Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Clarify Portions of Its Rules Under Chapter 14 (Securities Traded) Related to the Applicability of Certain Disclosure Requirements, 43216-43218 [2019-17856]
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<![CDATA[
43216
Federal Register / Vol. 84, No. 161 / Tuesday, August 20, 2019 / Notices
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
to make available publicly. All
submissions should refer to File
Number SR–MIAX–2019–37, and
should be submitted on or before
September 10, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–17846 Filed 8–19–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86661; File No. SR–
CboeEDGX–2019–025]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Relating To
Clarify Portions of Its Rules Under
Chapter 14 (Securities Traded) Related
to the Applicability of Certain
Disclosure Requirements
August 14, 2019.
jbell on DSK3GLQ082PROD with NOTICES
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 31,
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’’) proposes to
clarify portions of its rules under
Chapter 14 (Securities Traded) related to
the applicability of certain disclosure
requirements. 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/),
27 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
VerDate Sep<11>2014
20:49 Aug 19, 2019
Jkt 247001
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 clarify
portions of the rules under Chapter 14
(Securities Traded) related to the
applicability of certain disclosure
requirements.
Currently, under Rule 14.1 (Unlisted
Trading Privileges), Rule 14.2
(Investment Company Units), and Rule
14.8 (Portfolio Depositary Receipts) a
Member is required to provide to all
purchasers a written description of the
terms and characteristics of the
applicable securities (or a ‘‘product
description’’). In addition, Members also
have a separate prospectus delivery
requirement under Section 24(d) of the
Investment Company Act of 1940
(‘‘1940 Act’’). A Member, however, is
not required to send a Section 24(d)
prospectus for a security if such security
is subject of an order by the Securities
and Exchange Commission
(‘‘Commission’’) exempting it from
Section 24(d) prospectus delivery
requirements, and is not otherwise
subject to prospectus delivery
requirements under the Securities Act of
1933 (‘‘1933 Act’’). As such, the
Exchange provides rules requiring
Members to deliver a product
description for securities exempt from
the prospectus delivery requirements.
The Exchange notes that a product
description is a written description of
the terms and characteristics of a
security in a form prepared or approved
by the Exchange, whereas a prospectus
is a legal document required by and
filed with the Commission which
contains detailed disclosers about a
security.
PO 00000
Frm 00118
Fmt 4703
Sfmt 4703
Currently, Rule 14.1(c)(3)(A), Rule
14.2(d)(1), and Rule 14.8(j)(1) provide
govern the written description
requirements for derivative securities
traded under unlisted trading privileges
(‘‘UTP Derivative Securities’’), series of
Investment Company Units, and series
of Portfolio Depositary Receipts,
respectively. As written, these
subparagraphs under their respective
Rules do not make it explicit to
Members that the product description
requirement is applicable only to
prospectus-exempt products.
Furthermore, current Rules 14.2(d)(1)
and 14.8(j)(1) do not contain a provision
(like that of 14.1(c)(3)(B)) that the
Exchange will inform its Members by
means of an information circular when
the product description delivery
requirements apply. Therefore, in order
to provide Members with better
understanding of the provisions in
connection with these requirements, the
Exchange now proposes to amend its
rules to explicitly state that the product
description delivery requirements apply
only to the respective products that are
exempt from the 1940 Act prospectus
delivery requirements and are not
otherwise subject to the prospectus
delivery requirements under the 1933
Act. The Exchange also proposes to add
language to Rule 14.2(d)(1) and Rule
14.8(j)(1) to inform Members that the
Exchange will announce the
applicability of the product description
delivery requirements to particular
series of Portfolio Depositary Receipts or
Investment Company Units via
information circular. This change is
intended to provide clarity to Members
regarding when and how the Exchange
will notify Members of their product
delivery obligations. The Exchange
notes that Rule 14.1(c)(3)(B) currently
provides that the Exchange informs its
Members of the application of product
description delivery requirements
related to UTP Derivative Securities by
means of information circular. The
Exchange also notes that the proposed
amendments are substantially similar to
the disclosure requirement provision
currently applicable to Managed Fund
Shares on its affiliated exchange, Cboe
BZX Exchange, Inc. (‘‘BZX’’).5
The Exchange proposes to update the
heading of Rule 14.1(c)(3)(A), which
currently states ‘‘Prospectus Delivery’’,
to ‘‘Scope of Product Description’’ as it
believes this better aligns with the
requirements provided for under
paragraph (c)(3), thus provides further
clarity regarding the product description
requirements contained within this
paragraph.
5 See
E:\FR\FM\20AUN1.SGM
BZX Rule 14.11(i)(6).
