Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Certain Rules in Connection With Market-Makers in the Shell Rulebook, 54702-54704 [2019-22146]
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54702
Federal Register / Vol. 84, No. 197 / Thursday, October 10, 2019 / Notices
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–2019–067, 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
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–22149 Filed 10–9–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87228; File No. SR–CBOE–
2019–070]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Certain Rules
in Connection With Market-Makers in
the Shell Rulebook
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
September 26, 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 the Substance
of the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
certain rules in connection with MarketMakers in the shell Rulebook.
13 17
CFR 200.30–3(a)(12).
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).
1
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19:50 Oct 09, 2019
Jkt 250001
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 6, 2019, the Exchange
filed a rule filing, SR–CBOE–2019–059,5
operative upon the October 7, 2019
technology migration.6 This rule filing
amended the Exchange rules related to
its Market-Maker program, including
Market-Maker registration,
appointments, and obligations. Pursuant
to SR–CBOE–2019–059, the updated
Market-Maker rules reside in the
Exchange’s shell Rulebook, and, upon
migration, the rules in shell Rulebook
will take effect and the Market-Maker
rules in the currently effective Rulebook
will be deleted.7 Specifically, under SR–
CBOE–2019–059, Rule 5.50 will govern
appointment costs (or ‘‘weights’’, as
amended by SR–CBOE–2019–059) and
5 See Securities Exchange Act Release No. 87024
(September 19, 2019) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change
to Amend Certain Rules Relating To Market-Makers
Upon Migration to the Trading System Used by
Cboe Affiliated Exchanges) (SR–CBOE–2019–059).
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.
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Fmt 4703
Sfmt 4703
Rule 7.6 will govern the identification of
securities accounts of Market-Makers. In
SR–CBOE–2019–059, the Exchange
inadvertently neglected to update the
Global Trading Hours (‘‘GTH’’)
appointment weights in light of the
amended rules which will apply a
Market-Maker’s selected class
appointments across the entire trading
day (i.e., both GTH and Regular Trading
Hours (‘‘RTH’’)), and inadvertently
neglected to update some instances in
which the rules refer to appointment
costs. It also inadvertently did not
include language specific to Cboe
Options when conforming Rule 7.6 to
the corresponding rules of its affiliated
exchanges, C2, EDGX Options, and BZX
Options (collectively, the ‘‘Affiliated
Options Exchanges’’). The proposed
changes intended to remedy the
aforementioned are described in greater
detail below. In order to coincide with
the effective date of SR–CBOE–2019–
059 and the migration of the Exchange’s
trading platform to the same system
used by the Cboe Affiliated Exchanges,8
the Exchange also intends to implement
this proposed rule change on October 7,
2019.
In particular, SR–CBOE–2019–059
updated Rule 5.50(g) in the shell
Rulebook to reflect the manner in which
appointment weights will function upon
migration. SR–CBOE–2019–059 also
updated the rules to allow a MarketMaker to select class appointments that
will apply to classes during all trading
sessions beginning October 7, 2019.9 In
removing separate class appointments
between the two trading sessions, the
Exchange inadvertently failed to remove
the separate appointment weights for
options classes during GTH. Therefore,
the Exchange now proposes to remove
separate appointment weights for the
GTH trading session from the
appointment weight table under Rule
5.50(g). In addition to this, SR–CBOE–
2019–059 updated the term
appointment costs to appointment
weights, but inadvertently failed to
update all such references throughout
updated Rule 5.50(g). The Exchange
now proposes to update the remaining
references to appointment costs in Rule
5.50(g) to appointment weights.
SR–CBOE–2019–059 also conformed
Rule 7.6 in the shell Rulebook to the
corresponding rules of the Affiliated
Options Exchanges. Rule 7.6 governs the
identification of a Market-Maker’s
securities accounts. In conforming this
rule to the Affiliated Options
Exchanges’ corresponding rules, the
Exchange inadvertently did not
8 Id.
9 See
E:\FR\FM\10OCN1.SGM
Rule 5.50(a) in the shell Rulebook.
