-standard, non-proprietary API that permits
market participants to connect to exchanges. FIX connectivity provides
users with the ability to receive ``drop copy'' order fill messages
from their executing brokers. These fill messages allows customers to
update positions, risk calculations, and streamline back-office
functions. Additionally, FIX connections can be updated to permit the
platform to receive orders sent from another system and then route
these orders through the platform for execution (staged orders) as well
as provide users with the ability to route orders in various ways to
executing brokers (such as designation of a market to which the broker
is to route an order received from the platform and use of a broker's
``smart router'' functionality). Some users have connections to third-
party FIX routers, who currently normalize the format of messages of
their client. To the extent a FIX router has a connection to the Silexx
platform, users that also have connections to these routers may elect
to receive staged
[[Page 55446]]
orders, drop copies, and order routing functionality through a fix
router. Connectivity of Silexx into the technology of third-party FIX
routers causes the monthly fee for this functionality to be higher than
the fee for users who receive this feature directly. Additionally, the
Silexx platform permits users to elect to receive daily transmission of
equity order reports related to order users submit through the
platform. The proposed monthly fee will allow for the recoupment of
costs of developing, maintaining, and supporting this reporting
functionality.
The Exchange is offering each type of additional functionality as a
convenience. The fees for this additional functionality allow for Cboe
Silexx's recoupment of the costs of maintaining, supporting and
enhancing the functionality, as well as for income from the value-added
services being provided through use of the functionality in connection
with the platform. The Exchange believes the fee structure represents
an equitable allocation of reasonable fees because the same fees apply
to all users of each type of additional functionality. The Exchange
believes these fees are reasonable and appropriate as they are
competitive with similar products available throughout the market and
are based on Silexx's costs and fee structure currently in place for
these features. Use of each additional functionality is discretionary
and not compulsory. Except as otherwise set forth above, fees related
to the Silexx platform will be paid by the user that licenses the
platform directly from Cboe Silexx. The proposed fees would become
effective on the closing date of the acquisition.\17\
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\17\ The Exchange generally invoices firms for fees in arrears
on a monthly basis and intends to do so following the closing of the
acquisition with respect to all fees related to the Silexx platform,
as proposed in this filing. The Exchange understands certain Silexx
customers pay fees upfront at the beginning of the month. Therefore,
to avoid any double-charging of customers, Cboe Silexx will not
invoice any user for the proposed fees for the month in which the
closing date falls to the extent the user paid fees for such month
to Silexx at the beginning of such calendar month.
---------------------------------------------------------------------------
The Exchange proposes the following additional fees related to
dedicated instances of the Silexx platform. These fees are all paid by
the client firm with the dedicated instance.
----------------------------------------------------------------------------------------------------------------
Dedicated instance functionality Functionality description Fee
----------------------------------------------------------------------------------------------------------------
Dedicated Instance...................... Deployment of Silexx infrastructure $20,000/month.
components at a client hosted site.
Market Center Support................... Access to and support for domestic and 1,000/market center/month.
international market centers and asset
classes.
Dedicated Feed Handler.................. Market data feed handler for third-party 2,000/handler/month.
market data vendors.
Bloomberg Backoffice Integration........ Integrates Bloomberg backoffice files into 1,000/month.
master security database within Silexx.
Pro Plus API............................ Dedicated instances of API functionality.. 250/user/month.
CME STP................................. Connection to CME's straight through 1,500/month.
processing facility.
FIX International Connection (Session).. FIX connection for multiple asset classes 1,500/month.
and multiple market centers.
Additional Site......................... Deployment of dedicated instance at a 6,500/month.
secondary site.
----------------------------------------------------------------------------------------------------------------
A dedicated instance is local installation of the Silexx platform
within a client's system and hosted infrastructure, essentially
permitting a more customized experience for firms and their customers.
A dedicated instance permits the firm to determine which market centers
it wants its instance to access (and receive support for that access),
handle data from widely used third-party market-data vendors (e.g.
Bloomberg), integrate commonly used Bloomberg back office files into a
master security database, provide API functionality for users, connect
to the Chicago Mercantile Exchange's straight-through processing
facility, provide FIX connectivity for multiple asset classes and
multiple market centers around the world, and add the platform
functionality to a second hosted site. Additionally, the dedicated
instance permits firms to elect to receive various market data feeds
from throughout the industry. The dedicated instance fees for the
Silexx platform will allow for Cboe Silexx's recoupment of the costs of
installing, maintaining, supporting and enhancing dedicated instances
of the platform, as well as for income from the value-added services
being provided through use of a dedicated instance and each type of
added functionality. The Exchange believes the fee structure represents
an equitable allocation of reasonable fees because the same fees apply
to all client firms with dedicated instances. The Exchange believes
these fees are reasonable and appropriate as they are competitive with
similar products available throughout the market and are based on
Silexx's costs and fee structure currently in place for the platform.
