Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Update Its Rules Related to Complex Orders and Trading Halts, 33296-33299 [2019-14809]

Download as PDF jbell on DSK3GLQ082PROD with NOTICES 33296 Federal Register / Vol. 84, No. 134 / Friday, July 12, 2019 / Notices of the purposes of the Act. To the contrary, the Exchange believes that the proposed rule change will enhance competition between exchange listing markets in furtherance of Section 11A(a)(1)(C)(ii) of the Act 16 and consistent with Section 6(b)(8) of the Act 17 because it will provide issuers with a differentiated offering as compared to the other listing rules existing on other national securities exchanges. Moreover, as a new listing venue, the Exchange expects to face intense competition from existing exchanges. Consequently, the degree to which the proposed listing standards could impose any burden on intermarket competition is extremely limited because other national securities exchanges may propose similar listing standards and issuers are able to list on other national securities exchanges. The Exchange does not believe that such requirements would impose any burden on competing venues that is not necessary or appropriate in furtherance of the purposes of the Act. Further, issuers that do not wish to meet the Exchange’s listing standards are able to list on other national securities exchanges, and their securities may still trade on the Exchange through unlisted trading privileges.18 Conversely, other national securities exchanges that do not maintain similar listing rules would still be able to compete with the Exchange to execute transactions in securities listed on the Exchange, which would trade on such other national securities exchanges through unlisted trading privileges. To the extent the Exchange is successful in attracting issuers to the list on the Exchange, other exchanges or potential new entrants could respond by adopting their own rules that are designed to foster long-term value creation. The Exchange also does not believe that the proposal will impose any burden on competition between LTSEListed Issuers that is not necessary or appropriate in furtherance of the purposes of the Act because all companies electing to list on the Exchange will be subject to the same standards, and subject to the same surveillance and enforcement of these standards. To the extent that LTSEListed Issuers choose to compete by providing more complete or effective descriptions and policies in response to this filing, this will provide further transparency and information to the market and investors. 16 15 U.S.C. 78k–1(a)(1)(C)(ii). U.S.C. 78f(b)(8). 18 15 U.S.C. 78l(f); 17 CFR 240.12f–2. 17 15 VerDate Sep<11>2014 16:55 Jul 11, 2019 Jkt 247001 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: (A) By order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be 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– LTSE–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–LTSE–2019–01. 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 PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 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–LTSE–2019–01 and should be submitted on or before August 2, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Eduardo Aleman, Deputy Secretary. [FR Doc. 2019–14813 Filed 7–11–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–86323; File No. SR– CboeEDGX–2019–041] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Update Its Rules Related to Complex Orders and Trading Halts 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 24, 2019, Cboe EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 19 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\12JYN1.SGM 12JYN1 Federal Register / Vol. 84, No. 134 / Friday, July 12, 2019 / Notices I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) proposes to update its rules related to complex orders and trading halts. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ options/regulation/rule_filings/edgx/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. 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 jbell on DSK3GLQ082PROD with NOTICES The proposed rule change updates the Exchange’s trading halt procedures as they relate to complex orders. The Exchange recently adopted a rule change (Rule 21.7) to eliminate the distinction between how the opening auction process applies to a Member’s simple orders following a Regulatory Halt and a non-Regulatory Halt.5 This 5 See Securities Exchange Act Release No. 85988 (May 31, 2019), 84 FR 26492 (June 6, 2019) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Amending Rule 21.7 Concerning the Opening Auction Process) (SR–CboeEDGX–2019– 033). The changes in SR–CboeEDGX–2019–033 are currently effective but not yet operative; however, the proposed rule text in this rule filing assumes operativeness of those effective changes. The Exchange notes that the distinction between the two trading halts was made throughout its rules in connection with Regulatory Halts under the Regulation NMS Plan to Address Extraordinary Market Volatility (the ‘‘Plan’’). During a Regulatory Halt an underlying security has halted trading across the industry, and during a non-Regulatory Halt the primary exchange has experienced a technical issue but the underlying security continues to trade on other equities platforms. However, the Exchange determined that there would be a Queuing Period following a nonRegulatory Halt, like that of a Regulatory Halt, in order eliminate potential investor confusion VerDate Sep<11>2014 16:55 Jul 11, 2019 Jkt 247001 change will be implemented on June 27, 2019 6 and provides that, for the opening auction process following any trading halt, the System queues a User’s orders and quotes resting on the book at the time of the trading halt for participation in the opening rotation following the trading halt, unless the User entered instructions to cancels its resting orders and quotes. The Exchange now proposes to update the Complex Order Book (‘‘COB’’) re-opening process following a trading halt under Rule 21.20 to align with the proposed changes to the opening auction process following a halt for simple orders. Currently, Rule 21.20(c)(2)(A) provides that any complex