Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related To Updating Its Rule 21.1(h) To Allow for a User To Elect That a Bulk Message Opt-Out of the Display-Price Sliding Process, as Well as be Subject to the Lock-Only Display-Price Sliding Process, 29552-29555 [2019-13310]

Download as PDF 29552 Federal Register / Vol. 84, No. 121 / Monday, June 24, 2019 / Notices it relates to the clarifications proposed above for PIM pricing in Options 7, Section 3, Table 2, to add ‘‘ADV’’ and relatedly, delete ‘‘per day,’’ the Exchange notes that this is not a change to its current practice, but is a simple clean up change to make the Pricing Schedule easier for members to understand.8 For the foregoing reasons, the Exchange believes that its proposal is consistent with the Act. IV. Solicitation of Comments 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 not necessary or appropriate in furtherance of the purposes of the Act. As discussed above, the proposed changes are nonsubstantive changes, and are merely intended add further clarification to the Exchange’s Pricing Schedule and alleviate potential confusion. • 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– MRX–2019–11 on the subject line. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. 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 9 and subparagraph (f)(6) of Rule 19b–4 thereunder.10 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. 8 See supra note 5. U.S.C. 78s(b)(3)(A)(iii). 10 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file 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. jbell on DSK3GLQ082PROD with NOTICES 9 15 VerDate Sep<11>2014 16:50 Jun 21, 2019 Jkt 247001 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 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–MRX–2019–11. 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–MRX–2019–11 and should be submitted on or before July 15, 2019. PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Vanessa A. Countryman, Acting Secretary. [FR Doc. 2019–13308 Filed 6–21–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–86130; File No. SR– CboeBZX–2019–049] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related To Updating Its Rule 21.1(h) To Allow for a User To Elect That a Bulk Message Opt-Out of the Display-Price Sliding Process, as Well as be Subject to the Lock-Only Display-Price Sliding Process June 18, 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 June 4, 2019, Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX Options’’) proposes to update its Rule 21.1(h) to allow for a User to elect that a bulk message opt-out of the display-price sliding process, as well as be subject to the lock-only display-price sliding process. 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/ equities/regulation/rule_filings/bzx/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. 11 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\24JNN1.SGM 24JNN1 Federal Register / Vol. 84, No. 121 / Monday, June 24, 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 its rules to allow for a User to elect that a bulk message be subject to the lock-only display-price sliding process under Rule 21.1(h), as well as instruct a bulk message not be subject to the displayprice sliding process. The Exchange is proposing this change in order to provide Users that submit bulk messages with functionality that is currently available to them for orders. In December 2018, 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 in a single message. A User may submit a bulk message through a bulk port.5 The System 6 handles bulk message bids and offers in the same manner as it handles an order, or quote if submitted by a Market Maker, unless the Rules specify otherwise. Bulk message functionality was implemented by the Exchange as a way for Users to efficiently update (e.g., modify, cancel, etc.) and designate order types for multiple bids and offers within a single message. Currently, Rule 21.1(h)(1) provides that an order (including a bulk message) 7 that, at the time of entry, would lock or cross a Protected Quotation of another options exchange will be ranked at the locking price in the BZX Options Book and displayed by the System at one minimum price variation below the current NBO (for bids) or to one 5 The ‘‘System’’ is the automated trading system used by BZX Options for the trading of options contracts. See Rule 21.1(1)(3). 6 See Rule 16.1(a)(60). 