Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Update Its Price Adjust Process To Allow for the Process To Apply to Bulk Messages, 27178-27181 [2019-12187]
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Federal Register / Vol. 84, No. 112 / Tuesday, June 11, 2019 / Notices
should be submitted on or before July 2,
2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–12189 Filed 6–10–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86033; File No. SR–C2–
2019–012]
Self-Regulatory Organizations; Cboe
C2 Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Update Its Price
Adjust Process To Allow for the
Process To Apply to Bulk Messages
June 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 May 23,
2019, Cboe C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III 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.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) proposes to update
its Price Adjust process to allow for the
process to apply to bulk messages. 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/ctwo/),
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 Exchange proposes to amend its
rules to allow for the Price Adjust
process to apply to bulk messages and
make corresponding changes where
applicable. The Exchange is proposing
these amendments in order to provide
Options Members that submit bulk
messages with functionality that is
currently available to them for orders.
In February 2019, the Exchange
adopted bulk messaging functionality,
in which a User may enter, modify or
cancel up to an Exchange-specified
number of bids and offers. A User may
submit a bulk message through a bulk
port.5 The System 6 handles bulk
messages in the same manner as it
handles an order, or quote if submitted
by a Market-Maker, unless the Rules
specify otherwise. Currently, Rule 6.10
allows a User to designate an order to
be subject to the Price Adjust process
pursuant to Rule 6.12.7 Pursuant to
current Rule 6.12(b), the System ranks
and displays a buy (sell) order that, at
the time of entry, would lock or cross
a Protected Quotation of the Exchange
or another exchange at one minimum
price increment below (above) the
current National Best Offer (‘‘NBO’’) or
National Best Bid (‘‘NBB’’), as
applicable. The Price Adjust process
applies to orders (subject to the User’s
instructions or the Rules) that do not
execute upon entry and go to rest in the
C2 Book (for example, because an order
is not marketable upon entry, is not
eligible to route, etc.). It ensures these
5 See
Rule 6.8(c)(3).
‘‘System’’ is the automated trading system
the Exchange uses for the trading of option
contracts. See Rule 1.1.
7 An order that is not designated as Cancel Back
is also subject to the Price Adjust process (i.e.,
orders default to be subject to the Price Adjust
process).
6 The
14 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
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orders rest at executable prices in
accordance with linkage rules.8 Current
Rules 6.10(c) and 6.12(b) state that the
Price Adjust process does not apply to
bulk messages.9
Current Rule 6.10(c) also provides for
a Cancel Back order, in which a User
may designate an order not to be subject
to the Price Adjust process and the
System cancels or rejects such order if
displaying the order on the C2 Book
would create a violation of Rule 6.82
(Locked and Crossed Markets), or if the
order cannot otherwise be executed or
displayed in the C2 Book at its limit
price. The System executes a Book
Only—Cancel Back order marketable
against resting orders, and cancels or
rejects a Post Only—Cancel Back order
that locks or crosses the opposite side of
the BBO.
Furthermore, current Rule 6.12(c)
provides for additional System order
handling provisions regarding bulk
messages submitted through bulk
quoting ports. Specifically, Rule
6.12(c)(6)(A) provides that the System
will cancel or reject a Post Only bulk
message bid (offer) with a price that
locks or crosses the Exchange best offer
(bid) or ABO (ABB).10 The Exchange
notes that bulk messages that include a
Post Only instruction do not remove
liquidity from the Exchange or route
away to other exchanges.11 Current Rule
6.12(c)(6)(A) is consistent with how the
System handles a Post Only—Cancel
Back order.12 Additionally, current Rule
6.12(c)(6)(B) provides that the System
cancels or rejects a Book Only bulk
message bid (offer) that locks or crosses
the ABO (ABB) against offers (bids)
resting in the C2 Book at prices the same
as or better than the ABO (ABO) and
then cancels the unexecuted portion of
that bid (offer). Book Only orders do not
route away to other exchanges.13
8 See Section E of Chapter VI of the Rules. See
also Options Order Protection and Locked/Crossed
Market Plan (the ‘‘Linkage Plan’’).
9 Specifically, the multiple bids (offers) submitted
through a bulk message. Therefore, as proposed, a
Price Adjust or Cancel Back designation, as
applicable, applies to all bulk message bids and
offers within a single message.
