Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Amend Rule 11.11 and Rule 11.16, as Well as Its Fee Schedule, To Delete References to the SWPB Routing Option, 20915-20917 [2019-09726]
Download as PDF
<![CDATA[
Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Notices
jbell on DSK3GLQ082PROD with NOTICES
Agreements’’).1 Under the terms of each
Investment Management Agreement, the
Advisor, subject to the supervision of
the board of trustees of each Trust
(‘‘Board’’), provides continuous
investment management of the assets of
each Sub-Advised Series. Consistent
with the terms of each Investment
Management Agreement, the Advisor
may, subject to the approval of the
applicable Board, delegate portfolio
management responsibilities of all or a
portion of the assets of a Sub-Advised
Series to one or more Sub-Advisors.2
The Advisor will continue to have
overall responsibility for the
management and investment of the
assets of each Sub-Advised Series. The
Advisor will evaluate, select, and
recommend Sub-Advisors to manage the
assets of a Sub-Advised Series and will
oversee, monitor and review the SubAdvisors and their performance and
recommend the removal or replacement
of Sub-Advisors.
2. Applicants request an order to
permit the Advisor, subject to Board
approval, to enter into investment subadvisory agreements with the SubAdvisors (each, a ‘‘Sub-Advisory
Agreement’’) and materially amend such
Sub-Advisory Agreements without
obtaining the shareholder approval
1 Applicants request relief with respect to the
Series, as well as to any future series of the Trusts
and any other existing or future registered open-end
management investment company or series thereof
that, in each case, is advised by the Advisor, its
successors, or any entity controlling, controlled by,
or under common control with, the Advisor or its
successors (each, also an ‘‘Advisor’’), uses the
multi-manager structure described in the
application, and complies with the terms and
conditions set forth in the application (each, a
‘‘Sub-Advised Series’’). For purposes of the
requested order, ‘‘successor’’ is limited to an entity
that results from a reorganization into another
jurisdiction or a change in the type of business
organization. Future Sub-Advised Series may be
operated as a master-feeder structure pursuant to
section 12(d)(1)(E) of the Act. In such a structure,
certain Series (each, a ‘‘Feeder Fund’’) may invest
substantially all of their assets in a Sub-Advised
Series (a ‘‘Master Fund’’) pursuant to section
12(d)(1)(E) of the Act. No Feeder Fund will engage
any sub-advisers other than through approving the
engagement of one or more of the Master Fund’s
sub-advisers.
2 As used herein, a ‘‘Sub-Advisor’’ for a SubAdvised Series is (1) an indirect or direct ‘‘whollyowned subsidiary’’ (as such term is defined in the
Act) of the Advisor for that Sub-Advised Series, or
(2) a sister company of the Advisor for that SubAdvised Series that is an indirect or direct ‘‘whollyowned subsidiary’’ of the same company that,
indirectly or directly, wholly owns the Advisor
(each of (1) and (2) a ‘‘Wholly-Owned Sub-Advisor’’
and collectively, the ‘‘Wholly-Owned SubAdvisors’’), or (3) not an ‘‘affiliated person’’ (as
such term is defined in section 2(a)(3) of the Act)
of the Sub-Advised Series, any Feeder Fund
invested in a Master Fund, the Trusts, or the
Advisor, except to the extent that an affiliation
arises solely because the Sub-Advisor serves as a
sub-adviser to a Sub-Advised Series (‘‘NonAffiliated Sub-Advisors’’).
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required under section 15(a) of the Act
and rule 18f–2 under the Act.3
Applicants also seek an exemption from
the Disclosure Requirements to permit a
Sub-Advised Series to disclose (as both
a dollar amount and a percentage of the
Sub-Advised Series’ net assets): (a) the
aggregate fees paid to the Advisor and
any Wholly-Owned Sub-Advisor; (b) the
aggregate fees paid to Non-Affiliated
Sub-Advisors; and (c) the fee paid to
each Affiliated Sub-Advisor
(collectively, Aggregate Fee
Disclosure’’).4
3. Applicants agree that any order
granting the requested relief will be
subject to the terms and conditions
stated in the application. Such terms
and conditions provide for, among other
safeguards, appropriate disclosure to
Sub-Advised Series’ shareholders and
notification about sub-advisory changes
and enhanced Board oversight to protect
the interests of the Sub-Advised Series’
shareholders.