7 The Exchange notes that the display-price sliding designation, as well as the proposed opt-out and lock-only designations for a bulk message applies to all bulk message bids and offers within a single message. VerDate Sep<11>2014 16:50 Jun 21, 2019 Jkt 247001 minimum price variation above the current NBB (for offers).8 Under current Rule 21.1(h)(1) a User may elect to have the System only apply display-price sliding to the extent an order at the time of entry would lock a Protected Quotation of another options exchange (‘‘lock-only’’). Orders under the lockonly option will be cancelled if, upon entry, such order would cross a Protected Quotation of another options exchange. The lock-only display-price sliding option is a variation of displayprice sliding that is intended to allow Users to re-evaluate their orders and/or strategies in the event they are submitting orders to the Exchange that are crossing the market.9 Furthermore, Rule 21.1(h) does not currently state that a User may designate orders or bulk messages to not be subject to the display-price sliding process. However, the ability for Users to opt-out of the display-price sliding process currently exists for a User’s orders and is provided for under various other Exchange Rules.10 Current Rule 21.1(h)(1) states that display-price sliding applies to all bulk messages, and, as such, a User is currently unable to elect the lock-only or opt-out process (as currently provided for in other Exchange Rules) for bulk messages. The Exchange now proposes to amend Rule 21.1(h)(1) to remove the language that applies display-price sliding to all bulk messages, therefore, subjecting bulk messages, like orders, to a User’s election to have the System only apply the lock-only display-price sliding option or to opt-out of the display-price sliding process, pursuant to other Exchange Rules and as proposed (as described below). The Exchange notes that the lock-only and opt-out designations, as applicable, for bulk messages will apply to all bulk message bids and offers within a single message. Additionally, the Exchange proposes to explicitly state under Rule 21.1(h)(1) that a User may enter instructions for an order (including bulk messages) not to be subject to the display-price sliding process. As stated, the ability for Users to opt-out of the display-price sliding process currently exists for a User’s orders under other Exchange Rules.11 The Exchange is now proposing to make 8 In accordance with the linkage rules. See Chapter XXVII of the Rules. See also Options Order Protection and Locked/Crossed Market Plan (the ‘‘Linkage Plan’’). 9 See Securities Exchange Act No. 67657 (August 14, 2012), 77 FR 50199 (August 20, 2012) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change by BATS Exchange, Inc. To Amend BATS Rules Related to Price Sliding Functionality) (SR–BATS–2012–035). 10 See Rules 21.1(d)(6)–(9). 11 Id. PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 29553 this existing instruction explicit under the display-price sliding provision and applicable to a User’s orders and bulk messages. The proposed opt-out instruction is based on a similar repricing opt-out instruction under Rule 6.12(b) of the Exchange’s affiliated exchange, Cboe C2 Exchange, Inc. (‘‘C2’’).12 The Exchange believes that as bulk messages have become more widelyused, Users would benefit from the expansion of the lock-only functionality and functionality to opt-out of the display-price sliding process for bulk messages, both of which are currently available for Users’ orders. The Exchange believes that this proposed change provides Users with the flexibility to apply functionality currently available for their orders to their bulk messages. As proposed, Users will be able to instruct bulk message bids and offers not to be subject to display-price sliding and able to elect the lock-only option for bulk message bids and offers. 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.13 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 14 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) 15 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 allowing Users to elect that lock-only displayprice sliding apply to bulk messages, and that the System cancel any such 12 The Exchange notes that C2 is simultaneously proposing to include bulk messages in its re-pricing process. 13 15 U.S.C. 78f(b). 14 15 U.S.C. 78f(b)(5). 15 Id. E:\FR\FM\24JNN1.SGM 24JNN1 jbell on DSK3GLQ082PROD with NOTICES 29554 Federal Register / Vol. 84, No. 121 / Monday, June 24, 2019 / Notices bulk message that would cross another options exchange, 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 order handling functionality as they may apply to their orders. The Exchange also believes that the proposed change is consistent with the requirement that the rules facilitate transactions in securities, as well as remove impediments to and perfect the mechanism of a free and open market, because it will allow Users an additional opportunity to respond to continuously changing market conditions. The lock-only option provides Users an opportunity to reevaluate the price and/or strategy for bulk messages submitted that have been rejected for crossing another exchange. The Exchange believes that the ability to elect the lock-only option for bulk messages will