Use of a dedicated instance is discretionary and not compulsory.
The Exchange notes that Cboe Silexx may provide additional
technology products and services and may in the future engage in other
business activities, which may include the provision of other
technology products and services to broker-dealers and non-broker-
dealers in addition to the Silexx platform.\18\ In this regard:
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\18\ Cboe Silexx is not and, at least initially, will not be
registered as a broker-dealer under Section 15(a) of the Act. In
this regard, the Exchange notes the following: (a) Cboe Options and
Cboe Silexx will be responsible for the marketing of the platform.
Cboe Silexx will be the party to any agreements with customers for
the platform. (b) Cboe Options and Cboe Silexx will be responsible
for providing, supporting and maintaining the technology for the
platform. Cboe Options will be responsible for ensuring that Cboe
Silexx's provision of the platform, to the extent it is deemed a
facility of Cboe Options, meets Cboe Options' self-regulatory
organization obligations. (c) Unless it registers as a broker-dealer
under Section 15(a) of the Act, Cboe Silexx will not hold itself out
as a broker-dealer, provide advice related to securities
transactions, match orders, make decisions about routing orders,
facilitate the clearance and settlement of executed trades, prepare
or send transaction confirmations, screen counterparties for
creditworthiness, hold funds or securities, open, maintain,
administer or close brokerage accounts, or provide assistance in
resolving problems, discrepancies or disputes related to brokerage
accounts. Should Cboe Silexx seek to register as a broker-dealer in
the future, the Exchange represents that the broker-dealer would not
perform any operations without first discussing with the Commission
staff whether any of the broker-dealer's operations should be
subject to an Exchange rule filing required under the Act.
---------------------------------------------------------------------------
There will be procedures and internal controls in place
that are reasonably designed so that Cboe Silexx will not unfairly take
advantage of confidential information it receives as a result of its
relationship with Cboe Options in connection with the platform or any
other business activities.
The books, records, premises, officers, directors, agents and
employees of Cboe Silexx, with respect to the products that may be
deemed facilities of Cboe Options, will be deemed to be those of
[[Page 55447]]
Cboe Options for purposes of and subject to oversight pursuant to the
Act.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\19\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \20\ 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) \21\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. Additionally, the Exchange
also believes the proposed rule change is consistent with Section
6(b)(4) of the Act,\22\ which requires that Exchange rules provide for
the equitable allocation of reasonable dues, fees, and other charges
among its Trading Permit Holders and other persons using its
facilities.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(5).
\21\ Id.
\22\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
In particular, the Exchange believes that offering the platform and
all other functionality to market participants protects investors and
is in the public interest, because it will allow the Exchange to
directly offer users an order entry and management system in addition
to the technology products it currently offers (such as the PULSe
workstation). The Silexx platform is currently offered and used in the
marketplace and competes with similar products offered by other
technology providers as well as other exchanges.\23\ Additionally,
firms can create their own proprietary front-end order entry software
and routing technology.
---------------------------------------------------------------------------
\23\ For example, International Securities Exchange, LLC
(``ISE'') offers a front-end order entry workstation called PrecISE
to its customers, which the Exchange believes has similar
functionality as the system.
---------------------------------------------------------------------------
The Exchange believes the proposed rule change does not
discriminate among market participants because use of the platform and
all other functionality is completely voluntary. Users can choose to
route orders, including to Cboe Options, without the use of the
platform. The Exchange is making the platform and all other
functionality available as a convenience to market participants, who
will continue to have the option to use any order entry and management
system available in the marketplace to send orders to the Exchange and
other exchanges; the platform is merely an alternative that will be
offered by the Exchange rather than its current owner. The Silexx
platform is not an exclusive means available to market participants to
send orders to Cboe Options or other markets. Any orders sent through
the platform to Cboe Options for execution will receive no preferential
treatment. Additionally, the platform will be available to all market
participants, and the Exchange will license the platform to market
participants pursuant to the same terms and conditions.
The Exchange believes the platform and additional functionality
removes impediments to and perfects the mechanism of a free and open
market and a national market system because users have discretion to
determine to which broker-dealer they will route orders from the
platform, and, for certain versions of the platform, what type of
routing parameters will be available to them (whether it is the ability
to designate a destination market or use smart router functionality).
