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]
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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
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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.
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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
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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
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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).
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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’’)
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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
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Exchange Rule 11.9(c)(12).
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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
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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
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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).
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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.
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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
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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
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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
]]>Agencies
[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]
-----------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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\
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\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).
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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\
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\22\ 17 CFR 200.30-3(a)(12) and (59).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-15848 Filed 7-24-18; 8:45 am]
BILLING CODE 8011-01-P
