Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Certain Clearing Editor Functionality in Rule 6.6 of the Shell Rulebook, 51693-51696 [2019-21103]

Download as PDF Federal Register / Vol. 84, No. 189 / Monday, September 30, 2019 / Notices khammond on DSKJM1Z7X2PROD with NOTICES requires 956,656 hours each year ((3,764 broker-dealers × 254 hours) + (200 broker-dealers × 3 hours) 1. These burdens are recordkeeping burdens. The staff believes that compliance personnel would be charged with ensuring compliance with Commission regulation, including Rule 17a–4. The staff estimates that the hourly salary of a Compliance Clerk is $70 per hour.2 Based upon these numbers, the total internal cost of compliance for 4,104 respondents is the dollar cost of approximately $67 (956,656 yearly hours × $70). The total burden hour decrease of 86,210 is due to a decrease in the number of respondents from 4,104 to 3,764. Based on conversations with members of the securities industry and the Commission’s experience in the area, the staff estimates that the average broker-dealer spends approximately $5,000 each year to store documents required to be retained under Rule 17a– 4. Costs include the cost of physical space, computer hardware and software, etc., which vary widely depending on the size of the broker-dealer and the type of storage media employed. The Commission estimates that the annual reporting and recordkeeping cost burden is $18,820,000. This cost is calculated by the number of active, registered broker-dealers multiplied by the reporting and recordkeeping cost for each respondent (3,764 active, registered broker-dealers × $5,000). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view the background documentation for this information 1 On June 5, 2019, the Commission adopted Rule 151–1 under the Securities Exchange Act of 1934 establishing a standard of conduct for brokerdealers and natural persons who are associated persons of a broker-dealer when making a recommendation of any securities. See Securities Exchange Act Release No. 86031 (June 5, 2019), 84 FR 33318 (July 12, 2019). At the same time, the Commission adopted Exchange Act Rule 17a–14 (CFR 240.17a–14) and Form CRS (17 CFR 249.640) under the Exchange Act. See Form CRS Relationship Summary; Amendments to Form ADV Exchange Act Release No. 86032, Advisers Act Release No. 5247, File No. S7–08–18 (June 5, 2019), 84 FR 33492 (July 12, 2019). As part of new Rule 17a–14 and Form CRS, and Regulation Best Interest, the Commission amended Rule 17a–4 by adding new paragraphs (a)(24) and (a)(35). The collections of information and the related burdens associated with these amendments have been separately noticed for comment and are currently under review. 2 This figure is based on SIFMA’s Office Salaries in the Securities Industry 2013, modified by Commission staff to account for an 1,800-hour work-year multiplied by 2.93 to account for bonuses, firm size, employee benefits, and overhead. VerDate Sep<11>2014 19:16 Sep 27, 2019 Jkt 247001 collection at the following website: www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Lindsay.M.Abate@omb.eop.gov; and (ii) Charles Riddle, Acting Director/Chief Information Officer, Securities and Exchange Commission, c/o Candace Kenner, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: September 24, 2019. Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–21081 Filed 9–27–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–87079; File No. SR–CBOE– 2019–062] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Certain Clearing Editor Functionality in Rule 6.6 of the Shell Rulebook September 24, 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 September 18, 2019, Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) proposes to amend 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 PO 00000 Frm 00186 Fmt 4703 Sfmt 4703 51693 certain Clearing Editor functionality in Rule 6.6 of the shell Rulebook. The text of the proposed rule change is also available on the Exchange’s website (https://www.cboe.com/ AboutCBOE/CBOELegalRegulatory Home.aspx), 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 On September 5, 2019, the Exchange filed a rule filing, SR–CBOE–2019–056, which, amended Exchange Rules in connection with the Cboe Trading Match System (‘‘CTM’’).5 Pursuant to SR–CBOE–2019–056, which will be effective on October 7, 2019, the Exchange proposed to harmonize current Rule 6.67, in connection with the CTM, with C2 Rule 6.31, which provides for the ‘‘Clearing Editor’’ and is functionally equivalent to the Exchange’s current CTM. Under SR– CBOE–2019–056, Rule 6.6 in the shell Rulebook will govern the Exchange’s Clearing Editor and Rule 6.67 will be deleted from the current Rulebook, upon migration.6 SR–CBOE–2019–056 5 See Securities Exchange Act Release No. 86920 (September 10, 2019) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Cboe Trade Match System) (SR– CBOE–2019–056). 