Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Update Rule 16.1 To Include the Definition of Capacity, as well as Amend Its Fee Schedule To Reflect This Update, 35905-35907 [2019-15772]
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Federal Register / Vol. 84, No. 143 / Thursday, July 25, 2019 / Notices
All submissions should refer to File
Number SR–NASDAQ–2019–057. 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–NASDAQ–2019–057 and
should be submitted on or before
August 15, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–15776 Filed 7–24–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
jspears on DSK30JT082PROD with NOTICES
[Release No. 34–86415; File No. SR—
CboeEDGX–2019–046]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Relating To
Update Rule 16.1 To Include the
Definition of Capacity, as well as
Amend Its Fee Schedule To Reflect
This Update
July 19, 2019.
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 17,
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, II, and
III below, which Items have been
prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX Options’’)
proposes to update Rule 16.1 to include
the definition of capacity, as well as
amend its fee schedule to reflect this
update. 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 Exchange proposes to add
‘‘capacity’’ as a defined term under Rule
16.1 (Definitions). The proposed change
intends to codify the definition of
capacity in it rules, which is currently
referenced in its technical
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
27 17
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
CFR 200.30–3(a)(12).
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35905
specifications 5 and in certain rules. 6
This proposed change is also a
harmonizing change intended to
conform to the capacity definition under
the rules of its affiliated exchange, Cboe
C2 Exchange, Inc. (‘‘C2’’). The Exchange
also proposes to update a term under
Rule 20.7 (Audit Trail) to reflect the
proposed capacity definition. In
addition to this, the Exchange proposes
to conform certain definitions under its
fee schedule to this proposed definition.
Currently, the System 7 allows for a
User to mark its order with various
capacity codes which correspond to the
capacity of the User (i.e., a customer, a
Market Maker, etc.),8 and, pursuant to
current Exchange Rules, Users are
required to submit orders with the
proper capacity identification.9 The
current Exchange Rules, however, do
not provide for a specific definition of
the capacity in which a User may
submit an order nor for the
corresponding codes for different User
capacity types. Additionally, the current
fee schedule provides that a Member’s
transaction is assigned a fee code and
defines the various types (i.e., capacity
type) of Members to which the
corresponding fee codes are assigned.
Specifically, the Member type
definitions apply to any transaction
identified by such Member. For
example, ‘‘Market Maker’’ applies to any
transaction identified by a Member for
clearing in the Market Maker range at
the OCC, where such Member is
registered with the Exchange as a
Market Maker.
The Exchange now proposes to amend
Rule 16.1 to codify the definition of
‘‘capacity’’. The Exchange proposes to
define ‘‘capacity’’ to mean the capacity
in which a User submits an order,
which the User specifies by applying
the corresponding code to the order.
The proposed corresponding codes and
capacity types include: ‘‘B’’ to an order
for the account of a broker dealer,
including a foreign broker dealer; ‘‘C’’ to
an order for the account of a Priority
Customer; ‘‘F’’ to an order for the
proprietary account of an OCC clearing
member firm; ‘‘J’’ to an order for a joint
back office account; ‘‘M’’ to an order for
the account of a registered Market
5 See Cboe Options Exchanges Binary Order Entry
Specification, available at https://
cdn.batstrading.com/resources/membership/US_
Options_BOE_Specification.pdf.
6 See Rule 18.2, Rule 20.7(b), and Rule 21.10.
7 The automated trading system used by EDGX
Options for the trading of options contracts. See
Rule 16.1.
8 See Cboe Options Exchanges Binary Order Entry
Specification, available at https://
cdn.batstrading.com/resources/membership/US_
Options_BOE_Specification.pdf.
9 See Rule 20.7.
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Federal Register / Vol. 84, No. 143 / Thursday, July 25, 2019 / Notices
(b)(6). The Exchange now proposes to
update subparagraph (b)(6) to User
capacity, which is in line with the
proposed capacity definition under
proposed Rule 16.1.
The Exchange also proposes to update
the capacity type definitions of ‘‘Away
Market Maker’’, ‘‘Customer’’, ‘‘Firm’’,
‘‘Joint Back Office’’, Market Maker’’ and
‘‘Professional’’ in its fee schedule to
reflect the proposed capacity definition
and types under proposed Rule 16.1.
