Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Reserve Orders, 60534-60536 [2018-25596]
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Federal Register / Vol. 83, No. 227 / Monday, November 26, 2018 / Notices
response for a total annual internal
burden of 2,715,829 hours (59 hours per
response × 46,031 responses).
Written comments are invited on: (a)
Whether this 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 imposed by 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.
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
control number.
Please direct your written comment to
Charles Riddle, Acting 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: November 20, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–25687 Filed 11–23–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84619; File No. SR–
CboeEDGX–2018–051]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Adopt
Reserve Orders
November 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 November
5, 2018, Cboe EDGX Exchange, Inc.
(‘‘Exchange’’ or ‘‘‘‘EDGX’’’’) 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
Commission is publishing this notice to
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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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
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX Options’’)
proposes to adopt Reserve Orders.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
Rules of Cboe EDGX Exchange, Inc.
*
*
*
Rule 21.1.
*
*
Definitions
The following definitions apply to
Chapter XXI for the trading of options
listed on EDGX Options.
(a)–(c) No change.
(d) The term ‘‘Order Type’’ shall mean
the unique processing prescribed for
designated orders that are eligible for
entry into the System, and shall include:
(1) [(Reserved.)] ‘‘Reserve Orders’’ are
limit orders that have both a portion of
the quantity displayed (‘‘Display
Quantity’’) and a reserve portion of the
quantity (‘‘Reserve Quantity’’) not
displayed. Both the Display Quantity
and Reserve Quantity of the Reserve
Order are available for potential
execution against incoming orders.
When entering a Reserve Order, a User
must instruct the Exchange as to the
quantity of the order to be initially
displayed by the System (‘‘Max Floor’’).
If the Display Quantity of a Reserve
Order is fully executed, the System will,
in accordance with the User’s
instruction, replenish the Display
Quantity from the Reserve Quantity
using one of the below replenishment
instructions. If the remainder of an
order is less than the replenishment
amount, the System will display the
entire remainder of the order. The
System creates a new timestamp for
both the Display Quantity and Reserve
Quantity of the order each time it is
replenished from reserve.
(A) Random Replenishment. An
instruction that a User may attach to an
order with Reserve Quantity where the
System randomly replenishes the
Display Quantity for the order with a
number of contracts not outside a
replenishment range, which equals the
Max Floor plus and minus a
replenishment value established by the
User when entering a Reserve Order
with a Random Replenishment
instruction.
(B) Fixed Replenishment. For any
order that a User does not select
Random Replenishment, the System will
replenish the Display Quantity of the
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order with the number of contracts
equal to the Max Floor.
(2)–(12) No change.
(e)–(j) No change.
*
*
*
*
*
Rule 21.6. Entry of Orders
Users can enter orders into the
System, subject to the following
requirements and conditions:
(a) Users shall be permitted to
transmit to the System multiple orders
at a single as well as multiple price
levels. Each order will indicate the
Reserve Quantity (if applicable).
(b)–(f) No change.
*
*
*
*
*
Rule 21.8. Order Display and Book
Processing
(a)–(k) No change.
(l) Nondisplayed Orders. Displayed
orders have priority over nondisplayed
orders. Nondisplayed portions of
Reserve Orders are allocated in
accordance with paragraph (c) above,
but additional priority overlays do not
apply, except for the Customer Overlay
(if applicable).
*
*
*
*
*
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/About
CBOE/CBOELegalRegulatoryHome.
aspx), at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
In 2016, the Exchange’s parent
company, Cboe Global Markets, Inc.
(formerly named CBOE Holdings, Inc.)
(‘‘Cboe Global’’), which is also the
parent company of Cboe Exchange, Inc.
(‘‘Cboe Options’’) and Cboe C2
Exchange, Inc. (‘‘C2’’), acquired the
Exchange and its affiliated exchanges,
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Federal Register / Vol. 83, No. 227 / Monday, November 26, 2018 / Notices
Cboe EDGA Exchange, Inc. (‘‘EDGA’’),
Cboe BZX Exchange, Inc. (‘‘BZX or BZX
Options’’), and Cboe BYX Exchange,
Inc. (‘‘BYX’’ and, together with C2, Cboe
Options, EDGX, EDGA, and BZX, the
‘‘Cboe Affiliated Exchanges’’). In this
context, EDGX Options proposes to
align certain system functionality with
C2 and BZX Options. Although the
Exchange intentionally offers certain
features that differ from those offered by
the Cboe Affiliated Exchange and will
continue to do so, the Exchange believes
offering similar functionality to the
extent practicable will reduce potential
confusion for market participants.