6 Cboe Options intends to migrate its trading platform to the same system used by the Cboe Affiliated Exchanges (i.e., together with Cboe Options, C2 Exchange, Inc. (‘‘C2’’), Cboe EDGA Exchange, Inc. (‘‘EDGA’’), Cboe EDGX Exchange, Inc. (‘‘EDGX’’ or ‘‘EDGX Options’’), Cboe BZX Exchange, Inc. (‘‘BZX’’ or ‘‘BZX Options’’), and Cboe BYX Exchange, Inc. (‘‘BYX’’)) which the Exchange expects to complete on October 7, 2019. In connection with this technology migration, the Exchange has a shell Rulebook that resides alongside its current Rulebook, which shell Rulebook will contain the Rules that will be in place upon completion of the Cboe Options technology migration. E:\FR\FM\30SEN1.SGM 30SEN1 khammond on DSKJM1Z7X2PROD with NOTICES 51694 Federal Register / Vol. 84, No. 189 / Monday, September 30, 2019 / Notices intended to amend the rule to conform to the Clearing Editor functionality and rule language of that of C2 to the extent necessary to retain intended differences unique to Cboe Options market-model, functionality, and/or rule text. However, the Exchange now proposes to update Rule 6.6 in the shell Rulebook to describe additional functionality that is unique to the Exchange that was inadvertently not included in that previously filing. In order to coincide with the effective date of SR–CBOE– 2019–056 and the migration of the Exchange’s trading platform to the same system used by the Cboe Affiliated Exchanges,7 the Exchange also intends to implement this proposed rule change on October 7, 2019. In particular, the Exchange inadvertently removed paragraph (b) under current Rule 6.67, which currently applies to both trades executed electronically and in open outcry, which is unique to Cboe Options, and will continue to apply to trades executed in open outcry upon migration. Specifically, current Rule 6.67(b) permits Trading Permit Holders (‘‘TPHs’’) to change certain fields in CTM (Clearing Editor, as proposed), including series, quantity, buy or sell, and premium price, only if they provide notice to the Exchange. While the Exchange notes the removal this provision as it relates to trades executed electronically and in conformity with C2 Rule 6.31 is accurate, it will continue to apply to open outcry trades postmigration. Therefore, the Exchange now proposes to amend Rule 6.6 in the shell Rulebook and add Rule 6.6(d), which is substantively the same as current Rule 6.67(b) that was inadvertently removed under SR–CBOE–2019–056. Specifically, proposed Rule 6.6(d) states that, in addition to the fields listed in paragraph (b), Trading Permit Holders may change the following fields through the Clearing Editor for trades executed in open outcry: (1) Series, (2) Quantity, (3) Buy or Sell; or (4) Price. Each of these changes must be accompanied by a Reason Code. Notification of changes made pursuant to this paragraph (d) will automatically be sent to the Exchange with the submission of the changes through the Clearing Editor. The proposed rule change updates the language to make it explicit that proposed Rule 6.6(d) applies only to trades executed in open outcry. It also updates the term premium price to price and Customer ID (in Rule 6.6(a)) to Client Order ID, as these terms more accurately reflect the names of the fields 7 See id. VerDate Sep<11>2014 19:16 Sep 27, 2019 Jkt 247001 that are displayed on an order 8 and in the Clearing Editor, as well as the term origin code to Capacity code, which is in line with the language in Rule 6.6 and definition currently in the shell Rulebook.9 The current rule provides that notification of the change shall be made as soon as practicable, but no later than 15 minutes after the change has been made. The proposed rule change does not incorporate this language because, upon migration, the Exchange will automatically receive notification of changes to the fields listed under proposed Rule 6.6(d) when a TPH submits changes through use of the Clearing Editor. The automatic notification will include a Reason Code associated with each change in which a TPH