Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend EDGX Rules To Clarify the Handling of Orders That Contain Both a Post Only Instruction and Certain Other Order Handling Instructions Maintained To Facilitate Compliance With Rule 610(d) of Regulation NMS, 14427-14429 [2019-07051]
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Federal Register / Vol. 84, No. 69 / Wednesday, April 10, 2019 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85515; File No. SR–
CboeEDGX–2019–014]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend
EDGX Rules To Clarify the Handling of
Orders That Contain Both a Post Only
Instruction and Certain Other Order
Handling Instructions Maintained To
Facilitate Compliance With Rule 610(d)
of Regulation NMS
April 4, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 25,
2019, Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
jbell on DSK30RV082PROD with NOTICES
Cboe EDGX Exchange, Inc. (‘‘EDGX’’
or the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposed rule
change to amend EDGX rules to clarify
the handling of orders that contain both
a Post Only instruction and certain
other order handling instructions
maintained to facilitate compliance with
Rule 610(d) of Regulation NMS. The text
of the proposed rule change is attached
as Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend EDGX rules to
clarify the handling of orders that
contain both a Post Only instruction and
certain other order handling
instructions maintained to facilitate
compliance with Rule 610(d) of
Regulation NMS (the ‘‘Locked and
Crossed Markets Rule’’). An order
entered with a Post Only instruction
does not remove liquidity, except when
the order is an order to buy or sell a
security priced below $1.00, or when
executing as the taker of liquidity would
be economically beneficial to the firm
entering the order—i.e., if the value of
such execution when removing liquidity
equals or exceeds the value of such
execution if the order instead posted to
the EDGX Book and subsequently
provided liquidity, including the
applicable fees charged or rebates
provided.5 Today, the Exchange’s rules
state that this handling applies to Post
Only orders entered with Price Adjust 6
or Display-Price Sliding 7 instruction,
5 See
EDGX Rule 11.6(n)(4). To determine at the
time of a potential execution whether the value of
such execution when removing liquidity equals or
exceeds the value of such execution if the order
instead posted to the EDGX Book and subsequently
provided liquidity, the Exchange will use the
highest possible rebate paid and highest possible
fee charged for such executions on the Exchange.
6 ‘‘Price Adjust’’ is an order instruction requiring
that where an order would be a Locking Quotation
of an external market or Crossing Quotation if
displayed by the System on the EDGX Book at the
time of entry, the order will be displayed and
ranked at a price that is one Minimum Price
Variation lower (higher) than the Locking Price for
orders to buy (sell). See EDGX Rule 11.6(l)(1)(A).
7 ‘‘Display-Price Sliding’’ is an order instruction
requiring that where an order would be a Locking
Quotation or Crossing Quotation of an external
market if displayed by the System on the EDGX
Book at the time of entry, will be ranked at the
Locking Price in the EDGX Book and displayed by
the System at one Minimum Price Variation lower
PO 00000
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14427
which are re-pricing instructions used
for compliance with the Locked and
Crossed Markets Rule. Thus, an
executable order entered with a Post
Only instruction is eligible to remove
liquidity in the circumstances described
in EDGX Rule 11.6(n)(4) instead of
having its ranked price or display price
adjusted pursuant to those order
handling instructions.
However, the Exchange also offers a
‘‘Cancel Back’’ instruction that is not
covered by EDGX Rule 11.6(n)(4). An
order entered with a Cancel Back
instruction is immediately cancelled
instead of re-priced when displaying the
order at its limit price would create a
violation of the Locked and Crossed
Markets Rule.8 All orders must include
a Price Adjust, Display-Price Sliding, or
Cancel Back instruction,9 and orders
entered with a Post Only instruction are
handled in the same manner regardless
of which of these three additional
instructions is applied. The Exchange
therefore proposes to amend EDGX Rule
11.6(n)(4) to eliminate references to
Display-Price Sliding and Price Adjust,
similar to the current rules in place on
its affiliated equities exchanges, Cboe
BZX Exchange, Inc. (‘‘BZX’’) and Cboe
BYX Exchange, Inc. (‘‘BYX’’).10 The
Exchange believes that removing the
references to these two instructions in
the rule would reduce potential
confusion as the order handling
described in the rule today applies to all
orders entered with a Post Only
instruction, and not a specific subset of
those orders. No changes to the
Exchange’s trading or other systems are
contemplated by this proposed change,
which is instead designed to increase
transparency around the Exchange’s
current operation.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
requirements of Section 6(b) of the
Act,11 in general, and Section 6(b)(5) of
(higher) than the Locking Price for orders to buy
(sell). See EDGX Rule 11.6(l)(1)(B).