give Users greater flexibility and control over the circumstances under which their orders are able to interact with contra sideinterest. The Exchange notes that the lock-only option for bulk messages will also serve to protect investors because it is an additional protection mechanism that mitigates potential risk associated with Users submitting bulk messages at prices that are too aggressive or potentially erroneous. Furthermore, the proposed application of the lock-only option to bulk messages prevents the display of a locked or crossed market which is consistent with the Linkage Plan,16 thus, perfecting the mechanism of a free and open market and national market system and protecting investors. The Exchange also believes that codifying the opt-out instruction within Rule 21.1(h) will protect investors by making this instruction, which exists under other Exchange Rules,17 explicit within the display-price sliding process provision, thereby making the rules easier to understand for investors. Furthermore, by allowing for a User to enter instructions for a bulk message not to be subject to the display-price sliding process under Rule 21.1(h)(1) this proposed change will serve to remove impediments to and perfect the mechanism of a free and open market and a national market system as it provides Users with additional flexibility regarding how they want the System to handle their orders and bulk messages. The Exchange notes that this is an additional way to ensure compliance with the linkage rules for both orders and bulk messages,18 thereby protecting investors and the public interest. Additionally, this change is consistent with the re-pricing process under Rule 6.12(b) of the Exchange’s affiliated exchange, C2. The Exchange believes that mirroring the corresponding C2 opt-out instruction language will provide for better understanding for Users participating across the affiliated exchanges. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The 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 lock-only display-price sliding election and optout instructions to bulk messages will be available to all Users. The Exchange also notes that the opt-out and lock-only options are already available to all Users for their 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 an opt-out instruction option and a lockonly price sliding option for bulk messages that is similar to other opt-out and lock-only price sliding options available on other exchanges.19 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. 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 20 and Rule 18 See supra note 8. C2 Rule 6.12(b) and NYSE Chicago Article 1, Rule 2(b)(1)(C)(iii). 20 15 U.S.C. 78s(b)(3)(A)(iii). 19 See 16 See 17 See supra note 8. supra note 10. VerDate Sep<11>2014 16:50 Jun 21, 2019 Jkt 247001 PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 19b–4(f)(6) thereunder.21 Because the 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 prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)(iii) thereunder. 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– CboeBZX–2019–049 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–CboeBZX–2019–049. 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 21 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. E:\FR\FM\24JNN1.SGM 24JNN1 Federal Register / Vol. 84, No. 121 / Monday, June 24, 2019 / Notices 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–CboeBZX–2019–049 and should be submitted on or before July 15, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Vanessa A. Countryman, Acting Secretary. [FR Doc. 2019–13310 Filed 6–21–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION June 18, 2019. jbell on DSK3GLQ082PROD with NOTICES I. Introduction On March 1, 2019, NYSE Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) 1 of the Securities CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). VerDate Sep<11>2014 16:50 Jun 21, 2019 Jkt 247001 U.S.C. 78a. CFR 240.19b–4. 4 See Securities Exchange Act Release No. 85312 (March 14, 2019), 84 FR 10369. 5 Amendment No. 1 is available at: https:// www.sec.gov/comments/sr-nysearca-2019-12/ srnysearca201912-5393880-184151.pdf. 6 15 U.S.C. 78s(b)(2). 7 See Securities Exchange Act Release No. 85758, 84 FR 19978 (May 7, 2019). The Commission designated June 18, 2019, as the date by which the Commission shall approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change. 8 15 U.S.C. 78s(b)(2)(B). 9 A Managed Fund Share is a security that represents an interest in an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as an open-end investment company or similar entity that invests in a portfolio of securities selected by its investment adviser consistent with its investment objectives and policies. In contrast, an open-end investment company that issues Investment Company Units, listed and traded on the Exchange under NYSE Arca Rule 5.2–E(j)(3), seeks to provide investment results that correspond generally to the price and yield performance of a specific foreign or domestic stock index, fixed income securities index or combination thereof. 