Justia Agencies And Commissions Securities And Exchange Commission Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make Minor Updates and Consolidate Various Exchange Rules in Connection With Trading Permit Holder Registration and With Doing Business With the Public, and Move Those Rules From the Currently Effective Rulebook to Proposed Chapter 9 and, in Part, Chapter 3 of the Shell Structure for the Exchange's Rulebook That Will Become Effective Upon the Migration of the Exchange's Trading Platform to the Same System Used by the Cboe Affiliated Exchanges, 54704-54707 [2019-22139]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make Minor Updates and Consolidate Various Exchange Rules in Connection With Trading Permit Holder Registration and With Doing Business With the Public, and Move Those Rules From the Currently Effective Rulebook to Proposed Chapter 9 and, in Part, Chapter 3 of the Shell Structure for the Exchange's Rulebook That Will Become Effective Upon the Migration of the Exchange's Trading Platform to the Same System Used by the Cboe Affiliated Exchanges, 54704-54707 [2019-22139]

Download as PDF 54704 Federal Register / Vol. 84, No. 197 / Thursday, October 10, 2019 / Notices 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. submissions should refer to File Number SR–CBOE–2019–070, and should be submitted on or before October 31, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Jill M. Peterson, Assistant Secretary. 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: [FR Doc. 2019–22146 Filed 10–9–19; 8:45 am] 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– CBOE–2019–070 on the subject line. Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make Minor Updates and Consolidate Various Exchange Rules in Connection With Trading Permit Holder Registration and With Doing Business With the Public, and Move Those Rules From the Currently Effective Rulebook to Proposed Chapter 9 and, in Part, Chapter 3 of the Shell Structure for the Exchange’s Rulebook That Will Become Effective Upon the Migration of the Exchange’s Trading Platform to the Same System Used by the Cboe Affiliated Exchanges 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–2019–070. 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 such 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 VerDate Sep<11>2014 19:50 Oct 09, 2019 Jkt 250001 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–87229; File No. SR–CBOE– 2019–088] October 4, 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 October 3, 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 ‘‘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 Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) proposes to make minor updates and consolidate various Exchange Rules in connection with 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 1 15 PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 Trading Permit Holder (‘‘TPH’’) registration and with doing business with the public, and move those Rules from the currently effective Rulebook (‘‘current Rulebook’’) to proposed Chapter 9 and, in part, Chapter 3 of the shell structure for the Exchange’s Rulebook that will become effective upon the migration of the Exchange’s trading platform to the same system used by the Cboe Affiliated Exchanges (as defined below) (‘‘shell Rulebook’’). 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://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 In 2016, the Exchange’s parent company, Cboe Global Markets, Inc. (formerly named CBOE Holdings, Inc.) (‘‘Cboe Global’’), which is also the parent company of Cboe C2 Exchange, Inc. (‘‘C2’’), acquired 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’’ and, together with Cboe Options, C2, EDGX, EDGA, and BZX, the ‘‘Cboe Affiliated Exchanges’’). The Cboe Affiliated Exchanges are working to align certain system functionality, retaining only intended differences, between the Cboe Affiliated Exchanges, in the context of a technology migration. Cboe Options intends to migrate its trading platform to the same system used by the Cboe Affiliated Exchanges, which the Exchange expects to complete on E:\FR\FM\10OCN1.SGM 10OCN1 Federal Register / Vol. 84, No. 197 / Thursday, October 10, 2019 / Notices 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. The Exchange proposes to consolidate current Chapter 9 in connection with doing business with the public and TPH registration into proposed Chapter 9 (Doing Business With the Public), as well as proposed Section B of Chapter 3 (TPH Registration), in the shell Rulebook. The Exchange notes that in addition to consolidating and moving the various rules related to doing 54705 business with the public to proposed Chapter 9 and those related to TPH registration to proposed Section B of Chapter 3, the proposed rule change deletes the rules from the current Rulebook. The proposed rule change moves and, where applicable, consolidates the rules as follows: Shell rule Current rule Chapter 3. TPH Membership, Registration, and Participants Section B. TPH Registration 3.33 Continuing Education for Registered Persons: 3.33(a)–(c) ......................................................................................... 3.33(d) ............................................................................................... 3.33(e) ............................................................................................... 