Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 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, 14699-14701 [2019-07154]

Download as PDF Federal Register / Vol. 84, No. 70 / Thursday, April 11, 2019 / Notices Any interested person may, by May 1 2019, at 5:30 p.m., submit to the Commission in writing a request for a hearing on the cancellation, accompanied by a statement as to the nature of his interest, the reason for such request, and the issues, if any, of fact or law proposed to be controverted, and the writer may request to be notified if the Commission should order a hearing thereon. Any such communication should be addressed to the SEC’s Secretary at the address below. At any time after May 1 2019 the Commission may issue an order cancelling the registration, upon the basis of the information stated above, unless an order for a hearing on the cancellation shall be issued upon request or upon the Commission’s own motion. Persons who requested a hearing, or who requested to be advised as to whether a hearing is ordered, will receive any notices and orders issued in this matter, including the date of the hearing (if ordered) and any postponements thereof. Any adviser whose registration is cancelled under delegated authority may appeal that decision directly to the Commission in accordance with rules 430 and 431 of the Commission’s rules of practice (17 CFR 201.430 and 431). The Commission: Secretary, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. ADDRESSES: FOR FURTHER INFORMATION CONTACT: Olawale Oriola, Senior Counsel, at 202– 551–6541; SEC, Division of Investment Management, Office of Investment Adviser Regulation, 100 F Street NE, Washington, DC 20549–8549. For the Commission, by the Division of Investment Management, pursuant to delegated authority.2 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–07128 Filed 4–10–19; 8:45 am] amozie on DSK9F9SC42PROD with NOTICES BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–85521; File No. SR– CboeEDGA–2019–004] Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 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 5, 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 EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) 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 Cboe EDGA Exchange, Inc. (‘‘EDGA’’ or the ‘‘Exchange’’) is filing with the Securities and Exchange Commission (the ‘‘Commission’’) a proposed rule change to amend EDGA 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/ equities/regulation/rule_filings/edga/), 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 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 2 17 CFR 200.30–5(e)(2). VerDate Sep<11>2014 16:50 Apr 10, 2019 Jkt 247001 PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 14699 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 EDGA 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 EDGA 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 5 See EDGA 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 EDGA 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 EDGA 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 EDGA 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 EDGA Book at the time of entry, will be ranked at the Locking Price in the EDGA Book and displayed by the System at one Minimum Price Variation lower (higher) than the Locking Price for orders to buy (sell). See EDGA Rule 11.6(l)(1)(B). E:\FR\FM\11APN1.SGM 11APN1 14700 Federal Register / Vol. 84, No. 70 / Thursday, April 11, 2019 / Notices liquidity in the circumstances described in EDGA 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 EDGA 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 EDGA 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. amozie on DSK9F9SC42PROD with NOTICES 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 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 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 EDGA 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 EDGA Book at its limit price. See EDGA Rule 11.6(b). 9 Display-Price Sliding is applied as the default handling unless Price Adjust or Cancel Back is elected [sic] See EDGA 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). 12 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 16:50 Apr 10, 2019 Jkt 247001 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 EDGA 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 EDGA 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 PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 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 EDGA 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 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 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 as designated by the Commission. The Exchange has satisfied this requirement. 14 17 E:\FR\FM\11APN1.SGM 11APN1 Federal Register / Vol. 84, No. 70 / Thursday, April 11, 2019 / Notices 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– CboeEDGA–2019–004 on the subject line. Paper Comments amozie on DSK9F9SC42PROD with NOTICES • 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–CboeEDGA–2019–004. 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–CboeEDGA–2019–004, and VerDate Sep<11>2014 16:50 Apr 10, 2019 Jkt 247001 should be submitted on or before May 2, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–07154 Filed 4–10–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–85533; File No. SR– NYSECHX–2019–04] Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Current Pilot Program Related to Article 20, Rule 10, Handling of Clearly Erroneous Transactions April 5, 2019. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on April 3, 2019, the NYSE Chicago, Inc. (‘‘NYSE Chicago’’ or the ‘‘Exchange’’) 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 self-regulatory organization. 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 proposes to extend the current pilot program related to Article 20, Rule 10, Handling of Clearly Erroneous Executions, to the close of business on October 18, 2019. The proposed rule change is available on the Exchange’s website at www.nyse.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 self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received 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 PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 14701 on the proposed rule change. The text of those 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 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 purpose of the proposed rule change is to extend the current pilot program related to Article 20, Rule 10, Handling of Clearly Erroneous Executions, to the close of business on October 18, 2019. This change is being proposed in connection with proposed amendments to the Plan to Address Extraordinary Market Volatility (the ‘‘Limit Up-Limit Down Plan’’ or the ‘‘Plan’’) that would allow the Plan to continue to operate on a permanent basis.4 On September 10, 2010, the Commission approved, on a pilot basis, changes to Rule 10 that, among other things: (i) Provided for uniform treatment of clearly erroneous execution reviews in multi-stock events involving twenty or more securities; and (ii) reduced the ability of the Exchange to deviate from the objective standards set forth in the rule.5 In 2013, the Exchange adopted a provision designed to address the operation of the Plan.6 Finally, in 2014, the Exchange adopted two additional provisions providing that: (i) A series of transactions in a particular security on one or more trading days may be viewed as one event if all such transactions were effected based on the same fundamentally incorrect or grossly misinterpreted issuance information resulting in a severe valuation error for all such transactions; and (ii) in the event of any disruption or malfunction in the operation of the electronic communications and trading facilities of an Exchange, another SRO, or responsible single plan processor in connection with the transmittal or receipt of a trading halt, an Officer, acting on his or her own motion, shall nullify any transaction that occurs after a trading halt has been declared by the primary listing market for a security and before such trading halt has officially 4 See Securities Exchange Act Release No. 84843 (December 18, 2018), 83 FR 66464 (December 26, 2018) (File No. 4–631) (‘‘Eighteenth Amendment’’). 5 See Securities Exchange Act Release No. 62886 (Sept. 10, 2010), 75 FR 56613 (Sept. 16, 2010) (SR– CHX–2010–13). 6 See Securities Exchange Act Release No. 68802 (Feb. 1, 2013), 78 FR 9092 (Feb. 7, 2013) (SR–CHX– 2013–04). E:\FR\FM\11APN1.SGM 11APN1

