Self-Regulatory Organizations; Cboe Futures Exchange, LLC; Notice of Filing of Proposed Rule Change Regarding CFE's New Trading System, 58998-59004 [2017-26914]

Download as PDF 58998 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Notices Electronic Comments into the price and volume discovery processes. (B) Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Similarly, the Exchange does not believe that the proposed change to the Exchange’s tiered pricing structure burdens competition, but instead, enhances competition by modifying pricing incentives to attract order flow and incentivize participants to increase their participation on the Exchange. The Exchange notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee structures to be unreasonable or excessive. The Exchange does not believe the proposed amendments would burden intramarket competition as they would be available to all Members uniformly. (C) Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from Members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 18 and paragraph (f) of Rule 19b–4 thereunder.19 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. sradovich on DSK3GMQ082PROD with NOTICES 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: • Use the Commission’s internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CboeEDGX–2017–003 on the subject line. Paper Comments SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82248; File No. SR–CFE– 2017–003] Self-Regulatory Organizations; Cboe Futures Exchange, LLC; Notice of Filing of Proposed Rule Change Regarding CFE’s New Trading System December 8, 2017. • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–CboeEDGX–2017–003. 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 website (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website 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–CboeEDGX–2017–003 and should be submitted on or before January 4, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–26911 Filed 12–13–17; 8:45 am] Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on November 29, 2017 Cboe Futures Exchange, LLC (‘‘CFE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change described in Items I and II below, which Items have been prepared by CFE. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. CFE also has filed this proposed rule change with the Commodity Futures Trading Commission (‘‘CFTC’’). CFE filed a written certification with the CFTC under Section 5c(c) of the Commodity Exchange Act (‘‘CEA’’) 2 on November 29, 2017. I. Self-Regulatory Organization’s Description of the Proposed Rule Change The Exchange proposes to amend its rules in connection with the implementation of a new CFE trading system. The scope of this filing is limited solely to the application of the rule amendments to security futures traded on CFE. The only security futures that have been offered for trading on CFE were traded under Chapter 16 of CFE’s Rulebook, which is applicable to Individual Stock Based and ExchangeTraded Fund Based Volatility Index security futures. CFE does not currently list any security futures for trading. The text of the proposed rule change is attached as Exhibit 4 to the filing but is not attached to the publication of this notice. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, CFE 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. CFE has prepared BILLING CODE 8011–01–P 18 15 U.S.C. 78s(b)(3)(A). 19 17 CFR 240.19b–4(f). VerDate Sep<11>2014 21:28 Dec 13, 2017 1 15 20 17 Jkt 244001 PO 00000 CFR 200.30–3(a)(12). Frm 00207 Fmt 4703 Sfmt 4703 27 U.S.C. 78s(b)(7). U.S.C. 7a–2(c). E:\FR\FM\14DEN1.SGM 14DEN1 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Notices summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. that is either a CFE Trading Privilege Holder (‘‘TPH’’) or a Related Party of a TPH and is pre-authorized by a CFE Clearing Member to report Exchange of Contract for Related Position transactions and Block Trades on behalf of the TPH. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Cboe Global Markets, Inc. (formerly known as CBOE Holdings, Inc.) (‘‘Cboe Global Markets’’) is the parent company of CFE. On February 28, 2017, Cboe Global Markets completed the acquisition of Bats Global Markets, Inc. (‘‘Bats’’). In connection with this acquisition, all of the exchanges owned by Cboe Global Markets, including CFE, are migrating their trading platforms to trading systems based on Bats technology. CFE’s new trading system will be referred to in CFE rules as the ‘‘CFE System’’. The Exchange is proposing to amend the following rule provisions as a result of changes for the CFE System: CFE Rule Chapter 1; CFE Rules 303A, 403, 414, 415, 603, 620, 714, 1602, 1802, and 1902; and CFE Policy and Procedure XVIII. These provisions set forth rules related to Authorized Reporters, Order Entry Operator IDs, Order Entry and Maintenance of Front-End Audit Trail Information, Exchange of Contract for Related Position (‘‘ECRP’’) transactions, Block Trades, Market Manipulation, Disruptive Trading Practices, Imposition of Fines for Minor Rule Violations, Reportable Trading Volume, and Contract Specifications. With one exception, the rule amendments included as part of this rule change are to apply to all products traded on CFE, including both non-security futures and security futures. CFE is making these rule amendments in conjunction with other rule amendments being made by CFE in connection with the implementation of the CFE System that are not required to be submitted to the Commission pursuant to Section 19(b)(7) of the Act 3 and thus are not included as part of this rule change. sradovich on DSK3GMQ082PROD with NOTICES Authorized Reporter CFE Rule Chapter 1 includes definitions for terms used in CFE’s rules. CFE is proposing to include in Chapter 1 a definition for the term ‘‘Authorized Reporter’’ which includes cross-references to proposed CFE Rules 414(i) and 415(f) in which the term ‘‘Authorized Reporter’’ is defined. Specifically, the proposed definition of an Authorized Reporter in proposed Rules 414(i) and 415(f) is an individual 3 15 U.S.C. 78s(b)(7). VerDate Sep<11>2014 21:28 Dec 13, 2017 Jkt 244001 Order Entry Operator IDs CFE Rule 303A (Order Entry Operator IDs) sets forth that each TPH shall include an Order Entry Operator ID with every Order and the requirements applicable to Order Entry Operator IDs. CFE is proposing three changes to Rule 303A. First, CFE is proposing to amend Rule 303A(a) to provide that an Order Entry Operator ID must be included on every Cancel Order and Cancel Replace/ Modify Order and to provide that any Order that does not contain an Order Entry Operator ID will be rejected or canceled back to the sender by CFE’s trading system. Second, CFE is proposing to amend Rule 303A to remove references to quotes. A quote is a two-sided order that includes both a bid and an offer whereas an order only includes a bid or an offer. Most TPHs submit orders instead of quotes, and CFE will no longer accept quotes with the implementation of the CFE System. Third, CFE is proposing to replace the term ‘‘CBOE System’’ (which is the term in CFE’s current rules for CFE’s trading system) with the term ‘‘CFE System’’. Order Entry and Maintenance of FrontEnd Audit Trail Information CFE Rule 403 (Order Entry) sets forth details regarding, among other things, how Orders must be entered into CFE’s trading system, the information each Order must contain, and front-end audit trail information that must be maintained. CFE is proposing to revise Rule 403(a) to describe how TPHs will connect to the CFE System by deleting current language which describes how TPHs sign onto the CBOE System by inputting the user identification assigned for such purpose and replacing that language with language that describes how TPHs will connect to the CFE System in a form and manner prescribed by the Exchange. CFE is also updating Rule 403(a) to revise and reorder the list of items of information that must be included with every Order. Currently, Rule 403(a) provides that each Order must contain the following information: (i) Whether the Order is a buy or sell Order; (ii) Order type; (iii) commodity; (iv) contract expiration; (v) price; (vi) quantity; (vii) account type; (viii) PO 00000 Frm 00208 Fmt 4703 Sfmt 4703 58999 account designation; (ix) in the case of Orders for Options, strike price, type of option (put or call), and expiration month; and (x) such additional information as may be prescribed from time to time by the Exchange. CFE is proposing to amend Rule 403(a) to provide that each Order must contain the following information: (i) Whether the Order is a buy or sell Order; (ii) Order type; (iii) price or premium (if the Order is not a Market Order); (iv) quantity; (v) Contract identifier or product and contract expiration(s); (vi) Client Order ID; (vii) Executing Firm ID (‘‘EFID’’); (viii) Order Entry Operator ID; (ix) Clearing Corporation origin code (C for Customer or F for Firm); (x) Customer Type Indicator code; (xi) manual Order indicator; (xii) account designation; (xiii) in the case of Orders for Options, either Contract identifier or each of strike price, type of option (put or call), and expiration; and (xiv) such additional information as may be prescribed from time to time by the Exchange. Additionally, CFE is proposing to amend Rule 403(a) to provide that any Order that does not contain required information in a form and manner prescribed by the Exchange will be rejected or canceled back to the sender by the CFE System. CFE is proposing to revise Rule 403(c) to reference that the CFE System identifies the Clearing Member for the execution of an Order by the EFID used in the Order submission. CFE is also proposing to replace the reference in Rule 403(c) to CBOE Market Interface (‘‘CMi’’) order structure with a reference to Binary Order Entry (‘‘BOE’’) Order message information since the BOE protocol will be replacing the CMi protocol. CFE is retaining the reference in Rule 403(c) to the Financial Information Exchange (‘‘FIX’’) protocol since TPHs will be able to interface with the CFE System either through the BOE protocol or the FIX protocol. CFE is also proposing to amend Rule 403 to remove references to quotes, to replace the term ‘‘CBOE System’’ with the term ‘‘CFE System’’, and to replace the term ‘‘CBOE Workstation’’ with the term ‘‘CFE Workstation’’ (which is any computer connected directly to the CFE System, including by means of an Exchange defined protocol, for the purpose of trading Contracts on the Exchange). Exchange of Contract for Related Position Transactions CFE Rule 414 (Exchange of Contract for Related Position) sets forth details regarding ECRP transactions. The proposed changes to Rule 414 included E:\FR\FM\14DEN1.SGM 14DEN1 sradovich on DSK3GMQ082PROD with NOTICES 59000 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Notices as part of this rule change filing and which are described below are those amendments to Rule 414 that are related to recordkeeping or reporting. First, CFE is proposing to set forth in proposed Rule 414(e) the Reporting Deadline and Permissible Reporting Period for ECRP transactions that will apply with the CFE System. CFE is proposing that the Reporting Deadline for an ECRP transaction be that an ECRP transaction must be fully reported to the Exchange without delay and by no later than thirty minutes after the transaction is agreed upon, unless otherwise specified in the rules governing the relevant Contract. The Reporting Deadline would be measured from the time the transaction is agreed upon to the time that the full report of the transaction is received by the CFE System matching engine. CFE is proposing that the Permissible Reporting Period