Specifically, the Exchange notes the
proposed change to the current language
providing that the capacity types apply
to transactions identified by a Member
for clearing in the respective capacity
type range at the OCC. The Exchange
updates this language to provide that
the defined capacity types apply to
orders for the account of the respective
capacity type.12 This change reflects the
proposed capacity type definitions
under proposed Rule 16.1 and is in line
with the capacity codes applicable to
participants on the Exchange’s affiliated
exchange, C2. The Exchange also
believes that changing the definition of
the capacity types to apply to an order
for the account of the respective
capacity types better aligns with the
order identification requirements under
Rule 20.7. Under Rule 20.7 a Member
must submit proper order information
when entering orders and maintain
Customer order records that must
contain, among other things, User
capacity (as proposed). The Exchange
believes that codifying in the Rules the
codes that Users must apply to orders
for the accounts of the various capacity
types will provide additional
transparency to Members regarding the
appropriate order marking
requirements.
Maker; ‘‘N’’ to an order for the account
of a market maker, i.e., an Away Market
Maker; and ‘‘U’’ to an order for the
account of a Professional.10
This definition is substantially similar
to that of the definition under C2 Rule
1.1. The Exchange notes only slight
differences between its proposed rule
and that of its affiliated exchange, C2.
First, the Exchange provides that
capacity code ‘‘C’’ applies to orders for
the account of a Priority Customer,
whereas capacity code ‘‘C’’ under C2
Rule 1.1 applies to orders for the
account of Public Customer. This
difference accounts for the fact that C2
does not have a defined term for Priority
Customer, which pursuant to Rule 16.1,
means any person or entity that is not
a broker or dealer in securities or a
Professional. The Exchange believes that
incorporating this term, as opposed to
Public Customer, maintains consistency
with the Exchange’s fee schedule, which
already excludes brokers or dealers and
Professionals from the definition of the
term Customer for purposes of pricing
on the Exchange, and provides that
Professional capacity types are to be
separately marked as such. Second, the
Exchange provides that capacity code
‘‘N’’ is assigned to an order for the
account of a market maker on another
options exchange, and is otherwise
known as an Away Market Maker. C2
does not provide in its definition that
this capacity type is otherwise known as
an Away Market Maker. The Exchange’s
fee schedule currently defines Away
Market Maker to mean the same as this
proposed rule definition. Therefore, the
Exchange believes that incorporating
this language is a non-substantive
addition that does not alter the capacity
type definition attached to capacity
code ‘‘N’’ in any way, but rather
maintains consistency with the
Exchange’s fee schedule. The Exchange
also notes that it does not add capacity
code ‘‘L’’ like that of C2 for non-trading
permit holder affiliates as this capacity
code is only applicable to participants
on C2.11
The Exchange also proposes to update
Rule 20.7 (Audit Trail) to reflect the
proposed capacity definition under Rule
16.1(a). Specifically, current Rule
20.7(b) provides that order records
relating to EDGX Options must contain
certain information, including Member
capacity pursuant to subparagraph
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
10 See Rule 16.1(a)(47) (proposed Rule 16.1). A
Professional means any person or entity that is not
a broker or dealer in securities and places more
than 390 orders in listed options per day on average
during a calendar month for its own beneficial
account(s). All Professional orders shall be
appropriately marked by Options Members.
11 See supra note 5.
12 Though the Exchange proposes to remove the
OCC clearing range language in order to better align
these fee schedule definitions with those under
proposed 16.1 and C2 Rule 1.1, this does not alter
the manner in which each capacity type clears at
the OCC.
13 15 U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(5).
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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 change to adopt the
definition of capacity, including types
and codes, will remove impediments to
and perfect the mechanism of a free and
open market and a national market
system by providing Users with rules
that accurately reflect and add detail to
current System capacity code
specifications for which a User must use
to appropriately mark its orders. As a
result, the proposed change will help
facilitate understanding of and
compliance with the rules. In addition
to this, the Exchange believes that by
harmonizing the definition of capacity
types and codes, with that of its
affiliated exchange, C2, will result in
increased understanding of the
Exchange’s Rules and that of its
affiliated exchange rules for those
participating across the two affiliated
exchanges.