orders designated for a reopening following a halt will be queued until the halt has ended, at which time they will be eligible to be executed in the Opening Process for the COB. The Exchange now proposes to update this process to mirror that of the process for simple orders. Specifically, the Exchange proposes to amend Rule 21.20(c)(2)(A) to state that the System queues a Member’s open complex orders during a halt, unless the Member entered instructions to cancel its open complex orders upon a halt, until the halt has ended, at which time they will be eligible to be executed in the Opening Process for the COB. Additionally, the Exchange proposes to make similar changes to Interpretation and Policy .05 to Rule 21.20, which currently states that if a trading halt exists for the underlying security or a component of a complex strategy, trading in the complex strategy will be suspended and a Member’s complex orders will be cancelled unless a Member has instructed the Exchange not to cancel its orders. The Exchange proposes to amend the language, similar to that of proposed Rule 21.20(c)(2)(A), to state that the System queues a Member’s open complex orders during a halt, unless the Member entered instructions to cancel its open complex orders upon a halt, for participation in the re-opening of the COB. The Exchange notes that the proposed change to Rule 21.20 and its Interpretation and Policy .05 will align this rule with the trading halt process to be implemented for simple orders on June 27, 2019. The Exchange further notes that the proposed change is substantially similar to the language of its affiliated exchange’s, Cboe C2 regarding how the System will handle orders and quotes in the event of any trading halt. This is consistent with the Plan. 6 See Exchange Notice No. C2019061200 (June 21, 2019). PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 33297 Exchange, Inc. (‘‘C2’’), corresponding rule for trading halts in connection with complex orders.7 The Exchange believes that this proposed change will provide Members with the same ability to decide how their resting complex orders should be handled in the event of a trading halt as they will have for their simple orders in this event. The Exchange also believes this proposed update will eliminate potential investor confusion regarding how the System will handle complex orders as compared to simple orders upon implementation of the changes to the trading halt process for simple orders on June 27, 2019, as well as bolster understanding of the rules and functionality following trading halts between the Exchange and its affiliated exchange, C2, for those participating across both exchanges. 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. 8 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 9 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) 10 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The proposed rule change to harmonize the process for a Member’s 7 See C2 Rule 6.13(k). The Exchange notes that C2 recently proposed changes to this rule to eliminate the distinction between the re-opening process following a Regulatory and non-Regulatory Trading Halt. Therefore, following any trading halt, a complex order will be handled in the manner in which it is currently handled for a Regulatory Trading Halt: The System queues a User’s open complex orders, unless the User entered instructions to cancel its open complex orders upon a halt, for participation in the re-opening of the COB. See SR–C2–2019–016 (June 17, 2019). 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). 10 Id. E:\FR\FM\12JYN1.SGM 12JYN1 33298 Federal Register / Vol. 84, No. 134 / Friday, July 12, 2019 / Notices complex orders with that of a Member’s simple orders following a trading halt will protect investors by eliminating potential confusion regarding how the System will handle their complex orders as compared to their simple orders following any trading halt. The Exchange also believes that the proposed rule change will serve to remove impediments to and perfect the mechanism of a free and open market and a national market system by providing Members with the same ability to decide how their open (i.e., resting) complex orders a should be handled in the event of a trading halt, as they will have for their simple orders in this event beginning on June 27, 2019. Also, as stated above, the Exchange notes that the proposed change is substantively the same as the complex order trading halt rule of its affiliated exchange, C2.11 As a result, the Exchange believes that the proposed rule change will serve to protect investors by providing similar trading halt rules for complex orders between the two affiliated exchanges, thereby bolstering understanding of the affiliated exchanges’ rules and functionality for those participating across both exchanges. jbell on DSK3GLQ082PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change will not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. All Members will have the same flexibility regarding how the System will handle their complex orders during a trading halt. If a Member wants its complex orders to be handled in the manner they are today, that Member may instruct the Exchange to do so. The proposed rule change will not impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not intended as a competitive change, but rather to provide Members with the same flexibility with respect to the handling of their complex orders during a trading halt as they will have for their simple orders, and to provide consistent trading halt procedures under the Exchange’s rules. 11 See supra note 7. VerDate Sep<11>2014 16:55 Jul 11, 2019 Jkt 247001 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) of the Act 12 and Rule 19b– 4(f)(6) thereunder.13 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 14 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 15 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay so that the proposed rule change may become operative upon filing. Waiver of the operative delay would allow the Exchange to implement this proposed rule change simultaneously with the rule change to eliminate the trading halt distinctions between how the opening auction process following a halt applies to a Member’s simple orders, which the Exchange intends to implement on June 27, 2019. Therefore, the Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.16 At any time within 60 days of the filing of the proposed rule change, the U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 14 17 CFR 240.19b–4(f)(6). 