for an ECRP transaction be that the ECRP transaction must be fully reported to the Exchange during Trading Hours, or a queuing period, for the Contract that comprises the Contract leg of the transaction, when that Contract is not suspended. A queuing period is a time frame in which the CFE System accepts Orders but they are not executable. Proposed Rule 414(e) also addresses when it is permissible to agree to an ECRP transaction (referred to as a Permissible Agreement Period). Accordingly, in order to satisfy the requirements of proposed Rule 414(e), the time periods in which an ECRP transaction may occur would be limited to those time periods in which the transaction is agreed to within a Permissible Agreement Period and the transaction is able to be fully reported to the Exchange within a Permissible Reporting Period by no later than the Reporting Deadline. Under CFE’s current rules, the reporting deadline is the same as is proposed by this rule change but the permissible reporting periods are specified time frames that apply to all Contracts instead of having a permissible reporting period for each Contract based on its respective Trading Hours and queuing periods as is proposed. Second, CFE is proposing to amend in proposed Rule 414(g) the list of items of information currently set forth in Rule 414(f) that must be recorded on an order ticket for an ECRP by a TPH that acts as agent for an ECRP. In particular, CFE is proposing to add to the items of information that must be recorded the arrangement time, if any, for the ECRP transaction (which is the time at which the parties agreed to enter into the transaction at a later time). CFE is also proposing to clarify and provide that the VerDate Sep<11>2014 21:28 Dec 13, 2017 Jkt 244001 following information must be recorded for the Related Position: The identity, quantity, and price or premium of the Related Position (including the expiration, strike price, type of option (put or call), and delta in the case of an option). Third, CFE is proposing to revise a provision in proposed Rule 414(h) to make clear that references to ECRP are to an ECRP transaction. This provision is in current Rule 414(g) and requires a TPH to maintain records evidencing compliance with the criteria in Rule 414 or be able to obtain those records from the TPH’s Customer. Fourth, CFE is proposing to amend provisions in proposed Rule 414(i) that are currently in Rule 414(h) to provide that an Authorized Reporter for an ECRP transaction must be an individual (and not an entity) and that a Clearing Member may only authorize an Authorized Reporter to report both ECRP transactions and Block Trades (and not one or the other). Fifth, CFE is proposing to amend provisions in proposed Rule 414(j) that are currently in Rule 414(i) to no longer allow for notification of ECRP transactions to the Exchange to be made by email and to provide that the Contract legs of all ECRP transactions will be submitted for clearing on the Business Day during which the applicable transaction is fully reported to the Exchange. Current Rule 414(i) allows Authorized Reporters to designate either the calendar day of an ECRP transaction or the next Business Day as the Business Day for which the Contract leg of the transaction is submitted for clearing if an ECRP transaction is reported to the Exchange from 3:15 p.m. to 4:00 p.m. Chicago time Monday through Thursday. This will no longer be the case once ECRP transactions are reported directly to the CFE System (instead of by email) pursuant to proposed Rule 414(l) as described below. Sixth, CFE is proposing to update provisions in proposed Rule 414(k) that are currently in Rule 414(j) to revise and reorder the list of items of information that must be included in the notification to the Exchange of an ECRP transaction. Currently, the notification of an ECRP transaction must include the following information: The identity, contract expiration, price or premium, quantity, and time of execution of the relevant Contract leg (i.e., the time the parties agreed to the Exchange of Contract for Related Position transaction), (ii) the counterparty Clearing Member, (iii) the identity, quantity, and price of the Related Position, and (iv) any other information required by the Exchange. PO 00000 Frm 00209 Fmt 4703 Sfmt 4703 CFE is proposing to provide in proposed Rule 414(k) that the notification of an ECRP transaction must include the following information: (i) Whether the component of the transaction in the Contract listed on the Exchange is a single leg transaction, a transaction in a spread, or transaction in a strip; (ii) the Contract identifier (or product and contract expiration for a future or product, expiration, strike price, and type of option (put or call) in the case of an option), price (or premium for an option) and quantity of the relevant Contract leg of the transaction, and whether the relevant Contract leg is buy or sell; (iii) the time of execution (i.e., the time at which the parties agreed to the transaction); (iv) the arrangement time, if any (i.e., the time at which the parties agreed to enter into the transaction at a later time); (v) Operator ID; (vi) EFID; (vii) account; (viii) Clearing Corporation origin code; (ix) Customer Type Indicator code; (x) the identity, quantity, and price or premium of the Related Position (including the expiration, strike price, type of option (put or call), and delta in the case of an option); and (xi) any other information required by the Exchange. Seventh, CFE is also proposing to delete a provision from current Rule 414(k) which allows the Authorized Reporters and parties to an ECRP transaction thirty minutes from the time the CFE Help Desk transmits a transaction summary to the Authorized Reporters to notify the Help Desk of any inaccuracies in the content of the transaction summary. The Help Desk (which will be referred to as the Trade Desk with the implementation of the CFE System) will no longer transmit transaction summaries to Authorized Reporters since Authorized Reporters will be entering the information regarding ECRP transactions directly into the CFE System pursuant to proposed Rule 414(l) as described below and will no longer be relying on the Help Desk to manually enter into CFE’s trading system the information included in the email notifications that the Help Desk currently receives from Authorized Reporters regarding an ECRP transaction. Accordingly, the notification provision which permits Authorized Reporters and parties to the transaction to notify the Help Desk of any inaccuracies in the transaction summary from the Help Desk would no longer have applicability. Eighth, CFE proposes to provide in proposed Rule 414(l) that Authorized Reporters shall provide notification to the Exchange of ECRP transactions by reporting them to the CFE System in a form and manner prescribed by the E:\FR\FM\14DEN1.SGM 14DEN1 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES Exchange. Proposed Rule 414(l) also describes how the CFE System includes a mechanism, in a form and manner provided by the Exchange, for the Authorized Reporter that is the initiator of a notification of an ECRP transaction to enter information regarding the transaction and for the Authorized Reporter for the contra side of the transaction to accept the notification to the Exchange of the transaction as entered by the initiating Authorized Reporter and enter contra side information for the transaction. Ninth, CFE proposes to provide in proposed Rule 414(m) how CFE will measure adherence to Permissible Reporting Periods and the Reporting Deadline for ECRP transactions for timing purposes. Specifically, an ECRP transaction would be deemed to have been fully reported to the Exchange when the full report of the transaction has been received by the CFE System matching engine following notification to the CFE System of required information relating to the transaction by the initiating Authorized Reporter and acceptance and notification to the CFE System of required information relating to the transaction by the contra side Authorized Reporter. Tenth, CFE proposes to provide in proposed Rule 414(n) that CFE may modify the timing requirements for and permissible manner of notification to CFE for ECRP transactions in the event of unusual circumstances. For example, this provision could be invoked if the CFE System is not accepting notifications of ECRP transactions due to a system malfunction. Block Trades CFE Rule 415 (Block Trading) (to be renamed Block Trades) sets forth details regarding Block Trades. CFE is proposing to make corollary changes to Rule 415 in relation to recordkeeping and reporting that are substantially equivalent to the changes being made to Rule 414. Those proposed changes are described below. First, CFE is proposing to set forth in Rule 415(c) the Reporting Deadline and Permissible Reporting Period for Block Trades that will apply with the CFE System. CFE is proposing that the Reporting Deadline for a Block Trade be that a Block Trade must be fully reported to the Exchange without delay and by no later than ten minutes after the transaction is agreed upon, unless otherwise specified in the rules governing the relevant Contract. The Reporting Deadline would be measured from the time the transaction is agreed upon to the time that the full report of the transaction is received by the CFE VerDate Sep<11>2014 21:28 Dec 13, 2017 Jkt 244001 System matching engine. CFE is proposing that the Permissible Reporting Period for a Block Trade in a Contract be that the Block Trade must be fully reported to the Exchange during Trading Hours, or a queuing period, for the Contract, when that Contract is not suspended. Proposed Rule 415(c) also addresses when it is permissible to agree to a Block Trade (referred to as a Permissible Agreement Period). Accordingly, in order to satisfy the requirements of proposed Rule 415(c), the time periods in which a Block Trade may occur would be limited to those time periods in which the transaction is agreed to within a Permissible Agreement Period and the transaction is able to be fully reported to the Exchange within a Permissible Reporting Period by no later than the Reporting Deadline. Under CFE’s current rules, the reporting deadline is the same as is proposed by this rule change but the permissible reporting periods are specified time frames that apply to all Contracts instead of having a permissible reporting period for each Contract based on its respective Trading Hours and queuing periods as is proposed. Second, CFE is proposing to amend in Rule 415(e) the list of items of information that must be recorded by a TPH on an order ticket for a Block Trade. In particular, CFE is proposing to add to the items of information that must be recorded the arrangement time, if any, for the Block Trade. CFE is also proposing to clarify and provide that the expiration, strike price, and type of option (put or call) must be recorded for the Block Trade if it involves an option. Third, CFE is proposing to amend provisions in Rule 415(f) to provide that an Authorized Reporter for a Block Trade must be an individual (and not an entity) and that a Clearing Member may only authorize an Authorized Reporter to report both ECRP transactions and Block Trades (and not one or the other). Additionally, CFE is adding a provision to Rule 415(f) which is currently included in current Rule 414(h) in relation to ECRP transactions to make clear that both the parties to and Authorized Reporters for a Block Trade are obligated to comply with the requirements set forth in Rule 415, and any of these parties or Authorized Reporters may be held responsible by the Exchange for noncompliance with those requirements. Fifth, CFE is proposing