3.33(f) ................................................................................................ 3.33(g) ............................................................................................... 3.35 Exchange Approval ........................................................................ 3.36 Registration of Options Principals: 3.36(a) ............................................................................................... 3.36(b) ............................................................................................... 3.36(c) ............................................................................................... 3.37 Registration and Termination of Representatives: 3.37(a)–(c) ......................................................................................... 3.37(d) ............................................................................................... 3.37(e) ............................................................................................... 3.38 Other Affiliations of Registered Associated Persons ..................... 3.39 Discipline, Suspension, Expulsion of Registered Persons ............ 3.40 Branch Offices of TPH Organizations: 3.40(a)–(b) ......................................................................................... 3.40(c)–(g) ......................................................................................... 9.3A Continuing Education for Registered Persons. 9.3A.01. 9.3A.02. 9.3A.03. 9.3A.04. 9.1 Exchange Approval; 21.19A Doing Business with the Public (government securities options, provision in connection with Rule 9.1). 9.2 Registration of Options Principals; 21.19A Doing Business with the Public (government securities options, provision in connection with Rule 9.2). 9.2.01. 9.2.02. 9.3 Registration and Termination of Representatives. 9.3.01. 9.2.02. 9.4 Other Affiliations of Registered Associated Persons. 9.5 Discipline, Suspension, Expulsion of Registered Persons. 9.6 Branch Offices of TPH Organizations. 9.6.01. Chapter 9. Doing Business With the Public 9.1 9.2 Opening of Accounts: 9.1(a)–(f) ............................................................................................ 9.1(b)(1) ............................................................................................. 9.1(b)(2) ............................................................................................. 9.1(c) last sentence in paragraph ..................................................... 9.1(g) ................................................................................................. 9.1(h) ................................................................................................. Supervision of Accounts: 9.2(a)–(h) ........................................................................................... 9.2(g), included as last sentence ...................................................... 9.2(i)–(j) ............................................................................................. 9.2(k) ................................................................................................. Suitability of Recommendations: 9.3(a)–(b) ........................................................................................... 9.3(c) ................................................................................................. 9.4 Discretionary Accounts: 9.4(a)–(e) ........................................................................................... 9.4(f) .................................................................................................. 9.5 Confirmation to Customers .............................................................. 9.6 Statements of Accounts to Customers: 9.6(a) ................................................................................................. 9.6(b) ................................................................................................. 9.7 Statements of Financial Condition to Customers ............................ 9.8 Addressing of Communications to Customers ................................ 9.9 Delivery of Current Options Disclosure Documents ........................ 9.10 Restrictions on Pledge and Lending of Customers’ Securities ..... 9.11 Transactions of Certain Customers ............................................... 9.12 Prohibition Against Guarantees and Sharing in Accounts ............ 9.13 Assuming Losses ........................................................................... 9.14 Transfer of Accounts: 9.14(a)–(g) ......................................................................................... 9.14(h)–(i) .......................................................................................... 9.7 Opening of Accounts. 9.7.01. 9.7.02. 9.7.03. 9.7.04. 21.19A Doing Business with the Public (government securities options, provision in connection with Rule 9.7). 9.8 Supervision of Accounts. 9.8.03. 9.8.01–.02. 21.19A Doing Business with the Public (government securities options, provision in connection with Rule 9.8). 9.3 VerDate Sep<11>2014 19:50 Oct 09, 2019 Jkt 250001 PO 00000 Frm 00121 Fmt 4703 9.9 Suitability of Recommendations. 9.9.01. 9.10 Discretionary Accounts. 9.10.01. 9.11 Confirmation to Customers. 9.12 Statements of Accounts to Customers. 9.12.01. 9.13 Statements of Financial Condition to Customers. 9.14 Addressing of Communications to Customers. 