8 ‘‘Cancel Back’’ is an instruction the User may
attach to an order instructing the System to
immediately cancel the order when, if displayed by
the System on the EDGX Book at the time of entry,
or upon return to the System after being routed
away, would create a violation of Rule 610(d) of
Regulation NMS or Rule 201 of Regulation SHO, or
the order cannot otherwise be executed or posted
by the System to the EDGX Book at its limit price.
See EDGX Rule 11.6(b).
9 Display-Price Sliding is applied as the default
handling unless Price Adjust or Cancel Back is
elected [sic] See EDGX Rule 11.8(b)(10).
10 See BZX Rule 11.9(c)(6) and BYX Rule
11.9(c)(6).
11 15 U.S.C. 78f(b).
E:\FR\FM\10APN1.SGM
10APN1
jbell on DSK30RV082PROD with NOTICES
14428
Federal Register / Vol. 84, No. 69 / Wednesday, April 10, 2019 / Notices
the Act,12 in particular, in that it is
designed to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, to promote just and equitable
principles of trade, and, in general, to
protect investors and the public interest
and not to permit unfair discrimination
between customers, issuers, brokers, or
dealers.
Specifically, the Exchange believes
that the proposed rule change is
consistent with the public interest and
the protection of investors as it would
avoid potential confusion about how an
order is handled if entered with both a
Post Only and Cancel Back instruction.
Today, the Exchange’s rules provide
that an order entered into the EDGX
Book with a Post Only instruction
would remove liquidity in certain
circumstances, such as when
economically beneficial for the order. In
addition, the rules specify that this
handling applies to orders entered with
a Price Adjust or Display-Price Sliding
instruction. The rules, however, are
silent as to the handling applied if an
order with a Post Only instruction
contains a Cancel Back instruction. The
Exchange’s order handling is, in fact,
the same regardless of which of these
instructions are chosen by the member.
As such, the Exchange believes that it is
appropriate to amend EDGX Rule
11.6(n)(4) to eliminate references to the
Price Adjust or Display-Price Sliding
instruction, thereby making clear that
this handling applies to all orders
entered with a Post Only instruction
and not only those that also contain
Price Adjust or Display-Price Sliding
instructions.
The Exchange believes that this order
handling, which mirrors that in place on
the Exchange’s affiliated equities
markets (i.e., BZX and BYX) is
appropriate regardless of whether an
order entered with a Post Only
instruction also contains a Display-Price
Sliding, Price Adjust, or Cancel Back
instruction. Specifically, the Exchange
believes that it is consistent with just
and equitable principles of trade to
permit an order entered with a Post
Only instruction to remove liquidity
when the order is an order to buy or sell
a security priced below $1.00, or when
executing as the taker of liquidity would
be economically beneficial to the firm
entering the order. This handling is
designed to ensure that orders entered
with a Post Only instruction are eligible
to trade in certain circumstances where
the entering firm may have an interest
in securing an execution on entry—i.e.,
as the taker of liquidity—
12 15
U.S.C. 78f(b)(5).
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notwithstanding the member’s use of
the Post Only instruction. Although the
Exchange’s rules currently mention
order handling for the Display-Price
Sliding and Price Adjust instructions
specifically, this functionality should be
applied equally to any order entered
with a Post Only instruction. Thus,
amending the rule as proposed would
provide additional transparency into a
feature offered by the Exchange that is
potentially beneficial to members that
utilize the Post Only instruction.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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:
The Exchange does not believe that
the proposed rule change would impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Rather, the
proposed rule change would remove
ambiguity in the EDGX rules describing
the Post Only instruction by amending
those rules consistent with rules
currently in place for the Exchange’s
affiliates, BZX and BYX. No change to
the Exchange’s order handling is
contemplated by this proposed rule
change, which would merely clarify the
current handling for certain orders
entered with a Post Only instruction.
The Exchange therefore believes that the
proposed rule change would increase
transparency around the operation of
the Exchange to the benefit of members
and investors, without imposing any
significant burden on competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received 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) of the Act 13 and Rule 19b–
4(f)(6) thereunder.14
13 15
U.S.C. 78s(b)(3)(A).