10 The ABBO means the best bid (offer)
disseminated by other exchanges.
11 See Rule 6.10, which defines a ‘‘Post Only’’
order as an order the System ranks and executes
pursuant to Rule 6.12, subjects to the Price Adjust
process pursuant to Rule 6.12, or cancels or rejects
(including if it is not subject to the Price Adjust
process and locks or crosses a Protected Quotation
of another exchange), as applicable (in accordance
with User instructions), except the order may not
remove liquidity from the Book or route away to
another Exchange. Users may designate bulk
messages as Post Only as set forth in Rule 6.8(c).
12 See supra note 8.
13 See Rule 6.10, which defines a ‘‘Book Only’’
order as an order the System ranks and executes
pursuant to Rule 6.12, subjects to the Price Adjust
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Federal Register / Vol. 84, No. 112 / Tuesday, June 11, 2019 / Notices
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Current Rule 6.12(c)(6)(B) is consistent
with how the System handles Book
Only—Cancel Back orders.14 The
Exchange also notes that pursuant to
Rule 6.8(c), a Market-Maker with an
appointment in a class may designate a
bulk message for that class as Post Only
or Book Only, and other Users (i.e., nonMarket-Makers or Market-Makers
without an appointment in a class) must
designate a bulk message for that class
as Post Only.15
The Exchange now proposes to amend
Rule 6.10(c) and Rule 6.12(b) to permit
Users to designate bulk messages to be
subject to the Price Adjust process, and
permit Users to opt-out of such process
for bulk messages by designating bulk
messages as Cancel Back. The Price
Adjust and Cancel Back designations, as
applicable, will apply to all bulk
message bids and offers within a single
message. The Exchange notes that Users
have noted the regularity with which
their bulk messages are rejected because
Price Adjust does not apply to them. As
a result, some Users find this inefficient
when submitting bulk messages. The
Exchange believes that allowing bulk
messages to be subject to the Price
Adjust process will provide market
participants with additional
opportunities for execution and price
improvement, as well as additional
flexibility and control over their
submission of bulk messages. If a User
does not want a bulk message to be
subject to the Price Adjust process, it
may designate the bulk message as
Cancel Back, as noted above. A Cancel
Back bulk message will be handled in
the same manner as a bulk message is
handled today.16
As proposed, all bulk messages would
now be subject to the Price Adjust
process if it locks or crosses the BBO or
ABBO and rest in the C2 Book pursuant
to the process, thus avoiding display of
a locked or crossed market in
accordance with the linkage rules.17
Therefore, the Exchange now proposes
to remove Rules 6.12(c)(6)(A) and
6.12(c)(6)(B) (and amend the subsequent
process pursuant to Rule 6.12, or cancels, as
applicable (in accordance with User instructions),
without routing away to another exchange. Users
may designate bulk messages as Book Only as set
forth in Rule 6.8(c).
14 See supra note 8.
15 Pursuant to the current Rules, a bulk message
must be designated as Post Only or Book Only.
Additionally, because bulk messages must include
bids and offers, and may not be market orders, all
bulk messages are limit orders. See Rules 1.1 and
6.10(b).
16 The Exchange also proposes to make a nonsubstantive change to Rule 6.12(b) to amend the
capitalization of ‘‘exchange’’ in the phrase ‘‘or
another exchange’’, which is consistent with the
format of this phrase throughout the Rules.
17 See supra note 8.
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lettering as a result) because Post Only
and Bulk Only bulk messages will now
be included in the Price Adjust process,
the handling of which would now be
consistent with the current order
handing of Post Only and Book Only
orders under the Price Adjust process.18
The Exchange also notes that all bulk
messages not subject to the Price Adjust
process (because the User has
designated a bulk message as Cancel
Back) would be handled in the same
manner as the proposed deleted
subparagraphs (c)(6)(A) and (c)(6)(B)
pursuant to the Cancel Back instruction
under Rule 6.10(c).