The proposed rule change adopts
Reserve Orders. Reserve Orders permit
Users to enter orders with both
displayed and nondisplayed amounts.
Specifically, proposed Rule 21.1(d)(1)
provides that ‘‘Reserve Orders’’ are limit
orders that have both a portion of the
quantity displayed (‘‘Display Quantity’’)
and a reserve portion of the quantity
(‘‘Reserve Quantity’’) not displayed.3
Both the Display Quantity and Reserve
Quantity of the Reserve Order are
available for potential execution against
incoming orders. When entering a
Reserve Order, a User must instruct the
Exchange as to the quantity of the order
to be initially displayed by the System
(‘‘Max Floor’’). If the Display Quantity
of a Reserve Order is fully executed, the
System will, in accordance with the
User’s instruction, replenish the Display
Quantity from the Reserve Quantity
using one of two replenishment options,
as described below. If the remainder of
an order is less than the replenishment
amount, the System will display the
entire remainder of the order. The
System creates a new timestamp for
both the Display Quantity and Reserve
Quantity of the order each time it is
replenished from reserve.
A User may determine that a Reserve
Order should be subject to ‘‘Random
Replenishment’’ or ‘‘Fixed
Replenishment.’’ If a Reserve Order has
a Random Replenishment instruction,
the System randomly replenishes the
Display Quantity for the order with a
number of contracts not outside a
replenishment range, which equals the
Max Floor plus and minus a
replenishment value established by the
User when entering a Reserve Order
with a Random Replenishment
instruction. For any order that a User
does not select Random Replenishment,
the System will replenish the Display
Quantity of the order with the number
of contracts equal to the Max Floor.
3 The proposed change to Rule 21.6(a) states that
each order will indicate the Reserve Quantity (if
applicable).
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Jkt 247001
Pursuant to proposed Rule 21.8(l),
displayed orders have priority over
nondisplayed orders. In other words,
while both portions of a Reserve Order
may execute against incoming
marketable orders, the displayed portion
will be executed first, and the nondisplayed portion will only execute
after all displayed interest (from other
orders) at that price has executed.
Nondisplayed portions of Reserve
Orders are allocated in accordance with
Rule 21.8(c), but additional priority
overlays will not apply, except for the
Customer Overlay (if applicable).
Therefore, if there are nondisplayed
portions of multiple Reserve Orders at
the same price that can execute against
an incoming marketable order, those
nondisplayed portions will be allocated
in a pro-rata manner; however, if the
Customer Overlay has been applied to
the class, the nondisplayed portion of
any Customer Reserve Orders will
execute first. The Exchange notes that
pursuant to Rule 22.13, Interpretation
and Policy .03, with respect to
nondisplayed trading interest, including
the Reserve Quantity of a Reserve Order,
the exposure requirement in Rule
22.13(a) is satisfied if the displayable
portion of the order (the Display
Quantity) is displayed at its displayable
price for one second.
The proposed rule change is
substantially the same as the rules of
other options exchanges.4
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.5 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 6 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
4 See, e.g., C2 Rules 1.1 (definition of Reserve
order in Order Instruction definition) and 6.12(a)(3);
and BZX Options Rules 21.1(d)(1) and 21.8(a)(2).
5 15 U.S.C. 78f(b).
6 15 U.S.C. 78f(b)(5).
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60535
proposed rule change is consistent with
the Section 6(b)(5) 7 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The proposed rule change is generally
intended to add certain system
functionality currently offered by C2
and BZX Options to the Exchange’s
System in order to provide a consistent
technology offering for the Cboe
Affiliated Exchanges. A consistent
technology offering, in turn, will
simplify the technology
implementation, changes and
maintenance by Users of the Exchange
that are also participants on Cboe
Affiliated Exchanges. The proposed rule
change will provide Users with
additional flexibility to manage and
display their orders on the Exchange, as
well as increased functionality on the
Exchange. This may encourage market
participants to bring additional liquidity
to the market, which benefits all
investors. Additionally, this will
provide Users with greater
harmonization between the order
handling instructions available among
the Cboe Affiliated Exchanges.