to amend provisions in proposed Rule 415(g) to no longer allow for notification of Block Trades to the Exchange to be made by email and to provide that Block Trades will be submitted for clearing on the Business Day during which the PO 00000 Frm 00210 Fmt 4703 Sfmt 4703 59001 applicable transaction is fully reported to the Exchange. Current Rule 415(g) allows Authorized Reporters to designate either the calendar day of a Block Trade or the next Business Day as the Business Day for which the Block Trade is submitted for clearing if a Block Trade is reported to the Exchange from 3:15 p.m. to 4:00 p.m. Chicago time Monday through Thursday. This will no longer be the case once Block Trades are reported directly to the CFE System (instead of by email) pursuant to proposed Rule 415(i) as described below. Sixth, CFE is proposing to update provisions in Rule 415(h) to revise and reorder the list of items of information that must be included in the notification to the Exchange of a Block Trade. Currently, the notification of a Block Trade must include the following information: relevant Contract, contract expiration, price or premium, quantity, time of execution (i.e., the time the parties agreed to the Block Trade), counterparty Clearing Member and, if applicable, the underlying commodity, whether the transaction involved a put or a call and the strike price, and any other information that is required by the Exchange. CFE is proposing to provide in proposed Rule 415(h) that the notification of a Block Trade must include the following information: (i) Whether the Block Trade is a single leg transaction, a transaction in a spread, or a transaction in a strip; (ii) the Contract identifier (or product and contract expiration for a future or product, expiration, strike price, and type of option (put or call) in the case of an option), price (or premium for an option) and quantity of the Block Trade and whether the Block Trade is buy or sell; (iii) the time of execution (i.e., the time at which the parties agreed to the transaction); (iv) the arrangement time, if any (i.e., the time at which the parties agreed to enter into the transaction at a later time); (v) Operator ID; (vi) EFID; (vii) account; (viii) Clearing Corporation origin code; (ix) Customer Type Indicator code; and (x) any other information required by the Exchange. Seventh, CFE is proposing to delete a provision from current Rule 415(i) which allows the Authorized Reporters and parties to a Block Trade thirty minutes from the time the CFE Help Desk transmits a transaction summary to the Authorized Reporters to notify the Help Desk of any inaccuracies in the content of the transaction summary. The Help Desk (which will be referred to as the Trade Desk with the implementation of the CFE System) will no longer transmit transaction summaries to Authorized Reporters since Authorized E:\FR\FM\14DEN1.SGM 14DEN1 sradovich on DSK3GMQ082PROD with NOTICES 59002 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Notices Reporters will be entering the information regarding Block Trades directly into the CFE System pursuant to proposed Rule 415(i) as described below and will no longer be relying on the Help Desk to manually enter into CFE’s trading system the information included in the email notifications that the Help Desk currently receives from Authorized Reporters regarding a Block Trade. Accordingly, the notification provision which permits Authorized Reporters and parties to the transaction to notify the Help Desk of any inaccuracies in the transaction summary from the Help Desk would no longer have applicability. Eighth, CFE proposes to provide in proposed Rule 415(i) that Authorized Reporters shall provide notification to the Exchange of Block Trades by reporting them to the CFE System in a form and manner prescribed by the Exchange. Proposed Rule 415(i) also describes how the CFE System includes a mechanism, in a form and manner provided by the Exchange, for the Authorized Reporter that is the initiator of a notification of a Block Trade to enter information regarding the transaction and for the Authorized Reporter for the contra side of the transaction to accept the notification to the Exchange of the transaction as entered by the initiating Authorized Reporter and enter contra side information for the transaction. Ninth, CFE proposes to provide in proposed Rule 415(j) how CFE will measure adherence to Permissible Reporting Periods and the Reporting Deadline for Block Trades for timing purposes. Specifically, a Block Trade would be deemed to have been fully reported to the Exchange when the full report of the transaction has been received by the CFE System matching engine following notification to the CFE System of required information relating to the transaction by the initiating Authorized Reporter and acceptance and notification to the CFE System of required information relating to the transaction by the contra side Authorized Reporter. Tenth, CFE proposes to provide in proposed Rule 415(k) that CFE may modify the timing requirements for and permissible manner of notification to CFE for Block Trades in the event of unusual circumstances. For example, this provision could be invoked if the CFE System is not accepting notifications of Block Trades due to a system malfunction. Market Manipulation CFE Rule 603 (Market Manipulation) prohibits manipulation of the market in VerDate Sep<11>2014 21:28 Dec 13, 2017 Jkt 244001 any Contract traded on CFE. CFE is proposing to amend Rule 603 replace the term ‘‘CBOE System’’ with the term ‘‘CFE System’’. Disruptive Practices CFE Rule 620 (Disruptive Practices) sets forth prohibited disruptive trading practices, and Policy and Procedure XVIII (Disruptive Trading Practices (Rule 620) sets forth guidance regarding the factors the Exchange may use in assessing whether conduct violates Rule 620. Since CFE will no longer accept quotes with the implementation of the CFE System, CFE is proposing to revise Rule 620 and Policy and Procedure XVIII to eliminate references to quotes and to replace references to the CBOE System with references to the CFE System. CFE is proposing to revise Policy and Procedure XVIII(A) to eliminate reference to a category of other prices (such as an Expected Opening Price or EOP) since this concept does not exist with the CFE System. CFE is proposing to amend Policy and Procedure XVIII(J) to revise the definition of actionable messages in relation to the CFE System to be messages that can be accepted by another party or lead to the execution of a trade or cancellation of an Order and to change a reference to an example of a non-actionable message from a request for quote (which will no longer exist with the elimination of quotes) to a heartbeat message transmitted to the CFE System. CFE is proposing to amend Policy and Procedure XVIII(Q) and (U) to replace references to self-trade prevention functionality with references to match trade functionality (which is the name for this functionality with the CFE System). CFE is proposing to revise Policy and Procedure XVIII(R) to eliminate reference to opening rotation periods since this concept does not exist with the CFE System, to replace reference to an EOP with reference to an expected opening price (since although an EOP is not a price that is disseminated by the CFE System, the concept of what market participants expect an opening price to be would still exist), and to revise the restriction regarding the submission of Trade at Settlement (‘‘TAS’’) Orders between Business Days for a product in which TAS Orders may be submitted. CFE is amending the restriction on the submission of TAS Orders to provide that the first pre-opening notice for a TAS Contract in a product establishes the time at which TAS Orders may be submitted for all TAS Contracts in that PO 00000 Frm 00211 Fmt 4703 Sfmt 4703 product. Currently, this restriction applies individually to each TAS Contract based on when the pre-opening notice for that particular TAS Contract is disseminated. A pre-opening notice is a notice disseminated by CFE of the commencement of a queuing state in a Contract during which Orders may be submitted to the CFE System prior to the commencement of trading hours for that Contact. Additionally, the Exchange is proposing to amend Policy and Procedure XVIII(T) to eliminate a reference to user defined spreads and to change the title of the provision to better reflect the remaining portion of the provision which is not being deleted by this change. Although TPHs are currently not permitted to create user defined spreads, this prohibition is currently not systematically enforced by CFE’s trading system. CFE is proposing to remove the rule text prohibiting user defined spreads since the CFE System will be able to systematically prevent TPHs from creating user defined spreads. Imposition of Fines for Minor Rule Violations Rule 714 (Imposition of Fines for Minor Rule Violations) sets forth fine schedules for various violation types. The proposed changes to Rule 714 included as part of this rule change filing and which are described below are those amendments to Rule 714 that are related to recordkeeping or reporting. Specifically, CFE is proposing (i) to modify the fine schedule in Rule 714(f)(i) regarding failure to include an Order Entry Operator ID with an Order submission to eliminate reference to quotes and to change a reference from CBOE System to CFE System; (ii) to modify the fine schedule in Rule 714(f)(ii) regarding failure to identify the correct account type in an Order submission to be more specific to reference failure to identify the correct Customer Type Indicator Code in the Order submission; and (iii) to modify the fine schedules in Rule 714(f)(iii), (iv), (viii), (ix), (x), and (xiv) to either renumber the rule cross-references in those fine schedules without changing their substance to reflect the new rule numbers for the cross-referenced provisions or to change references from CBOE System to CFE System. Reportable Trading Volume Rule 1602(n)(ii) sets forth the reportable trading volume that triggers the requirement to report a volume threshold account to the CFTC for Individual Stock Based and Exchange E:\FR\FM\14DEN1.SGM 14DEN1 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Notices Traded Fund Based Security Futures (referred to in Chapter 16 of CFE’s rules as Volatility Index futures). CFE does not currently list any Volatility Index futures for trading but did so previously and may do so in the future. CFE is proposing to amend Rule 1602(n)(ii) to provide that the reportable trading volume that triggers the requirement to report a volume threshold account is 50 or more futures contracts in a Volatility Index futures contract during a single trading day or such other reportable trading volume threshold as may be designated by the CFTC. This proposed change is consistent with the comparable reportable trading volume rule language this is applicable in relation to other CFE products. CFE is proposing to add the additional phrase that the level may be ‘‘such other reportable trading volume threshold as may be designated by the CFTC’’. Although the level currently designated in Rule 1602(n)(ii) is consistent with CFTC regulations, the CFTC has issued no-action letters with a different designated level and may do so in the future. The proposed additional language allows for reporting consistent with these CFTC designations when and if they are in effect. Contract Specifications CFE Rule 1802 sets forth contract specifications for Single Stock Futures, and CFE Rule 1902 sets forth contract specifications for Narrow-Based Stock Index Futures. CFE is proposing to amend Rules 1802 and 1902 to capitalize the term ‘‘Spread Order’’, to replace the term ‘‘Help Desk’’ with the term ‘‘Trade Desk’’, and to replace the term ‘‘CBOE System’’ with the term ‘‘CFE System’’. sradovich on DSK3GMQ082PROD with NOTICES 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,4 in general, and furthers the objectives of Sections 6(b)(5) 5 and 6(b)(7) 6 in particular in that it is designed: • To prevent fraudulent and manipulative acts and practices; • to foster cooperation and coordination with persons engaged in facilitating transactions in securities; and • 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. 