4. Section 6(c) of the Act provides that
the Commission may exempt any
person, security, or transaction or any
class or classes of persons, securities, or
transactions from any provisions of the
Act, or any rule thereunder, if such
relief is necessary or appropriate in the
public interest and consistent with the
protection of investors and purposes
fairly intended by the policy and
provisions of the Act. Applicants
believe that the requested relief meets
this standard because, as further
explained in the application, the
Investment Management Agreements
will remain subject to shareholder
approval, while the role of the SubAdvisors is substantially equivalent to
that of individual portfolio managers, so
that requiring shareholder approval of
Sub-Advisory Agreements would
impose unnecessary delays and
expenses on the Sub-Advised Series.
Applicants believe that the requested
relief from the Disclosure Requirements
meets this standard because it will
improve the Advisor’s ability to
negotiate fees paid to the Sub-Advisors
that are more advantageous for the SubAdvised Series.
3 The requested relief will not extend to any subadviser, other than a Wholly-Owned Sub-Advisor,
who is an affiliated person, as defined in section
2(a)(3) of the Act, of the Sub-Advised Series, of any
Feeder Fund, or of the Advisor, other than by
reason of serving as a sub-adviser to one or more
of the Sub-Advised Series (‘‘Affiliated SubAdvisor’’).
4 For any Sub-Advised Series that is a Master
Fund, the relief would also permit any Feeder Fund
invested in that Master Fund to disclose Aggregate
Fee Disclosure.
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20915
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–09721 Filed 5–10–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85800; File No. SR–
CboeEDGX–2019–026]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Relating to
Amend Rule 11.11 and Rule 11.16, as
Well as Its Fee Schedule, To Delete
References to the SWPB Routing
Option
May 7, 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 April 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 ‘‘noncontroversial’’ 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 EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) proposes to
amend Rule 11.11 and Rule 11.16, as
well as its Fee Schedule, to delete
references to the SWPB routing option.
The text of the proposed rule change is
provided in 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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20916
Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Notices
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
jbell on DSK3GLQ082PROD with NOTICES
1. Purpose
The Exchange proposes to amend
Rule 11.11(g) (Routing Options) to
delete the SWPB routing option under
subparagraph (g)(10), as well as
references to the SWPB routing option
under Rule 11.16(e) (Limit Up-Limit
Down Mechanism). The Exchange also
proposes to amend its fee schedule to
delete references to the SWPB routing
options under fee code SW and under
footnote 8. The Exchange intends to
implement the proposed rule changes
on May 1, 2019.
Currently, Rule 11.11(g) provides for
a variety of routing away options under
which the System 5 will consider the
quotations only of accessible Trading
Centers. The term ‘‘System routing
table’’ refers to the proprietary process
for determining the specific trading
venues to which the System routes
orders and the order in which it routes
them.6 Rule 11.13(g)(10) currently
provides for SWPB as one of such
routing options. SWPB is a routing
option under which an order checks the
System for available shares and then is
sent to only Protected Quotations and
only for displayed size. To the extent
that any portion of the routed order is
unexecuted, the remainder is posted to
the EDGX Book at the order’s limit
price, unless otherwise instructed by the
User.7 Also, if at the time of entry, there
5 The ‘‘System’’ is the Exchange’s electronic
communications and trading facility designated by
the Board through which securities orders of Users
are consolidated for ranking, execution and, when
applicable, routing away. See Exchange Rule
1.5(cc).
6 The Exchange reserves the right to maintain a
different System routing table for different routing
options and to modify the System routing table at
any time without notice. See Exchange Rule
11.11(g).