The Exchange notes that allowing
bulk messages to be subject to a
repricing process is consistent with the
handling of similar order (and quote)
types on other exchanges.19 A similar
repricing (display-price sliding) process
for bulk messages currently exists under
Rule 21.1(h)(1) of the Exchange’s
affiliated exchange, Cboe BZX
Exchange, Inc. (‘‘BZX Options’’). The
Exchange also notes that other
exchanges subject orders (quotes)
similar to Post Only and Book Only bulk
messages to a repricing process like the
Price Adjust process. For example,
NYSE Arca, Inc. (‘‘Arca’’) recently
adopted order types called the Market
Maker Add Liquidity Only quotation
(‘‘MMALO’’), which like a Post Only
instruction may not remove liquidity
from the Exchange, and the Market
Maker Repricing quotation (‘‘MMRP’’).20
Pursuant to Arca’s repricing process, if
these quotes would not be able to trade
upon entry (for example, because the
MMALO would take liquidity or display
at a price that locks or crosses any
interest on the Exchange or the NBBO),
it would be displayed at one minimum
price variation below (above) such sell
(buy) interest.
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.21 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 22 requirements that the rules of
18 See
supra notes 11 and 13.
Securities Exchange Act Release No. 84737
(December 6, 2018), 83 FR 63919 (December 12,
2018) (SR–NYSEArca–2018–74) (order approving
the proposed order types). See also BZX Options
Rule 21.1(h)(1).
20 See Arca Rule 6.37A–O(a)(3)(A) and Rule
6.37A–O(a)(3)(C).
21 15 U.S.C. 78f(b).
22 15 U.S.C. 78f(b)(5).
19 See
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27179
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) 23 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
that the proposed rule change subjecting
bulk messages to the Price Adjust
process will remove impediments to
and perfect the mechanism of a free and
open market because it provides Users
with the flexibility to apply to bulk
messages the same functionality they
may apply to their orders. The Exchange
believes that repricing bulk messages for
Users (that do not opt out of the Price
Adjust process), as opposed to
automatically rejecting messages that
lock or cross protected quotes when
posted to the C2 Book, will permit Users
to use bulk messages to respond to
continuously changing market
conditions in a more efficient manner,
as well as provide additional
opportunity for execution and price
improvement. The proposed repricing of
bulk messages prevents the display of a
locked or crossed market and is
consistent with the Linkage Plan,24
thereby perfecting the mechanism of a
free and open market and national
market system and protecting investors.
The Exchange also believes that by
providing Users with the ability to
designate bulk messages as subject to
the Price Adjust process instead of
cancelling or rejecting these messages
under certain circumstances, will give
Users greater flexibility and control over
the circumstances under which their
orders are able to interact with contra
side-interest on the Exchange. The
Exchange believes this may increase the
opportunities for execution at multiple
price points and encourage the
provision of more liquidity to the
market, and therefore believes that it is
reasonably designed to facilitate the
mechanism of price discovery.
The Exchange notes that the options
markets are quote driven markets and
thus dependent on liquidity providers,
23 Id.
24 See
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which are most commonly registered
market-makers but also other Users,
such as professional traders, for
liquidity and price discovery. The
Exchange believes that subjecting bulk
messages to the Price Adjust process
will provide liquidity providers with
greater flexibility with respect to their
submission of bulk messages, the
primary purpose of which is to provide
liquidity to the market. The Exchange
believes that the reduction in the
number of rejected bulk messages will
promote efficacy in bulk messaging and
may encourage the provision of more
liquidity. This may result in more
trading opportunities and tighter
spreads and contribute to price
discovery. As a result, this proposed
change intends to improve overall
market quality and enhance competition
on the Exchange to the benefit of all
investors.25
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
Exchange does not believe the proposed
rule change will impose any burden on
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as the
proposed application of the Price Adjust
and the Cancel Back process to bulk
messages will be available to all
applicable Users (e.g. Market-Makers
may submit Book Only bulk messages,
therefore, the option to apply the Price
Adjust or Cancel Back process to Book
Only bulk messages is available to all
Market-Makers). While bulk messages
will by default be subject to the Price
Adjust process, all Users may apply the
Cancel Back instruction to bulk
messages in order to opt out of that
process for its bulk messages (and
continue to have their bulk messages be
handled in the same manner as they are
today). The Exchange also notes that the
Price Adjust and Cancel Back
instructions are already available to all
Users for orders, including Post Only
and Book Only orders, and will apply to
bulk messages in the same manner as
they apply to orders.