15 17 CFR 240.19b–4(f)(6)(iii). 16 For purposes only of waiving the 30-day operative delay, the Commission also has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 12 15 13 17 Frm 00081 Fmt 4703 Sfmt 4703 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 change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CboeEDGX–2019–041 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–CboeEDGX–2019–041. 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 E:\FR\FM\12JYN1.SGM 12JYN1 Federal Register / Vol. 84, No. 134 / Friday, July 12, 2019 / Notices personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–CboeEDGX–2019–041 and should be submitted on or before August 2, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Dated: July 8, 2019. Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–14809 Filed 7–11–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–86328; File No. SR–FINRA– 2019–018] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make a Technical Correction and Other Non-Substantive Changes to FINRA Rules July 8, 2019. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on June 27, 2019, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by FINRA. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. jbell on DSK3GLQ082PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to make technical and other non-substantive changes within FINRA rules. The text of the proposed rule change is available on FINRA’s website at https://www.finra.org, at the principal office of FINRA 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, FINRA included statements concerning 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 16:55 Jul 11, 2019 Jkt 247001 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. FINRA 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 On April 10, 2019, the SEC announced the immediate effectiveness of the adoption of the remaining legacy NASD rules as FINRA rules in the consolidated FINRA rulebook and the remaining Incorporated NYSE Rules and Incorporated NYSE Rule Interpretations in the consolidated FINRA rulebook as a separate Temporary Dual FINRA– NYSE Member Rules Series.3 Among other things, the rule change, File No. SR–FINRA–2019–009, was intended to move, without any substantive changes, specified Incorporated NYSE Rules, including their supplementary materials, to the Temporary Dual FINRA–NYSE Member Rules Series.4 These rules now bear a ‘‘T’’ modifier after the rule and interpretation number to denote their placement in the Temporary Dual FINRA–NYSE Member Rules Series. In File No. SR–FINRA– 2019–009, Supplementary Material .10 (Exceptions to Rule 409(b)) under Incorporated NYSE Rule 409 (Statements of Accounts to Customers) was inadvertently omitted from the set of Incorporated NYSE Rules described in the rule change.5 Neither Exhibit 4 nor Exhibit 5 to File No. SR–FINRA– 3 See Securities Exchange Act Release No. 85589 (April 10, 2019), 84 FR 15646 (April 16, 2019) (Notice of Filing and Immediate Effectiveness of File No. SR–FINRA–2019–009). 4 File No. SR–FINRA–2019–009 specified some Incorporated NYSE Rule definitions and Incorporated NYSE Rule 375 and the related Interpretation to be deleted. Some of the then existing set of Incorporated NYSE Rules that also had supplementary materials and were moved to the Temporary Dual FINRA–NYSE Member Rules Series included: NYSE Rule 311T (Formation and Approval of Member Organization); NYSE Rule 313T (Submission of Partnership Articles— Submission of Corporate Documents); NYSE Rule 321T (Formation or Acquisition of Subsidiaries); NYSE Rule 408T (Discretionary Power in Customers’ Accounts); and NYSE Rule 416T (Questionnaires and Reports). 5 See supra note 4. See also retired Incorporated NYSE Rule 409.10 located at: https:// finra.complinet.com/en/display/display_ main.html?rbid=2403&record_id=13957. Retired Incorporated NYSE Rule 409.10 includes a reference to ‘‘[¶ 2409],’’ which FINRA is proposing to eliminate on the basis that the cross-reference is obsolete. PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 33299 2019–009 included this supplementary material as rule text. Consequently, Supplementary Material .10 to Incorporated NYSE Rule 409 does not appear in Temporary Dual FINRA– NYSE Rule 409T as was originally intended. The proposed rule change would correct this technical error by restoring Supplementary Material .10 from Incorporated NYSE Rule 409 to Temporary Dual FINRA–NYSE Rule 409T. In addition, the proposed rule change would update a rule reference in FINRA CAT, LLC Delegation Plan to clarify that the SEC Rule 613 referenced in the Delegation Plan refers to Rule 613 of SEC Regulation NMS and to reflect FINRA Manual style convention changes. The FINRA CAT, LLC Delegation Plan was filed for immediate effectiveness on April 24, 2019.6 FINRA has filed the proposed rule change for immediate effectiveness and has requested that the SEC waive the requirement that the proposed rule change not become operative for 30 days after the date of the filing, so FINRA can implement the proposed rule change immediately. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,7 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. FINRA believes that the proposed rule change will provide greater clarity to members and the public regarding FINRA rules by restoring the text of Incorporated NYSE Rule 409.10 to the consolidated FINRA rulebook as Temporary Dual FINRA– NYSE Rule 409T.10 and by making technical updates to FINRA CAT, LLC Delegation Plan. B. Self-Regulatory Organization’s Statement on Burden on Competition FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change brings clarity and consistency to FINRA rules without adding any burden on firms. 6 See Securities Exchange Act Release No. 85764 (May 2, 2019), 84 FR 20173 (May 8, 2019) (Notice of Filing and Immediate Effectiveness of File No. SR–FINRA–2019–015). 7 15 U.S.C. 78o–3(b)(6). E:\FR\FM\12JYN1.SGM 12JYN1