Additionally, the Exchange believes
that the proposed change to reflect the
proposed capacity definition throughout
the corresponding definitions in the fee
schedule will provide Members with
clearer definitions of capacity types that
will better align with the Exchange
Rules as well as provide detail to the
System specifications already in place.
As a result, the proposed change will
mitigate any confusion surrounding the
fee schedule capacity definitions and
applicable codes. As such, increased
User understanding of the Exchange’s
fee schedule definitions as they
correspond to the Exchange Rules will
serve to remove impediments to and
perfect the mechanism of a free and
open market, and thereby protect
investors. Likewise, the Exchange
believes that the proposed change to
Rule 20.7(b)(6) to more accurately
reflect the proposed definition of
capacity will also serve to remove
impediments to and perfect the
mechanism of a free and open market by
aligning the Exchange Rules, in turn
bolstering Member understanding, and
thus, facilitating less burdensome
15 Id.
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Federal Register / Vol. 84, No. 143 / Thursday, July 25, 2019 / Notices
regulatory compliance with the audit
trail rules.
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 notes that the proposed rule
change is not designed to address any
competitive issues but is only intended
to provide clarity with respect to the
definition of capacity types and
consistency throughout its Rules and fee
schedule with respect to capacity codes.
The Exchange does not believe that the
proposed change will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because all Users are already required to
submit orders with the appropriate
capacity code, and the same capacity
codes are available to all Members. The
Exchange also believes that the
proposed rule change reduces the
regulatory compliance burden on all
Members by better aligning the Rules
and fee schedule with the existing audit
trail requirements. Moreover, the
Exchange does not believe that the
proposed change will impose any
burden on intermarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
As noted, the proposed rule change is
not intended as a competitive change,
but rather to provide Members with
added detail and clarity regarding the
capacity codes applicable to their orders
submitted to the Exchange.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
jspears on DSK30JT082PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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 for 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)
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16:56 Jul 24, 2019
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of the Act 16 and Rule 19b–4(f)(6)
thereunder.17
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 rule-comments@
sec.gov. Please include File Number SR–
CboeEDGX–2019–046 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–2019–046. 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
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 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.
PO 00000
16 15
17 17
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35907
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeEDGX–2019–046 and
should be submitted on or before
August 15, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–15772 Filed 7–24–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86419; File No. SR–
CboeBZX–2019–066]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Relating To
Update Rule 16.1 To Include the
Definition of Capacity, as Well as
Amend Its Fee Schedule To Reflect
This Update
July 19, 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 July 17,
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, II, and
III below, which Items have been
prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
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]]>Agencies
[Federal Register Volume 84, Number 143 (Thursday, July 25, 2019)]
[Notices]
[Pages 35905-35907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15772]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86415; File No. SR--CboeEDGX-2019-046]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating To Update Rule 16.1 To Include the Definition of Capacity, as
well as Amend Its Fee Schedule To Reflect This Update
July 19, 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 July 17, 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, II,
and III below, which Items have been prepared by the Exchange. The
Exchange filed the proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule
19b-4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX Options'')
proposes to update Rule 16.1 to include the definition of capacity, as
well as amend its fee schedule to reflect this update. 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 Exchange proposes to add ``capacity'' as a defined term under
Rule 16.1 (Definitions). The proposed change intends to codify the
definition of capacity in it rules, which is currently referenced in
its technical specifications \5\ and in certain rules. \6\ This
proposed change is also a harmonizing change intended to conform to the
capacity definition under the rules of its affiliated exchange, Cboe C2
Exchange, Inc. (``C2''). The Exchange also proposes to update a term
under Rule 20.7 (Audit Trail) to reflect the proposed capacity
definition. In addition to this, the Exchange proposes to conform
certain definitions under its fee schedule to this proposed definition.
---------------------------------------------------------------------------
\5\ See Cboe Options Exchanges Binary Order Entry Specification,
available at https://cdn.batstrading.com/resources/membership/US_Options_BOE_Specification.pdf.
\6\ See Rule 18.2, Rule 20.7(b), and Rule 21.10.