9.15 Delivery of Current Options Disclosure Documents. 9.16 Restrictions on Pledge and Lending of Customers’ Securities. 9.17 Transactions of Certain Customers. 9.18 Prohibition Against Guarantees and Sharing in Accounts. 9.19 Assuming Losses. 9.20 Transfer of Accounts. 9.20.01–.02. Sfmt 4703 E:\FR\FM\10OCN1.SGM 10OCN1 54706 Federal Register / Vol. 84, No. 197 / Thursday, October 10, 2019 / Notices Shell rule Current rule 9.15 Options Communications: 9.15(a)–(e) ......................................................................................... 9.15(e)(3) ........................................................................................... 9.15(f) ................................................................................................ 9.15(g) ............................................................................................... 9.15(h) ............................................................................................... 9.16 Brokers’ Blanket Bonds ................................................................. 9.16(a) ............................................................................................... 9.16(b) ............................................................................................... 9.16(c) ............................................................................................... 9.16(d) ............................................................................................... 9.16(e) ............................................................................................... 9.17 Customer Complaints .................................................................... 9.18 Telemarketing: 9.18(a)–(n) ......................................................................................... 9.18(o) ............................................................................................... 9.19 Borrowing From or Lending to Customers .................................... The proposed rule changes make only non-substantive changes to the rules in order to update headings that better flow with the consolidated rules, update cross-references to other rule text that will be implemented upon migration, update certain technical text formatting that will be used in the Rules upon migration (e.g., using words for numbers below 10 in the text and numerals for numbers above 10 in the text), incorporate defined terms, and reformat the paragraph lettering and numbering. The proposed change removes an expired clause under current Rule 9.3A(a)(3) (proposed Rule 3.33(a)(3)) which currently states that, until January 4, 2016, the Exchange will offer the S501 Series 56 Proprietary Trader Continuing Education Program for Series 56 registered persons, and the S101 General Program for Series 7, Series 57, and all other registered persons. The proposed rule also makes non-substantive changes in connection with removing a redundant rule. The proposed rule change removes Rule 28.13 which states that the rules in Chapter 9 have a parallel application to Corporate Debt Security options, as this is redundant of the Chapter itself and its applicability to all options trading on the Exchange. It also removes the language under current Rule 21.19A regarding current Rule 9.15, which states that Rule 9.15 requires delivery of the current options disclosure document, because this is redundant of Rule 9.15 itself. 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 VerDate Sep<11>2014 19:50 Oct 09, 2019 Jkt 250001 9.21 Options Communications. 9.21.01. 9.21.02. 9.21.03. 9.21.04. 9.22 Brokers’ Blanket Bonds, and introductory language to 9.22.01. 9.22.01(a). 9.22.01(b). 9.22.01(c). 9.22.01(d). 9.22.01(e). 9.23 Customer Complaints. 9.24 Telemarketing. 9.24.01–.02. 9.25 Borrowing from or Lending to Customers. Section 6(b) of the Act.5 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 6 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) 7 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The proposed rule change does not make any substantive changes to the rules and is merely intended to consolidate, reorganize, and make nonsubstantive updates to the Exchange’s rules in anticipation of the technology migration on October 7, 2019. The Exchange believes that the nonsubstantive proposed changes, which update technical text and formatting (e.g., paragraph headings and numberrelated references), update rule crossreferences, consolidate and reorganize rules and rule paragraphs and/or Interpretations and Policies, and remove an expired clause and a redundant rule that is integrally provided for in the Chapter in which it references, will foster cooperation and coordination with those facilitating transactions in securities and remove impediments to and perfect the mechanism of a free and 5 15 6 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). open market and national market system by simplifying the Exchange Rules and Rulebook as a whole, and making its Rules easier to follow and understand, which will also result in less burdensome and more efficient regulatory compliance. 