Non-broker-dealer users may separately enter into an agreement with a
broker-dealer (the Exchange will have no involvement with the entry
into such agreements), which can provide for routing to U.S. options
and stock exchanges (and trading centers). Only Trading Permit Holders
will continue to be permitted to directly route orders received from
the platform to Cboe Options, and only members of other U.S. exchanges
will be able to enter orders for execution at those exchanges that they
receive from the platform. The Exchange also notes that broker-dealers
must continue to ensure that orders they receive from the platform will
be subject to applicable pre-trade risk control requirements of the
broker-dealer that directly submits the orders to an exchange in
accordance with Rule 15c3-5 under the Act.\24\
---------------------------------------------------------------------------
\24\ See 17 CFR 240.15c3-5.
---------------------------------------------------------------------------
The monthly log-in ID fees, API fee, crossing fee, and port fee for
the Silexx platform will allow for Cboe Silexx's recoupment of the
costs of developing, maintaining, supporting and enhancing the
platform, the API and crossing functionality, and connections from
users to executing brokers, as well as for income from the value-added
services being provided through use of the various versions of the
platform and these additional services. The Exchange believes the fee
structure represents an equitable allocation of reasonable fees because
the same monthly log-in ID fees apply to all users of each version of
the Silexx platform, and because varying fees for different versions of
the platform reflect the additional functionality available in the
versions. The Exchange believes these fees are reasonable and
appropriate as they are competitive with similar products available
throughout the market and are substantially similar to Silexx's costs
and fee structure currently in place for the platform. Use of the
platform, and other functionality, is discretionary and not compulsory.
The monthly fees related to FIX connectivity services will allow
for the recoupment of costs of maintaining and supporting this
functionality as well as for income from the value-added services being
provided from use of this functionality. The Exchange believes the fee
is reasonable because the Exchange incurs costs to monitor, develop,
and implement upgrades, maintain, and customize the platform to ensure
availability of this functionality to customers. The Exchange believes
the fee is equitable and non-discriminatory because the monthly fee is
assessed to any user electing to use this functionality. Connectivity
of Silexx into the technology of third-party FIX routers causes the
monthly fee for this functionality to be higher than the fee for users
who receive this feature directly. Use of the FIX connectivity services
by a user is voluntary.
The proposed monthly fee related to equity order reports will allow
for the recoupment of costs of developing, maintaining, and supporting
this reporting functionality. The Exchange believes the monthly fee for
transmission of equity order reports is reasonable because the Exchange
incurs costs to monitor, develop, and implement upgrades, maintain, and
customize the platform to allow sending and receiving of equity order
reports. The Exchange believes the fee is equitable and not unfairly
discriminatory as it is assessed to all executing brokers electing to
receive equity order reports. Receipt of the reports is completely
voluntary.
A dedicated instance is local installation of the Silexx pro
platform within a client's system and hosted Web site benefits
investors, as it permits a more customized experience for firms and
their customers. The Exchange
[[Page 55448]]
believes the fees are reasonable because the Exchange incurs costs to
customize dedicated instances of the platform. The dedicated instance
fees for the Silexx platform will allow for Cboe Silexx's recoupment of
the costs of installing, maintaining, supporting and enhancing
dedicated instances of the platform, as well as for income from the
value-added services being provided through use of a dedicated instance
and each type of added functionality. The Exchange believes the fee
structure represents an equitable allocation of reasonable fees because
the same fees apply to all client firms with dedicated instances. The
Exchange believes these fees are reasonable and appropriate as they are
competitive with similar products available throughout the market and
are based on Silexx's costs and fee structure currently in place for
the platform. Use of a dedicated instance is discretionary and not
compulsory.
B. Self-Regulatory Organization's Statement on Burden on Competition
Cboe Options 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 will make each
version of the platform and additional functionality available to
market participants on the same terms and conditions, and use of the
platform will be completely voluntary. Users have discretion to
determine which version of the platform to use, if any, and to which
executing broker-dealer to route orders through the platform. Market
participants will continue to have the flexibility to use any order
entry and management technology they choose. The Exchange will merely
be directly offering the platform as an alternative to a product that
the Exchange currently makes available in the market (PULSe). If market
participants believe that other products available in the marketplace
are more beneficial than the Silexx platform, they will simply use
those products instead. Orders sent to the Exchange through the
platform for execution will receive no preferential treatment. The Cboe
Options trade engine does not distinguish between orders sent from
Silexx and orders sent in any other manner. Use of the platform
provides users with no additional access to the Exchange than is
available through the use of any other front-end order entry system.