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
14 17
PO 00000
Frm 00090
Fmt 4703
Sfmt 4703
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–2019–014 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–2019–014. 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
as designated by the Commission. The Exchange
has satisfied this requirement.
E:\FR\FM\10APN1.SGM
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Federal Register / Vol. 84, No. 69 / Wednesday, April 10, 2019 / Notices
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–2019–014, and
should be submitted on or before May
1, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–07051 Filed 4–9–19; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–85513; File No. SR–
NASDAQ–2019–022]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend and
Restate the Exchange’s Membership
Rules
April 4, 2019.
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 March 27,
2019, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘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.
jbell on DSK30RV082PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to a proposal
[sic] to amend and restate the
Exchange’s membership rules, as
discussed below.
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaq.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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20:36 Apr 09, 2019
Jkt 247001
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
SECURITIES AND EXCHANGE
COMMISSION
15 17
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
The Exchange has adopted Rules, as
set forth in the Rule 1000 Series, which
prescribe the qualifications for and the
procedures for applying for membership
on the Exchange. The Exchange now
proposes to update, reorganize and
clarify these Rules, as described below.
As a general matter, the proposal
makes several categories of changes to
the Exchange’s membership rules. First,
the proposal reorganizes the rules so
that they are arranged in a more logical
order. Second, the proposal removes
duplicative provisions, eliminates
unnecessary complexity in the
membership process, and otherwise
streamlines the membership rules and
their associated procedures. Third, the
proposal relaxes needlessly rigid
deadlines that the rules prescribe for
taking certain actions with respect to
membership applications. Fourth and
finally, the proposal makes technical
corrections and updates to the Rules,
including by updating obsolete
references to the National Association of
Securities Dealers (‘‘NASD,’’ now
known as ‘‘FINRA’’), correcting the
capitalization of defined terms (e.g.,
‘‘Member’’), and generalizing references
to the Exchange so as to facilitate
harmonization of the Exchange’s
membership rules with those of its sister
exchanges.
The Exchange does not believe that
any of the proposed changes will
adversely impact the existing rights of
prospective or existing Members or
Associated Persons. Likewise, the
Exchange does not believe that the
proposed changes will compromise the
ability of the Exchange or its
Membership Department to scrutinize
prospective or existing Members or
Associated Persons.
PO 00000
Frm 00091
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14429
A summary of specific proposed
changes follows.
Rule 1002
The proposal amends Rule 1002 in
several respects. First, it deletes existing
paragraph (c), which pertains to the
payment by Members and Associated
Persons of dues, fees, assessments and
other charges, because the requirement
of Members and Associated Persons to
make such payments is set forth
elsewhere in the Rules, such that
existing paragraph (c) is unnecessary.3
The Exchange also proposes to move
existing paragraph (d), which governs
the reinstatement of membership and
registration, to a new Rule 1018 that
will consolidate all provisions of the
Rules relating to transfer, resignation,
termination, and reinstatement of
membership. Additionally, the
Exchange proposes to consolidate and
move to this Rule, as newly-renumbered
paragraph (d), largely duplicative
provisions relating to the registration of
branch offices and the designation of
offices of supervisory jurisdiction,
which presently reside in Rule 1012(j)
and IM–1002–4, respectively.4 Within
the new paragraph (d), the Exchange
proposes to delete language from
existing Rule 1012(j)(1) that requires a
Member to pay dues, fees, and charges
associated with a branch office—as that
provision is superfluous for reasons
discussed above. Under renumbered
paragraph (d)(3)(A), the Exchange also
proposes to simplify the existing rules
for determining compliance with branch
office registration and supervisory office
designation requirements. Whereas the
existing processes—as set forth in Rule
1012(j) and IM–1002–4—provide that
Exchange Members that are also FINRA
members are deemed to comply with
the branch office and designated
supervisory office requirements to the
extent that they comply with NASD–
1000–4 and Article IV, Section 8 of the
NASD’s By-Laws, the proposal provides
that such Exchange Members are
deemed to comply to the extent that
they keep current Form BR, which
3 See
Rule 9553.
proposed subparagraph (d)(3)(B), the
Exchange proposes to clarify the existing rule text
in Rule 1012(j) and IM–1002–4, which provide that
Members that are not FINRA members shall
designate offices of supervisory jurisdiction and
branch offices by submitting to the Exchange a
‘‘written filing’’ to the Exchange ‘‘in such form as
[the Exchange] may prescribe.’’ The proposed
change clarifies that this written filing is the
‘‘Branch Office Disclosure Form.’’ The Branch
Office Disclosure Form is presently in use for this
purpose and it is not a new form. Nevertheless, the
Exchange believes that it will be helpful in the Rule
to identify the specific form that must be filed
rather than refer vaguely to a filing in such form as
the Exchange may prescribe.
