Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Exchange Rule 11.13, Order Execution and Routing, To Amend the Operation of the Super Aggressive Order Instruction, 35291-35295 [2018-15848]

Download as PDF daltland on DSKBBV9HB2PROD with NOTICES Federal Register / Vol. 83, No. 143 / Wednesday, July 25, 2018 / Notices such as supply and demand. Therefore, applicants assert that secondary market transactions in shares will not lead to discrimination or preferential treatment among purchasers. Finally, applicants represent that share market prices will be disciplined by arbitrage opportunities, which should prevent shares from trading at a material discount or premium from NAV. 6. With respect to Funds that effect creations and redemptions of Creation Units in kind and that are based on certain Underlying Indexes that include foreign securities, applicants request relief from the requirement imposed by section 22(e) in order to allow such Funds to pay redemption proceeds within fifteen calendar days following the tender of Creation Units for redemption. Applicants assert that the requested relief would not be inconsistent with the spirit and intent of section 22(e) to prevent unreasonable, undisclosed or unforeseen delays in the actual payment of redemption proceeds. 7. Applicants request an exemption to permit Funds of Funds to acquire Fund shares beyond the limits of section 12(d)(1)(A) of the Act; and the Funds, and any principal underwriter for the Funds, and/or any broker or dealer registered under the Exchange Act, to sell shares to Funds of Funds beyond the limits of section 12(d)(1)(B) of the Act. The application’s terms and conditions are designed to, among other things, help prevent any potential (i) undue influence over a Fund through control or voting power, or in connection with certain services, transactions, and underwritings, (ii) excessive layering of fees, and (iii) overly complex fund structures, which are the concerns underlying the limits in sections 12(d)(1)(A) and (B) of the Act. 8. Applicants request an exemption from sections 17(a)(1) and 17(a)(2) of the Act to permit persons that are Affiliated Persons, or Second Tier Affiliates, of the Funds, solely by virtue of certain ownership interests, to effectuate purchases and redemptions in-kind. The deposit procedures for in-kind purchases of Creation Units and the redemption procedures for in-kind redemptions of Creation Units will be the same for all purchases and redemptions, and Deposit Instruments and Redemption Instruments will be valued in the same manner as those investment positions currently held by the Funds. Applicants also seek relief from the prohibitions on affiliated transactions in section 17(a) to permit a Fund to sell its shares to and redeem its shares from a Fund of Funds, and to engage in the accompanying in-kind VerDate Sep<11>2014 18:50 Jul 24, 2018 Jkt 244001 transactions with the Fund of Funds.4 The purchase of Creation Units by a Fund of Funds directly from a Fund will be accomplished in accordance with the policies of the Fund of Funds and will be based on the NAVs of the Funds. 9. Applicants also request relief to permit a Feeder Fund to acquire shares of another registered investment company managed by the Adviser having substantially the same investment objectives as the Feeder Fund (‘‘Master Fund’’) beyond the limitations in section 12(d)(1)(A) and permit the Master Fund, and any principal underwriter for the Master Fund, to sell shares of the Master Fund to the Feeder Fund beyond the limitations in section 12(d)(1)(B). 10. Section 6(c) of the Act permits the Commission to exempt any persons or transactions from any provision of the Act if such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that (a) the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part of any person concerned; (b) the proposed transaction is consistent with the policies of each registered investment company involved; and (c) the proposed transaction is consistent with the general purposes of the Act. For the Commission, by the Division of Investment Management, under delegated authority. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–15861 Filed 7–24–18; 8:45 am] BILLING CODE 8011–01–P 4 The requested relief would apply to direct sales of shares in Creation Units by a Fund to a Fund of Funds and redemptions of those shares. Applicants, moreover, are not seeking relief from section 17(a) for, and the requested relief will not apply to, transactions where a Fund could be deemed an Affiliated Person, or a Second-Tier Affiliate, of a Fund of Funds because an Adviser or an entity controlling, controlled by or under common control with an Adviser provides investment advisory services to that Fund of Funds. PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 35291 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83673; File No. SR– CboeBZX–2018–051] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Exchange Rule 11.13, Order Execution and Routing, To Amend the Operation of the Super Aggressive Order Instruction July 19, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 11, 2018, Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ‘‘noncontroversial’’ proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) thereunder,4 which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend the operation of the Super Aggressive order instruction under paragraph (b)(4)(C) of Exchange Rule 11.13. The text of the proposed rule change is available at the Exchange’s website at www.markets.cboe.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). 2 17 E:\FR\FM\25JYN1.SGM 25JYN1 35292 Federal Register / Vol. 83, No. 143 / Wednesday, July 25, 2018 / Notices the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change daltland on DSKBBV9HB2PROD with NOTICES 1. Purpose The Exchange proposes to amend the description of the Super Aggressive ReRoute instruction (‘‘Super Aggressive instruction’’) under paragraph (b)(4)(C) of Exchange Rule 11.13, Order Execution and Routing to: (i) Specify that an incoming BZX Post Only Order or Partial Post Only at Limit Order that locks a resting order with a Super Aggressive instruction must be designated as eligible for display on the Exchange (a ‘‘displayed order’’) for the order with a Super Aggressive instruction to engage in a liquidity swap and execute against that incoming order; and (ii) modify language from the description of the Super Aggressive instruction that states if an order that does not contain a Super Aggressive instruction maintains higher priority than one or more Super Aggressive eligible orders, the Super Aggressive eligible order(s) with lower priority will not be converted and an incoming BZX Post Only Order or Partial Post Only at Limit Order will be posted or cancelled in accordance with Exchange Rule 11.9(c)(6) or 11.9(c)(7). Super Aggressive is an optional order instruction that directs the System 5 to route an order when an away Trading Center locks or crosses the limit price of the order resting on the BZX Book.6 When an order with a Super Aggressive instruction is locked by an incoming BZX Post Only Order or Partial Post Only at Limit Order (hereafter collectively referred to as a ‘‘Post Only Order’’) that does not remove liquidity pursuant to Rule 11.9(c)(6) or 11.9(c)(7), respectively,7 the order with a Super Aggressive instruction is converted to 5 The term ‘‘System’’ is defined as ‘‘the electronic communications and trading facility designated by the Board through which securities orders of Users are consolidated for ranking, execution and, when applicable, routing away.’’ See Exchange Rule 1.5(aa). 6 See Exchange Rule 1.5(e). 7 A BZX Post Only Order will remove contra-side liquidity from the BZX Book if the order is an order to buy or sell a security priced below $1.00 or if the value of such execution when removing liquidity equals or exceeds the value of such execution if the order instead posted to the BZX Book and subsequently provided liquidity, including the applicable fees charged or rebates provided. See Exchange Rule 11.9(c)(6). A Partial Post Only at Limit Order will remove liquidity from the BZX Book up to the full size of the order if, at the time of receipt, it can be executed at prices better than its limit price. See Exchange Rule 11.9(c)(7). VerDate Sep<11>2014 18:50 Jul 24, 2018 Jkt 244001 an executable order and will remove liquidity against such incoming order. First, the Exchange proposes to modify the behavior of the Super Aggressive instruction to require that the incoming Post Only Order that locks a resting order with a Super Aggressive instruction must be designated as a displayed order for an execution to occur. The Super Aggressive instruction is generally utilized for best execution purposes because it enables the order to immediately attempt to access displayed liquidity on another Trading Center that is either priced equal to or better than the order with a Super Aggressive instruction’s limit price. The Super Aggressive instruction also enables the order to execute against an equally priced incoming Post Only Order that would otherwise not execute by being willing to act as the liquidity remover in such a scenario. Today, the incoming Post Only Order may either be a displayed order or a non-displayed order for it to engage in a liquidity swap with an order with a Super Aggressive instruction resting on the BZX Book. Consistent with the Super Aggressive instruction to access liquidity displayed on other Trading Centers, the Exchange proposes to amend the Super Aggressive instruction such that an order with such instruction will execute against an equally priced incoming Post Only Order only when such order is to be displayed on the BZX Book. The order with a Super Aggressive instruction would continue to act as a liquidity remover in such a scenario. Should such an equally priced incoming Post Only Order not be designated as a displayed order, the resting order with a Super Aggressive instruction would remain on the BZX Book and await an execution where it may act as a liquidity provider. The incoming Post Only Order that is also designated as a non-displayed order would be posted to the BZX Book at its limit price, creating an internally locked non-displayed book. As is the case today, an execution would continue to occur where an incoming Post Only Order is priced more aggressively than the order with a Super Aggressive instruction resting on the BZX Book, regardless of whether the incoming Post Only Order was designated as a displayed order or a non-displayed order.8 The Exchange notes that Users seeking to act as a liquidity remover once resting on the BZX Book in all cases (i.e., seeking to execute against incoming Post Only orders regardless of the display instruction) may attach the Non-Displayed Swap (‘‘NDS’’) PO 00000 8 See id. Frm 00091 instruction to their order.9 The NDS instruction is similar to the Super Aggressive instruction, in that it also is an optional order instruction that a User may include on an order that directs the Exchange to have such order, when resting on the BZX Book, execute against an incoming Post Only Order rather than have it be locked by the incoming order. Today, because orders with either instruction (i.e., Super Aggressive and NDS) will execute against incoming Post Only Orders regardless of whether the order is to be displayed, the instructions are currently identical with two exceptions. First, an order with a Super Aggressive instruction will not convert into a liquidity removing order and execute against a Post Only Order if there is an order on the order book with priority over such order that does not also contain a Super Aggressive instruction. As further described below, the Exchange is proposing to modify this feature of the Super Aggressive instruction. The second current distinction between the two instructions, which would remain, is that an order with a Super Aggressive instruction can be displayed on the Exchange whereas an order with the NDS instruction must be non-displayed. As amended, the additional distinction between the two instructions would be whether an order would become a liquidity removing order against any Post Only Order that would lock it (i.e., NDS) or only when the Post Only Order that would lock it also is a displayed order (i.e., Super Aggressive). The below examples illustrate the proposed behavior. Assume the National Best Bid and Offer (‘‘NBBO’’) is $10.00 by $10.10. An order to buy is displayed on the BZX Book at $10.00 with a Super Aggressive instruction. There are no other orders resting on the BZX Book. An order to sell at $10.00 with a Post Only that is designated as a displayed order is entered. The incoming order to sell would execute against the resting order to buy at $10.00, the locking price, because the incoming order was designated as a displayed order. The order to buy would act as the liquidity remover and the order to sell would act as the liquidity adder. However, no execution would occur if the incoming order to sell was designated as a non-displayed order. Instead, the incoming order to sell would be posted non-displayed to the BZX Book at $10.00, its limit price, causing the BZX Book to be internally locked. 9 See Fmt 4703 Sfmt 4703 E:\FR\FM\25JYN1.SGM Exchange Rule 11.9(c)(12). 25JYN1 daltland on DSKBBV9HB2PROD with NOTICES Federal Register / Vol. 83, No. 143 / Wednesday, July 25, 2018 / Notices Second, the Exchange proposes to enable a Post Only Order that is designated as a displayed order to execute against an equally priced nondisplayed order with a Super Aggressive instruction where a non-displayed order without a Super Aggressive instruction maintains time priority over the Super Aggressive eligible order at that price. In such case, the non-displayed, non-Super Aggressive order seeks to remain a liquidity provider and would cede time priority to the order with a Super Aggressive instruction, which is willing to act as a liquidity remover to facilitate the execution. The Exchange proposes to effect this change by modifying language in the description of the Super Aggressive instruction to state that if an order displayed on the BZX Book does not contain a Super Aggressive instruction and maintains higher priority than one or more Super Aggressive eligible orders, the Super Aggressive eligible order(s) with lower priority will not be converted and the incoming Post Only Order will be posted or cancelled in accordance with Exchange Rule 11.9(c)(6) or Rule 11.9(c)(7). Thus, an order with a Super Aggressive instruction, whether displayed on the Exchange or nondisplayed, will never execute ahead of a displayed order that maintains time priority. The Super Aggressive instruction is designed to facilitate executions that would otherwise not occur due to Post Only Order requirement to not