4 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 6 15 U.S.C. 78f(b)(7). 5 15 VerDate Sep<11>2014 21:28 Dec 13, 2017 Jkt 244001 The proposed rule change is consistent with these provisions in that it revises CFE’s rules, including CFE’s recordkeeping and reporting requirements as they may relate to security futures, to conform to the functionality of the CFE System. In particular, the proposed amendments will align the changes resulting from the implementation of the CFE System with the rule provisions contained in CFE’s rules. B. Self-Regulatory Organization’s Statement on Burden on Competition CFE does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act in that the proposed rule changes to Chapter 1 of CFE’s rules to include a definition for Authorized Reporter, to Rule 303A requiring the inclusion of an Order Entry Operator ID on every Cancel Order and Cancel Replace/Modify Order, to Rule 403 regarding the information that must be included with Order submissions and front-end audit trail information that must be maintained, to Rule 414 and 415 regarding ECRP transaction and Block Trade recordkeeping and reporting requirements, to Rule 603 to update terminology, to Rule 620 and Policy and Procedure XVIII to update guidance regarding disruptive trading conduct to conform to the way the CFE System will function, to Rule 714 to update the fine schedules for minor rule violations to conform to other CFE rule revisions, to Rule 1602(n) to update the reportable trading volume threshold requirements for Volatility Index futures, and to Rules 1802 and 1902 to update terminology will enhance CFE’s ability to carry out its responsibilities as a self-regulatory organization. Additionally, CFE believes that the proposed amendments are equitable and not unfairly discriminatory because the changes will apply equally to all market participants. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change will become operative on December 13, 2017. At any time within 60 days of the date of effectiveness of the proposed rule change, the Commission, after PO 00000 Frm 00212 Fmt 4703 Sfmt 4703 59003 consultation with the CFTC, may summarily abrogate the proposed rule change and require that the proposed rule change be refiled in accordance with the provisions of Section 19(b)(1) of the Act.7 IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CFE–2017–003 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–CFE–2017–003. 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 website (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. 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 7 15 E:\FR\FM\14DEN1.SGM U.S.C. 78s(b)(1). 14DEN1 59004 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Notices Number SR–CFE–2017–003, and should be submitted on or before January 4, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–26914 Filed 12–13–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82256; File No. SR–MIAX– 2017–18] Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing of Amendment No. 1 to a Proposed Rule Change to Amend the Fee Schedule December 11, 2017. On May 1, 2017, Miami International Securities Exchange LLC (‘‘MIAX Options’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to adopt a fee schedule to establish the fees for Industry Members related to the National Market System Plan Governing the Consolidated Audit Trail (‘‘CAT NMS Plan’’). The proposed rule change was published in the Federal Register for comment on May 19, 2017.3 The Commission received seven comment letters on the proposed rule change,4 8 17 CFR 200.30–3(a)(73). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 80675 (May 15, 2017), 82 FR 23100 (May 19, 2017) (‘‘Original Proposal’’). 4 Since the CAT NMS Plan Participants’ proposed rule changes to adopt fees to be charged to Industry Members to fund the consolidated audit trail are substantively identical, the Commission is considering all comments received on the proposed rule changes regardless of the comment file to which they were submitted. See text accompanying notes 14–17 infra, for a list of the CAT NMS Plan Participants. See Letter from Theodore R. Lazo, Managing Director and Associate General Counsel, Securities Industry and Financial Markets Association, to Brent J. Fields, Secretary, Commission (dated June 6, 2017), available at: https://www.sec.gov/comments/sr-batsbzx-2017-38/ batsbzx201738-1788188-153228.pdf; Letter from Patricia L. Cerny and Steven O’Malley, Compliance Consultants, to Brent J. Fields, Secretary, Commission (dated June 12, 2017), available at: https://www.sec.gov/comments/sr-cboe-2017-040/ cboe2017040-1799253-153675.pdf; Letter from Daniel Zinn, General Counsel, OTC Markets Group Inc., to Eduardo A. Aleman, Assistant Secretary, Commission (dated June 13, 2017), available at: https://www.sec.gov/comments/sr-finra-2017-011/ finra2017011-1801717-153703.pdf; Letter from Joanna Mallers, Secretary, FIA Principal Traders sradovich on DSK3GMQ082PROD with NOTICES 1 15 VerDate Sep<11>2014 21:28 Dec 13, 2017 Jkt 244001 and a response to comments from the Participants.5 On June 30, 2017, the Commission temporarily suspended and initiated proceedings to determine whether to approve or disapprove the proposed rule change.6 The Commission thereafter received seven comment letters,7 and a response to comments from the Participants.8 On November 7, 2017, the Exchange filed Amendment No. 1 to the proposed rule change, as Group, to Brent J. Fields, Secretary, Commission (dated June 22, 2017), available at: https:// www.sec.gov/comments/sr-cboe-2017-040/ cboe2017040-1819670-154195.pdf; Letter from Stuart J. Kaswell, Executive Vice President and Managing Director, General Counsel, Managed Funds Association, to Brent J. Fields, Secretary, Commission (dated June 23, 2017), available at: https://www.sec.gov/comments/sr-finra-2017-011/ finra2017011-1822454-154283.pdf; and Letter from Suzanne H. Shatto, Investor, to Commission (dated June 27, 2017), available at: https://www.sec.gov/ comments/sr-batsedgx-2017-22/batsedgx201722154443.pdf. The Commission also received a comment letter which is not pertinent to these proposed rule changes. See Letter from Christina Crouch, Smart Ltd., to Brent J. Fields, Secretary, Commission (dated June 5, 2017), available at: https://www.sec.gov/comments/sr-batsbzx-2017-38/ batsbzx201738-1785545-153152.htm. 5 See Letter from CAT NMS Plan Participants to Brent J. Fields, Secretary, Commission (dated June 29, 2017), available at: https://www.sec.gov/ comments/sr-batsbyx-2017-11/batsbyx2017111832632-154584.pdf. 6 See Securities Exchange Act Release No. 81067 (June 30, 2017), 82 FR 31656 (July 7, 2017). 7 See Letter from W. Hardy Callcott, Partner, Sidley Austin LLP, to Brent J. Fields, Secretary, Commission (dated July 27, 2017), available at: https://www.sec.gov/comments/sr-batsbyx-2017-11/ batsbyx201711-2148338-157737.pdf; Letter from Kevin Coleman, General Counsel and Chief Compliance Officer, Belvedere Trading LLC, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: https://www.sec.gov/ comments/sr-batsbyx-2017-11/batsbyx2017112148360-157740.pdf; Letter from Joanna Mallers, Secretary, FIA Principal Traders Group, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: https://www.sec.gov/comments/srbatsbyx-2017-11/batsbyx201711-2151228157745.pdf; Letter from Theodore R. Lazo, Managing Director and Associate General Counsel, SIFMA, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: https:// www.sec.gov/comments/sr-batsbyx-2017-11/ batsbyx201711-2150977-157744.pdf; Letter from Stuart J. Kaswell, Executive Vice President and Managing Director, General Counsel, Managed Funds Association, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: https://www.sec.gov/comments/sr-batsbyx-2017-11/ batsbyx201711-2150818-157743.pdf; Letter from John Kinahan, Chief Executive Officer, Group One Trading, L.P., to Brent J. Fields, Secretary, Commission (dated August 10, 2017), available at: https://www.sec.gov/comments/sr-finra-2017-011/ finra2017011-2214568-160619.pdf; Letter from Joseph Molluso, Executive Vice President and CFO, Virtu Financial, to Brent J. Fields, Commission (dated August 18, 2017), available at: https:// www.sec.gov/comments/sr-finra-2017-011/ finra2017011-2238648-160830.pdf. 8 See Letter from Michael Simon, Chair, CAT NMS Plan Operating Committee, to Brent J. Fields, Commission, Secretary (dated November 2, 2017), available at https://www.sec.gov/comments/srbatsbyx-2017-11/batsbyx201711-2674608161412.pdf. PO 00000 Frm 00213 Fmt 4703 Sfmt 4703 described in Items I and II below, which Items have been prepared by the Exchange.9 On November 9, 2017, the Commission extended the time period within which to approve the proposed rule change or disapprove the proposed rule change to January 14, 2018.10 The Commission is publishing this notice to solicit comments from interested persons on Amendment No. 1.11 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change On May 1, 2017 Miami International Securities Exchange, LLC (‘‘MIAX Options’’ or ‘‘Exchange’’), filed with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) a proposed rule change SR–MIAX–2017–18 (the ‘‘Original Proposal’’),12 to amend the MIAX Options Fee Schedule (the ‘‘Fee Schedule’’) to adopt a fee schedule to establish the fees for Industry Members related to the National Market System Plan Governing the Consolidated Audit Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’).13 MIAX Options files this proposed rule change (the ‘‘Amendment’’) to amend the Original Proposal. This Amendment replaces the Original Proposal in its entirety, and also describes the changes from the Original Proposal. The text of the proposed rule change is available on the Exchange’s website at http://www.miaxoptions.com/rulefilings, at MIAX’s principal office, and at the Commission’s Public Reference Room. 9 Amendment No. 1 to the proposed rule change replaces and supersedes the Original Proposal in its entirety. 10 See Securities Exchange Act Release No. 82049 (November 9, 2017), 82 FR 53549 (November 16, 2017). 11 The Commission notes that on December 1, 2017, the Exchange filed Amendment No. 2 to the proposed rule change. Amendment No. 2 is a partial amendment to the proposed rule change, as amended by Amendment No. 1. Amendment No. 2 proposes to change the parenthetical regarding the OTC Equity Securities discount in paragraph (b)(2) of the proposed fee schedule from ‘‘with a discount for Equity ATSs exclusively trading OTC Equity Securities based on the average shares per trade ratio between NMS Stocks and OTC Equity Securities’’ to ‘‘with a discount for OTC Equity Securities market share of Equity ATSs trading OTC Equity Securities based on the average shares per trade ratio between NMS Stocks and OTC Equity Securities.’’ See Securities Exchange Act Release No. 82257 (December 11, 2017). 12 See Securities Exchange Act Release No. 80675 (May 15, 2017), 82 FR 23100 (May 19, 2017)(SR– MIAX–2017–18). 13 Unless otherwise specified, capitalized terms used in this fee filing are defined as set forth herein, in the CAT Compliance Rule Series, the CAT NMS Plan, or the Original Proposal. E:\FR\FM\14DEN1.SGM 14DEN1