Agencies

[Federal Register Volume 84, Number 70 (Thursday, April 11, 2019)]
[Notices]
[Pages 14699-14701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07154]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85521; File No. SR-CboeEDGA-2019-004]


Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change 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 5, 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 EDGA Exchange, Inc. (the ``Exchange'' or 
``EDGA'') 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 EDGA Exchange, Inc. (``EDGA'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (the ``Commission'') a 
proposed rule change to amend EDGA 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/equities/regulation/rule_filings/edga/), 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 EDGA 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 EDGA 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

[[Page 14700]]

liquidity in the circumstances described in EDGA Rule 11.6(n)(4) 
instead of having its ranked price or display price adjusted pursuant 
to those order handling instructions.
---------------------------------------------------------------------------

    \5\ See EDGA 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 EDGA 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 EDGA 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 EDGA 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 
EDGA Book at the time of entry, will be ranked at the Locking Price 
in the EDGA Book and displayed by the System at one Minimum Price 
Variation lower (higher) than the Locking Price for orders to buy 
(sell). See EDGA Rule 11.6(l)(1)(B).
---------------------------------------------------------------------------

    However, the Exchange also offers a ``Cancel Back'' instruction 
that is not covered by EDGA 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 EDGA 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.
---------------------------------------------------------------------------

    \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 EDGA 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 EDGA Book at its limit price. See EDGA Rule 11.6(b).
    \9\ Display-Price Sliding is applied as the default handling 
unless Price Adjust or Cancel Back is elected [sic] See EDGA Rule 
11.8(b)(10).
    \10\ See BZX Rule 11.9(c)(6) and BYX Rule 11.9(c)(6).
---------------------------------------------------------------------------

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 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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 EDGA 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 EDGA 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 EDGA 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

[[Page 14701]]

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-CboeEDGA-2019-004 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-CboeEDGA-2019-004. 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-CboeEDGA-2019-004, and should be 
submitted on or before May 2, 2019.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-07154 Filed 4-10-19; 8:45 am]
 BILLING CODE 8011-01-P
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