4 In
E:\FR\FM\10APN1.SGM
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]]>Agencies
[Federal Register Volume 84, Number 69 (Wednesday, April 10, 2019)]
[Notices]
[Pages 14427-14429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07051]
[[Page 14427]]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85515; File No. SR-CboeEDGX-2019-014]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend EDGX Rules To Clarify the Handling of Orders That Contain Both a
Post Only Instruction and Certain Other Order Handling Instructions
Maintained To Facilitate Compliance With Rule 610(d) of Regulation NMS
April 4, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 25, 2019, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (``EDGX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (the ``Commission'') a
proposed rule change to amend EDGX rules to clarify the handling of
orders that contain both a Post Only instruction and certain other
order handling instructions maintained to facilitate compliance with
Rule 610(d) of Regulation NMS. The text of the proposed rule change is
attached as Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend EDGX rules to
clarify the handling of orders that contain both a Post Only
instruction and certain other order handling instructions maintained to
facilitate compliance with Rule 610(d) of Regulation NMS (the ``Locked
and Crossed Markets Rule''). An order entered with a Post Only
instruction does not remove liquidity, except when the order is an
order to buy or sell a security priced below $1.00, or when executing
as the taker of liquidity would be economically beneficial to the firm
entering the order--i.e., if the value of such execution when removing
liquidity equals or exceeds the value of such execution if the order
instead posted to the EDGX Book and subsequently provided liquidity,
including the applicable fees charged or rebates provided.\5\ Today,
the Exchange's rules state that this handling applies to Post Only
orders entered with Price Adjust \6\ or Display-Price Sliding \7\
instruction, which are re-pricing instructions used for compliance with
the Locked and Crossed Markets Rule. Thus, an executable order entered
with a Post Only instruction is eligible to remove liquidity in the
circumstances described in EDGX Rule 11.6(n)(4) instead of having its
ranked price or display price adjusted pursuant to those order handling
instructions.
---------------------------------------------------------------------------
\5\ See EDGX Rule 11.6(n)(4). To determine at the time of a
potential execution whether the value of such execution when
removing liquidity equals or exceeds the value of such execution if
the order instead posted to the EDGX Book and subsequently provided
liquidity, the Exchange will use the highest possible rebate paid
and highest possible fee charged for such executions on the
Exchange.
\6\ ``Price Adjust'' is an order instruction requiring that
where an order would be a Locking Quotation of an external market or
Crossing Quotation if displayed by the System on the EDGX Book at
the time of entry, the order will be displayed and ranked at a price
that is one Minimum Price Variation lower (higher) than the Locking
Price for orders to buy (sell). See EDGX Rule 11.6(l)(1)(A).
\7\ ``Display-Price Sliding'' is an order instruction requiring
that where an order would be a Locking Quotation or Crossing
Quotation of an external market if displayed by the System on the
EDGX Book at the time of entry, will be ranked at the Locking Price
in the EDGX Book and displayed by the System at one Minimum Price
Variation lower (higher) than the Locking Price for orders to buy
(sell). See EDGX Rule 11.6(l)(1)(B).
---------------------------------------------------------------------------
However, the Exchange also offers a ``Cancel Back'' instruction
that is not covered by EDGX Rule 11.6(n)(4). An order entered with a
Cancel Back instruction is immediately cancelled instead of re-priced
when displaying the order at its limit price would create a violation
of the Locked and Crossed Markets Rule.\8\ All orders must include a
Price Adjust, Display-Price Sliding, or Cancel Back instruction,\9\ and
orders entered with a Post Only instruction are handled in the same
manner regardless of which of these three additional instructions is
applied. The Exchange therefore proposes to amend EDGX Rule 11.6(n)(4)
to eliminate references to Display-Price Sliding and Price Adjust,
similar to the current rules in place on its affiliated equities
exchanges, Cboe BZX Exchange, Inc. (``BZX'') and Cboe BYX Exchange,
Inc. (``BYX'').\10\ The Exchange believes that removing the references
to these two instructions in the rule would reduce potential confusion
as the order handling described in the rule today applies to all orders
entered with a Post Only instruction, and not a specific subset of
those orders. No changes to the Exchange's trading or other systems are
contemplated by this proposed change, which is instead designed to
increase transparency around the Exchange's current operation.