remove liquidity. Users entering orders with the Super Aggressive instruction tend to be fee agnostic because an order with a Super Aggressive instruction is willing to route to an away Trading Center displaying an equally or better priced order (i.e., pay a fee at such Trading Center). Meanwhile, an order without the Super Aggressive instruction elects to remain on the BZX Book as the liquidity provider until it may execute against an incoming order that would act as the liquidity remover. Therefore, enabling the Super Aggressive order to execute against an incoming order, regardless of whether a non-displayed order without a Super Aggressive instruction maintains priority, is consistent with the User’s intent for both orders—one choses to remain the liquidity provider and forgo the execution while the other is willing to execute irrespective of whether it is the liquidity provider or remover. The Exchange notes that similar behavior occurs for orders utilizing the NDS instruction,10 which also seeks to 10 See Exchange Rule 11.9(c)(12). See also Securities Exchange Act Release No. 83537 (June VerDate Sep<11>2014 18:50 Jul 24, 2018 Jkt 244001 engage in a liquidity swap against incoming Post Only Orders. The Exchange, however, has proposed to retain the existing limitation with respect to orders displayed on the BZX Book. The following example illustrates the operation of an order with a Super Aggressive instruction under the proposed rule change. Assume the NBBO is $10.00 by $10.04. There is a non-displayed Limit Order to buy resting on the BZX Book at $10.03 (‘‘Order A’’). A second non-displayed Limit Order to buy at $10.03 is then entered with a Super Aggressive instruction and has time priority behind the first Limit Order (‘‘Order B’’). A Post Only Order to sell priced at $10.03 is entered. Under current behavior, the incoming sell Post Only Order would not execute against Order A and would post to the BZX Book 11 because the value of such execution against the resting buy order when removing liquidity does not equal or exceed the value of such execution if the order instead posted to the BZX Book and subsequently provided liquidity, including the applicable fees charged or rebates provided. Further, the incoming sell Post Only Order could not execute against Order B because Order A is on the BZX Book and maintains time priority over Order B. Under the proposed change, the incoming sell order, if it was designated as a displayed order, would execute against Order B and Order B would become the remover of liquidity while the incoming sell Post Only Order would become the liquidity provider. In such case, Order A cedes priority to Order B because Order A did not also include a Super Aggressive instruction 12 and thus the User that submitted the order did not indicate the preference to be treated as the remover of liquidity in favor of an execution; instead, by not using Super Aggressive, a User indicates the preference to remain posted on the BZX Book as a liquidity provider. However, if the incoming sell order was priced at $10.02, it would receive sufficient price improvement to execute upon entry against all resting buy Limit Orders in time priority at $10.03.13 Also, if Order 28, 2018), (SR–CboeBZX–2018–042) (including an example where an order cedes execution priority to an order with an NDS instruction). 11 Such order would be posted to the BZX Book in accordance with the Exchange’s re-pricing instructions to comply with Rule 610(d) of Regulation NMS. See Exchange Rules 11.9(g)(1) and (g)(2). See also 242 CFR 242.610(d). 12 This behavior is consistent with the operation of the Exchange’s NDS instruction. See supra note 10. 13 The execution occurs here because the value of the execution against the buy order when removing PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 35293 A was displayed on the BZX Book, no execution would occur, as the proposed change would only apply to nondisplayed liquidity. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 14 in general, and furthers the objectives of Section 6(b)(5) of the Act 15 in particular, in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The proposed changes to the Super Aggressive order instruction are designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The Super Aggressive instruction is an optional feature that is intended to reflect the order management practices of various market participants. The proposal to limit the execution of an order with a Super Aggressive instruction to execute against incoming Post Only Orders that also are designated as displayed orders promotes just and equitable principles of trade because it enables Users to elect an order instruction consistent with their intent to execute only against displayed orders, in part, for best execution purposes. The amended Super Aggressive instruction would ensure executions at the best available price displayed on another Trading Center or against an incoming order that would have been displayed on the BZX Book. Users seeking to act as a liquidity remover once resting on the BZX Book and execute against an incoming Post Only Order that is also designated as a non-displayed order may attach the NDS instruction to their order.16 The proposed change to the Super Aggressive instruction also removes impediments to and perfects the mechanism of a free and open market and a national market system because it liquidity exceeds the value of such execution if the order instead posted to the BZX Book and subsequently provided liquidity, including the applicable fees charged or rebates provided. See supra note 7. 14 15 U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(5). 16 See Exchange Rule 11.9(c)(12). E:\FR\FM\25JYN1.SGM 25JYN1 35294 Federal Register / Vol. 83, No. 143 / Wednesday, July 25, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES is designed to facilitate executions that would otherwise not occur due to the Post Only Order requirement to not remove liquidity. The proposal enables non-displayed Super Aggressive orders to execute against an incoming order, regardless of whether another nondisplayed order without a Super Aggressive instruction maintains priority consistent with the User’s intent for both orders—one chooses to remain the liquidity provider and forgo the execution while the other is willing to execute irrespective of whether it is the liquidity provider or remover. The nonSuper Aggressive order seeks to remain a liquidity provider and cede its time priority to the order with a Super Aggressive instruction, which is willing to act as a liquidity remover to facilitate the execution. It also enables an order without the Super Aggressive instruction to remain on the BZX Book as a liquidity provider, consistent with the expected operation of their resting order. The Exchange notes that similar behavior occurs for orders utilizing the NDS 17 instruction, which also seeks to engage in a liquidity swap against incoming Post Only Orders. Finally, by limiting the proposed change to nondisplayed orders, the proposal remains consistent with NDS and also retains existing functionality with respect to the handling of displayed orders. For the reasons set forth above, the Exchange believes the proposal removes impediments to and perfects the mechanism of a free and open market and a national market system, and, in general, protects investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. On