3 17 Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Amendment No. 1 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the iShares Commodity Curve Carry Strategy ETF 1 15 II. The Exchange’s Description of the Proposed Rule Change, as Modified by Amendment No. 1 The Exchange proposes to list and trade shares (‘‘Shares’’) of the iShares Commodity Curve Carry Strategy ETF (‘‘Fund’’) under NYSE Arca Rule 8.600– E, which governs the listing and trading of Managed Fund Shares 9 on the Exchange. 2 15 [Release No. 34–86136; File No. SR– NYSEArca–2019–12] 22 17 Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 a proposed rule change to list and trade the shares of the iShares Commodity Curve Carry Strategy ETF, a series of the iShares U.S. ETF Trust. The proposed rule change was published for comment in the Federal Register on March 20, 2019.4 On April 18, 2019, the Exchange filed Amendment No. 1 to the proposed rule change, which replaced and superseded the proposed rule change as originally filed.5 The Commission received no comments on the proposed rule change. On May 1, 2019, pursuant to Section 19(b)(2) of the Act,6 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change.7 The Commission is publishing this notice and order to solicit comments on the proposed rule change, as modified by Amendment No. 1, from interested persons and to institute proceedings under Section 19(b)(2)(B) of the Act 8 to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1. PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 29555 The Shares will be offered by iShares U.S. ETF Trust (the ‘‘Trust’’), which is registered with the Commission as an open-end management investment company.10 The Fund is a series of the Trust. BlackRock Fund Advisors (‘‘BFA’’ or ‘‘Adviser’’) will be the investment adviser for the Fund. BlackRock Investments, LLC will be the distributor (‘‘Distributor’’) for the Fund’s Shares. State Street Bank and Trust Company will serve as the administrator, custodian and transfer agent (‘‘Custodian’’ or ‘‘Transfer Agent’’) for the Fund. Commentary .06 to Rule 8.600–E provides that, if the investment adviser to the investment company issuing Managed Fund Shares is affiliated with a broker-dealer, such investment adviser shall erect and maintain a ‘‘fire wall’’ between the investment adviser and the broker-dealer with respect to access to information concerning the composition and/or changes to such investment company portfolio.11 In addition, Commentary .06 further requires that personnel who make decisions on the open-end fund’s portfolio composition must be subject to procedures designed 10 The Trust is registered under the 1940 Act. On December 3, 2018, the Trust filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) its registration statement on Form N–1A under the Securities Act of 1933 (15 U.S.C. 77a), and under the 1940 Act relating to the Fund (File Nos. 333–179904 and 811–22649) (‘‘Registration Statement’’). The description of the operation of the Trust and the Fund herein is based, in part, on the Registration Statement. In addition, the Commission has issued an order upon which the Trust may rely, granting certain exemptive relief under the 1940 Act. See Investment Company Act Release No. 29571(January 24, 2011) (File No. 812– 13601). 11 An investment adviser to an open-end fund is required to be registered under the Investment Advisers Act of 1940 (the ‘‘Advisers Act’’). As a result, the Adviser and its related personnel are subject to the provisions of Rule 204A–1 under the Advisers Act relating to codes of ethics. This Rule requires investment advisers to adopt a code of ethics that reflects the fiduciary nature of the relationship to clients as well as compliance with other applicable securities laws. Accordingly, procedures designed to prevent the communication and misuse of non-public information by an investment adviser must be consistent with Rule 204A–1 under the Advisers Act. In addition, Rule 206(4)–7 under the Advisers Act makes it unlawful for an investment adviser to provide investment advice to clients unless such investment adviser has (i) adopted and implemented written policies and procedures reasonably designed to prevent violation, by the investment adviser and its supervised persons, of the Advisers Act and the Commission rules adopted thereunder; (ii) implemented, at a minimum, an annual review regarding the adequacy of the policies and procedures established pursuant to subparagraph (i) above and the effectiveness of their implementation; and (iii) designated an individual (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. E:\FR\FM\24JNN1.SGM 24JNN1