will be prompted to provide in the Clearing Editor when making changes pursuant to proposed Rule 6.6(d).10 Therefore, the Exchange notes that the proposed rule does not substantively alter the notification requirement attached to proposed Rule 6.6(d), but only updates it to accurately reflect the manner in which notice will automatically be submitted to the Exchange through use of the Clearing Editor. In addition, the proposed rule change adds certain Cboe Options-specific fields to the list of fields that do not require a reason code under proposed Rule 6.6(b). The Exchange now proposes to incorporate Strategy ID,11 Frequent Trader ID,12 Compression Trade ID,13 and ORS ID 14 to the list of fields that a TPH may change through the Clearing Editor (for both trades executed electronically and in open outcry) without notice to the Exchange. These fields are unique to orders executed on Cboe Options 15 and TPHs currently 8 See Cboe Options FIX Specifications, available at: https://cdn.cboe.com/resources/membership/ US_Options_FIX_Specification.pdf. 9 See Rule 1.1 in the shell Rulebook. 10 Example Reason Codes include: Input Error; Unmatched Trade; Unknown; Manual Add; Other Text Required; Trade Nullification; Trade Adjustment; Error Account; and System Issue. 11 Strategy ID indicates whether an order qualifies for certain treatment for various strategies provided under the Exchange’s Fees Schedule. See Cboe Exchange, Inc. Fees Schedule (for example, footnote 13). 12 Frequent Trader ID is a unique identification number which can be appended by executing agents to orders submitted to the Exchange on behalf of those customers registered for the Frequent Trader Program. See Cboe Exchange, Inc. Fees Schedule, ‘‘Frequent Trader Program’’ Table. 13 Compression Trader ID indicates whether an order qualifies for certain treatment in connection with facilitating a compression of options positions. See Cboe Exchange, Inc. Fees Schedule, footnote 41. 14 ORS ID indicates whether an order qualifies for certain treatment under the ORS Program. See Cboe Options Exchange, Inc. Fees Schedule, ‘‘Order Router Subsidy Program’’ Table. 15 See supra note 8. PO 00000 Frm 00187 Fmt 4703 Sfmt 4703 submit all updates to such fields to the Exchange populated via a form postexecution today.16 Upon migration, the Exchange functionality will allow for automated entry for these fields, just like all other order fields. Therefore, the proposed amendment merely intends to make it explicit that TPHs may continue to submit updates to these fields postexecution. The Exchange also proposes to clarify that a TPH may make a change from a Capacity code (C) to any other Capacity code only if the change is accompanied by a Reason Code and, like proposed paragraph (d), makes it explicit that notice of such change will automatically be sent to the Exchange with the submission of the change through the Clearing Editor. This is substantially the same manner in which current Rule 6.67 functions, where both Rule 6.67(a) and (b) are applicable to trades executed electronically and on open outcry (therefore, changing a customer Capacity code is permissible under current Rule 6.67 for all trades executed if notification is provided to the Exchange). The Exchange proposes to maintain that a TPH may change the Capacity code from a customer Capacity code to any other Capacity code for trades executed electronically or in open outcry, however, it still must provide notification to the Exchange via a prompted Reason Code and, like changes made pursuant to proposed paragraph (d), will automatically provide such notification to the Exchange when the change is submitted through the Clearing Editor. 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.17 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 18 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 16 The Exchange notes that TPHs may currently update Frequent Trader ID via CTM. See Securities Exchange Act Release No. 86617 (August 9, 2019), 84 FR 41776 (August 15, 2019) Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Ability To Submit Frequent Trader Forms (SR–CBOE–2019–043). 17 15 U.S.C. 78f(b). 