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 reiterates that the proposed rule change is being proposed in the context of a technology migration of the Cboe Affiliated Exchanges, and not as a competitive filing. The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition because it does not make any substantive changes to the current Exchange Rules. The proposed rule change merely intends to provide consolidated rules upon migration and are consistent with the technical text and formatting in the shell Rulebook that will be in place come October 7, 2019. The Exchange does not believe that the proposed rule change will impose any burden on intermarket competition because the proposed rules are the same as the Exchange’s current rules, all of which have all been previously filed with the Commission. 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. 7 Id. PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 E:\FR\FM\10OCN1.SGM 10OCN1 Federal Register / Vol. 84, No. 197 / Thursday, October 10, 2019 / Notices 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 8 and Rule 19b– 4(f)(6) thereunder.9 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 10 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 11 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 so that the Exchange may implement the proposed rule change at the time of its anticipated October 7, 2019 system migration. The Exchange believes that waiver of the operative delay is appropriate because, as the Exchange discussed above, its proposal does not make any substantive changes to the Exchange’s rules. 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 makes only non-substantive changes to the rules. Therefore, the Commission hereby waives the operative delay and designates the proposal as operative upon filing.12 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 8 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. 10 17 CFR 240.19b–4(f)(6). 11 17 CFR 240.19b–4(f)(6)(iii). 12 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). 9 17 VerDate Sep<11>2014 19:50 Oct 09, 2019 Jkt 250001 Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments 54707 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–22139 Filed 10–9–19; 8:45 am] 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 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–87223; File No. SR– NYSEArca–2019–55] • 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– CBOE–2019–088 on the subject line. Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change To Amend NYSE Arca Rule 8.700–E and To List and Trade Shares of the Dynamic Short Short-Term Volatility Futures ETF Paper Comments October 4, 2019. • 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–2019–088. 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–2019–088 and should be submitted on or before October 31, 2019. I. Introduction On August 7, 2019, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposal to: (1) Amend NYSE Arca Rule 8.700–E to add futures contracts and swaps on the Cboe Volatility Index (‘‘VIX’’ or ‘‘VIX Index’’) to the financial instruments that an issue of Managed Trust Securities 3 may hold; and (2) to list and trade shares (‘‘Shares’’) of the Dynamic Short ShortTerm Volatility Futures ETF (‘‘Fund’’), a PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 13 17 CFR 200.30–3(a)(12). U.S.C.78s(b)(1). 2 17 CFR 240.19b–4. 3 Managed Trust Security means a security that is registered under the Securities Act of 1933 (15 U.S.C. 77a), as amended (the ‘‘Securities Act’’), and (i) is issued by a trust (‘‘Trust’’), or any series thereof, that (1) is a commodity pool as defined in the Commodity Exchange Act and regulations thereunder, is not registered or required to be registered as an investment company under the Investment Company Act of 1940, as amended, and is managed by a commodity pool operator registered with the Commodity Futures Trading Commission, and (2) holds long and/or short positions in exchange-traded futures contracts and/ or certain currency forward contracts and/or swaps selected by the Trust’s advisor consistent with the Trust’s investment objectives, which will only include exchange-traded futures contracts involving commodities, commodity indices, currencies, currency indices, stock indices, the EURO STOXX 50 Volatility Index (VSTOXX), fixed income indices, interest rates and sovereign, private and mortgage or asset backed debt instruments, and/or forward contracts on specified currencies, and/or swaps on stock indices, fixed income indices, commodity indices, VSTOXX, commodities, currencies, currency indices, or interest rates, each as disclosed in the Trust’s prospectus as such may be amended from time to time, and cash and cash equivalents; and (ii) is issued and redeemed continuously in specified aggregate amounts at the next applicable net asset value. See NYSE Arca Rule 8.700–E(c)(1). 1 15 E:\FR\FM\10OCN1.SGM 10OCN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 84, Number 197 (Thursday, October 10, 2019)]
[Notices]
[Pages 54704-54707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22139]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87229; File No. SR-CBOE-2019-088]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Make 
Minor Updates and Consolidate Various Exchange Rules in Connection With 
Trading Permit Holder Registration and With Doing Business With the 
Public, and Move Those Rules From the Currently Effective Rulebook to 
Proposed Chapter 9 and, in Part, Chapter 3 of the Shell Structure for 
the Exchange's Rulebook That Will Become Effective Upon the Migration 
of the Exchange's Trading Platform to the Same System Used by the Cboe 
Affiliated Exchanges