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\8\ ``Cancel Back'' is an instruction the User may attach to an
order instructing the System to immediately cancel the order when,
if displayed by the System on the EDGX Book at the time of entry, or
upon return to the System after being routed away, would create a
violation of Rule 610(d) of Regulation NMS or Rule 201 of Regulation
SHO, or the order cannot otherwise be executed or posted by the
System to the EDGX Book at its limit price. See EDGX Rule 11.6(b).
\9\ Display-Price Sliding is applied as the default handling
unless Price Adjust or Cancel Back is elected [sic] See EDGX Rule
11.8(b)(10).
\10\ See BZX Rule 11.9(c)(6) and BYX Rule 11.9(c)(6).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the requirements of Section 6(b) of the Act,\11\ in general, and
Section 6(b)(5) of
[[Page 14428]]
the Act,\12\ in particular, in that it is designed to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, to promote just and equitable principles of
trade, and, in general, to protect investors and the public interest
and not to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that the proposed rule change
is consistent with the public interest and the protection of investors
as it would avoid potential confusion about how an order is handled if
entered with both a Post Only and Cancel Back instruction. Today, the
Exchange's rules provide that an order entered into the EDGX Book with
a Post Only instruction would remove liquidity in certain
circumstances, such as when economically beneficial for the order. In
addition, the rules specify that this handling applies to orders
entered with a Price Adjust or Display-Price Sliding instruction. The
rules, however, are silent as to the handling applied if an order with
a Post Only instruction contains a Cancel Back instruction. The
Exchange's order handling is, in fact, the same regardless of which of
these instructions are chosen by the member. As such, the Exchange
believes that it is appropriate to amend EDGX Rule 11.6(n)(4) to
eliminate references to the Price Adjust or Display-Price Sliding
instruction, thereby making clear that this handling applies to all
orders entered with a Post Only instruction and not only those that
also contain Price Adjust or Display-Price Sliding instructions.
The Exchange believes that this order handling, which mirrors that
in place on the Exchange's affiliated equities markets (i.e., BZX and
BYX) is appropriate regardless of whether an order entered with a Post
Only instruction also contains a Display-Price Sliding, Price Adjust,
or Cancel Back instruction. Specifically, the Exchange believes that it
is consistent with just and equitable principles of trade to permit an
order entered with a Post Only instruction to remove liquidity when the
order is an order to buy or sell a security priced below $1.00, or when
executing as the taker of liquidity would be economically beneficial to
the firm entering the order. This handling is designed to ensure that
orders entered with a Post Only instruction are eligible to trade in
certain circumstances where the entering firm may have an interest in
securing an execution on entry--i.e., as the taker of liquidity--
notwithstanding the member's use of the Post Only instruction. Although
the Exchange's rules currently mention order handling for the Display-
Price Sliding and Price Adjust instructions specifically, this
functionality should be applied equally to any order entered with a
Post Only instruction. Thus, amending the rule as proposed would
provide additional transparency into a feature offered by the Exchange
that is potentially beneficial to members that utilize the Post Only
instruction.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Rather, the proposed rule
change would remove ambiguity in the EDGX rules describing the Post
Only instruction by amending those rules consistent with rules
currently in place for the Exchange's affiliates, BZX and BYX. No
change to the Exchange's order handling is contemplated by this
proposed rule change, which would merely clarify the current handling
for certain orders entered with a Post Only instruction. The Exchange
therefore believes that the proposed rule change would increase
transparency around the operation of the Exchange to the benefit of
members and investors, without imposing any significant burden on
competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received 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) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. 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-2019-014 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-2019-014. 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
[[Page 14429]]
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-2019-
014, and should be submitted on or before May 1, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-07051 Filed 4-9-19; 8:45 am]
BILLING CODE 8011-01-P