7 The term ‘‘User’’ is defined as ‘‘any Member or
Sponsored Participant who is authorized to obtain
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Jkt 247001
is an insufficient share quantity in the
SWPB order to fulfill the displayed size
of all Protected Quotations, then the
entire SWPB order will be cancelled
back to the User immediately. Currently,
Rule 11.16 provides for the Regulation
NMS Plan to Address Extraordinary
Market Volatility (the ‘‘Plan’’) during a
pilot period. Specifically, Rule
11.16(e)(5)(D)(2) provides a description
of how the two current SWP routing
strategies, SWPA and SPWB, are
handled in accordance with the Plan
when an order to buy utilizing an SWP
routing strategy has a limit price that is
greater than the Upper Price Band or if
a sell order utilizing an SWP routing
strategy has a limit price that is less
than the Lower Price Band.
Additionally, current fee code SW is
yielded on orders routed using SWPA or
SWPB routing strategies, except for
removal of liquidity from the New York
Stock Exchange (‘‘NYSE’’).8 Current
footnote 8 provides that fee code D will
be yielded on orders routed using
SWPA or SWPB if such strategy
removes liquidity from NYSE.
The Exchange has determined that
because few Users elect the SWPB
routing option, which often experiences
no usage for extended periods of time,
the current demand does not warrant
the infrastructure and ongoing
maintenance expenses required to
support these products. Therefore, the
Exchange now proposes to delete SWPB
as a routing option under Rule
11.11(g)(10) and references to the SWPB
routing option under Rule
11.16(e)(5)(D)(2). The Exchange
proposes to amend Rule 11.11(g)
formatting accordingly, changing the
numbering of current subparagraphs
(g)(11) through (g)(14) to subparagraphs
(g)(10) through (g)(13). The Exchange
also proposes to amend its fee schedule
to delete references to the SWPB routing
option under fee code SW, as well as
under footnote 8. The Exchange notes
that Users seeking to route only to
Protected Quotations for displayed size
may use the other SWP routing option,
SWPA.9
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
access to the System pursuant to Rule 11.3.’’ See
Exchange Rule 1.5(ee).
8 Orders that yield fee code SW receive a
discounted fee of $0.0031 per share at or above
$1.00 and 0.30% of Dollar Value per share below
$1.00.
9 See Exchange Rule 11.11(g)(9).
PO 00000
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Fmt 4703
Sfmt 4703
Section 6(b) of the Act.10 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 11 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) 12 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, The Exchange does not
believe that this proposal will permit
unfair discrimination among customers,
brokers, or dealers because the SWPB
routing options will no longer be
available to all Users. Also, the
Exchange believes the proposed rule
change to remove references to SWPB
will remove impediments to the
mechanism of a free and open market,
thereby protecting investors and the
public interest. As stated, the Exchange
noted that few Users elect the SWPB
routing option and has determined that
the current demand does not warrant
the infrastructure and ongoing
maintenance expense required to
support these products. Therefore, the
Exchange is discontinuing this routing
option. The Exchange notes that routing
through the Exchange is voluntary and
Users are free to designate the
alternative SWP routing option, SWPA,
currently offered by the Exchange.13 In
addition, the SWPB routing option is
not a core product offering by the
Exchange, nor is the Exchange required
by the Act to offer such a product. By
removing references to a routing option
that will no longer be offered by the
Exchange, the Exchange believes the
proposed rule change will remove
impediments to the mechanism of a free
and open market and protect investors
by providing investors with increased
transparency regarding rules that reflect
routing options currently available on
the Exchange.
10 15
11 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
12 Id.
13 See
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supra note 9.
13MYN1
Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Notices
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 to remove SWPB
is not designed to address any
competitive issues but rather to increase
transparency by eliminating the SWPB
routing option that is to be discontinued
by the Exchange.
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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 14 and Rule
19b–4(f)(6) 15 thereunder. 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 16 and Rule
19b–4(f)(6) 17 thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative for 30 days after the
date of the filing. However, Rule 19b–
4(f)(6)(iii) 18 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. In
support of its waiver request, the
Exchange stated its belief that waiving
the operative delay would allow the
Exchange to modify its rules in a timely
manner by eliminating rules that
account for a service the Exchange
intends to discontinue on May 1, 2019.