---------------------------------------------------------------------------
Currently, the System \7\ allows for a User to mark its order with
various capacity codes which correspond to the capacity of the User
(i.e., a customer, a Market Maker, etc.),\8\ and, pursuant to current
Exchange Rules, Users are required to submit orders with the proper
capacity identification.\9\ The current Exchange Rules, however, do not
provide for a specific definition of the capacity in which a User may
submit an order nor for the corresponding codes for different User
capacity types. Additionally, the current fee schedule provides that a
Member's transaction is assigned a fee code and defines the various
types (i.e., capacity type) of Members to which the corresponding fee
codes are assigned. Specifically, the Member type definitions apply to
any transaction identified by such Member. For example, ``Market
Maker'' applies to any transaction identified by a Member for clearing
in the Market Maker range at the OCC, where such Member is registered
with the Exchange as a Market Maker.
---------------------------------------------------------------------------
\7\ The automated trading system used by EDGX Options for the
trading of options contracts. See Rule 16.1.
\8\ See Cboe Options Exchanges Binary Order Entry Specification,
available at https://cdn.batstrading.com/resources/membership/US_Options_BOE_Specification.pdf.
\9\ See Rule 20.7.
---------------------------------------------------------------------------
The Exchange now proposes to amend Rule 16.1 to codify the
definition of ``capacity''. The Exchange proposes to define
``capacity'' to mean the capacity in which a User submits an order,
which the User specifies by applying the corresponding code to the
order. The proposed corresponding codes and capacity types include:
``B'' to an order for the account of a broker dealer, including a
foreign broker dealer; ``C'' to an order for the account of a Priority
Customer; ``F'' to an order for the proprietary account of an OCC
clearing member firm; ``J'' to an order for a joint back office
account; ``M'' to an order for the account of a registered Market
[[Page 35906]]
Maker; ``N'' to an order for the account of a market maker, i.e., an
Away Market Maker; and ``U'' to an order for the account of a
Professional.\10\
---------------------------------------------------------------------------
\10\ See Rule 16.1(a)(47) (proposed Rule 16.1). A Professional
means any person or entity that is not a broker or dealer in
securities and places more than 390 orders in listed options per day
on average during a calendar month for its own beneficial
account(s). All Professional orders shall be appropriately marked by
Options Members.
---------------------------------------------------------------------------
This definition is substantially similar to that of the definition
under C2 Rule 1.1. The Exchange notes only slight differences between
its proposed rule and that of its affiliated exchange, C2. First, the
Exchange provides that capacity code ``C'' applies to orders for the
account of a Priority Customer, whereas capacity code ``C'' under C2
Rule 1.1 applies to orders for the account of Public Customer. This
difference accounts for the fact that C2 does not have a defined term
for Priority Customer, which pursuant to Rule 16.1, means any person or
entity that is not a broker or dealer in securities or a Professional.
The Exchange believes that incorporating this term, as opposed to
Public Customer, maintains consistency with the Exchange's fee
schedule, which already excludes brokers or dealers and Professionals
from the definition of the term Customer for purposes of pricing on the
Exchange, and provides that Professional capacity types are to be
separately marked as such. Second, the Exchange provides that capacity
code ``N'' is assigned to an order for the account of a market maker on
another options exchange, and is otherwise known as an Away Market
Maker. C2 does not provide in its definition that this capacity type is
otherwise known as an Away Market Maker. The Exchange's fee schedule
currently defines Away Market Maker to mean the same as this proposed
rule definition. Therefore, the Exchange believes that incorporating
this language is a non-substantive addition that does not alter the
capacity type definition attached to capacity code ``N'' in any way,
but rather maintains consistency with the Exchange's fee schedule. The
Exchange also notes that it does not add capacity code ``L'' like that
of C2 for non-trading permit holder affiliates as this capacity code is
only applicable to participants on C2.\11\
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\11\ See supra note 5.
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The Exchange also proposes to update Rule 20.7 (Audit Trail) to
reflect the proposed capacity definition under Rule 16.1(a).
Specifically, current Rule 20.7(b) provides that order records relating
to EDGX Options must contain certain information, including Member
capacity pursuant to subparagraph (b)(6). The Exchange now proposes to
update subparagraph (b)(6) to User capacity, which is in line with the
proposed capacity definition under proposed Rule 16.1.