Agencies

[Federal Register Volume 82, Number 239 (Thursday, December 14, 2017)]
[Notices]
[Pages 58998-59004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-26914]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82248; File No. SR-CFE-2017-003]


Self-Regulatory Organizations; Cboe Futures Exchange, LLC; Notice 
of Filing of Proposed Rule Change Regarding CFE's New Trading System

December 8, 2017.
    Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 29, 2017 Cboe 
Futures Exchange, LLC (``CFE'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change described in Items I and II below, which Items have been 
prepared by CFE. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons. CFE also 
has filed this proposed rule change with the Commodity Futures Trading 
Commission (``CFTC''). CFE filed a written certification with the CFTC 
under Section 5c(c) of the Commodity Exchange Act (``CEA'') \2\ on 
November 29, 2017.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(7).
    \2\ 7 U.S.C. 7a-2(c).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    The Exchange proposes to amend its rules in connection with the 
implementation of a new CFE trading system. The scope of this filing is 
limited solely to the application of the rule amendments to security 
futures traded on CFE. The only security futures that have been offered 
for trading on CFE were traded under Chapter 16 of CFE's Rulebook, 
which is applicable to Individual Stock Based and Exchange-Traded Fund 
Based Volatility Index security futures. CFE does not currently list 
any security futures for trading. The text of the proposed rule change 
is attached as Exhibit 4 to the filing but is not attached to the 
publication of this notice.

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

    In its filing with the Commission, CFE 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. CFE has prepared

[[Page 58999]]

summaries, set forth in Sections A, B, and C below, of the most 
significant aspects of such statements.

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

1. Purpose
    Cboe Global Markets, Inc. (formerly known as CBOE Holdings, Inc.) 
(``Cboe Global Markets'') is the parent company of CFE. On February 28, 
2017, Cboe Global Markets completed the acquisition of Bats Global 
Markets, Inc. (``Bats''). In connection with this acquisition, all of 
the exchanges owned by Cboe Global Markets, including CFE, are 
migrating their trading platforms to trading systems based on Bats 
technology. CFE's new trading system will be referred to in CFE rules 
as the ``CFE System''.
    The Exchange is proposing to amend the following rule provisions as 
a result of changes for the CFE System: CFE Rule Chapter 1; CFE Rules 
303A, 403, 414, 415, 603, 620, 714, 1602, 1802, and 1902; and CFE 
Policy and Procedure XVIII. These provisions set forth rules related to 
Authorized Reporters, Order Entry Operator IDs, Order Entry and 
Maintenance of Front-End Audit Trail Information, Exchange of Contract 
for Related Position (``ECRP'') transactions, Block Trades, Market 
Manipulation, Disruptive Trading Practices, Imposition of Fines for 
Minor Rule Violations, Reportable Trading Volume, and Contract 
Specifications. With one exception, the rule amendments included as 
part of this rule change are to apply to all products traded on CFE, 
including both non-security futures and security futures. CFE is making 
these rule amendments in conjunction with other rule amendments being 
made by CFE in connection with the implementation of the CFE System 
that are not required to be submitted to the Commission pursuant to 
Section 19(b)(7) of the Act \3\ and thus are not included as part of 
this rule change.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78s(b)(7).
---------------------------------------------------------------------------