The proposed rule change also
removes impediments to and perfect the
mechanism of a free and open market
and a national market system because
the proposed functionality is available
on other options exchanges.8 The
proposed rule change does not propose
to implement new or unique
functionality that has not been
previously filed with the Commission or
is not available on Cboe Affiliated
Exchanges.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change will not impose a
burden on intramarket competition,
because the use of Reserve Orders, like
all other order instructions available on
the Exchange, is voluntary. Reserve
Orders entered by all Users will be
handled in the same manner. The
proposed rule change will not impose a
burden on intermarket competition,
because Reserve Order functionality is
available on other options exchanges.9
7 Id.
8 See
supra note 6.
9 Id.
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Federal Register / Vol. 83, No. 227 / Monday, November 26, 2018 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 10 and
subparagraph (f)(6) of Rule 19b–4
thereunder.11
A proposed rule change filed under
Rule 19b–4(f)(6) 12 normally does not
become operative prior to 30 days after
the date of the filing. However, Rule
19b–4(f)(6)(iii) 13 permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposed
rule change may become effective and
operative immediately upon filing. The
Exchange states that waiver of the
operative delay will provide Users with
additional flexibility to manage and
display their orders and provide
additional control over their executions
on the Exchange as soon as possible.
The Exchange further states that waiver
of the operative delay will allow the
Exchange to continue to strive towards
a complete technology integration of the
Cboe Affiliated Exchanges, with gradual
roll-outs of new functionality to ensure
the stability of the System. The
Exchange notes that the proposed rule
change is generally intended to codify
and to add certain system functionality
to the Exchange’s System in order to
provide a consistent technology offering
for the Cboe Affiliated Exchanges. The
Exchange further notes that a consistent
technology offering will simplify the
10 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
12 17 CFR 240.19b–4(f)(6).
13 17 CFR 240.19b–4(f)(6)(iii).
11 17
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17:28 Nov 23, 2018
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technology implementation changes and
maintenance by Trading Permit Holders
of the Exchange that are also
participants on Cboe Affiliated
Exchanges. The Commission believes
that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest.
Therefore, the Commission hereby
waives the 30-day operative delay and
designates the proposed rule change as
operative upon filing.14
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:
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–
CboeEDGX–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–CboeEDGX–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
14 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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communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeEDGX–2018–051 and
should be submitted on or before
December 17, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–25596 Filed 11–23–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84636; File No. SR–
NYSEAMER–2018–49]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Article II,
Section 2.03(h)(ii) and Article VI of Its
Operating Agreement
November 20, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on November
9, 2018, NYSE American LLC
(‘‘Exchange’’ or ‘‘NYSE American’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
15 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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]]>Agencies
[Federal Register Volume 83, Number 227 (Monday, November 26, 2018)]
[Notices]
[Pages 60534-60536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25596]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84619; File No. SR-CboeEDGX-2018-051]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Adopt Reserve Orders
November 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 November 5, 2018, Cboe EDGX Exchange, Inc. (``Exchange'' or
````EDGX'''') 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
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX Options'')
proposes to adopt Reserve Orders.
(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe EDGX Exchange, Inc.
* * * * *
Rule 21.1. Definitions
The following definitions apply to Chapter XXI for the trading of
options listed on EDGX Options.
(a)-(c) No change.
(d) The term ``Order Type'' shall mean the unique processing
prescribed for designated orders that are eligible for entry into the
System, and shall include:
(1) [(Reserved.)] ``Reserve Orders'' are limit orders that have
both a portion of the quantity displayed (``Display Quantity'') and a
reserve portion of the quantity (``Reserve Quantity'') not displayed.