18 15 U.S.C. 78f(b)(5). E:\FR\FM\30SEN1.SGM 30SEN1 Federal Register / Vol. 84, No. 189 / Monday, September 30, 2019 / Notices khammond on DSKJM1Z7X2PROD with NOTICES 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) 19 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The proposed rule change is substantively the same as the manner in which the CTM rules and postexecution functionality and/or processes work today. The proposed change merely amends the rule proposed under SR–CBOE–2019–056 to permit changes in certain fields that TPHs are already permitted to change through the Clearing Editor or other post-execution forms. The proposed change is intended to correct an inadvertent omission from Rule 6.6 in the shell Rulebook of a provision from Rule 6.67 in the current Rulebook that currently applies to open outcry executions, and will continue to apply to open outcry executions upon migration. Likewise, the Exchange notes that TPHs may currently update fields that require notification for trades executed in open outcry and make changes made from customer Capacity code (C), with the same requisite notice. Therefore, the proposed change does not alter the manner in which the current rule functions but instead removes impediments to and perfects the mechanism of a free and open market and national market system by continuing to allow for these functions, along with automatic notification containing reason codes transmitted to the Exchange through submission of the changes in the Clearing Editor, upon migration. Additionally, the Exchange notes that the proposed amendment to add certain fields for which updates do not require notification to the rule will remove impediments to and perfect the mechanism of a free and open market and national market system because TPHs may already submit updates to these fields (in paper form) postexecution and the rule is designed to continue to allow TPHs to make such updates post-execution in electronic form upon migration. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The 19 Id. VerDate Sep<11>2014 19:16 Sep 27, 2019 Jkt 247001 proposed amendment merely updates Rule 6.6 in the shell Rulebook to continue to allow for certain postexecution changes, which are currently permitted on the Exchange, through the use of the Clearing Editor after October 7, 2019. The Exchange notes that all proposed changes and current changes made pursuant to Rule 6.6 occur postexecution, therefore will not have any impact on trading. As the same postexecution changes are already permitted and made via processes and functionality currently in place on the Exchange, the Exchange believes this proposed filing to allow for the continuation of the same post-execution changes through use of the Clearing Editor will have no impact on competition. The Exchange also notes that the proposed change is intended to reduce the compliance burden on TPHs by providing them with functionality that allows for automatic input and notification 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 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 20 and Rule 19b– 4(f)(6) thereunder.21 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 22 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 23 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 asked the Commission to waive the 30-day 20 15 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. 22 17 CFR 240.19b–4(f)(6). 23 17 CFR 240.19b–4(f)(6)(iii). 21 17 PO 00000 Frm 00188 Fmt 4703 Sfmt 4703 51695 operative delay. The Exchange believes that waiver of the operative delay is consistent with the protection of investors and the public interest because, as the Exchange discussed above, its proposal complements its recent filing, SR–CBOE–2019–056, in which it conformed the rule governing the Clearing Editor to that of C2 but inadvertently omitted from that proposal current Cboe-specific provisions that the Exchange wishes to maintain post migration. Accordingly, its proposal is designed to preserve current functionality in order to continue to permit TPHs to make certain post-execution changes after October 7, 2019 through the use of the Clearing Editor. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest because the proposal does not raise any new or novel issues, and waiver will allow the changes in this filing to align with the proposed amendments to Rule 6.6 that the Exchange adopted pursuant to SR–CBOE–2019–056, thereby minimizing disruptions to TPHs and their customers with respect to postexecution functionality and processes available on the Exchange. Therefore, the Commission hereby waives the operative delay and designates the proposal as operative upon filing.24 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 24 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). E:\FR\FM\30SEN1.SGM 30SEN1 51696 Federal Register / Vol. 84, No. 189 / Monday, September 30, 2019 / Notices • Send an email to rule-comments@ sec.gov. Please include File Number SR– CBOE–2019–062 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–CBOE–2019–062. 