The Exchange does not believe the
proposed rule change will impose any
burden on intermarket competition that
25 The Exchange also believes that its proposed
change to amend the capitalization of ‘‘exchange’’
when referring to ‘‘another exchange’’ in Rule
6.12(b) is a clarifying change that will alleviate
potential investor confusion because it is consistent
with the format of this phrase throughout the Rules.
See supra note 14.
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is not necessary or appropriate in
furtherance of the purposes of the Act,
because it will provide Users with bulk
message repricing functionality that is
similar to other order and quote
repricing available on other options
exchanges. The Exchange believes the
proposed functionality will permit the
Exchange to operate on an even playing
field relative to other exchanges that
have similar functionality.
As discussed above, the options
markets are quote driven markets and
thus dependent on various Users as
liquidity providers and for price
discovery. The Exchange believes the
proposed amendment to subject bulk
messages to the Price Adjust process
will provide liquidity providers with
additional flexibility and control over
interactions of their bulk messages with
contra-side liquidity, as well as
additional opportunity for execution at
multiple price points and price
improvement. This may encourage the
provision of more liquidity, which may
result in more trading opportunities and
tighter spreads, and contribute to price
discovery. This may improve overall
market quality and enhance competition
on the Exchange, to the benefit of all
investors.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) Impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 26 and
subparagraph (f)(6) of Rule 19b–4
thereunder.27
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
26 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
27 17
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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–
C2–2019–012 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–C2–2019–012. 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
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Federal Register / Vol. 84, No. 112 / Tuesday, June 11, 2019 / Notices
to make available publicly. All
submissions should refer to File
Number SR–C2–2019–012 and should
be submitted on or before July 2, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–12187 Filed 6–10–19; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice 10787]
60-Day Notice of Proposed Information
Collection: Statement of Exigent/
Special Family Circumstances for
Issuance of a U.S. Passport to a Minor
Under Age 16
Notice of request for public
comment.
ACTION:
The Department of State is
seeking Office of Management and
Budget (OMB) approval for the
information collection described below.
In accordance with the Paperwork
Reduction Act of 1995, we are
requesting comments on this collection
from all interested individuals and
organizations. The purpose of this
notice is to allow 60 days for public
comment preceding submission of the
collection to OMB.
DATES: The Department will accept
comments from the public up to August
12, 2019.
ADDRESSES: You may submit comments
by any of the following methods:
• Web: Persons with access to the
internet may comment on this notice by
going to www.Regulations.gov. You can
search for the document by entering
‘‘Docket Number: DOS–2019–0013’’ in
the Search field. Then click the
‘‘Comment Now’’ button and complete
the comment form.
• Email: PPTFormsOfficer@state.gov.
• Regular Mail: Send written
comments to: PPT Forms Officer, U.S.
Department of State, CA/PPT/S/PMO,
44132 Mercure Cir., P.O. Box 1199,
Sterling, VA 20166–1199.
SUPPLEMENTARY INFORMATION:
• Title of Information Collection:
Statement of Exigent/Special Family
Circumstances for Issuance of a U.S.
Passport to a Minor under Age 16.
• OMB Control Number: 1405–0216.
• Type of Request: Revision of a
Currently Approved Collection.
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SUMMARY:
28 17
CFR 200.30–3(a)(12).
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• Originating Office: Bureau of
Consular Affairs, Passport Services (CA/
PPT).
• Form Number: DS–5525.
• Respondents: Individuals or
Households.
• Estimated Number of Respondents:
37,451.
• Estimated Number of Responses:
37,451.
• Average Time per Response: 30
minutes.
• Total Estimated Burden Time:
18,726 hours per year.
• Frequency: On occasion.
• Obligation to Respond: Required to
Obtain a Benefit.
We are soliciting public comments to
permit the Department to:
• Evaluate whether the proposed
information collection is necessary for
the proper functions of the Department.
• Evaluate the accuracy of our
estimate of the time and cost burden for
this proposed collection, including the
validity of the methodology and
assumptions used.
• Enhance the quality, utility, and
clarity of the information to be
collected.
• Minimize the reporting burden on
those who are to respond, including the
use of automated collection techniques
or other forms of information
technology.
Please note that comments submitted
in response to this Notice are public
record. Before including any detailed
personal information, you should be
aware that your comments as submitted,
including your personal information,
will be available for public review.