October 4, 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 October 3, 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.
---------------------------------------------------------------------------

    \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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to make minor updates and consolidate various Exchange Rules in 
connection with Trading Permit Holder (``TPH'') registration and with 
doing business with the public, and move those Rules from the currently 
effective Rulebook (``current Rulebook'') to proposed Chapter 9 and, in 
part, Chapter 3 of the shell structure for the Exchange's Rulebook that 
will become effective upon the migration of the Exchange's trading 
platform to the same system used by the Cboe Affiliated Exchanges (as 
defined below) (``shell Rulebook''). 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://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
    In 2016, the Exchange's parent company, Cboe Global Markets, Inc. 
(formerly named CBOE Holdings, Inc.) (``Cboe Global''), which is also 
the parent company of Cboe C2 Exchange, Inc. (``C2''), acquired 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'' and, together with 
Cboe Options, C2, EDGX, EDGA, and BZX, the ``Cboe Affiliated 
Exchanges''). The Cboe Affiliated Exchanges are working to align 
certain system functionality, retaining only intended differences, 
between the Cboe Affiliated Exchanges, in the context of a technology 
migration. Cboe Options intends to migrate its trading platform to the 
same system used by the Cboe Affiliated Exchanges, which the Exchange 
expects to complete on

[[Page 54705]]

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.
    The Exchange proposes to consolidate current Chapter 9 in 
connection with doing business with the public and TPH registration 
into proposed Chapter 9 (Doing Business With the Public), as well as 
proposed Section B of Chapter 3 (TPH Registration), in the shell 
Rulebook. The Exchange notes that in addition to consolidating and 
moving the various rules related to doing business with the public to 
proposed Chapter 9 and those related to TPH registration to proposed 
Section B of Chapter 3, the proposed rule change deletes the rules from 
the current Rulebook. The proposed rule change moves and, where 
applicable, consolidates the rules as follows:

------------------------------------------------------------------------
               Shell rule                          Current rule
------------------------------------------------------------------------
        Chapter 3. TPH Membership, Registration, and Participants
                       Section B. TPH Registration
------------------------------------------------------------------------
3.33 Continuing Education for
 Registered Persons:
    3.33(a)-(c)........................  9.3A Continuing Education for
                                          Registered Persons.
    3.33(d)............................  9.3A.01.
    3.33(e)............................  9.3A.02.
    3.33(f)............................  9.3A.03.
    3.33(g)............................  9.3A.04.
3.35 Exchange Approval.................  9.1 Exchange Approval; 21.19A
                                          Doing Business with the Public
                                          (government securities
                                          options, provision in
                                          connection with Rule 9.1).
3.36 Registration of Options
 Principals:
    3.36(a)............................  9.2 Registration of Options
                                          Principals; 21.19A Doing
                                          Business with the Public
                                          (government securities
                                          options, provision in
                                          connection with Rule 9.2).
    3.36(b)............................  9.2.01.
    3.36(c)............................  9.2.02.
3.37 Registration and Termination of
 Representatives:
    3.37(a)-(c)........................  9.3 Registration and
                                          Termination of
                                          Representatives.
    3.37(d)............................  9.3.01.
    3.37(e)............................  9.2.02.
3.38 Other Affiliations of Registered    9.4 Other Affiliations of
 Associated Persons.                      Registered Associated Persons.
3.39 Discipline, Suspension, Expulsion   9.5 Discipline, Suspension,
 of Registered Persons.                   Expulsion of Registered
                                          Persons.
3.40 Branch Offices of TPH
 Organizations:
    3.40(a)-(b)........................  9.6 Branch Offices of TPH
                                          Organizations.
    3.40(c)-(g)........................  9.6.01.
------------------------------------------------------------------------
                Chapter 9. Doing Business With the Public
------------------------------------------------------------------------
9.1 Opening of Accounts:
    9.1(a)-(f).........................  9.7 Opening of Accounts.
    9.1(b)(1)..........................  9.7.01.
    9.1(b)(2)..........................  9.7.02.
    9.1(c) last sentence in paragraph..  9.7.03.
    9.1(g).............................  9.7.04.
    9.1(h).............................  21.19A Doing Business with the
                                          Public (government securities
                                          options, provision in
                                          connection with Rule 9.7).
9.2 Supervision of Accounts:
    9.2(a)-(h).........................  9.8 Supervision of Accounts.
    9.2(g), included as last sentence..  9.8.03.
    9.2(i)-(j).........................  9.8.01-.02.
    9.2(k).............................  21.19A Doing Business with the
                                          Public (government securities
                                          options, provision in
                                          connection with Rule 9.8).
9.3 Suitability of Recommendations:
    9.3(a)-(b).........................  9.9 Suitability of
                                          Recommendations.
    9.3(c).............................  9.9.01.
9.4 Discretionary Accounts:
    9.4(a)-(e).........................  9.10 Discretionary Accounts.
    9.4(f).............................  9.10.01.
9.5 Confirmation to Customers..........  9.11 Confirmation to Customers.
9.6 Statements of Accounts to
 Customers:
    9.6(a).............................  9.12 Statements of Accounts to
                                          Customers.
    9.6(b).............................  9.12.01.
9.7 Statements of Financial Condition    9.13 Statements of Financial
 to Customers.                            Condition to Customers.
9.8 Addressing of Communications to      9.14 Addressing of
 Customers.                               Communications to Customers.
9.9 Delivery of Current Options          9.15 Delivery of Current
 Disclosure Documents.                    Options Disclosure Documents.
9.10 Restrictions on Pledge and Lending  9.16 Restrictions on Pledge and
 of Customers' Securities.                Lending of Customers'
                                          Securities.
9.11 Transactions of Certain Customers.  9.17 Transactions of Certain
                                          Customers.
9.12 Prohibition Against Guarantees and  9.18 Prohibition Against
 Sharing in Accounts.                     Guarantees and Sharing in
                                          Accounts.
9.13 Assuming Losses...................  9.19 Assuming Losses.
9.14 Transfer of Accounts:
    9.14(a)-(g)........................  9.20 Transfer of Accounts.
    9.14(h)-(i)........................  9.20.01-.02.

[[Page 54706]]

 
9.15 Options Communications:
    9.15(a)-(e)........................  9.21 Options Communications.
    9.15(e)(3).........................  9.21.01.
    9.15(f)............................  9.21.02.
    9.15(g)............................  9.21.03.
    9.15(h)............................  9.21.04.
9.16 Brokers' Blanket Bonds............  9.22 Brokers' Blanket Bonds,
                                          and introductory language to
                                          9.22.01.
    9.16(a)............................  9.22.01(a).
    9.16(b)............................  9.22.01(b).
    9.16(c)............................  9.22.01(c).
    9.16(d)............................  9.22.01(d).
    9.16(e)............................  9.22.01(e).
9.17 Customer Complaints...............  9.23 Customer Complaints.
9.18 Telemarketing:
    9.18(a)-(n)........................  9.24 Telemarketing.
    9.18(o)............................  9.24.01-.02.
9.19 Borrowing From or Lending to        9.25 Borrowing from or Lending
 Customers.                               to Customers.
------------------------------------------------------------------------