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–CBOE–2019–062 and should be submitted on or before October 21, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–21103 Filed 9–27–19; 8:45 am] khammond on DSKJM1Z7X2PROD with NOTICES BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon Written Request, Copies Available From: Securities and Exchange 25 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:16 Sep 27, 2019 Jkt 247001 Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736. Extension: Rule 10b–10, SEC File No. 270–389, OMB Control No. 3235–0444. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (‘‘PRA’’), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for approval of extension of the previously approved collection of information provided for in Rule 10b–10 (17 CFR 240.10b–10) under the Securities and Exchange Act of 1934 (15 U.S.C. 78a et seq.). Rule 10b–10 requires broker-dealers to convey specified information to customers regarding their securities transactions. This information includes the date and time of the transaction, the identity and number of shares bought or sold, and whether the broker-dealer acts as agent for the customer or as principal for its own account. Depending on whether the broker-dealer acts as agent or principal, Rule 10b–10 requires the disclosure of commissions, as well as mark-up and mark-down information. For transactions in debt securities, Rule 10b–10 requires the disclosure of redemption and yield information. Rule 10b–10 potentially applies to all of the approximately 3,750 firms registered with the Commission that effect transactions for or with customers. Based on information provided by registered broker-dealers to the Commission in FOCUS Reports, the Commission staff estimates that on average, registered broker-dealers process approximately 18,843,624,843 order tickets per year for transactions for or with customers. Each order ticket representing a transaction effected for or with a customer generally results in one confirmation. Therefore, the Commission staff estimates that approximately 18,843,624,843 confirmations are sent to customers annually. The confirmations required by Rule 10b–10 are generally processed through automated systems. It takes approximately 30 seconds to generate and send a confirmation. Accordingly, the Commission staff estimates that broker-dealers spend approximately 157,030,207 hours per year complying with Rule 10b–10 (18,843,624,843 × .5 ÷ 60). The amount of confirmations sent and the cost of sending each confirmation varies from firm to firm. Smaller firms generally send fewer confirmations than larger firms because they effect fewer transactions. The Commission staff PO 00000 Frm 00189 Fmt 4703 Sfmt 4703 estimates the costs of producing and sending a paper confirmation, including postage, to be approximately 63 cents. The Commission staff also estimates that the cost of producing and sending a wholly electronic confirmation is approximately 39 cents. Based on informal discussions with industry participants, as well as representations made in requests for exemptive and noaction letters relating to Rule 10b–10, the staff estimates that broker-dealers used electronic confirmations for approximately 35 percent of transactions. Based on these calculations, Commission staff estimates that 12,248,356,148 paper confirmations are mailed each year at a cost of $7,716,464,373. Commission staff also estimates that 6,595,268,695 wholly electronic confirmations are sent each year at a cost of $2,572,154,791. Accordingly, Commission staff estimates that the total annual cost associated with generating and delivering to investors the information required under Rule 10b–10 would be $10,288,619,164. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Lindsay.M.Abate@omb.eop.gov; and (ii) Charles Riddle, Acting Director/Chief Information Officer, Securities and Exchange Commission, c/o Candace Kenner, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: September 24, 2019. Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–21083 Filed 9–27–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meetings Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public TIME AND DATE: E:\FR\FM\30SEN1.SGM 30SEN1