14 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
U.S.C. 78s(b)(3)(A)(iii).
17 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s 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.
18 17 CFR 240.19b–4(f)(6)(iii).
15 17
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16 15
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16:29 May 10, 2019
Jkt 247001
The Commission believes that waiver of
the operative delay is consistent with
the protection of investors and the
public interest, and accordingly, the
Commission hereby waives the 30-day
operative delay and designates the
proposed rule change operative upon
filing.19
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 will institute proceedings
to determine whether the proposed rule
change 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–2019–026 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–2019–026. 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
19 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).
PO 00000
Frm 00072
Fmt 4703
Sfmt 4703
20917
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–2019–026 and
should be submitted on or before June
3, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–09726 Filed 5–10–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85799; File No. SR–
CboeEDGA–2019–008)
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Relating To
Amend Rule 11.11 and Rule 11.16, as
Well as Its Fee Schedule, To Delete
References to the SWPB Routing
Option
May 7, 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 April 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
20 17
CFR 200.30–3(a)(12).
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).
1 15
E:\FR\FM\13MYN1.SGM
13MYN1
]]>Agencies
[Federal Register Volume 84, Number 92 (Monday, May 13, 2019)]
[Notices]
[Pages 20915-20917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09726]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85800; File No. SR-CboeEDGX-2019-026]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to Amend Rule 11.11 and Rule 11.16, as Well as Its Fee
Schedule, To Delete References to the SWPB Routing Option
May 7, 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 April 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. (the ``Exchange'' or ``EDGX'') proposes to
amend Rule 11.11 and Rule 11.16, as well as its Fee Schedule, to delete
references to the SWPB routing option. The text of the proposed rule
change is provided in 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.
[[Page 20916]]
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 Exchange proposes to amend Rule 11.11(g) (Routing Options) to
delete the SWPB routing option under subparagraph (g)(10), as well as
references to the SWPB routing option under Rule 11.16(e) (Limit Up-
Limit Down Mechanism). The Exchange also proposes to amend its fee
schedule to delete references to the SWPB routing options under fee
code SW and under footnote 8. The Exchange intends to implement the
proposed rule changes on May 1, 2019.
Currently, Rule 11.11(g) provides for a variety of routing away
options under which the System \5\ will consider the quotations only of
accessible Trading Centers. The term ``System routing table'' refers to
the proprietary process for determining the specific trading venues to
which the System routes orders and the order in which it routes
them.\6\ Rule 11.13(g)(10) currently provides for SWPB as one of such
routing options. SWPB is a routing option under which an order checks
the System for available shares and then is sent to only Protected
Quotations and only for displayed size. To the extent that any portion
of the routed order is unexecuted, the remainder is posted to the EDGX
Book at the order's limit price, unless otherwise instructed by the
User.\7\ Also, if at the time of entry, there is an insufficient share
quantity in the SWPB order to fulfill the displayed size of all
Protected Quotations, then the entire SWPB order will be cancelled back
to the User immediately. Currently, Rule 11.16 provides for the
Regulation NMS Plan to Address Extraordinary Market Volatility (the
``Plan'') during a pilot period. Specifically, Rule 11.16(e)(5)(D)(2)
provides a description of how the two current SWP routing strategies,
SWPA and SPWB, are handled in accordance with the Plan when an order to
buy utilizing an SWP routing strategy has a limit price that is greater
than the Upper Price Band or if a sell order utilizing an SWP routing
strategy has a limit price that is less than the Lower Price Band.
Additionally, current fee code SW is yielded on orders routed using
SWPA or SWPB routing strategies, except for removal of liquidity from
the New York Stock Exchange (``NYSE'').\8\ Current footnote 8 provides
that fee code D will be yielded on orders routed using SWPA or SWPB if
such strategy removes liquidity from NYSE.
---------------------------------------------------------------------------
\5\ The ``System'' is the Exchange's electronic communications
and trading facility designated by the Board through which
securities orders of Users are consolidated for ranking, execution
and, when applicable, routing away. See Exchange Rule 1.5(cc).