    The proposed rule changes make only non-substantive changes to the 
rules in order to update headings that better flow with the 
consolidated rules, update cross-references to other rule text that 
will be implemented upon migration, update certain technical text 
formatting that will be used in the Rules upon migration (e.g., using 
words for numbers below 10 in the text and numerals for numbers above 
10 in the text), incorporate defined terms, and reformat the paragraph 
lettering and numbering. The proposed change removes an expired clause 
under current Rule 9.3A(a)(3) (proposed Rule 3.33(a)(3)) which 
currently states that, until January 4, 2016, the Exchange will offer 
the S501 Series 56 Proprietary Trader Continuing Education Program for 
Series 56 registered persons, and the S101 General Program for Series 
7, Series 57, and all other registered persons. The proposed rule also 
makes non-substantive changes in connection with removing a redundant 
rule. The proposed rule change removes Rule 28.13 which states that the 
rules in Chapter 9 have a parallel application to Corporate Debt 
Security options, as this is redundant of the Chapter itself and its 
applicability to all options trading on the Exchange. It also removes 
the language under current Rule 21.19A regarding current Rule 9.15, 
which states that Rule 9.15 requires delivery of the current options 
disclosure document, because this is redundant of Rule 9.15 itself.
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.\5\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \6\ 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) \7\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ Id.
---------------------------------------------------------------------------

    The proposed rule change does not make any substantive changes to 
the rules and is merely intended to consolidate, reorganize, and make 
non-substantive updates to the Exchange's rules in anticipation of the 
technology migration on October 7, 2019. The Exchange believes that the 
non-substantive proposed changes, which update technical text and 
formatting (e.g., paragraph headings and number-related references), 
update rule cross-references, consolidate and reorganize rules and rule 
paragraphs and/or Interpretations and Policies, and remove an expired 
clause and a redundant rule that is integrally provided for in the 
Chapter in which it references, will foster cooperation and 
coordination with those facilitating transactions in securities and 
remove impediments to and perfect the mechanism of a free and open 
market and national market system by simplifying the Exchange Rules and 
Rulebook as a whole, and making its Rules easier to follow and 
understand, which will also result in less burdensome and more 
efficient regulatory compliance.

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 reiterates that 
the proposed rule change is being proposed in the context of a 
technology migration of the Cboe Affiliated Exchanges, and not as a 
competitive filing. The Exchange does not believe that the proposed 
rule change will impose any burden on intramarket competition because 
it does not make any substantive changes to the current Exchange Rules. 
The proposed rule change merely intends to provide consolidated rules 
upon migration and are consistent with the technical text and 
formatting in the shell Rulebook that will be in place come October 7, 
2019. The Exchange does not believe that the proposed rule change will 
impose any burden on intermarket competition because the proposed rules 
are the same as the Exchange's current rules, all of which have all 
been previously filed with the Commission.

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.

[[Page 54707]]

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 \8\ and Rule 19b-
4(f)(6) thereunder.\9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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 \10\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ 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 so that 
the Exchange may implement the proposed rule change at the time of its 
anticipated October 7, 2019 system migration. The Exchange believes 
that waiver of the operative delay is appropriate because, as the 
Exchange discussed above, its proposal does not make any substantive 
changes to the Exchange's rules. 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 makes only non-substantive changes to the 
rules. Therefore, the Commission hereby waives the operative delay and 
designates the proposal as operative upon filing.\12\
---------------------------------------------------------------------------

    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ 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 will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CBOE-2019-088 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-2019-088. 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-2019-088 and should be submitted on 
or before October 31, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-22139 Filed 10-9-19; 8:45 am]
 BILLING CODE 8011-01-P

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