Agencies

[Federal Register Volume 84, Number 189 (Monday, September 30, 2019)]
[Notices]
[Pages 51693-51696]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21103]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87079; File No. SR-CBOE-2019-062]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Certain Clearing Editor Functionality in Rule 6.6 of the Shell Rulebook

September 24, 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 September 18, 2019, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend certain Clearing Editor functionality in Rule 6.6 of the shell 
Rulebook.
    The text of the proposed rule change is also available on the 
Exchange's website (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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
    On September 5, 2019, the Exchange filed a rule filing, SR-CBOE-
2019-056, which, amended Exchange Rules in connection with the Cboe 
Trading Match System (``CTM'').\5\ Pursuant to SR-CBOE-2019-056, which 
will be effective on October 7, 2019, the Exchange proposed to 
harmonize current Rule 6.67, in connection with the CTM, with C2 Rule 
6.31, which provides for the ``Clearing Editor'' and is functionally 
equivalent to the Exchange's current CTM. Under SR-CBOE-2019-056, Rule 
6.6 in the shell Rulebook will govern the Exchange's Clearing Editor 
and Rule 6.67 will be deleted from the current Rulebook, upon 
migration.\6\ SR-CBOE-2019-056

[[Page 51694]]

intended to amend the rule to conform to the Clearing Editor 
functionality and rule language of that of C2 to the extent necessary 
to retain intended differences unique to Cboe Options market-model, 
functionality, and/or rule text. However, the Exchange now proposes to 
update Rule 6.6 in the shell Rulebook to describe additional 
functionality that is unique to the Exchange that was inadvertently not 
included in that previously filing. In order to coincide with the 
effective date of SR-CBOE-2019-056 and the migration of the Exchange's 
trading platform to the same system used by the Cboe Affiliated 
Exchanges,\7\ the Exchange also intends to implement this proposed rule 
change on October 7, 2019.
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    \5\ See Securities Exchange Act Release No. 86920 (September 10, 
2019) (Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change Relating to the Cboe Trade Match System) (SR-CBOE-2019-
056).
    \6\ Cboe Options intends to migrate its trading platform to the 
same system used by the Cboe Affiliated Exchanges (i.e., together 
with Cboe Options, C2 Exchange, Inc. (``C2''), Cboe EDGA Exchange, 
Inc. (``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX'' or ``EDGX 
Options''), Cboe BZX Exchange, Inc. (``BZX'' or ``BZX Options''), 
and Cboe BYX Exchange, Inc. (``BYX'')) which the Exchange expects to 
complete on October 7, 2019. In connection with this technology 
migration, the Exchange has a shell Rulebook that resides alongside 
its current Rulebook, which shell Rulebook will contain the Rules 
that will be in place upon completion of the Cboe Options technology 
migration.
    \7\ See id.
---------------------------------------------------------------------------

    In particular, the Exchange inadvertently removed paragraph (b) 
under current Rule 6.67, which currently applies to both trades 
executed electronically and in open outcry, which is unique to Cboe 
Options, and will continue to apply to trades executed in open outcry 
upon migration. Specifically, current Rule 6.67(b) permits Trading 
Permit Holders (``TPHs'') to change certain fields in CTM (Clearing 
Editor, as proposed), including series, quantity, buy or sell, and 
premium price, only if they provide notice to the Exchange. While the 
Exchange notes the removal this provision as it relates to trades 
executed electronically and in conformity with C2 Rule 6.31 is 
accurate, it will continue to apply to open outcry trades post-
migration. Therefore, the Exchange now proposes to amend Rule 6.6 in 
the shell Rulebook and add Rule 6.6(d), which is substantively the same 
as current Rule 6.67(b) that was inadvertently removed under SR-CBOE-
2019-056. Specifically, proposed Rule 6.6(d) states that, in addition 
to the fields listed in paragraph (b), Trading Permit Holders may 
change the following fields through the Clearing Editor for trades 
executed in open outcry: (1) Series, (2) Quantity, (3) Buy or Sell; or 
(4) Price. Each of these changes must be accompanied by a Reason Code. 
Notification of changes made pursuant to this paragraph (d) will 
automatically be sent to the Exchange with the submission of the 
changes through the Clearing Editor. The proposed rule change updates 
the language to make it explicit that proposed Rule 6.6(d) applies only 
to trades executed in open outcry. It also updates the term premium 
price to price and Customer ID (in Rule 6.6(a)) to Client Order ID, as 
these terms more accurately reflect the names of the fields that are 
displayed on an order \8\ and in the Clearing Editor, as well as the 
term origin code to Capacity code, which is in line with the language 
in Rule 6.6 and definition currently in the shell Rulebook.\9\ The 
current rule provides that notification of the change shall be made as 
soon as practicable, but no later than 15 minutes after the change has 
been made. The proposed rule change does not incorporate this language 
because, upon migration, the Exchange will automatically receive 
notification of changes to the fields listed under proposed Rule 6.6(d) 
when a TPH submits changes through use of the Clearing Editor. The 
automatic notification will include a Reason Code associated with each 
change in which a TPH will be prompted to provide in the Clearing 
Editor when making changes pursuant to proposed Rule 6.6(d).\10\ 
Therefore, the Exchange notes that the proposed rule does not 
substantively alter the notification requirement attached to proposed 
Rule 6.6(d), but only updates it to accurately reflect the manner in 
which notice will automatically be submitted to the Exchange through 
use of the Clearing Editor.
---------------------------------------------------------------------------