The Exchange notes that the platform and additional functionality are
already available and used in the marketplace today. This acquisition
merely changes the party that will own and license them to users going
forward.
The proposed fees related to additional functionality will not
impose any burden on competition, because the fees relate to optional
functionality and are assessed equally on users or firms electing to
use the functionality. Use of such functionality is completely
voluntary. Access to Silexx functionality, and the proposed Silexx
fees, are unrelated to trading activity on the Exchange.
The proposed fees related to dedicated instances of the platform
will not impose any burden on competition, because the fees relate to
optional functionality and are assessed equally on firms electing to
obtain a dedicated instance. Use of a dedicated instance is completely
voluntary.
Cboe Options believes that the proposed rule change will relieve
any burden on, or otherwise promote, competition. Cboe Options will be
offering a type of product that is widely available throughout the
industry, including from some exchanges. Market participants can also
develop their own proprietary products with the same functionality. ISE
currently offers a similar front-end order entry application. Cboe
Options believes that the platform will be an addition to its current
suite of technology products it offers to market participants to enter
and manage orders for routing to U.S. exchanges. Any market participant
will be able to use the platform. Cboe Silexx's ownership of Silexx
will not provide a competitive advantage over competing products as a
result of its affiliation with Cboe.
The Exchange notes that when Congress charged the Commission with
supervising the development of a ``national market system'' for
securities, a premise of its action was that prices, products and
services ordinarily would be determined by market forces.\25\
Consistent with this purpose, Congress and the Commission have
repeatedly stated their preference for competition, rather than
regulatory intervention, to determine prices, products and services in
the securities markets.\26\ Many exchanges and other market
participants make technology products, including products similar to
the Silexx platform, available to the industry. Other market
participants that offer these products can adjust pricing or add
functionality to attract users to their products to compete with the
Exchange-offered products based on all competitive forces in the
marketplace, as the Exchange expects these other market participants
currently do. The Exchange believes that other market participants that
offer these products will continue to remain competitive in the market
for order-entry, management and routing products, as they currently are
in this market in which at least two exchanges (including Cboe Options)
offer similar technology products. For example, Cboe Options currently
offers PULSe, and ISE currently offers PrecISE. The Exchange believes
that many investors will continue to elect to use competing products
available from non-exchange technology providers.
---------------------------------------------------------------------------
\25\ See, e.g., H.R. Rep. No. 94-229, at 92 (1975) (Conf. Rep.)
(stating Congress's intent that the ``national market system evolve
through the interplay of competitive forces as unnecessary
regulatory restrictions are removed'').
\26\ See S. Rep. No. 94-75, 94th Cong., 1st Sess. 8 (1975)
(``The objective [in enacting the 1975 amendments to the Exchange
Act] would be to enhance competition and to allow economic forces,
interacting within a fair regulatory field, to arrive at appropriate
variations in practices and services.''); Order Approving Proposed
Rule Change Relating to NYSE Arca Data, Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR 74770 (Dec. 9, 2008) at
74781 (``The Exchange Act and its legislative history strongly
support the Commission's reliance on competition, whenever possible,
in meeting its regulatory responsibilities for overseeing the SROs
and the national market system. Indeed, competition among multiple
markets and market participants trading the same products is the
hallmark of the national market system.'') (SR-NYSEArca-2006-21);
Regulation NMS, 70 FR at 37499 (observing that NMS regulation ``has
been remarkably successful in promoting market competition in [the]
forms that are most important to investors and listed companies'').
---------------------------------------------------------------------------
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)(iii) of the Act \27\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\28\
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\27\ 15 U.S.C. 78s(b)(3)(A)(iii).
\28\ 17 CFR 240.19b-4(f)(6). 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.
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[[Page 55449]]
A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of its filing. However,
Rule 19b-4(f)(6)(iii) \29\ permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay so that the proposed rule
change will become operative upon filing. The Exchange states that such
waiver will enable continuous access to the platform by users and a
seamless transition of ownership of Silexx. The Commission believes
that waiver of the 30-day operative delay is consistent with the
protection of investors and the public interest because the proposal
does not raise any novel issues and waiver will allow current users of
Silexx to continue to use the platform without interruption. Therefore,
the Commission hereby waives the operative delay and designates the
proposed rule change operative upon filing.\30\
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\29\ 17 CFR 240.19b-4(f)(6)(iii).
\30\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such 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 shall institute proceedings to
determine whether the proposed rule change 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-CBOE-2017-068 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2017-068. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2017-068, and should be
submitted on or before December 12, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-25144 Filed 11-20-17; 8:45 am]
BILLING CODE 8011-01-P