Agencies

[Federal Register Volume 84, Number 134 (Friday, July 12, 2019)]
[Notices]
[Pages 33296-33299]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-14809]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86323; File No. SR-CboeEDGX-2019-041]


Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating To Update Its Rules Related to Complex Orders and Trading 
Halts

    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 24, 2019, Cboe EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Exchange 
filed the proposal as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).

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[[Page 33297]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to 
update its rules related to complex orders and trading halts. The text 
of the proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

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 proposed rule change updates the Exchange's trading halt 
procedures as they relate to complex orders. The Exchange recently 
adopted a rule change (Rule 21.7) to eliminate the distinction between 
how the opening auction process applies to a Member's simple orders 
following a Regulatory Halt and a non-Regulatory Halt.\5\ This change 
will be implemented on June 27, 2019 \6\ and provides that, for the 
opening auction process following any trading halt, the System queues a 
User's orders and quotes resting on the book at the time of the trading 
halt for participation in the opening rotation following the trading 
halt, unless the User entered instructions to cancels its resting 
orders and quotes.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 85988 (May 31, 
2019), 84 FR 26492 (June 6, 2019) (Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change Amending Rule 21.7 
Concerning the Opening Auction Process) (SR-CboeEDGX-2019-033). The 
changes in SR-CboeEDGX-2019-033 are currently effective but not yet 
operative; however, the proposed rule text in this rule filing 
assumes operativeness of those effective changes. The Exchange notes 
that the distinction between the two trading halts was made 
throughout its rules in connection with Regulatory Halts under the 
Regulation NMS Plan to Address Extraordinary Market Volatility (the 
``Plan''). During a Regulatory Halt an underlying security has 
halted trading across the industry, and during a non-Regulatory Halt 
the primary exchange has experienced a technical issue but the 
underlying security continues to trade on other equities platforms. 
However, the Exchange determined that there would be a Queuing 
Period following a non-Regulatory Halt, like that of a Regulatory 
Halt, in order eliminate potential investor confusion regarding how 
the System will handle orders and quotes in the event of any trading 
halt. This is consistent with the Plan.
    \6\ See Exchange Notice No. C2019061200 (June 21, 2019).
---------------------------------------------------------------------------