the contrary, the proposed changes to the Super Aggressive order instruction are intended to improve the usefulness of the instruction and to align its operation with the intention of the User, resulting in enhanced competition through increased usage and execution quality on the Exchange. Thus, to the extent the change is intended to improve functionality on the Exchange to encourage Users to direct their orders to the Exchange, the change is competitive, but the Exchange does not believe the proposed change will result in any burden on intermarket competition as it is a minor change to available functionality. The proposed 17 See supra note 10. VerDate Sep<11>2014 18:50 Jul 24, 2018 Jkt 244001 changes to the Super Aggressive order instruction also promote intramarket competition because they will facilitate the execution of orders that would otherwise remain unexecuted consistent with the intent of the User entering the order, thereby increasing the efficient functioning of the Exchange. Further, the Super Aggressive order instruction will remain available to all Users in the same way it is today. Thus, Users can continue to choose between various optional order instructions, including Super Aggressive, NDS, and others, depending on the order handling they prefer the Exchange to utilize. Therefore, the Exchange does not believe the proposed rule change will result in any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 18 and subparagraph (f)(6) of Rule 19b–4 thereunder.19 A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative for 30 days after the date of the filing. However, Rule 19b– 4(f)(6)(iii) 20 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. In its filing, BZX requested that the Commission waive the 30-day operative delay so that the Exchange can implement the proposed rule change promptly after filing. The Exchange stated that the proposal to allow an U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 20 17 CFR 240.19b–4(f)(6)(iii). PO 00000 18 15 19 17 Frm 00093 Fmt 4703 Sfmt 4703 order with a Super Aggressive instruction to execute against an incoming Post Only order only if the Post Only order is displayable is consistent with the use of the Super Aggressive instruction to access liquidity displayed on other Trading Centers. Further, according to the Exchange, users seeking to execute against incoming non-displayable Post Only orders will continue to be able to attach the NDS order instruction, as well as other order instructions that may permit such executions. In addition, the Exchange stated that the proposed priority change where non-displayed orders without a Super Aggressive instruction would cede priority to nondisplayed orders with a Super Aggressive instruction is similar to, and consistent with, the Exchange’s priority ceding functionality for orders with an NDS instruction and would facilitate executions that would otherwise not occur due to an incoming Post Only order’s requirement not to remove liquidity. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest, as the proposed rule change relates to optional functionality that is consistent with existing functionality and, if selected by Exchange users, may enable them to better manage their orders and may increase order interaction on the Exchange. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposed rule change operative upon filing.21 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: 21 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). E:\FR\FM\25JYN1.SGM 25JYN1 Federal Register / Vol. 83, No. 143 / Wednesday, July 25, 2018 / Notices Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CboeBZX–2018–051 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. daltland on DSKBBV9HB2PROD with NOTICES All submissions should refer to File Number SR–CboeBZX–2018–051. 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 (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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–CboeBZX–2018–051, and should be submitted on or before August 15, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–15848 Filed 7–24–18; 8:45 am] BILLING CODE 8011–01–P 22 17 CFR 200.30–3(a)(12) and (59). VerDate Sep<11>2014 18:50 Jul 24, 2018 Jkt 244001 SECURITIES AND EXCHANGE COMMISSION Proposed Collection; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Extension: Form N–8B–2, SEC File No. 270–186, OMB Control No. 3235–0186 Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (the ‘‘Commission’’) is soliciting comments on the collection of information summarized below. The Commission plans to submit this existing collection of information to the Office of Management and Budget for extension and approval. Form N–8B–2 (17 CFR 274.12) is the form used by unit investment trusts (‘‘UITs’’) other than separate accounts that are currently issuing securities, including UITs that are issuers of periodic payment plan certificates and UITs of which a management investment company is the sponsor or depositor, to comply with the filing and disclosure requirements imposed by section 8(b) of the Investment Company Act of 1940 (15 U.S.C. 80a–8(b)). Form N–8B–2 requires disclosure about the organization of a UIT, its securities, the personnel and affiliated persons of the depositor, the distribution and redemption of securities, the trustee or custodian, and financial statements. The Commission uses the information provided in the collection of information to determine compliance with section 8(b) of the Investment Company Act. Each registrant subject to the Form N– 8B–2 filing requirement files Form N– 8B–2 for its initial filing and does not file post-effective amendments on Form N–8B–2.1 The Commission staff estimates that approximately one respondent files one Form N–8B–2 filing annually with the Commission.2 Staff estimates that the burden for compliance with Form N–8B–2 is approximately 10 hours per filing. The total hour burden for the Form N–8B– 1 Post-effective amendments are filed with the Commission on the UIT’s Form S–6. Hence, respondents only file Form N–8B–2 for their initial registration statement and not for post-effective amendments. 2 In 2015 the Commission received 3 filings, while in 2016 and 2017, the Commission received 0 filings, respectively. The cumulative 3-year average is, therefore, 1 filing per year. PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 35295 2 filing requirement therefore is 10 hours in the aggregate (1 respondent × one filing per respondent × 10 hours per filing). Estimates of the burden hours are made solely for the purposes of the PRA and are not derived from a comprehensive or even a representative survey or study of the costs of SEC rules and forms. The information provided on Form N–8B–2 is mandatory. The information provided on Form N–8B–2 will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency’s estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Please direct your written comments to Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Candace Kenner, 100 F Street NE, Washington, DC 20549; or send an email to: PRA_ Mailbox@sec.gov. Dated: July 19, 2018. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–15857 Filed 7–24–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Extension: Rule 24b–1; SEC File No. 270–205; OMB Control No. 3235–0194 Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the Securities E:\FR\FM\25JYN1.SGM 25JYN1