Agencies

[Federal Register Volume 84, Number 121 (Monday, June 24, 2019)]
[Notices]
[Pages 29552-29555]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13310]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86130; File No. SR-CboeBZX-2019-049]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Related To 
Updating Its Rule 21.1(h) To Allow for a User To Elect That a Bulk 
Message Opt-Out of the Display-Price Sliding Process, as Well as be 
Subject to the Lock-Only Display-Price Sliding Process

June 18, 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 June 4, 2019, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') 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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX Options'') 
proposes to update its Rule 21.1(h) to allow for a User to elect that a 
bulk message opt-out of the display-price sliding process, as well as 
be subject to the lock-only display-price sliding process. 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/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

[[Page 29553]]

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 a User to 
elect that a bulk message be subject to the lock-only display-price 
sliding process under Rule 21.1(h), as well as instruct a bulk message 
not be subject to the display-price sliding process. The Exchange is 
proposing this change in order to provide Users that submit bulk 
messages with functionality that is currently available to them for 
orders.
    In December 2018, 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 in a single message. A 
User may submit a bulk message through a bulk port.\5\ The System \6\ 
handles bulk message bids and offers in the same manner as it handles 
an order, or quote if submitted by a Market Maker, unless the Rules 
specify otherwise. Bulk message functionality was implemented by the 
Exchange as a way for Users to efficiently update (e.g., modify, 
cancel, etc.) and designate order types for multiple bids and offers 
within a single message. Currently, Rule 21.1(h)(1) provides that an 
order (including a bulk message) \7\ that, at the time of entry, would 
lock or cross a Protected Quotation of another options exchange will be 
ranked at the locking price in the BZX Options Book and displayed by 
the System at one minimum price variation below the current NBO (for 
bids) or to one minimum price variation above the current NBB (for 
offers).\8\ Under current Rule 21.1(h)(1) a User may elect to have the 
System only apply display-price sliding to the extent an order at the 
time of entry would lock a Protected Quotation of another options 
exchange (``lock-only''). Orders under the lock-only option will be 
cancelled if, upon entry, such order would cross a Protected Quotation 
of another options exchange. The lock-only display-price sliding option 
is a variation of display-price sliding that is intended to allow Users 
to re-evaluate their orders and/or strategies in the event they are 
submitting orders to the Exchange that are crossing the market.\9\ 
Furthermore, Rule 21.1(h) does not currently state that a User may 
designate orders or bulk messages to not be subject to the display-
price sliding process. However, the ability for Users to opt-out of the 
display-price sliding process currently exists for a User's orders and 
is provided for under various other Exchange Rules.\10\ Current Rule 
21.1(h)(1) states that display-price sliding applies to all bulk 
messages, and, as such, a User is currently unable to elect the lock-
only or opt-out process (as currently provided for in other Exchange 
Rules) for bulk messages.
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    \5\ The ``System'' is the automated trading system used by BZX 
Options for the trading of options contracts. See Rule 21.1(1)(3).
    \6\ See Rule 16.1(a)(60).
    \7\ The Exchange notes that the display-price sliding 
designation, as well as the proposed opt-out and lock-only 
designations for a bulk message applies to all bulk message bids and 
offers within a single message.
    \8\ In accordance with the linkage rules. See Chapter XXVII of 
the Rules. See also Options Order Protection and Locked/Crossed 
Market Plan (the ``Linkage Plan'').
    \9\ See Securities Exchange Act No. 67657 (August 14, 2012), 77 
FR 50199 (August 20, 2012) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by BATS Exchange, Inc. To 
Amend BATS Rules Related to Price Sliding Functionality) (SR-BATS-
2012-035).
    \10\ See Rules 21.1(d)(6)-(9).
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    The Exchange now proposes to amend Rule 21.1(h)(1) to remove the 
language that applies display-price sliding to all bulk messages, 
therefore, subjecting bulk messages, like orders, to a User's election 
to have the System only apply the lock-only display-price sliding 
option or to opt-out of the display-price sliding process, pursuant to 
other Exchange Rules and as proposed (as described below). The Exchange 
notes that the lock-only and opt-out designations, as applicable, for 
bulk messages will apply to all bulk message bids and offers within a 
single message.
    Additionally, the Exchange proposes to explicitly state under Rule 
21.1(h)(1) that a User may enter instructions for an order (including 
bulk messages) not to be subject to the display-price sliding process. 
As stated, the ability for Users to opt-out of the display-price 
sliding process currently exists for a User's orders under other 
Exchange Rules.\11\ The Exchange is now proposing to make this existing 
instruction explicit under the display-price sliding provision and 
applicable to a User's orders and bulk messages. The proposed opt-out 
instruction is based on a similar re-pricing opt-out instruction under 
Rule 6.12(b) of the Exchange's affiliated exchange, Cboe C2 Exchange, 
Inc. (``C2'').\12\
---------------------------------------------------------------------------