Abstract of Proposed Collection
The information collected on the DS–
5525, ‘‘Statement of Exigent/Special
Family Circumstances for Issuance of a
U.S. Passport to a Minor under Age 16’’,
is used in conjunction with the DS–11,
‘‘Application for a U.S. Passport’’. The
DS–5525 can serve as the statement
describing exigent or special family
circumstances, which is required if
notarized written consent of the nonapplying parent or guardian cannot be
obtained when the passport application
is executed for a minor under age 16.
Methodology
Passport Services collects information
from U.S. citizens and non-citizen
nationals when they complete and
submit the DS–5525, ‘‘Statement of
Exigent/Special Family Circumstances
for Issuance of a U.S. Passport to a
Minor under Age 16’’. Passport
applicants can either download the DS–
5525 from the internet or obtain the
form from an Acceptance Facility/
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27181
Passport Agency. The form must be
completed, signed, and submitted along
with the applicant’s DS–11,
‘‘Application for a U.S. Passport’’.
Rachel M. Arndt,
Deputy Assistant Secretary for Passport
Services.
[FR Doc. 2019–12297 Filed 6–10–19; 8:45 am]
BILLING CODE 4710–06–P
SURFACE TRANSPORTATION BOARD
[Docket No. EP 431 (Sub-No. 4)]
Review of the General Purpose
Costing System
In a Notice of Proposed Rulemaking
(NPR) served in this docket on February
4, 2013, the Board sought public
comment on proposals to modify the
Board’s general purpose costing system,
the Uniform Railroad Costing System
(URCS), to eliminate a feature known as
the ‘‘make-whole adjustment’’ and to
adjust the locomotive unit-mile (LUM)
cost allocation. After evaluating
comments received in response to the
NPR, the Board served a Supplemental
Notice of Proposed Rulemaking (SNPR)
on August 4, 2016, with modified
proposals for eliminating the makewhole adjustment and changing the
LUM cost allocation, and a new
proposal to modify train-mile (TM) cost
allocations. For the reasons stated
below, the Board will discontinue this
proceeding.
As discussed in prior decisions in this
proceeding, the Board uses URCS for a
variety of regulatory functions. URCS is
used in rate reasonableness proceedings
as part of the initial market dominance
determination. URCS also plays a role in
the Board’s determination of whether a
rate exceeds a reasonable maximum,
and, when warranted, setting the
maximum rate prescription. In addition,
URCS is used to develop variable costs
for making cost determinations in
abandonment, certain trackage rights,
and other proceedings; to provide the
railroad industry and shippers with a
standardized costing model; to cost the
Board’s Carload Waybill Sample; and to
provide interested parties with basic
cost information regarding railroad
industry operations.
URCS develops a regulatory cost
estimate that can be applied to a service
that occurs anywhere on a rail carrier’s
system. These cost estimates are
developed through three distinct phases
of URCS.
• Phase I occurred only once when
URCS was originally developed using
the annual reports submitted by Class I
rail carriers (R–1 reports). Regression
E:\FR\FM\11JNN1.SGM
11JNN1
]]>Agencies
[Federal Register Volume 84, Number 112 (Tuesday, June 11, 2019)]
[Notices]
[Pages 27178-27181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-12187]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86033; File No. SR-C2-2019-012]
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Update
Its Price Adjust Process To Allow for the Process To Apply to Bulk
Messages
June 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 May 23, 2019, Cboe C2 Exchange, Inc. (the ``Exchange'' or
``C2'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III 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.
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\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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe C2 Exchange, Inc. (the ``Exchange'' or ``C2'') proposes to
update its Price Adjust process to allow for the process to apply to
bulk messages. 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/ctwo/), 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 Exchange proposes to amend its rules to allow for the Price
Adjust process to apply to bulk messages and make corresponding changes
where applicable. The Exchange is proposing these amendments in order
to provide Options Members that submit bulk messages with functionality
that is currently available to them for orders.