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[Federal Register Volume 83, Number 143 (Wednesday, July 25, 2018)]
[Notices]
[Pages 35291-35295]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15848]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83673; File No. SR-CboeBZX-2018-051]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Exchange Rule 11.13, Order Execution and Routing, To Amend the 
Operation of the Super Aggressive Order Instruction

July 19, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 11, 2018, Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Exchange has designated this 
proposal as a ``non-controversial'' proposed rule change pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
which renders it effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend the operation of the Super 
Aggressive order instruction under paragraph (b)(4)(C) of Exchange Rule 
11.13.
    The text of the proposed rule change is available at the Exchange's 
website at www.markets.cboe.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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

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

[[Page 35292]]

the most significant parts of such statements.

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

1. Purpose
    The Exchange proposes to amend the description of the Super 
Aggressive Re-Route instruction (``Super Aggressive instruction'') 
under paragraph (b)(4)(C) of Exchange Rule 11.13, Order Execution and 
Routing to: (i) Specify that an incoming BZX Post Only Order or Partial 
Post Only at Limit Order that locks a resting order with a Super 
Aggressive instruction must be designated as eligible for display on 
the Exchange (a ``displayed order'') for the order with a Super 
Aggressive instruction to engage in a liquidity swap and execute 
against that incoming order; and (ii) modify language from the 
description of the Super Aggressive instruction that states if an order 
that does not contain a Super Aggressive instruction maintains higher 
priority than one or more Super Aggressive eligible orders, the Super 
Aggressive eligible order(s) with lower priority will not be converted 
and an incoming BZX Post Only Order or Partial Post Only at Limit Order 
will be posted or cancelled in accordance with Exchange Rule 11.9(c)(6) 
or 11.9(c)(7).
    Super Aggressive is an optional order instruction that directs the 
System \5\ to route an order when an away Trading Center locks or 
crosses the limit price of the order resting on the BZX Book.\6\ When 
an order with a Super Aggressive instruction is locked by an incoming 
BZX Post Only Order or Partial Post Only at Limit Order (hereafter 
collectively referred to as a ``Post Only Order'') that does not remove 
liquidity pursuant to Rule 11.9(c)(6) or 11.9(c)(7), respectively,\7\ 
the order with a Super Aggressive instruction is converted to an 
executable order and will remove liquidity against such incoming order.
---------------------------------------------------------------------------