    The Exchange now proposes to update the Complex Order Book 
(``COB'') re-opening process following a trading halt under Rule 21.20 
to align with the proposed changes to the opening auction process 
following a halt for simple orders. Currently, Rule 21.20(c)(2)(A) 
provides that any complex orders designated for a re-opening following 
a halt will be queued until the halt has ended, at which time they will 
be eligible to be executed in the Opening Process for the COB. The 
Exchange now proposes to update this process to mirror that of the 
process for simple orders. Specifically, the Exchange proposes to amend 
Rule 21.20(c)(2)(A) to state that the System queues a Member's open 
complex orders during a halt, unless the Member entered instructions to 
cancel its open complex orders upon a halt, until the halt has ended, 
at which time they will be eligible to be executed in the Opening 
Process for the COB. Additionally, the Exchange proposes to make 
similar changes to Interpretation and Policy .05 to Rule 21.20, which 
currently states that if a trading halt exists for the underlying 
security or a component of a complex strategy, trading in the complex 
strategy will be suspended and a Member's complex orders will be 
cancelled unless a Member has instructed the Exchange not to cancel its 
orders. The Exchange proposes to amend the language, similar to that of 
proposed Rule 21.20(c)(2)(A), to state that the System queues a 
Member's open complex orders during a halt, unless the Member entered 
instructions to cancel its open complex orders upon a halt, for 
participation in the re-opening of the COB. The Exchange notes that the 
proposed change to Rule 21.20 and its Interpretation and Policy .05 
will align this rule with the trading halt process to be implemented 
for simple orders on June 27, 2019. The Exchange further notes that the 
proposed change is substantially similar to the language of its 
affiliated exchange's, Cboe C2 Exchange, Inc. (``C2''), corresponding 
rule for trading halts in connection with complex orders.\7\
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    \7\ See C2 Rule 6.13(k). The Exchange notes that C2 recently 
proposed changes to this rule to eliminate the distinction between 
the re-opening process following a Regulatory and non-Regulatory 
Trading Halt. Therefore, following any trading halt, a complex order 
will be handled in the manner in which it is currently handled for a 
Regulatory Trading Halt: The System queues a User's open complex 
orders, unless the User entered instructions to cancel its open 
complex orders upon a halt, for participation in the re-opening of 
the COB. See SR-C2-2019-016 (June 17, 2019).
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    The Exchange believes that this proposed change will provide 
Members with the same ability to decide how their resting complex 
orders should be handled in the event of a trading halt as they will 
have for their simple orders in this event. The Exchange also believes 
this proposed update will eliminate potential investor confusion 
regarding how the System will handle complex orders as compared to 
simple orders upon implementation of the changes to the trading halt 
process for simple orders on June 27, 2019, as well as bolster 
understanding of the rules and functionality following trading halts 
between the Exchange and its affiliated exchange, C2, for those 
participating across both exchanges.
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. \8\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \9\ 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) \10\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Id.
---------------------------------------------------------------------------

    The proposed rule change to harmonize the process for a Member's

[[Page 33298]]

complex orders with that of a Member's simple orders following a 
trading halt will protect investors by eliminating potential confusion 
regarding how the System will handle their complex orders as compared 
to their simple orders following any trading halt. The Exchange also 
believes that the proposed rule change will serve to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system by providing Members with the same ability to decide how 
their open (i.e., resting) complex orders a should be handled in the 
event of a trading halt, as they will have for their simple orders in 
this event beginning on June 27, 2019. Also, as stated above, the 
Exchange notes that the proposed change is substantively the same as 
the complex order trading halt rule of its affiliated exchange, C2.\11\ 
As a result, the Exchange believes that the proposed rule change will 
serve to protect investors by providing similar trading halt rules for 
complex orders between the two affiliated exchanges, thereby bolstering 
understanding of the affiliated exchanges' rules and functionality for 
those participating across both exchanges.
---------------------------------------------------------------------------

    \11\ See supra note 7.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change 
will not impose any burden on intramarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act. All 
Members will have the same flexibility regarding how the System will 
handle their complex orders during a trading halt. If a Member wants 
its complex orders to be handled in the manner they are today, that 
Member may instruct the Exchange to do so. The proposed rule change 
will not impose any burden on intermarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act. The 
proposed rule change is not intended as a competitive change, but 
rather to provide Members with the same flexibility with respect to the 
handling of their complex orders during a trading halt as they will 
have for their simple orders, and to provide consistent trading halt 
procedures under the Exchange's rules.

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) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \14\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \15\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay so 
that the proposed rule change may become operative upon filing. Waiver 
of the operative delay would allow the Exchange to implement this 
proposed rule change simultaneously with the rule change to eliminate 
the trading halt distinctions between how the opening auction process 
following a halt applies to a Member's simple orders, which the 
Exchange intends to implement on June 27, 2019. Therefore, the 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the operative delay and 
designates the proposed rule change operative upon filing.\16\
---------------------------------------------------------------------------

    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CboeEDGX-2019-041 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-CboeEDGX-2019-041. 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

[[Page 33299]]

personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CboeEDGX-2019-041 and should 
be submitted on or before August 2, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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    Dated: July 8, 2019.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-14809 Filed 7-11-19; 8:45 am]
 BILLING CODE 8011-01-P
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