Both the Display Quantity and Reserve Quantity of the Reserve Order are
available for potential execution against incoming orders. When
entering a Reserve Order, a User must instruct the Exchange as to the
quantity of the order to be initially displayed by the System (``Max
Floor''). If the Display Quantity of a Reserve Order is fully executed,
the System will, in accordance with the User's instruction, replenish
the Display Quantity from the Reserve Quantity using one of the below
replenishment instructions. If the remainder of an order is less than
the replenishment amount, the System will display the entire remainder
of the order. The System creates a new timestamp for both the Display
Quantity and Reserve Quantity of the order each time it is replenished
from reserve.
(A) Random Replenishment. An instruction that a User may attach to
an order with Reserve Quantity where the System randomly replenishes
the Display Quantity for the order with a number of contracts not
outside a replenishment range, which equals the Max Floor plus and
minus a replenishment value established by the User when entering a
Reserve Order with a Random Replenishment instruction.
(B) Fixed Replenishment. For any order that a User does not select
Random Replenishment, the System will replenish the Display Quantity of
the order with the number of contracts equal to the Max Floor.
(2)-(12) No change.
(e)-(j) No change.
* * * * *
Rule 21.6. Entry of Orders
Users can enter orders into the System, subject to the following
requirements and conditions:
(a) Users shall be permitted to transmit to the System multiple
orders at a single as well as multiple price levels. Each order will
indicate the Reserve Quantity (if applicable).
(b)-(f) No change.
* * * * *
Rule 21.8. Order Display and Book Processing
(a)-(k) No change.
(l) Nondisplayed Orders. Displayed orders have priority over
nondisplayed orders. Nondisplayed portions of Reserve Orders are
allocated in accordance with paragraph (c) above, but additional
priority overlays do not apply, except for the Customer Overlay (if
applicable).
* * * * *
The text of the proposed rule change is also available on the
Exchange's website (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
In 2016, the Exchange's parent company, Cboe Global Markets, Inc.
(formerly named CBOE Holdings, Inc.) (``Cboe Global''), which is also
the parent company of Cboe Exchange, Inc. (``Cboe Options'') and Cboe
C2 Exchange, Inc. (``C2''), acquired the Exchange and its affiliated
exchanges,
[[Page 60535]]
Cboe EDGA Exchange, Inc. (``EDGA''), Cboe BZX Exchange, Inc. (``BZX or
BZX Options''), and Cboe BYX Exchange, Inc. (``BYX'' and, together with
C2, Cboe Options, EDGX, EDGA, and BZX, the ``Cboe Affiliated
Exchanges''). In this context, EDGX Options proposes to align certain
system functionality with C2 and BZX Options. Although the Exchange
intentionally offers certain features that differ from those offered by
the Cboe Affiliated Exchange and will continue to do so, the Exchange
believes offering similar functionality to the extent practicable will
reduce potential confusion for market participants.
The proposed rule change adopts Reserve Orders. Reserve Orders
permit Users to enter orders with both displayed and nondisplayed
amounts. Specifically, proposed Rule 21.1(d)(1) provides that ``Reserve
Orders'' are limit orders that have both a portion of the quantity
displayed (``Display Quantity'') and a reserve portion of the quantity
(``Reserve Quantity'') not displayed.\3\ Both the Display Quantity and
Reserve Quantity of the Reserve Order are available for potential
execution against incoming orders. When entering a Reserve Order, a
User must instruct the Exchange as to the quantity of the order to be
initially displayed by the System (``Max Floor''). If the Display
Quantity of a Reserve Order is fully executed, the System will, in
accordance with the User's instruction, replenish the Display Quantity
from the Reserve Quantity using one of two replenishment options, as
described below. If the remainder of an order is less than the
replenishment amount, the System will display the entire remainder of
the order. The System creates a new timestamp for both the Display
Quantity and Reserve Quantity of the order each time it is replenished
from reserve.
---------------------------------------------------------------------------
\3\ The proposed change to Rule 21.6(a) states that each order
will indicate the Reserve Quantity (if applicable).
---------------------------------------------------------------------------
A User may determine that a Reserve Order should be subject to
``Random Replenishment'' or ``Fixed Replenishment.'' If a Reserve Order
has a Random Replenishment instruction, the System randomly replenishes
the Display Quantity for the order with a number of contracts not
outside a replenishment range, which equals the Max Floor plus and
minus a replenishment value established by the User when entering a
Reserve Order with a Random Replenishment instruction. For any order
that a User does not select Random Replenishment, the System will
replenish the Display Quantity of the order with the number of
contracts equal to the Max Floor.