Authorized Reporter
    CFE Rule Chapter 1 includes definitions for terms used in CFE's 
rules. CFE is proposing to include in Chapter 1 a definition for the 
term ``Authorized Reporter'' which includes cross-references to 
proposed CFE Rules 414(i) and 415(f) in which the term ``Authorized 
Reporter'' is defined. Specifically, the proposed definition of an 
Authorized Reporter in proposed Rules 414(i) and 415(f) is an 
individual that is either a CFE Trading Privilege Holder (``TPH'') or a 
Related Party of a TPH and is pre-authorized by a CFE Clearing Member 
to report Exchange of Contract for Related Position transactions and 
Block Trades on behalf of the TPH.
Order Entry Operator IDs
    CFE Rule 303A (Order Entry Operator IDs) sets forth that each TPH 
shall include an Order Entry Operator ID with every Order and the 
requirements applicable to Order Entry Operator IDs. CFE is proposing 
three changes to Rule 303A.
    First, CFE is proposing to amend Rule 303A(a) to provide that an 
Order Entry Operator ID must be included on every Cancel Order and 
Cancel Replace/Modify Order and to provide that any Order that does not 
contain an Order Entry Operator ID will be rejected or canceled back to 
the sender by CFE's trading system.
    Second, CFE is proposing to amend Rule 303A to remove references to 
quotes. A quote is a two-sided order that includes both a bid and an 
offer whereas an order only includes a bid or an offer. Most TPHs 
submit orders instead of quotes, and CFE will no longer accept quotes 
with the implementation of the CFE System.
    Third, CFE is proposing to replace the term ``CBOE System'' (which 
is the term in CFE's current rules for CFE's trading system) with the 
term ``CFE System''.
Order Entry and Maintenance of Front-End Audit Trail Information
    CFE Rule 403 (Order Entry) sets forth details regarding, among 
other things, how Orders must be entered into CFE's trading system, the 
information each Order must contain, and front-end audit trail 
information that must be maintained.
    CFE is proposing to revise Rule 403(a) to describe how TPHs will 
connect to the CFE System by deleting current language which describes 
how TPHs sign onto the CBOE System by inputting the user identification 
assigned for such purpose and replacing that language with language 
that describes how TPHs will connect to the CFE System in a form and 
manner prescribed by the Exchange.
    CFE is also updating Rule 403(a) to revise and reorder the list of 
items of information that must be included with every Order. Currently, 
Rule 403(a) provides that each Order must contain the following 
information: (i) Whether the Order is a buy or sell Order; (ii) Order 
type; (iii) commodity; (iv) contract expiration; (v) price; (vi) 
quantity; (vii) account type; (viii) account designation; (ix) in the 
case of Orders for Options, strike price, type of option (put or call), 
and expiration month; and (x) such additional information as may be 
prescribed from time to time by the Exchange. CFE is proposing to amend 
Rule 403(a) to provide that each Order must contain the following 
information: (i) Whether the Order is a buy or sell Order; (ii) Order 
type; (iii) price or premium (if the Order is not a Market Order); (iv) 
quantity; (v) Contract identifier or product and contract 
expiration(s); (vi) Client Order ID; (vii) Executing Firm ID 
(``EFID''); (viii) Order Entry Operator ID; (ix) Clearing Corporation 
origin code (C for Customer or F for Firm); (x) Customer Type Indicator 
code; (xi) manual Order indicator; (xii) account designation; (xiii) in 
the case of Orders for Options, either Contract identifier or each of 
strike price, type of option (put or call), and expiration; and (xiv) 
such additional information as may be prescribed from time to time by 
the Exchange.
    Additionally, CFE is proposing to amend Rule 403(a) to provide that 
any Order that does not contain required information in a form and 
manner prescribed by the Exchange will be rejected or canceled back to 
the sender by the CFE System.
    CFE is proposing to revise Rule 403(c) to reference that the CFE 
System identifies the Clearing Member for the execution of an Order by 
the EFID used in the Order submission. CFE is also proposing to replace 
the reference in Rule 403(c) to CBOE Market Interface (``CMi'') order 
structure with a reference to Binary Order Entry (``BOE'') Order 
message information since the BOE protocol will be replacing the CMi 
protocol. CFE is retaining the reference in Rule 403(c) to the 
Financial Information Exchange (``FIX'') protocol since TPHs will be 
able to interface with the CFE System either through the BOE protocol 
or the FIX protocol.
    CFE is also proposing to amend Rule 403 to remove references to 
quotes, to replace the term ``CBOE System'' with the term ``CFE 
System'', and to replace the term ``CBOE Workstation'' with the term 
``CFE Workstation'' (which is any computer connected directly to the 
CFE System, including by means of an Exchange defined protocol, for the 
purpose of trading Contracts on the Exchange).
Exchange of Contract for Related Position Transactions
    CFE Rule 414 (Exchange of Contract for Related Position) sets forth 
details regarding ECRP transactions. The proposed changes to Rule 414 
included

[[Page 59000]]

as part of this rule change filing and which are described below are 
those amendments to Rule 414 that are related to recordkeeping or 
reporting.
    First, CFE is proposing to set forth in proposed Rule 414(e) the 
Reporting Deadline and Permissible Reporting Period for ECRP 
transactions that will apply with the CFE System. CFE is proposing that 
the Reporting Deadline for an ECRP transaction be that an ECRP 
transaction must be fully reported to the Exchange without delay and by 
no later than thirty minutes after the transaction is agreed upon, 
unless otherwise specified in the rules governing the relevant 
Contract. The Reporting Deadline would be measured from the time the 
transaction is agreed upon to the time that the full report of the 
transaction is received by the CFE System matching engine. CFE is 
proposing that the Permissible Reporting Period for an ECRP transaction 
be that the ECRP transaction must be fully reported to the Exchange 
during Trading Hours, or a queuing period, for the Contract that 
comprises the Contract leg of the transaction, when that Contract is 
not suspended. A queuing period is a time frame in which the CFE System 
accepts Orders but they are not executable. Proposed Rule 414(e) also 
addresses when it is permissible to agree to an ECRP transaction 
(referred to as a Permissible Agreement Period). Accordingly, in order 
to satisfy the requirements of proposed Rule 414(e), the time periods 
in which an ECRP transaction may occur would be limited to those time 
periods in which the transaction is agreed to within a Permissible 
Agreement Period and the transaction is able to be fully reported to 
the Exchange within a Permissible Reporting Period by no later than the 
Reporting Deadline. Under CFE's current rules, the reporting deadline 
is the same as is proposed by this rule change but the permissible 
reporting periods are specified time frames that apply to all Contracts 
instead of having a permissible reporting period for each Contract 
based on its respective Trading Hours and queuing periods as is 
proposed.
    Second, CFE is proposing to amend in proposed Rule 414(g) the list 
of items of information currently set forth in Rule 414(f) that must be 
recorded on an order ticket for an ECRP by a TPH that acts as agent for 
an ECRP. In particular, CFE is proposing to add to the items of 
information that must be recorded the arrangement time, if any, for the 
ECRP transaction (which is the time at which the parties agreed to 
enter into the transaction at a later time). CFE is also proposing to 
clarify and provide that the following information must be recorded for 
the Related Position: The identity, quantity, and price or premium of 
the Related Position (including the expiration, strike price, type of 
option (put or call), and delta in the case of an option).
    Third, CFE is proposing to revise a provision in proposed Rule 
414(h) to make clear that references to ECRP are to an ECRP 
transaction. This provision is in current Rule 414(g) and requires a 
TPH to maintain records evidencing compliance with the criteria in Rule 
414 or be able to obtain those records from the TPH's Customer.
    Fourth, CFE is proposing to amend provisions in proposed Rule 
414(i) that are currently in Rule 414(h) to provide that an Authorized 
Reporter for an ECRP transaction must be an individual (and not an 
entity) and that a Clearing Member may only authorize an Authorized 
Reporter to report both ECRP transactions and Block Trades (and not one 
or the other).
    Fifth, CFE is proposing to amend provisions in proposed Rule 414(j) 
that are currently in Rule 414(i) to no longer allow for notification 
of ECRP transactions to the Exchange to be made by email and to provide 
that the Contract legs of all ECRP transactions will be submitted for 
clearing on the Business Day during which the applicable transaction is 
fully reported to the Exchange. Current Rule 414(i) allows Authorized 
Reporters to designate either the calendar day of an ECRP transaction 
or the next Business Day as the Business Day for which the Contract leg 
of the transaction is submitted for clearing if an ECRP transaction is 
reported to the Exchange from 3:15 p.m. to 4:00 p.m. Chicago time 
Monday through Thursday. This will no longer be the case once ECRP 
transactions are reported directly to the CFE System (instead of by 
email) pursuant to proposed Rule 414(l) as described below.
    Sixth, CFE is proposing to update provisions in proposed Rule 
414(k) that are currently in Rule 414(j) to revise and reorder the list 
of items of information that must be included in the notification to 
the Exchange of an ECRP transaction. Currently, the notification of an 
ECRP transaction must include the following information: The identity, 
contract expiration, price or premium, quantity, and time of execution 
of the relevant Contract leg (i.e., the time the parties agreed to the 
Exchange of Contract for Related Position transaction), (ii) the 
counterparty Clearing Member, (iii) the identity, quantity, and price 
of the Related Position, and (iv) any other information required by the 
Exchange. CFE is proposing to provide in proposed Rule 414(k) that the 
notification of an ECRP transaction must include the following 
information: (i) Whether the component of the transaction in the 
Contract listed on the Exchange is a single leg transaction, a 
transaction in a spread, or transaction in a strip; (ii) the Contract 
identifier (or product and contract expiration for a future or product, 
expiration, strike price, and type of option (put or call) in the case 
of an option), price (or premium for an option) and quantity of the 
relevant Contract leg of the transaction, and whether the relevant 
Contract leg is buy or sell; (iii) the time of execution (i.e., the 
time at which the parties agreed to the transaction); (iv) the 
arrangement time, if any (i.e., the time at which the parties agreed to 
enter into the transaction at a later time); (v) Operator ID; (vi) 
EFID; (vii) account; (viii) Clearing Corporation origin code; (ix) 
Customer Type Indicator code; (x) the identity, quantity, and price or 
premium of the Related Position (including the expiration, strike 
price, type of option (put or call), and delta in the case of an 
option); and (xi) any other information required by the Exchange.
    Seventh, CFE is also proposing to delete a provision from current 
Rule 414(k) which allows the Authorized Reporters and parties to an 
ECRP transaction thirty minutes from the time the CFE Help Desk 
transmits a transaction summary to the Authorized Reporters to notify 
the Help Desk of any inaccuracies in the content of the transaction 
summary. The Help Desk (which will be referred to as the Trade Desk 
with the implementation of the CFE System) will no longer transmit 
transaction summaries to Authorized Reporters since Authorized 
Reporters will be entering the information regarding ECRP transactions 
directly into the CFE System pursuant to proposed Rule 414(l) as 
described below and will no longer be relying on the Help Desk to 
manually enter into CFE's trading system the information included in 
the email notifications that the Help Desk currently receives from 
Authorized Reporters regarding an ECRP transaction. Accordingly, the 
notification provision which permits Authorized Reporters and parties 
to the transaction to notify the Help Desk of any inaccuracies in the 
transaction summary from the Help Desk would no longer have 
applicability.
    Eighth, CFE proposes to provide in proposed Rule 414(l) that 
Authorized Reporters shall provide notification to the Exchange of ECRP 
transactions by reporting them to the CFE System in a form and manner 
prescribed by the