In February 2019, the Exchange adopted bulk messaging
functionality, in which a User may enter, modify or cancel up to an
Exchange-specified number of bids and offers. A User may submit a bulk
message through a bulk port.\5\ The System \6\ handles bulk messages in
the same manner as it handles an order, or quote if submitted by a
Market-Maker, unless the Rules specify otherwise. Currently, Rule 6.10
allows a User to designate an order to be subject to the Price Adjust
process pursuant to Rule 6.12.\7\ Pursuant to current Rule 6.12(b), the
System ranks and displays a buy (sell) order that, at the time of
entry, would lock or cross a Protected Quotation of the Exchange or
another exchange at one minimum price increment below (above) the
current National Best Offer (``NBO'') or National Best Bid (``NBB''),
as applicable. The Price Adjust process applies to orders (subject to
the User's instructions or the Rules) that do not execute upon entry
and go to rest in the C2 Book (for example, because an order is not
marketable upon entry, is not eligible to route, etc.). It ensures
these orders rest at executable prices in accordance with linkage
rules.\8\ Current Rules 6.10(c) and 6.12(b) state that the Price Adjust
process does not apply to bulk messages.\9\
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\5\ See Rule 6.8(c)(3).
\6\ The ``System'' is the automated trading system the Exchange
uses for the trading of option contracts. See Rule 1.1.
\7\ An order that is not designated as Cancel Back is also
subject to the Price Adjust process (i.e., orders default to be
subject to the Price Adjust process).
\8\ See Section E of Chapter VI of the Rules. See also Options
Order Protection and Locked/Crossed Market Plan (the ``Linkage
Plan'').
\9\ Specifically, the multiple bids (offers) submitted through a
bulk message. Therefore, as proposed, a Price Adjust or Cancel Back
designation, as applicable, applies to all bulk message bids and
offers within a single message.
---------------------------------------------------------------------------
Current Rule 6.10(c) also provides for a Cancel Back order, in
which a User may designate an order not to be subject to the Price
Adjust process and the System cancels or rejects such order if
displaying the order on the C2 Book would create a violation of Rule
6.82 (Locked and Crossed Markets), or if the order cannot otherwise be
executed or displayed in the C2 Book at its limit price. The System
executes a Book Only--Cancel Back order marketable against resting
orders, and cancels or rejects a Post Only--Cancel Back order that
locks or crosses the opposite side of the BBO.
Furthermore, current Rule 6.12(c) provides for additional System
order handling provisions regarding bulk messages submitted through
bulk quoting ports. Specifically, Rule 6.12(c)(6)(A) provides that the
System will cancel or reject a Post Only bulk message bid (offer) with
a price that locks or crosses the Exchange best offer (bid) or ABO
(ABB).\10\ The Exchange notes that bulk messages that include a Post
Only instruction do not remove liquidity from the Exchange or route
away to other exchanges.\11\ Current Rule 6.12(c)(6)(A) is consistent
with how the System handles a Post Only--Cancel Back order.\12\
Additionally, current Rule 6.12(c)(6)(B) provides that the System
cancels or rejects a Book Only bulk message bid (offer) that locks or
crosses the ABO (ABB) against offers (bids) resting in the C2 Book at
prices the same as or better than the ABO (ABO) and then cancels the
unexecuted portion of that bid (offer). Book Only orders do not route
away to other exchanges.\13\
[[Page 27179]]
Current Rule 6.12(c)(6)(B) is consistent with how the System handles
Book Only--Cancel Back orders.\14\ The Exchange also notes that
pursuant to Rule 6.8(c), a Market-Maker with an appointment in a class
may designate a bulk message for that class as Post Only or Book Only,
and other Users (i.e., non-Market-Makers or Market-Makers without an
appointment in a class) must designate a bulk message for that class as
Post Only.\15\
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\10\ The ABBO means the best bid (offer) disseminated by other
exchanges.
\11\ See Rule 6.10, which defines a ``Post Only'' order as an
order the System ranks and executes pursuant to Rule 6.12, subjects
to the Price Adjust process pursuant to Rule 6.12, or cancels or
rejects (including if it is not subject to the Price Adjust process
and locks or crosses a Protected Quotation of another exchange), as
applicable (in accordance with User instructions), except the order
may not remove liquidity from the Book or route away to another
Exchange. Users may designate bulk messages as Post Only as set
forth in Rule 6.8(c).
\12\ See supra note 8.
\13\ See Rule 6.10, which defines a ``Book Only'' order as an
order the System ranks and executes pursuant to Rule 6.12, subjects
to the Price Adjust process pursuant to Rule 6.12, or cancels, as
applicable (in accordance with User instructions), without routing
away to another exchange. Users may designate bulk messages as Book
Only as set forth in Rule 6.8(c).