    \11\ Id.
    \12\ The Exchange notes that C2 is simultaneously proposing to 
include bulk messages in its re-pricing process.
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    The Exchange believes that as bulk messages have become more 
widely-used, Users would benefit from the expansion of the lock-only 
functionality and functionality to opt-out of the display-price sliding 
process for bulk messages, both of which are currently available for 
Users' orders. The Exchange believes that this proposed change provides 
Users with the flexibility to apply functionality currently available 
for their orders to their bulk messages. As proposed, Users will be 
able to instruct bulk message bids and offers not to be subject to 
display-price sliding and able to elect the lock-only option for bulk 
message bids and offers.
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.\13\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \14\ 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) \15\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes that the proposed rule change 
allowing Users to elect that lock-only display-price sliding apply to 
bulk messages, and that the System cancel any such

[[Page 29554]]

bulk message that would cross another options exchange, 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 order handling functionality as they may apply to 
their orders. The Exchange also believes that the proposed change is 
consistent with the requirement that the rules facilitate transactions 
in securities, as well as remove impediments to and perfect the 
mechanism of a free and open market, because it will allow Users an 
additional opportunity to respond to continuously changing market 
conditions. The lock-only option provides Users an opportunity to re-
evaluate the price and/or strategy for bulk messages submitted that 
have been rejected for crossing another exchange. The Exchange believes 
that the ability to elect the lock-only option for bulk messages will 
give Users greater flexibility and control over the circumstances under 
which their orders are able to interact with contra side-interest. The 
Exchange notes that the lock-only option for bulk messages will also 
serve to protect investors because it is an additional protection 
mechanism that mitigates potential risk associated with Users 
submitting bulk messages at prices that are too aggressive or 
potentially erroneous. Furthermore, the proposed application of the 
lock-only option to bulk messages prevents the display of a locked or 
crossed market which is consistent with the Linkage Plan,\16\ thus, 
perfecting the mechanism of a free and open market and national market 
system and protecting investors.
---------------------------------------------------------------------------

    \16\ See supra note 8.
---------------------------------------------------------------------------

    The Exchange also believes that codifying the opt-out instruction 
within Rule 21.1(h) will protect investors by making this instruction, 
which exists under other Exchange Rules,\17\ explicit within the 
display-price sliding process provision, thereby making the rules 
easier to understand for investors. Furthermore, by allowing for a User 
to enter instructions for a bulk message not to be subject to the 
display-price sliding process under Rule 21.1(h)(1) this proposed 
change will serve to remove impediments to and perfect the mechanism of 
a free and open market and a national market system as it provides 
Users with additional flexibility regarding how they want the System to 
handle their orders and bulk messages. The Exchange notes that this is 
an additional way to ensure compliance with the linkage rules for both 
orders and bulk messages,\18\ thereby protecting investors and the 
public interest. Additionally, this change is consistent with the re-
pricing process under Rule 6.12(b) of the Exchange's affiliated 
exchange, C2. The Exchange believes that mirroring the corresponding C2 
opt-out instruction language will provide for better understanding for 
Users participating across the affiliated exchanges.
---------------------------------------------------------------------------

    \17\ See supra note 10.
    \18\ See supra note 8.
---------------------------------------------------------------------------

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 lock-only 
display-price sliding election and opt-out instructions to bulk 
messages will be available to all Users. The Exchange also notes that 
the opt-out and lock-only options are already available to all Users 
for their 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 an opt-out instruction option and a lock-only price 
sliding option for bulk messages that is similar to other opt-out and 
lock-only price sliding options available on other exchanges.\19\ 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.
---------------------------------------------------------------------------

    \19\ See C2 Rule 6.12(b) and NYSE Chicago Article 1, Rule 
2(b)(1)(C)(iii).
---------------------------------------------------------------------------

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 \20\ and Rule 19b-4(f)(6) thereunder.\21\ 
Because the 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \21\ 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.
---------------------------------------------------------------------------

    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-CboeBZX-2019-049 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-CboeBZX-2019-049. 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

[[Page 29555]]

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-CboeBZX-2019-049 and should be submitted 
on or before July 15, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019-13310 Filed 6-21-19; 8:45 am]
BILLING CODE 8011-01-P
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