20AUN1
Federal Register / Vol. 84, No. 161 / Tuesday, August 20, 2019 / Notices
jbell on DSK3GLQ082PROD with NOTICES
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.6 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 7 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) 8 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange also believes the
proposed rule change is consistent with
Section 6(b)(1) of the Act, which
provides that the Exchange be organized
and have the capacity to be able to carry
out the purposes of the Act and to
enforce compliance by the Exchange’s
Members and persons associated with
its Members with the Act, the rules and
regulations thereunder, and the rules of
the Exchange.
In particular, the Exchange believes
that this proposal benefits and protects
investors because it is designed to
bolster Member understanding of its
rules and the applicability of the
subparagraphs providing for written
description disclosure requirements to
certain products. Because such current
subparagraphs (Rule 14.1(c)(3)(A), Rule
14.2(d)(1), and Rule 14.8(j)(1)) do not
explicitly state under what
circumstances they will apply to the
respective products under each
subparagraph, the Exchange has found
that it is unclear to Members that the
subparagraphs in connection with the
required written description only apply
to securities or series that are exempt
from the Section 24(d) prospectus
delivery requirements, and otherwise
not subject to prospectus delivery
requirements under the 1933 Act. The
Exchange thus believes this proposed
6 15
7 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange 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, as amended.
On the contrary, the proposed rule
change is not designed to address any
competitive issues but is only intended
to bolster Member understanding of its
rules with respect to the applicability of
certain disclosure requirement
provisions.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No comments were solicited or
received 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:
A. Significantly affect the protection
of investors or the public interest;
B. impose any significant burden on
competition; and
C. 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
9 See
20:49 Aug 19, 2019
Act 10 and Rule 19b–4(f)(6) 11
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–
CboeEDGX–2019–025 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–2019–025. 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
10 15
8 Id.
VerDate Sep<11>2014
change will enhance Members’
understanding with respect to when and
to which products the relevant
subparagraphs are applicable, thereby
protecting investors and the public
interest. The Exchange notes that this
proposal does not alter any of the
disclosure requirements applicable to
market participants, but merely intends
to make explicit when the written
disclosure provisions apply, as well as
establish that the Exchange will notify
Members via information circular of
their product description obligations for
particular series of Portfolio Depositary
Receipts and Investment Company
Units. Additionally, the Exchange
believes that providing clear rules
regarding the applicability of provisions
requiring written product description
deliveries will enable the Exchange to
be organized and have the capacity to
enforce compliance its Members with
the Act and the rules of Exchange.
Additionally, the proposed changes
are substantially similar to the rule of
affiliated exchange, BZX, for disclosure
requirements currently applicable to
Managed Fund Shares.9
Jkt 247001
PO 00000
supra note 5.
Frm 00119
Fmt 4703
11 17
Sfmt 4703
43217
E:\FR\FM\20AUN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
20AUN1
43218
Federal Register / Vol. 84, No. 161 / Tuesday, August 20, 2019 / Notices
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–2019–025 and
should be submitted on or before
September 10, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–17856 Filed 8–19–19; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–86676; File No. SR–
CboeEDGA–2019–013]
August 14, 2019.
jbell on DSK3GLQ082PROD with NOTICES
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on August 1,
2019, Cboe EDGA Exchange, Inc.
(‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. 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 EDGA Exchange, Inc. (‘‘EDGA’’
or the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposed rule
change to introduce a Small Retail
Broker Distribution Program. The text of
the proposed changes to the fee
schedule are enclosed [sic] as Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
VerDate Sep<11>2014
20:49 Aug 19, 2019
Jkt 247001
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Small Retail Broker Eligibility
Requirements
The Exchange proposes to introduce a
Program that would reduce costs for
small retail brokers that provide top of
book data to their clients. In order to be
approved for the Small Retail Broker
Distribution Program, Distributors
would have to provide Cboe One
Summary Feed Data to a limited number
of clients with which the firm has
established a brokerage relationship,
and would have to provide such data
primarily to Non-Professional Data
Users. Specifically, distributors would
have to attest that they meet the
following criteria: (1) Distributor is a
broker-dealer distributing Cboe One
Summary Feed Data to Non-Professional
Data Users with whom the broker-dealer
has a brokerage relationship; (2) More
than 50% of the Distributor’s total Data
User population must consist of NonProfessional Data Users, inclusive of
those not receiving Cboe One Summary
Feed Data ; and (3) Distributor
distributes Cboe One Summary Feed
Data to no more than 5,000 NonProfessional Data Users.