\14\ See supra note 8.
\15\ Pursuant to the current Rules, a bulk message must be
designated as Post Only or Book Only. Additionally, because bulk
messages must include bids and offers, and may not be market orders,
all bulk messages are limit orders. See Rules 1.1 and 6.10(b).
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The Exchange now proposes to amend Rule 6.10(c) and Rule 6.12(b) to
permit Users to designate bulk messages to be subject to the Price
Adjust process, and permit Users to opt-out of such process for bulk
messages by designating bulk messages as Cancel Back. The Price Adjust
and Cancel Back designations, as applicable, will apply to all bulk
message bids and offers within a single message. The Exchange notes
that Users have noted the regularity with which their bulk messages are
rejected because Price Adjust does not apply to them. As a result, some
Users find this inefficient when submitting bulk messages. The Exchange
believes that allowing bulk messages to be subject to the Price Adjust
process will provide market participants with additional opportunities
for execution and price improvement, as well as additional flexibility
and control over their submission of bulk messages. If a User does not
want a bulk message to be subject to the Price Adjust process, it may
designate the bulk message as Cancel Back, as noted above. A Cancel
Back bulk message will be handled in the same manner as a bulk message
is handled today.\16\
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\16\ The Exchange also proposes to make a non-substantive change
to Rule 6.12(b) to amend the capitalization of ``exchange'' in the
phrase ``or another exchange'', which is consistent with the format
of this phrase throughout the Rules.
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As proposed, all bulk messages would now be subject to the Price
Adjust process if it locks or crosses the BBO or ABBO and rest in the
C2 Book pursuant to the process, thus avoiding display of a locked or
crossed market in accordance with the linkage rules.\17\ Therefore, the
Exchange now proposes to remove Rules 6.12(c)(6)(A) and 6.12(c)(6)(B)
(and amend the subsequent lettering as a result) because Post Only and
Bulk Only bulk messages will now be included in the Price Adjust
process, the handling of which would now be consistent with the current
order handing of Post Only and Book Only orders under the Price Adjust
process.\18\ The Exchange also notes that all bulk messages not subject
to the Price Adjust process (because the User has designated a bulk
message as Cancel Back) would be handled in the same manner as the
proposed deleted subparagraphs (c)(6)(A) and (c)(6)(B) pursuant to the
Cancel Back instruction under Rule 6.10(c).
---------------------------------------------------------------------------
\17\ See supra note 8.
\18\ See supra notes 11 and 13.
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The Exchange notes that allowing bulk messages to be subject to a
repricing process is consistent with the handling of similar order (and
quote) types on other exchanges.\19\ A similar repricing (display-price
sliding) process for bulk messages currently exists under Rule
21.1(h)(1) of the Exchange's affiliated exchange, Cboe BZX Exchange,
Inc. (``BZX Options''). The Exchange also notes that other exchanges
subject orders (quotes) similar to Post Only and Book Only bulk
messages to a repricing process like the Price Adjust process. For
example, NYSE Arca, Inc. (``Arca'') recently adopted order types called
the Market Maker Add Liquidity Only quotation (``MMALO''), which like a
Post Only instruction may not remove liquidity from the Exchange, and
the Market Maker Repricing quotation (``MMRP'').\20\ Pursuant to Arca's
repricing process, if these quotes would not be able to trade upon
entry (for example, because the MMALO would take liquidity or display
at a price that locks or crosses any interest on the Exchange or the
NBBO), it would be displayed at one minimum price variation below
(above) such sell (buy) interest.
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\19\ See Securities Exchange Act Release No. 84737 (December 6,
2018), 83 FR 63919 (December 12, 2018) (SR-NYSEArca-2018-74) (order
approving the proposed order types). See also BZX Options Rule
21.1(h)(1).
\20\ See Arca Rule 6.37A-O(a)(3)(A) and Rule 6.37A-O(a)(3)(C).
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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.\21\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \22\ 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) \23\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\21\ 15 U.S.C. 78f(b).
\22\ 15 U.S.C. 78f(b)(5).
\23\ Id.