    \5\ The term ``System'' is defined as ``the electronic 
communications and trading facility designated by the Board through 
which securities orders of Users are consolidated for ranking, 
execution and, when applicable, routing away.'' See Exchange Rule 
1.5(aa).
    \6\ See Exchange Rule 1.5(e).
    \7\ A BZX Post Only Order will remove contra-side liquidity from 
the BZX Book if the order is an order to buy or sell a security 
priced below $1.00 or if the value of such execution when removing 
liquidity equals or exceeds the value of such execution if the order 
instead posted to the BZX Book and subsequently provided liquidity, 
including the applicable fees charged or rebates provided. See 
Exchange Rule 11.9(c)(6). A Partial Post Only at Limit Order will 
remove liquidity from the BZX Book up to the full size of the order 
if, at the time of receipt, it can be executed at prices better than 
its limit price. See Exchange Rule 11.9(c)(7).
---------------------------------------------------------------------------

    First, the Exchange proposes to modify the behavior of the Super 
Aggressive instruction to require that the incoming Post Only Order 
that locks a resting order with a Super Aggressive instruction must be 
designated as a displayed order for an execution to occur. The Super 
Aggressive instruction is generally utilized for best execution 
purposes because it enables the order to immediately attempt to access 
displayed liquidity on another Trading Center that is either priced 
equal to or better than the order with a Super Aggressive instruction's 
limit price. The Super Aggressive instruction also enables the order to 
execute against an equally priced incoming Post Only Order that would 
otherwise not execute by being willing to act as the liquidity remover 
in such a scenario. Today, the incoming Post Only Order may either be a 
displayed order or a non-displayed order for it to engage in a 
liquidity swap with an order with a Super Aggressive instruction 
resting on the BZX Book.
    Consistent with the Super Aggressive instruction to access 
liquidity displayed on other Trading Centers, the Exchange proposes to 
amend the Super Aggressive instruction such that an order with such 
instruction will execute against an equally priced incoming Post Only 
Order only when such order is to be displayed on the BZX Book. The 
order with a Super Aggressive instruction would continue to act as a 
liquidity remover in such a scenario. Should such an equally priced 
incoming Post Only Order not be designated as a displayed order, the 
resting order with a Super Aggressive instruction would remain on the 
BZX Book and await an execution where it may act as a liquidity 
provider. The incoming Post Only Order that is also designated as a 
non-displayed order would be posted to the BZX Book at its limit price, 
creating an internally locked non-displayed book. As is the case today, 
an execution would continue to occur where an incoming Post Only Order 
is priced more aggressively than the order with a Super Aggressive 
instruction resting on the BZX Book, regardless of whether the incoming 
Post Only Order was designated as a displayed order or a non-displayed 
order.\8\
---------------------------------------------------------------------------

    \8\ See id.
---------------------------------------------------------------------------

    The Exchange notes that Users seeking to act as a liquidity remover 
once resting on the BZX Book in all cases (i.e., seeking to execute 
against incoming Post Only orders regardless of the display 
instruction) may attach the Non-Displayed Swap (``NDS'') instruction to 
their order.\9\ The NDS instruction is similar to the Super Aggressive 
instruction, in that it also is an optional order instruction that a 
User may include on an order that directs the Exchange to have such 
order, when resting on the BZX Book, execute against an incoming Post 
Only Order rather than have it be locked by the incoming order. Today, 
because orders with either instruction (i.e., Super Aggressive and NDS) 
will execute against incoming Post Only Orders regardless of whether 
the order is to be displayed, the instructions are currently identical 
with two exceptions. First, an order with a Super Aggressive 
instruction will not convert into a liquidity removing order and 
execute against a Post Only Order if there is an order on the order 
book with priority over such order that does not also contain a Super 
Aggressive instruction. As further described below, the Exchange is 
proposing to modify this feature of the Super Aggressive instruction. 
The second current distinction between the two instructions, which 
would remain, is that an order with a Super Aggressive instruction can 
be displayed on the Exchange whereas an order with the NDS instruction 
must be non-displayed. As amended, the additional distinction between 
the two instructions would be whether an order would become a liquidity 
removing order against any Post Only Order that would lock it (i.e., 
NDS) or only when the Post Only Order that would lock it also is a 
displayed order (i.e., Super Aggressive).
---------------------------------------------------------------------------

    \9\ See Exchange Rule 11.9(c)(12).
---------------------------------------------------------------------------

    The below examples illustrate the proposed behavior. Assume the 
National Best Bid and Offer (``NBBO'') is $10.00 by $10.10. An order to 
buy is displayed on the BZX Book at $10.00 with a Super Aggressive 
instruction. There are no other orders resting on the BZX Book. An 
order to sell at $10.00 with a Post Only that is designated as a 
displayed order is entered. The incoming order to sell would execute 
against the resting order to buy at $10.00, the locking price, because 
the incoming order was designated as a displayed order. The order to 
buy would act as the liquidity remover and the order to sell would act 
as the liquidity adder. However, no execution would occur if the 
incoming order to sell was designated as a non-displayed order. 
Instead, the incoming order to sell would be posted non-displayed to 
the BZX Book at $10.00, its limit price, causing the BZX Book to be 
internally locked.