Pursuant to proposed Rule 21.8(l), displayed orders have priority
over nondisplayed orders. In other words, while both portions of a
Reserve Order may execute against incoming marketable orders, the
displayed portion will be executed first, and the non-displayed portion
will only execute after all displayed interest (from other orders) at
that price has executed. Nondisplayed portions of Reserve Orders are
allocated in accordance with Rule 21.8(c), but additional priority
overlays will not apply, except for the Customer Overlay (if
applicable). Therefore, if there are nondisplayed portions of multiple
Reserve Orders at the same price that can execute against an incoming
marketable order, those nondisplayed portions will be allocated in a
pro-rata manner; however, if the Customer Overlay has been applied to
the class, the nondisplayed portion of any Customer Reserve Orders will
execute first. The Exchange notes that pursuant to Rule 22.13,
Interpretation and Policy .03, with respect to nondisplayed trading
interest, including the Reserve Quantity of a Reserve Order, the
exposure requirement in Rule 22.13(a) is satisfied if the displayable
portion of the order (the Display Quantity) is displayed at its
displayable price for one second.
The proposed rule change is substantially the same as the rules of
other options exchanges.\4\
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\4\ See, e.g., C2 Rules 1.1 (definition of Reserve order in
Order Instruction definition) and 6.12(a)(3); and BZX Options Rules
21.1(d)(1) and 21.8(a)(2).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\5\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \6\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
\7\ Id.
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The proposed rule change is generally intended to add certain
system functionality currently offered by C2 and BZX Options to the
Exchange's System in order to provide a consistent technology offering
for the Cboe Affiliated Exchanges. A consistent technology offering, in
turn, will simplify the technology implementation, changes and
maintenance by Users of the Exchange that are also participants on Cboe
Affiliated Exchanges. The proposed rule change will provide Users with
additional flexibility to manage and display their orders on the
Exchange, as well as increased functionality on the Exchange. This may
encourage market participants to bring additional liquidity to the
market, which benefits all investors. Additionally, this will provide
Users with greater harmonization between the order handling
instructions available among the Cboe Affiliated Exchanges.
The proposed rule change also removes impediments to and perfect
the mechanism of a free and open market and a national market system
because the proposed functionality is available on other options
exchanges.\8\ The proposed rule change does not propose to implement
new or unique functionality that has not been previously filed with the
Commission or is not available on Cboe Affiliated Exchanges.
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\8\ See supra note 6.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change
will not impose a burden on intramarket competition, because the use of
Reserve Orders, like all other order instructions available on the
Exchange, is voluntary. Reserve Orders entered by all Users will be
handled in the same manner. The proposed rule change will not impose a
burden on intermarket competition, because Reserve Order functionality
is available on other options exchanges.\9\
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\9\ Id.
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[[Page 60536]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \10\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become effective and operative immediately upon filing.
The Exchange states that waiver of the operative delay will provide
Users with additional flexibility to manage and display their orders
and provide additional control over their executions on the Exchange as
soon as possible. The Exchange further states that waiver of the
operative delay will allow the Exchange to continue to strive towards a
complete technology integration of the Cboe Affiliated Exchanges, with
gradual roll-outs of new functionality to ensure the stability of the
System. The Exchange notes that the proposed rule change is generally
intended to codify and to add certain system functionality to the
Exchange's System in order to provide a consistent technology offering
for the Cboe Affiliated Exchanges. The Exchange further notes that a
consistent technology offering will simplify the technology
implementation changes and maintenance by Trading Permit Holders of the
Exchange that are also participants on Cboe Affiliated Exchanges. The
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Therefore, the Commission hereby waives the 30-day operative delay and
designates the proposed rule change as operative upon filing.\14\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ 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:
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-CboeEDGX-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-CboeEDGX-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-CboeEDGX-2018-051 and should be
submitted on or before December 17, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Eduardo A. Aleman,
Assistant Secretary.
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\15\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2018-25596 Filed 11-23-18; 8:45 am]
BILLING CODE 8011-01-P