[[Page 59001]]

Exchange. Proposed Rule 414(l) also describes how the CFE System 
includes a mechanism, in a form and manner provided by the Exchange, 
for the Authorized Reporter that is the initiator of a notification of 
an ECRP transaction to enter information regarding the transaction and 
for the Authorized Reporter for the contra side of the transaction to 
accept the notification to the Exchange of the transaction as entered 
by the initiating Authorized Reporter and enter contra side information 
for the transaction.
    Ninth, CFE proposes to provide in proposed Rule 414(m) how CFE will 
measure adherence to Permissible Reporting Periods and the Reporting 
Deadline for ECRP transactions for timing purposes. Specifically, an 
ECRP transaction would be deemed to have been fully reported to the 
Exchange when the full report of the transaction has been received by 
the CFE System matching engine following notification to the CFE System 
of required information relating to the transaction by the initiating 
Authorized Reporter and acceptance and notification to the CFE System 
of required information relating to the transaction by the contra side 
Authorized Reporter.
    Tenth, CFE proposes to provide in proposed Rule 414(n) that CFE may 
modify the timing requirements for and permissible manner of 
notification to CFE for ECRP transactions in the event of unusual 
circumstances. For example, this provision could be invoked if the CFE 
System is not accepting notifications of ECRP transactions due to a 
system malfunction.
Block Trades
    CFE Rule 415 (Block Trading) (to be renamed Block Trades) sets 
forth details regarding Block Trades. CFE is proposing to make 
corollary changes to Rule 415 in relation to recordkeeping and 
reporting that are substantially equivalent to the changes being made 
to Rule 414. Those proposed changes are described below.
    First, CFE is proposing to set forth in Rule 415(c) the Reporting 
Deadline and Permissible Reporting Period for Block Trades that will 
apply with the CFE System. CFE is proposing that the Reporting Deadline 
for a Block Trade be that a Block Trade must be fully reported to the 
Exchange without delay and by no later than ten minutes after the 
transaction is agreed upon, unless otherwise specified in the rules 
governing the relevant Contract. The Reporting Deadline would be 
measured from the time the transaction is agreed upon to the time that 
the full report of the transaction is received by the CFE System 
matching engine. CFE is proposing that the Permissible Reporting Period 
for a Block Trade in a Contract be that the Block Trade must be fully 
reported to the Exchange during Trading Hours, or a queuing period, for 
the Contract, when that Contract is not suspended. Proposed Rule 415(c) 
also addresses when it is permissible to agree to a Block Trade 
(referred to as a Permissible Agreement Period). Accordingly, in order 
to satisfy the requirements of proposed Rule 415(c), the time periods 
in which a Block Trade may occur would be limited to those time periods 
in which the transaction is agreed to within a Permissible Agreement 
Period and the transaction is able to be fully reported to the Exchange 
within a Permissible Reporting Period by no later than the Reporting 
Deadline. Under CFE's current rules, the reporting deadline is the same 
as is proposed by this rule change but the permissible reporting 
periods are specified time frames that apply to all Contracts instead 
of having a permissible reporting period for each Contract based on its 
respective Trading Hours and queuing periods as is proposed.
    Second, CFE is proposing to amend in Rule 415(e) the list of items 
of information that must be recorded by a TPH on an order ticket for a 
Block Trade. In particular, CFE is proposing to add to the items of 
information that must be recorded the arrangement time, if any, for the 
Block Trade. CFE is also proposing to clarify and provide that the 
expiration, strike price, and type of option (put or call) must be 
recorded for the Block Trade if it involves an option.
    Third, CFE is proposing to amend provisions in Rule 415(f) to 
provide that an Authorized Reporter for a Block Trade must be an 
individual (and not an entity) and that a Clearing Member may only 
authorize an Authorized Reporter to report both ECRP transactions and 
Block Trades (and not one or the other). Additionally, CFE is adding a 
provision to Rule 415(f) which is currently included in current Rule 
414(h) in relation to ECRP transactions to make clear that both the 
parties to and Authorized Reporters for a Block Trade are obligated to 
comply with the requirements set forth in Rule 415, and any of these 
parties or Authorized Reporters may be held responsible by the Exchange 
for noncompliance with those requirements.
    Fifth, CFE is proposing to amend provisions in proposed Rule 415(g) 
to no longer allow for notification of Block Trades to the Exchange to 
be made by email and to provide that Block Trades will be submitted for 
clearing on the Business Day during which the applicable transaction is 
fully reported to the Exchange. Current Rule 415(g) allows Authorized 
Reporters to designate either the calendar day of a Block Trade or the 
next Business Day as the Business Day for which the Block Trade is 
submitted for clearing if a Block Trade is reported to the Exchange 
from 3:15 p.m. to 4:00 p.m. Chicago time Monday through Thursday. This 
will no longer be the case once Block Trades are reported directly to 
the CFE System (instead of by email) pursuant to proposed Rule 415(i) 
as described below.
    Sixth, CFE is proposing to update provisions in Rule 415(h) to 
revise and reorder the list of items of information that must be 
included in the notification to the Exchange of a Block Trade. 
Currently, the notification of a Block Trade must include the following 
information: relevant Contract, contract expiration, price or premium, 
quantity, time of execution (i.e., the time the parties agreed to the 
Block Trade), counterparty Clearing Member and, if applicable, the 
underlying commodity, whether the transaction involved a put or a call 
and the strike price, and any other information that is required by the 
Exchange. CFE is proposing to provide in proposed Rule 415(h) that the 
notification of a Block Trade must include the following information: 
(i) Whether the Block Trade is a single leg transaction, a transaction 
in a spread, or a transaction in a strip; (ii) the Contract identifier 
(or product and contract expiration for a future or product, 
expiration, strike price, and type of option (put or call) in the case 
of an option), price (or premium for an option) and quantity of the 
Block Trade and whether the Block Trade is buy or sell; (iii) the time 
of execution (i.e., the time at which the parties agreed to the 
transaction); (iv) the arrangement time, if any (i.e., the time at 
which the parties agreed to enter into the transaction at a later 
time); (v) Operator ID; (vi) EFID; (vii) account; (viii) Clearing 
Corporation origin code; (ix) Customer Type Indicator code; and (x) any 
other information required by the Exchange.
    Seventh, CFE is proposing to delete a provision from current Rule 
415(i) which allows the Authorized Reporters and parties to a Block 
Trade thirty minutes from the time the CFE Help Desk transmits a 
transaction summary to the Authorized Reporters to notify the Help Desk 
of any inaccuracies in the content of the transaction summary. The Help 
Desk (which will be referred to as the Trade Desk with the 
implementation of the CFE System) will no longer transmit transaction 
summaries to Authorized Reporters since Authorized

[[Page 59002]]