\6\ The Exchange reserves the right to maintain a different
System routing table for different routing options and to modify the
System routing table at any time without notice. See Exchange Rule
11.11(g).
\7\ The term ``User'' is defined as ``any Member or Sponsored
Participant who is authorized to obtain access to the System
pursuant to Rule 11.3.'' See Exchange Rule 1.5(ee).
\8\ Orders that yield fee code SW receive a discounted fee of
$0.0031 per share at or above $1.00 and 0.30% of Dollar Value per
share below $1.00.
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The Exchange has determined that because few Users elect the SWPB
routing option, which often experiences no usage for extended periods
of time, the current demand does not warrant the infrastructure and
ongoing maintenance expenses required to support these products.
Therefore, the Exchange now proposes to delete SWPB as a routing option
under Rule 11.11(g)(10) and references to the SWPB routing option under
Rule 11.16(e)(5)(D)(2). The Exchange proposes to amend Rule 11.11(g)
formatting accordingly, changing the numbering of current subparagraphs
(g)(11) through (g)(14) to subparagraphs (g)(10) through (g)(13). The
Exchange also proposes to amend its fee schedule to delete references
to the SWPB routing option under fee code SW, as well as under footnote
8. The Exchange notes that Users seeking to route only to Protected
Quotations for displayed size may use the other SWP routing option,
SWPA.\9\
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\9\ See Exchange Rule 11.11(g)(9).
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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.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ 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) \12\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ Id.
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In particular, The Exchange does not believe that this proposal
will permit unfair discrimination among customers, brokers, or dealers
because the SWPB routing options will no longer be available to all
Users. Also, the Exchange believes the proposed rule change to remove
references to SWPB will remove impediments to the mechanism of a free
and open market, thereby protecting investors and the public interest.
As stated, the Exchange noted that few Users elect the SWPB routing
option and has determined that the current demand does not warrant the
infrastructure and ongoing maintenance expense required to support
these products. Therefore, the Exchange is discontinuing this routing
option. The Exchange notes that routing through the Exchange is
voluntary and Users are free to designate the alternative SWP routing
option, SWPA, currently offered by the Exchange.\13\ In addition, the
SWPB routing option is not a core product offering by the Exchange, nor
is the Exchange required by the Act to offer such a product. By
removing references to a routing option that will no longer be offered
by the Exchange, the Exchange believes the proposed rule change will
remove impediments to the mechanism of a free and open market and
protect investors by providing investors with increased transparency
regarding rules that reflect routing options currently available on the
Exchange.
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\13\ See supra note 9.
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[[Page 20917]]
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 to
remove SWPB is not designed to address any competitive issues but
rather to increase transparency by eliminating the SWPB routing option
that is to be discontinued by the Exchange.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \14\ and Rule 19b-4(f)(6) \15\ thereunder.
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 \16\ and Rule 19b-4(f)(6) \17\
thereunder.
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\14\ 15 U.S.C. 78s(b)(3)(A)(iii).
\15\ 17 CFR 240.19b-4(f)(6).
\16\ 15 U.S.C. 78s(b)(3)(A)(iii).
\17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's 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) normally does
not become operative for 30 days after the date of the filing. However,
Rule 19b-4(f)(6)(iii) \18\ 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. In support of its
waiver request, the Exchange stated its belief that waiving the
operative delay would allow the Exchange to modify its rules in a
timely manner by eliminating rules that account for a service the
Exchange intends to discontinue on May 1, 2019. The Commission believes
that waiver of the operative delay is consistent with the protection of
investors and the public interest, and accordingly, the Commission
hereby waives the 30-day operative delay and designates the proposed
rule change operative upon filing.\19\
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\18\ 17 CFR 240.19b-4(f)(6)(iii).
\19\ 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 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 will institute proceedings to
determine whether the proposed rule change 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-2019-026 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-2019-026. 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-2019-026 and should be
submitted on or before June 3, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-09726 Filed 5-10-19; 8:45 am]
BILLING CODE 8011-01-P