The Exchange also proposes to update the capacity type definitions
of ``Away Market Maker'', ``Customer'', ``Firm'', ``Joint Back
Office'', Market Maker'' and ``Professional'' in its fee schedule to
reflect the proposed capacity definition and types under proposed Rule
16.1. Specifically, the Exchange notes the proposed change to the
current language providing that the capacity types apply to
transactions identified by a Member for clearing in the respective
capacity type range at the OCC. The Exchange updates this language to
provide that the defined capacity types apply to orders for the account
of the respective capacity type.\12\ This change reflects the proposed
capacity type definitions under proposed Rule 16.1 and is in line with
the capacity codes applicable to participants on the Exchange's
affiliated exchange, C2. The Exchange also believes that changing the
definition of the capacity types to apply to an order for the account
of the respective capacity types better aligns with the order
identification requirements under Rule 20.7. Under Rule 20.7 a Member
must submit proper order information when entering orders and maintain
Customer order records that must contain, among other things, User
capacity (as proposed). The Exchange believes that codifying in the
Rules the codes that Users must apply to orders for the accounts of the
various capacity types will provide additional transparency to Members
regarding the appropriate order marking requirements.
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\12\ Though the Exchange proposes to remove the OCC clearing
range language in order to better align these fee schedule
definitions with those under proposed 16.1 and C2 Rule 1.1, this
does not alter the manner in which each capacity type clears at the
OCC.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\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.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ Id.
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In particular, the Exchange believes that the proposed change to
adopt the definition of capacity, including types and codes, will
remove impediments to and perfect the mechanism of a free and open
market and a national market system by providing Users with rules that
accurately reflect and add detail to current System capacity code
specifications for which a User must use to appropriately mark its
orders. As a result, the proposed change will help facilitate
understanding of and compliance with the rules. In addition to this,
the Exchange believes that by harmonizing the definition of capacity
types and codes, with that of its affiliated exchange, C2, will result
in increased understanding of the Exchange's Rules and that of its
affiliated exchange rules for those participating across the two
affiliated exchanges.
Additionally, the Exchange believes that the proposed change to
reflect the proposed capacity definition throughout the corresponding
definitions in the fee schedule will provide Members with clearer
definitions of capacity types that will better align with the Exchange
Rules as well as provide detail to the System specifications already in
place. As a result, the proposed change will mitigate any confusion
surrounding the fee schedule capacity definitions and applicable codes.
As such, increased User understanding of the Exchange's fee schedule
definitions as they correspond to the Exchange Rules will serve to
remove impediments to and perfect the mechanism of a free and open
market, and thereby protect investors. Likewise, the Exchange believes
that the proposed change to Rule 20.7(b)(6) to more accurately reflect
the proposed definition of capacity will also serve to remove
impediments to and perfect the mechanism of a free and open market by
aligning the Exchange Rules, in turn bolstering Member understanding,
and thus, facilitating less burdensome
[[Page 35907]]
regulatory compliance with the audit trail rules.
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 notes that the
proposed rule change is not designed to address any competitive issues
but is only intended to provide clarity with respect to the definition
of capacity types and consistency throughout its Rules and fee schedule
with respect to capacity codes. The Exchange does not believe that the
proposed change will impose any burden on intramarket competition that
is not necessary or appropriate in furtherance of the purposes of the
Act because all Users are already required to submit orders with the
appropriate capacity code, and the same capacity codes are available to
all Members. The Exchange also believes that the proposed rule change
reduces the regulatory compliance burden on all Members by better
aligning the Rules and fee schedule with the existing audit trail
requirements. Moreover, the Exchange does not believe that the proposed
change will impose any burden on intermarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act. As
noted, the proposed rule change is not intended as a competitive
change, but rather to provide Members with added detail and clarity
regarding the capacity codes applicable to their orders submitted to
the Exchange.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 for 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 \16\ and Rule 19b-4(f)(6)
thereunder.\17\
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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 at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the 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-2019-046 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-2019-046. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CboeEDGX-2019-046 and should be
submitted on or before August 15, 2019.
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\18\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-15772 Filed 7-24-19; 8:45 am]
BILLING CODE 8011-01-P