    \8\ See Cboe Options FIX Specifications, available at: https://cdn.cboe.com/resources/membership/US_Options_FIX_Specification.pdf.
    \9\ See Rule 1.1 in the shell Rulebook.
    \10\ Example Reason Codes include: Input Error; Unmatched Trade; 
Unknown; Manual Add; Other Text Required; Trade Nullification; Trade 
Adjustment; Error Account; and System Issue.
---------------------------------------------------------------------------

    In addition, the proposed rule change adds certain Cboe Options-
specific fields to the list of fields that do not require a reason code 
under proposed Rule 6.6(b). The Exchange now proposes to incorporate 
Strategy ID,\11\ Frequent Trader ID,\12\ Compression Trade ID,\13\ and 
ORS ID \14\ to the list of fields that a TPH may change through the 
Clearing Editor (for both trades executed electronically and in open 
outcry) without notice to the Exchange. These fields are unique to 
orders executed on Cboe Options \15\ and TPHs currently submit all 
updates to such fields to the Exchange populated via a form post-
execution today.\16\ Upon migration, the Exchange functionality will 
allow for automated entry for these fields, just like all other order 
fields. Therefore, the proposed amendment merely intends to make it 
explicit that TPHs may continue to submit updates to these fields post-
execution. The Exchange also proposes to clarify that a TPH may make a 
change from a Capacity code (C) to any other Capacity code only if the 
change is accompanied by a Reason Code and, like proposed paragraph 
(d), makes it explicit that notice of such change will automatically be 
sent to the Exchange with the submission of the change through the 
Clearing Editor. This is substantially the same manner in which current 
Rule 6.67 functions, where both Rule 6.67(a) and (b) are applicable to 
trades executed electronically and on open outcry (therefore, changing 
a customer Capacity code is permissible under current Rule 6.67 for all 
trades executed if notification is provided to the Exchange). The 
Exchange proposes to maintain that a TPH may change the Capacity code 
from a customer Capacity code to any other Capacity code for trades 
executed electronically or in open outcry, however, it still must 
provide notification to the Exchange via a prompted Reason Code and, 
like changes made pursuant to proposed paragraph (d), will 
automatically provide such notification to the Exchange when the change 
is submitted through the Clearing Editor.
---------------------------------------------------------------------------

    \11\ Strategy ID indicates whether an order qualifies for 
certain treatment for various strategies provided under the 
Exchange's Fees Schedule. See Cboe Exchange, Inc. Fees Schedule (for 
example, footnote 13).
    \12\ Frequent Trader ID is a unique identification number which 
can be appended by executing agents to orders submitted to the 
Exchange on behalf of those customers registered for the Frequent 
Trader Program. See Cboe Exchange, Inc. Fees Schedule, ``Frequent 
Trader Program'' Table.
    \13\ Compression Trader ID indicates whether an order qualifies 
for certain treatment in connection with facilitating a compression 
of options positions. See Cboe Exchange, Inc. Fees Schedule, 
footnote 41.
    \14\ ORS ID indicates whether an order qualifies for certain 
treatment under the ORS Program. See Cboe Options Exchange, Inc. 
Fees Schedule, ``Order Router Subsidy Program'' Table.
    \15\ See supra note 8.
    \16\ The Exchange notes that TPHs may currently update Frequent 
Trader ID via CTM. See Securities Exchange Act Release No. 86617 
(August 9, 2019), 84 FR 41776 (August 15, 2019) Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the 
Ability To Submit Frequent Trader Forms (SR-CBOE-2019-043).
---------------------------------------------------------------------------

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.\17\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \18\ 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

[[Page 51695]]