[[Page 35293]]

    Second, the Exchange proposes to enable a Post Only Order that is 
designated as a displayed order to execute against an equally priced 
non-displayed order with a Super Aggressive instruction where a non-
displayed order without a Super Aggressive instruction maintains time 
priority over the Super Aggressive eligible order at that price. In 
such case, the non-displayed, non-Super Aggressive order seeks to 
remain a liquidity provider and would cede time priority to the order 
with a Super Aggressive instruction, which is willing to act as a 
liquidity remover to facilitate the execution. The Exchange proposes to 
effect this change by modifying language in the description of the 
Super Aggressive instruction to state that if an order displayed on the 
BZX Book does not contain a Super Aggressive instruction and maintains 
higher priority than one or more Super Aggressive eligible orders, the 
Super Aggressive eligible order(s) with lower priority will not be 
converted and the incoming Post Only Order will be posted or cancelled 
in accordance with Exchange Rule 11.9(c)(6) or Rule 11.9(c)(7). Thus, 
an order with a Super Aggressive instruction, whether displayed on the 
Exchange or non-displayed, will never execute ahead of a displayed 
order that maintains time priority.
    The Super Aggressive instruction is designed to facilitate 
executions that would otherwise not occur due to Post Only Order 
requirement to not remove liquidity. Users entering orders with the 
Super Aggressive instruction tend to be fee agnostic because an order 
with a Super Aggressive instruction is willing to route to an away 
Trading Center displaying an equally or better priced order (i.e., pay 
a fee at such Trading Center). Meanwhile, an order without the Super 
Aggressive instruction elects to remain on the BZX Book as the 
liquidity provider until it may execute against an incoming order that 
would act as the liquidity remover. Therefore, enabling the Super 
Aggressive order to execute against an incoming order, regardless of 
whether a non-displayed order without a Super Aggressive instruction 
maintains priority, is consistent with the User's intent for both 
orders--one choses to remain the liquidity provider and forgo the 
execution while the other is willing to execute irrespective of whether 
it is the liquidity provider or remover. The Exchange notes that 
similar behavior occurs for orders utilizing the NDS instruction,\10\ 
which also seeks to engage in a liquidity swap against incoming Post 
Only Orders. The Exchange, however, has proposed to retain the existing 
limitation with respect to orders displayed on the BZX Book.
---------------------------------------------------------------------------

    \10\ See Exchange Rule 11.9(c)(12). See also Securities Exchange 
Act Release No. 83537 (June 28, 2018), (SR-CboeBZX-2018-042) 
(including an example where an order cedes execution priority to an 
order with an NDS instruction).
---------------------------------------------------------------------------

    The following example illustrates the operation of an order with a 
Super Aggressive instruction under the proposed rule change. Assume the 
NBBO is $10.00 by $10.04. There is a non-displayed Limit Order to buy 
resting on the BZX Book at $10.03 (``Order A''). A second non-displayed 
Limit Order to buy at $10.03 is then entered with a Super Aggressive 
instruction and has time priority behind the first Limit Order (``Order 
B''). A Post Only Order to sell priced at $10.03 is entered. Under 
current behavior, the incoming sell Post Only Order would not execute 
against Order A and would post to the BZX Book \11\ because the value 
of such execution against the resting buy order when removing liquidity 
does not equal or exceed the value of such execution if the order 
instead posted to the BZX Book and subsequently provided liquidity, 
including the applicable fees charged or rebates provided. Further, the 
incoming sell Post Only Order could not execute against Order B because 
Order A is on the BZX Book and maintains time priority over Order B. 
Under the proposed change, the incoming sell order, if it was 
designated as a displayed order, would execute against Order B and 
Order B would become the remover of liquidity while the incoming sell 
Post Only Order would become the liquidity provider. In such case, 
Order A cedes priority to Order B because Order A did not also include 
a Super Aggressive instruction \12\ and thus the User that submitted 
the order did not indicate the preference to be treated as the remover 
of liquidity in favor of an execution; instead, by not using Super 
Aggressive, a User indicates the preference to remain posted on the BZX 
Book as a liquidity provider. However, if the incoming sell order was 
priced at $10.02, it would receive sufficient price improvement to 
execute upon entry against all resting buy Limit Orders in time 
priority at $10.03.\13\ Also, if Order A was displayed on the BZX Book, 
no execution would occur, as the proposed change would only apply to 
non-displayed liquidity.
---------------------------------------------------------------------------

    \11\ Such order would be posted to the BZX Book in accordance 
with the Exchange's re-pricing instructions to comply with Rule 
610(d) of Regulation NMS. See Exchange Rules 11.9(g)(1) and (g)(2). 
See also 242 CFR 242.610(d).
    \12\ This behavior is consistent with the operation of the 
Exchange's NDS instruction. See supra note 10.
    \13\ The execution occurs here because the value of the 
execution against the buy order when removing liquidity exceeds the 
value of such execution if the order instead posted to the BZX Book 
and subsequently provided liquidity, including the applicable fees 
charged or rebates provided. See supra note 7.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \14\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \15\ in particular, in that it is designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed changes to the Super Aggressive order instruction are 
designed to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system and, 
in general, to protect investors and the public interest. The Super 
Aggressive instruction is an optional feature that is intended to 
reflect the order management practices of various market participants. 
The proposal to limit the execution of an order with a Super Aggressive 
instruction to execute against incoming Post Only Orders that also are 
designated as displayed orders promotes just and equitable principles 
of trade because it enables Users to elect an order instruction 
consistent with their intent to execute only against displayed orders, 
in part, for best execution purposes. The amended Super Aggressive 
instruction would ensure executions at the best available price 
displayed on another Trading Center or against an incoming order that 
would have been displayed on the BZX Book. Users seeking to act as a 
liquidity remover once resting on the BZX Book and execute against an 
incoming Post Only Order that is also designated as a non-displayed 
order may attach the NDS instruction to their order.\16\
---------------------------------------------------------------------------