---------------------------------------------------------------------------
In particular, the Exchange believes that the proposed rule change
subjecting bulk messages to the Price Adjust process will remove
impediments to and perfect the mechanism of a free and open market
because it provides Users with the flexibility to apply to bulk
messages the same functionality they may apply to their orders. The
Exchange believes that repricing bulk messages for Users (that do not
opt out of the Price Adjust process), as opposed to automatically
rejecting messages that lock or cross protected quotes when posted to
the C2 Book, will permit Users to use bulk messages to respond to
continuously changing market conditions in a more efficient manner, as
well as provide additional opportunity for execution and price
improvement. The proposed repricing of bulk messages prevents the
display of a locked or crossed market and is consistent with the
Linkage Plan,\24\ thereby perfecting the mechanism of a free and open
market and national market system and protecting investors.
---------------------------------------------------------------------------
\24\ See supra note 8.
---------------------------------------------------------------------------
The Exchange also believes that by providing Users with the ability
to designate bulk messages as subject to the Price Adjust process
instead of cancelling or rejecting these messages under certain
circumstances, will give Users greater flexibility and control over the
circumstances under which their orders are able to interact with contra
side-interest on the Exchange. The Exchange believes this may increase
the opportunities for execution at multiple price points and encourage
the provision of more liquidity to the market, and therefore believes
that it is reasonably designed to facilitate the mechanism of price
discovery.
The Exchange notes that the options markets are quote driven
markets and thus dependent on liquidity providers,
[[Page 27180]]
which are most commonly registered market-makers but also other Users,
such as professional traders, for liquidity and price discovery. The
Exchange believes that subjecting bulk messages to the Price Adjust
process will provide liquidity providers with greater flexibility with
respect to their submission of bulk messages, the primary purpose of
which is to provide liquidity to the market. The Exchange believes that
the reduction in the number of rejected bulk messages will promote
efficacy in bulk messaging and may encourage the provision of more
liquidity. This may result in more trading opportunities and tighter
spreads and contribute to price discovery. As a result, this proposed
change intends to improve overall market quality and enhance
competition on the Exchange to the benefit of all investors.\25\
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\25\ The Exchange also believes that its proposed change to
amend the capitalization of ``exchange'' when referring to ``another
exchange'' in Rule 6.12(b) is a clarifying change that will
alleviate potential investor confusion because it is consistent with
the format of this phrase throughout the Rules. See supra note 14.
---------------------------------------------------------------------------
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 Exchange does not
believe the proposed rule change will impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act, as the proposed application of the Price Adjust
and the Cancel Back process to bulk messages will be available to all
applicable Users (e.g. Market-Makers may submit Book Only bulk
messages, therefore, the option to apply the Price Adjust or Cancel
Back process to Book Only bulk messages is available to all Market-
Makers). While bulk messages will by default be subject to the Price
Adjust process, all Users may apply the Cancel Back instruction to bulk
messages in order to opt out of that process for its bulk messages (and
continue to have their bulk messages be handled in the same manner as
they are today). The Exchange also notes that the Price Adjust and
Cancel Back instructions are already available to all Users for orders,
including Post Only and Book Only orders, and will apply to bulk
messages in the same manner as they apply to orders.
The Exchange does not believe the proposed rule change will impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act, because it will
provide Users with bulk message repricing functionality that is similar
to other order and quote repricing available on other options
exchanges. The Exchange believes the proposed functionality will permit
the Exchange to operate on an even playing field relative to other
exchanges that have similar functionality.
As discussed above, the options markets are quote driven markets
and thus dependent on various Users as liquidity providers and for
price discovery. The Exchange believes the proposed amendment to
subject bulk messages to the Price Adjust process will provide
liquidity providers with additional flexibility and control over
interactions of their bulk messages with contra-side liquidity, as well
as additional opportunity for execution at multiple price points and
price improvement. This may encourage the provision of more liquidity,
which may result in more trading opportunities and tighter spreads, and
contribute to price discovery. This may improve overall market quality
and enhance competition on the Exchange, to the benefit of all
investors.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) Impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \26\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\27\
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\26\ 15 U.S.C. 78s(b)(3)(A)(iii).
\27\ 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.
---------------------------------------------------------------------------
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-C2-2019-012 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-C2-2019-012. 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
[[Page 27181]]
to make available publicly. All submissions should refer to File Number
SR-C2-2019-012 and should be submitted on or before July 2, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
---------------------------------------------------------------------------
\28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-12187 Filed 6-10-19; 8:45 am]
BILLING CODE 8011-01-P