These proposed requirements for
participating in the Program are
designed to ensure that the benefits
provided by the Program inure to the
benefit of small retail brokers that
provide Cboe One Summary Feed Data
to a limited number of subscribers. As
explained later in this filing,
distributors that provide EDGA
Exchange Data to a larger number of
subscribers can benefit from the current
pricing structure through scale, due to
subscriber fees that are significantly
lower than those charged by the
Exchange’s competitors, and an
Enterprise license that caps the total
fees to be paid by firms that distribute
market data to a sizeable customer base.
The Exchange believes that offering
similarly attractive pricing to small
retail brokers, including regional firms
both inside and outside of the U.S. that
may not have the same established
client base as the larger retail brokers,
would make the Exchange’s data a more
competitive alternative for those firms,
and would help ensure that such
information is widely available to a
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.
1. Purpose
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Introduce a
Small Retail Broker Distribution
Program
1 15
Consolidation Fee of $1,000 per month,
and User fees equal to $10 per month for
each Professional User, and $0.25 per
month for each Non-Professional User.3
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
12 17
equities/regulation/rule_filings/edga/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
The purpose of the proposed rule
change is to introduce a pricing program
that would allow small retail brokers
that purchase top of book market data
from the Exchange to benefit from
discounted fees for access to such
market data. The Small Retail Broker
Distribution Program (the ‘‘Program’’)
would reduce the distribution and
consolidation fees paid by small brokerdealers that operate a retail business. In
turn, the Program may increase retail
investor access to real-time U.S. equity
quote and trade information, and allow
the Exchange to better compete for this
business with competitors that offer
similar optional products.
Current Fees
The Cboe One Summary Feed is a top
of book data feed that provides real-time
U.S. equity quote and trade information
to investors based on equity orders
submitted to the Exchange and its
affiliated equities exchanges—i.e., Cboe
EDGX Exchange, Inc., Cboe BZX
Exchange, Inc., and Cboe BYX
Exchange, Inc. Specifically, the Cboe
One Summary Feed is a data feed that
contains the aggregate best bid and offer
of all displayed orders for securities
traded on the Exchange and its affiliated
exchanges. The Cboe One Summary
Feed also contains the individual last
sale information for the Exchange and
each of its affiliated exchanges, and
consolidated volume for all listed equity
securities. The fee for external
distribution of the Cboe One Summary
Feed is $5,000 per month, and external
distributors are also liable for a Data
PO 00000
Frm 00120
Fmt 4703
Sfmt 4703
3 The Exchange also offers an Enterprise license
for the Cboe One Summary Feed at a cost of $50,000
per month. An Enterprise license permits
distribution to an unlimited number of Professional
and Non-Professional Users, keeping costs down for
firms that provide access to a large number of
subscribers.
E:\FR\FM\20AUN1.SGM
20AUN1
]]>Agencies
[Federal Register Volume 84, Number 161 (Tuesday, August 20, 2019)]
[Notices]
[Pages 43216-43218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-17856]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86661; File No. SR-CboeEDGX-2019-025]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating To Clarify Portions of Its Rules Under Chapter 14 (Securities
Traded) Related to the Applicability of Certain Disclosure Requirements
August 14, 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 31, 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'') proposes to
clarify portions of its rules under Chapter 14 (Securities Traded)
related to the applicability of certain disclosure requirements. 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 clarify portions of the rules under
Chapter 14 (Securities Traded) related to the applicability of certain
disclosure requirements.
Currently, under Rule 14.1 (Unlisted Trading Privileges), Rule 14.2
(Investment Company Units), and Rule 14.8 (Portfolio Depositary
Receipts) a Member is required to provide to all purchasers a written
description of the terms and characteristics of the applicable
securities (or a ``product description''). In addition, Members also
have a separate prospectus delivery requirement under Section 24(d) of
the Investment Company Act of 1940 (``1940 Act''). A Member, however,
is not required to send a Section 24(d) prospectus for a security if
such security is subject of an order by the Securities and Exchange
Commission (``Commission'') exempting it from Section 24(d) prospectus
delivery requirements, and is not otherwise subject to prospectus
delivery requirements under the Securities Act of 1933 (``1933 Act'').
As such, the Exchange provides rules requiring Members to deliver a
product description for securities exempt from the prospectus delivery
requirements. The Exchange notes that a product description is a
written description of the terms and characteristics of a security in a
form prepared or approved by the Exchange, whereas a prospectus is a
legal document required by and filed with the Commission which contains
detailed disclosers about a security.