    \16\ See Exchange Rule 11.9(c)(12).
---------------------------------------------------------------------------

    The proposed change to the Super Aggressive instruction also 
removes impediments to and perfects the mechanism of a free and open 
market and a national market system because it

[[Page 35294]]

is designed to facilitate executions that would otherwise not occur due 
to the Post Only Order requirement to not remove liquidity. The 
proposal enables non-displayed Super Aggressive orders to execute 
against an incoming order, regardless of whether another non-displayed 
order without a Super Aggressive instruction maintains priority 
consistent with the User's intent for both orders--one chooses to 
remain the liquidity provider and forgo the execution while the other 
is willing to execute irrespective of whether it is the liquidity 
provider or remover. The non-Super Aggressive order seeks to remain a 
liquidity provider and cede its time priority to the order with a Super 
Aggressive instruction, which is willing to act as a liquidity remover 
to facilitate the execution. It also enables an order without the Super 
Aggressive instruction to remain on the BZX Book as a liquidity 
provider, consistent with the expected operation of their resting 
order. The Exchange notes that similar behavior occurs for orders 
utilizing the NDS \17\ instruction, which also seeks to engage in a 
liquidity swap against incoming Post Only Orders. Finally, by limiting 
the proposed change to non-displayed orders, the proposal remains 
consistent with NDS and also retains existing functionality with 
respect to the handling of displayed orders.
---------------------------------------------------------------------------

    \17\ See supra note 10.
---------------------------------------------------------------------------

    For the reasons set forth above, the Exchange believes the proposal 
removes impediments to and perfects the mechanism of a free and open 
market and a national market system, and, in general, protects 
investors and the public interest.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. On 
the contrary, the proposed changes to the Super Aggressive order 
instruction are intended to improve the usefulness of the instruction 
and to align its operation with the intention of the User, resulting in 
enhanced competition through increased usage and execution quality on 
the Exchange. Thus, to the extent the change is intended to improve 
functionality on the Exchange to encourage Users to direct their orders 
to the Exchange, the change is competitive, but the Exchange does not 
believe the proposed change will result in any burden on intermarket 
competition as it is a minor change to available functionality. The 
proposed changes to the Super Aggressive order instruction also promote 
intramarket competition because they will facilitate the execution of 
orders that would otherwise remain unexecuted consistent with the 
intent of the User entering the order, thereby increasing the efficient 
functioning of the Exchange. Further, the Super Aggressive order 
instruction will remain available to all Users in the same way it is 
today. Thus, Users can continue to choose between various optional 
order instructions, including Super Aggressive, NDS, and others, 
depending on the order handling they prefer the Exchange to utilize. 
Therefore, the Exchange does not believe the proposed rule change will 
result in any burden on intramarket competition that is not necessary 
or appropriate in furtherance of the purposes of the Act.

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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \18\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\19\
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of the filing. However, 
Rule 19b-4(f)(6)(iii) \20\ permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. In its filing, BZX requested that 
the Commission waive the 30-day operative delay so that the Exchange 
can implement the proposed rule change promptly after filing. The 
Exchange stated that the proposal to allow an order with a Super 
Aggressive instruction to execute against an incoming Post Only order 
only if the Post Only order is displayable is consistent with the use 
of the Super Aggressive instruction to access liquidity displayed on 
other Trading Centers. Further, according to the Exchange, users 
seeking to execute against incoming non-displayable Post Only orders 
will continue to be able to attach the NDS order instruction, as well 
as other order instructions that may permit such executions. In 
addition, the Exchange stated that the proposed priority change where 
non-displayed orders without a Super Aggressive instruction would cede 
priority to non-displayed orders with a Super Aggressive instruction is 
similar to, and consistent with, the Exchange's priority ceding 
functionality for orders with an NDS instruction and would facilitate 
executions that would otherwise not occur due to an incoming Post Only 
order's requirement not to remove liquidity. The Commission believes 
that waiver of the 30-day operative delay is consistent with the 
protection of investors and the public interest, as the proposed rule 
change relates to optional functionality that is consistent with 
existing functionality and, if selected by Exchange users, may enable 
them to better manage their orders and may increase order interaction 
on the Exchange. Accordingly, the Commission hereby waives the 30-day 
operative delay and designates the proposed rule change operative upon 
filing.\21\
---------------------------------------------------------------------------

    \20\ 17 CFR 240.19b-4(f)(6)(iii).
    \21\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

[[Page 35295]]

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CboeBZX-2018-051 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-CboeBZX-2018-051. 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 (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for 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-CboeBZX-2018-051, and should be 
submitted on or before August 15, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12) and (59).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-15848 Filed 7-24-18; 8:45 am]
 BILLING CODE 8011-01-P


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