Reporters will be entering the information regarding Block Trades 
directly into the CFE System pursuant to proposed Rule 415(i) as 
described below and will no longer be relying on the Help Desk to 
manually enter into CFE's trading system the information included in 
the email notifications that the Help Desk currently receives from 
Authorized Reporters regarding a Block Trade. Accordingly, the 
notification provision which permits Authorized Reporters and parties 
to the transaction to notify the Help Desk of any inaccuracies in the 
transaction summary from the Help Desk would no longer have 
applicability.
    Eighth, CFE proposes to provide in proposed Rule 415(i) that 
Authorized Reporters shall provide notification to the Exchange of 
Block Trades by reporting them to the CFE System in a form and manner 
prescribed by the Exchange. Proposed Rule 415(i) also describes how the 
CFE System includes a mechanism, in a form and manner provided by the 
Exchange, for the Authorized Reporter that is the initiator of a 
notification of a Block Trade to enter information regarding the 
transaction and for the Authorized Reporter for the contra side of the 
transaction to accept the notification to the Exchange of the 
transaction as entered by the initiating Authorized Reporter and enter 
contra side information for the transaction.
    Ninth, CFE proposes to provide in proposed Rule 415(j) how CFE will 
measure adherence to Permissible Reporting Periods and the Reporting 
Deadline for Block Trades for timing purposes. Specifically, a Block 
Trade would be deemed to have been fully reported to the Exchange when 
the full report of the transaction has been received by the CFE System 
matching engine following notification to the CFE System of required 
information relating to the transaction by the initiating Authorized 
Reporter and acceptance and notification to the CFE System of required 
information relating to the transaction by the contra side Authorized 
Reporter.
    Tenth, CFE proposes to provide in proposed Rule 415(k) that CFE may 
modify the timing requirements for and permissible manner of 
notification to CFE for Block Trades in the event of unusual 
circumstances. For example, this provision could be invoked if the CFE 
System is not accepting notifications of Block Trades due to a system 
malfunction.
Market Manipulation
    CFE Rule 603 (Market Manipulation) prohibits manipulation of the 
market in any Contract traded on CFE. CFE is proposing to amend Rule 
603 replace the term ``CBOE System'' with the term ``CFE System''.
Disruptive Practices
    CFE Rule 620 (Disruptive Practices) sets forth prohibited 
disruptive trading practices, and Policy and Procedure XVIII 
(Disruptive Trading Practices (Rule 620) sets forth guidance regarding 
the factors the Exchange may use in assessing whether conduct violates 
Rule 620.
    Since CFE will no longer accept quotes with the implementation of 
the CFE System, CFE is proposing to revise Rule 620 and Policy and 
Procedure XVIII to eliminate references to quotes and to replace 
references to the CBOE System with references to the CFE System.
    CFE is proposing to revise Policy and Procedure XVIII(A) to 
eliminate reference to a category of other prices (such as an Expected 
Opening Price or EOP) since this concept does not exist with the CFE 
System.
    CFE is proposing to amend Policy and Procedure XVIII(J) to revise 
the definition of actionable messages in relation to the CFE System to 
be messages that can be accepted by another party or lead to the 
execution of a trade or cancellation of an Order and to change a 
reference to an example of a non-actionable message from a request for 
quote (which will no longer exist with the elimination of quotes) to a 
heartbeat message transmitted to the CFE System.
    CFE is proposing to amend Policy and Procedure XVIII(Q) and (U) to 
replace references to self-trade prevention functionality with 
references to match trade functionality (which is the name for this 
functionality with the CFE System).
    CFE is proposing to revise Policy and Procedure XVIII(R) to 
eliminate reference to opening rotation periods since this concept does 
not exist with the CFE System, to replace reference to an EOP with 
reference to an expected opening price (since although an EOP is not a 
price that is disseminated by the CFE System, the concept of what 
market participants expect an opening price to be would still exist), 
and to revise the restriction regarding the submission of Trade at 
Settlement (``TAS'') Orders between Business Days for a product in 
which TAS Orders may be submitted. CFE is amending the restriction on 
the submission of TAS Orders to provide that the first pre-opening 
notice for a TAS Contract in a product establishes the time at which 
TAS Orders may be submitted for all TAS Contracts in that product. 
Currently, this restriction applies individually to each TAS Contract 
based on when the pre-opening notice for that particular TAS Contract 
is disseminated. A pre-opening notice is a notice disseminated by CFE 
of the commencement of a queuing state in a Contract during which 
Orders may be submitted to the CFE System prior to the commencement of 
trading hours for that Contact.
    Additionally, the Exchange is proposing to amend Policy and 
Procedure XVIII(T) to eliminate a reference to user defined spreads and 
to change the title of the provision to better reflect the remaining 
portion of the provision which is not being deleted by this change. 
Although TPHs are currently not permitted to create user defined 
spreads, this prohibition is currently not systematically enforced by 
CFE's trading system. CFE is proposing to remove the rule text 
prohibiting user defined spreads since the CFE System will be able to 
systematically prevent TPHs from creating user defined spreads.
Imposition of Fines for Minor Rule Violations
    Rule 714 (Imposition of Fines for Minor Rule Violations) sets forth 
fine schedules for various violation types. The proposed changes to 
Rule 714 included as part of this rule change filing and which are 
described below are those amendments to Rule 714 that are related to 
recordkeeping or reporting.
    Specifically, CFE is proposing (i) to modify the fine schedule in 
Rule 714(f)(i) regarding failure to include an Order Entry Operator ID 
with an Order submission to eliminate reference to quotes and to change 
a reference from CBOE System to CFE System; (ii) to modify the fine 
schedule in Rule 714(f)(ii) regarding failure to identify the correct 
account type in an Order submission to be more specific to reference 
failure to identify the correct Customer Type Indicator Code in the 
Order submission; and (iii) to modify the fine schedules in Rule 
714(f)(iii), (iv), (viii), (ix), (x), and (xiv) to either re-number the 
rule cross-references in those fine schedules without changing their 
substance to reflect the new rule numbers for the cross-referenced 
provisions or to change references from CBOE System to CFE System.
Reportable Trading Volume
    Rule 1602(n)(ii) sets forth the reportable trading volume that 
triggers the requirement to report a volume threshold account to the 
CFTC for Individual Stock Based and Exchange

[[Page 59003]]

Traded Fund Based Security Futures (referred to in Chapter 16 of CFE's 
rules as Volatility Index futures). CFE does not currently list any 
Volatility Index futures for trading but did so previously and may do 
so in the future.
    CFE is proposing to amend Rule 1602(n)(ii) to provide that the 
reportable trading volume that triggers the requirement to report a 
volume threshold account is 50 or more futures contracts in a 
Volatility Index futures contract during a single trading day or such 
other reportable trading volume threshold as may be designated by the 
CFTC. This proposed change is consistent with the comparable reportable 
trading volume rule language this is applicable in relation to other 
CFE products. CFE is proposing to add the additional phrase that the 
level may be ``such other reportable trading volume threshold as may be 
designated by the CFTC''. Although the level currently designated in 
Rule 1602(n)(ii) is consistent with CFTC regulations, the CFTC has 
issued no-action letters with a different designated level and may do 
so in the future. The proposed additional language allows for reporting 
consistent with these CFTC designations when and if they are in effect.
Contract Specifications
    CFE Rule 1802 sets forth contract specifications for Single Stock 
Futures, and CFE Rule 1902 sets forth contract specifications for 
Narrow-Based Stock Index Futures. CFE is proposing to amend Rules 1802 
and 1902 to capitalize the term ``Spread Order'', to replace the term 
``Help Desk'' with the term ``Trade Desk'', and to replace the term 
``CBOE System'' with the term ``CFE System''.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\4\ in general, and furthers the 
objectives of Sections 6(b)(5) \5\ and 6(b)(7) \6\ in particular in 
that it is designed:
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78f(b)(7).
---------------------------------------------------------------------------

     To prevent fraudulent and manipulative acts and practices;
     to foster cooperation and coordination with persons 
engaged in facilitating transactions in securities; and
     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.
    The proposed rule change is consistent with these provisions in 
that it revises CFE's rules, including CFE's recordkeeping and 
reporting requirements as they may relate to security futures, to 
conform to the functionality of the CFE System. In particular, the 
proposed amendments will align the changes resulting from the 
implementation of the CFE System with the rule provisions contained in 
CFE's rules.

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

    CFE does not believe that the proposed rule change will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act in that the proposed rule changes to Chapter 1 
of CFE's rules to include a definition for Authorized Reporter, to Rule 
303A requiring the inclusion of an Order Entry Operator ID on every 
Cancel Order and Cancel Replace/Modify Order, to Rule 403 regarding the 
information that must be included with Order submissions and front-end 
audit trail information that must be maintained, to Rule 414 and 415 
regarding ECRP transaction and Block Trade recordkeeping and reporting 
requirements, to Rule 603 to update terminology, to Rule 620 and Policy 
and Procedure XVIII to update guidance regarding disruptive trading 
conduct to conform to the way the CFE System will function, to Rule 714 
to update the fine schedules for minor rule violations to conform to 
other CFE rule revisions, to Rule 1602(n) to update the reportable 
trading volume threshold requirements for Volatility Index futures, and 
to Rules 1802 and 1902 to update terminology will enhance CFE's ability 
to carry out its responsibilities as a self-regulatory organization. 
Additionally, CFE believes that the proposed amendments are equitable 
and not unfairly discriminatory because the changes will apply equally 
to all market participants.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change will become operative on December 13, 
2017. At any time within 60 days of the date of effectiveness of the 
proposed rule change, the Commission, after consultation with the CFTC, 
may summarily abrogate the proposed rule change and require that the 
proposed rule change be refiled in accordance with the provisions of 
Section 19(b)(1) of the Act.\7\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CFE-2017-003 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-CFE-2017-003. 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 website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. 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

[[Page 59004]]

Number SR-CFE-2017-003, and should be submitted on or before January 4, 
2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(73).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-26914 Filed 12-13-17; 8:45 am]
 BILLING CODE 8011-01-P