Currently, Rule 14.1(c)(3)(A), Rule 14.2(d)(1), and Rule 14.8(j)(1)
provide govern the written description requirements for derivative
securities traded under unlisted trading privileges (``UTP Derivative
Securities''), series of Investment Company Units, and series of
Portfolio Depositary Receipts, respectively. As written, these
subparagraphs under their respective Rules do not make it explicit to
Members that the product description requirement is applicable only to
prospectus-exempt products. Furthermore, current Rules 14.2(d)(1) and
14.8(j)(1) do not contain a provision (like that of 14.1(c)(3)(B)) that
the Exchange will inform its Members by means of an information
circular when the product description delivery requirements apply.
Therefore, in order to provide Members with better understanding of the
provisions in connection with these requirements, the Exchange now
proposes to amend its rules to explicitly state that the product
description delivery requirements apply only to the respective products
that are exempt from the 1940 Act prospectus delivery requirements and
are not otherwise subject to the prospectus delivery requirements under
the 1933 Act. The Exchange also proposes to add language to Rule
14.2(d)(1) and Rule 14.8(j)(1) to inform Members that the Exchange will
announce the applicability of the product description delivery
requirements to particular series of Portfolio Depositary Receipts or
Investment Company Units via information circular. This change is
intended to provide clarity to Members regarding when and how the
Exchange will notify Members of their product delivery obligations. The
Exchange notes that Rule 14.1(c)(3)(B) currently provides that the
Exchange informs its Members of the application of product description
delivery requirements related to UTP Derivative Securities by means of
information circular. The Exchange also notes that the proposed
amendments are substantially similar to the disclosure requirement
provision currently applicable to Managed Fund Shares on its affiliated
exchange, Cboe BZX Exchange, Inc. (``BZX'').\5\
---------------------------------------------------------------------------
\5\ See BZX Rule 14.11(i)(6).
---------------------------------------------------------------------------
The Exchange proposes to update the heading of Rule 14.1(c)(3)(A),
which currently states ``Prospectus Delivery'', to ``Scope of Product
Description'' as it believes this better aligns with the requirements
provided for under paragraph (c)(3), thus provides further clarity
regarding the product description requirements contained within this
paragraph.
[[Page 43217]]
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.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ 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) \8\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The Exchange also believes the proposed rule
change is consistent with Section 6(b)(1) of the Act, which provides
that the Exchange be organized and have the capacity to be able to
carry out the purposes of the Act and to enforce compliance by the
Exchange's Members and persons associated with its Members with the
Act, the rules and regulations thereunder, and the rules of the
Exchange.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
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In particular, the Exchange believes that this proposal benefits
and protects investors because it is designed to bolster Member
understanding of its rules and the applicability of the subparagraphs
providing for written description disclosure requirements to certain
products. Because such current subparagraphs (Rule 14.1(c)(3)(A), Rule
14.2(d)(1), and Rule 14.8(j)(1)) do not explicitly state under what
circumstances they will apply to the respective products under each
subparagraph, the Exchange has found that it is unclear to Members that
the subparagraphs in connection with the required written description
only apply to securities or series that are exempt from the Section
24(d) prospectus delivery requirements, and otherwise not subject to
prospectus delivery requirements under the 1933 Act. The Exchange thus
believes this proposed change will enhance Members' understanding with
respect to when and to which products the relevant subparagraphs are
applicable, thereby protecting investors and the public interest. The
Exchange notes that this proposal does not alter any of the disclosure
requirements applicable to market participants, but merely intends to
make explicit when the written disclosure provisions apply, as well as
establish that the Exchange will notify Members via information
circular of their product description obligations for particular series
of Portfolio Depositary Receipts and Investment Company Units.
Additionally, the Exchange believes that providing clear rules
regarding the applicability of provisions requiring written product
description deliveries will enable the Exchange to be organized and
have the capacity to enforce compliance its Members with the Act and
the rules of Exchange.
Additionally, the proposed changes are substantially similar to the
rule of affiliated exchange, BZX, for disclosure requirements currently
applicable to Managed Fund Shares.\9\
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\9\ See supra note 5.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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, as amended. On
the contrary, the proposed rule change is not designed to address any
competitive issues but is only intended to bolster Member understanding
of its rules with respect to the applicability of certain disclosure
requirement provisions.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No comments were solicited or received 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:
A. Significantly affect the protection of investors or the public
interest;
B. impose any significant burden on competition; and
C. 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 \10\ and
Rule 19b-4(f)(6) \11\ 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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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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-2019-025 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-2019-025. 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
[[Page 43218]]
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-2019-025 and should be submitted on or before September 10,
2019.
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\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-17856 Filed 8-19-19; 8:45 am]
BILLING CODE 8011-01-P