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) \19\ requirement that the rules of an exchange not be designed 
to permit unfair discrimination between customers, issuers, brokers, or 
dealers.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ Id.
---------------------------------------------------------------------------

    The proposed rule change is substantively the same as the manner in 
which the CTM rules and post-execution functionality and/or processes 
work today. The proposed change merely amends the rule proposed under 
SR-CBOE-2019-056 to permit changes in certain fields that TPHs are 
already permitted to change through the Clearing Editor or other post-
execution forms. The proposed change is intended to correct an 
inadvertent omission from Rule 6.6 in the shell Rulebook of a provision 
from Rule 6.67 in the current Rulebook that currently applies to open 
outcry executions, and will continue to apply to open outcry executions 
upon migration. Likewise, the Exchange notes that TPHs may currently 
update fields that require notification for trades executed in open 
outcry and make changes made from customer Capacity code (C), with the 
same requisite notice. Therefore, the proposed change does not alter 
the manner in which the current rule functions but instead removes 
impediments to and perfects the mechanism of a free and open market and 
national market system by continuing to allow for these functions, 
along with automatic notification containing reason codes transmitted 
to the Exchange through submission of the changes in the Clearing 
Editor, upon migration. Additionally, the Exchange notes that the 
proposed amendment to add certain fields for which updates do not 
require notification to the rule will remove impediments to and perfect 
the mechanism of a free and open market and national market system 
because TPHs may already submit updates to these fields (in paper form) 
post-execution and the rule is designed to continue to allow TPHs to 
make such updates post-execution in electronic form upon migration.

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

    The Exchange does not believe that the proposed change will impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed amendment merely 
updates Rule 6.6 in the shell Rulebook to continue to allow for certain 
post-execution changes, which are currently permitted on the Exchange, 
through the use of the Clearing Editor after October 7, 2019. The 
Exchange notes that all proposed changes and current changes made 
pursuant to Rule 6.6 occur post-execution, therefore will not have any 
impact on trading. As the same post-execution changes are already 
permitted and made via processes and functionality currently in place 
on the Exchange, the Exchange believes this proposed filing to allow 
for the continuation of the same post-execution changes through use of 
the Clearing Editor will have no impact on competition. The Exchange 
also notes that the proposed change is intended to reduce the 
compliance burden on TPHs by providing them with functionality that 
allows for automatic input and notification 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 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 \20\ and Rule 19b-
4(f)(6) thereunder.\21\
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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 \22\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \23\ 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 asked the Commission to waive the 30-day operative delay. The 
Exchange believes that waiver of the operative delay is consistent with 
the protection of investors and the public interest because, as the 
Exchange discussed above, its proposal complements its recent filing, 
SR-CBOE-2019-056, in which it conformed the rule governing the Clearing 
Editor to that of C2 but inadvertently omitted from that proposal 
current Cboe-specific provisions that the Exchange wishes to maintain 
post migration. Accordingly, its proposal is designed to preserve 
current functionality in order to continue to permit TPHs to make 
certain post-execution changes after October 7, 2019 through the use of 
the Clearing Editor. The Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest because the proposal does not raise any new or novel 
issues, and waiver will allow the changes in this filing to align with 
the proposed amendments to Rule 6.6 that the Exchange adopted pursuant 
to SR-CBOE-2019-056, thereby minimizing disruptions to TPHs and their 
customers with respect to post-execution functionality and processes 
available on the Exchange. Therefore, the Commission hereby waives the 
operative delay and designates the proposal as operative upon 
filing.\24\
---------------------------------------------------------------------------

    \22\ 17 CFR 240.19b-4(f)(6).
    \23\ 17 CFR 240.19b-4(f)(6)(iii).
    \24\ 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).
---------------------------------------------------------------------------

    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

[[Page 51696]]

     Send an email to [email protected]. Please include 
File Number SR-CBOE-2019-062 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-CBOE-2019-062. 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-CBOE-2019-062 and should be submitted on 
or before October 21, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-21103 Filed 9-27-19; 8:45 am]
BILLING CODE 8011-01-P
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