10OCN1
Federal Register / Vol. 84, No. 197 / Thursday, October 10, 2019 / Notices
maintain the language which provides
that, in a manner prescribed by the
Exchange, ‘‘upon request’’ each MarketMaker must file with the Exchange a list
identifying all accounts enumerated in
the same provision. This specification is
not currently in the corresponding rules
of the Affiliated Options Exchanges, but
the Exchange intends to maintain this
provision for post-migration. Therefore,
the Exchange now proposes to include
the existing language in currently
effective Rule 8.9 into shell Rule 7.6(a)
in order to continue this account
identification process for Market-Makers
post-migration. The proposed change to
include the Exchange request provision
will simply allow Market-Makers to
continue to identify accounts in the
manner to which they are accustomed
and currently adhere, instead of taking
on a potential additional compliance
burden in identifying all accounts to the
Exchange notwithstanding an Exchange
request.
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.10 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 11 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) 12 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The proposed rule change to remove
separate appointment weights for the
GTH trading session under Rule 5.50(g)
will foster cooperation and coordination
with persons facilitating transactions in
securities and remove impediments to
and perfect the mechanism of a free and
open market and a national market
system because it will mitigate any
10 15
11 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
12 Id.
VerDate Sep<11>2014
potential confusion for Market-Makers
upon migration when they will be able
to select class appointments that apply
to classes across all trading sessions.
The proposed change protects investors
by aligning the term appointment
weight and the appointment weight
table with the correct term that will be
used, and the class appointment process
that will be in place, post-migration.
Additionally, the proposed change to
incorporate the Cboe Options-specific
request language into the rule governing
identification of Market-Maker accounts
is substantively the same as the manner
in which the current account
identification process works today. The
proposed change is intended to correct
an inadvertent omission from Rule
7.6(a) in the shell Rulebook that
currently applies to Market-Makers and
does not alter the manner in which the
current rule functions. Instead, it will
remove impediments to and protect the
mechanism of a free and open market
and national market system by allowing
Market-Makers to continue to identify
accounts upon the request of the
Exchange, without taking on any
potential additional compliance burden
notwithstanding an Exchange request.
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 change is not intended as a
competitive filing, but merely aligns the
appointment weight table with the
appointment process that will be in
effect upon the October 7, 2019
migration. Additionally, the proposed
change amends the rules to continue to
allow for Market-Makers to identify
accounts upon Exchange request postmigration, consistent with the process
currently in place. The Exchange also
notes that, as stated above, the proposed
change is intended mitigate any
potential compliance burden on MarketMakers by continuing to allow for
account identification upon Exchange
request. The Exchange notes that neither
the GTH appointment weights (because
they will not be relevant to the postmigration class appointment structure
and just provides Market-Makers with
uniform quoting ability per appointment
across the trading day 13) nor the
account identification procedures have
any impact on trading on the Exchange.
13 See
19:50 Oct 09, 2019
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supra note 9.
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Fmt 4703
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54703
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 14 and Rule 19b–
4(f)(6) thereunder.15
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 16 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 17
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 this proposed rule
change to make additional changes to
conform to changes it recently adopted
in SR–CBOE–2019–059 and have both
sets of changes operative for its
anticipated October 7, 2019 system
migration. The Commission believes
that waiver of the operative delay is
consistent with the protection of
investors and the public interest
because the proposal does not raise any
new or novel issues. Therefore, the
Commission hereby waives the
operative delay and designates the
proposal as operative upon filing.18
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
14 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.
16 17 CFR 240.19b–4(f)(6).
17 17 CFR 240.19b–4(f)(6)(iii).
18 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).
15 17
E:\FR\FM\10OCN1.SGM
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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
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Agencies
[Federal Register Volume 84, Number 197 (Thursday, October 10, 2019)]
[Notices]
[Pages 54702-54704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22146]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87228; File No. SR-CBOE-2019-070]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Certain Rules in Connection With Market-Makers in the Shell Rulebook
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 September 26, 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 the
Substance of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend certain rules in connection with Market-Makers in 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 6, 2019, the Exchange filed a rule filing, SR-CBOE-
2019-059,\5\ operative upon the October 7, 2019 technology
migration.\6\ This rule filing amended the Exchange rules related to
its Market-Maker program, including Market-Maker registration,
appointments, and obligations. Pursuant to SR-CBOE-2019-059, the
updated Market-Maker rules reside in the Exchange's shell Rulebook,
and, upon migration, the rules in shell Rulebook will take effect and
the Market-Maker rules in the currently effective Rulebook will be
deleted.\7\ Specifically, under SR-CBOE-2019-059, Rule 5.50 will govern
appointment costs (or ``weights'', as amended by SR-CBOE-2019-059) and
Rule 7.6 will govern the identification of securities accounts of
Market-Makers. In SR-CBOE-2019-059, the Exchange inadvertently
neglected to update the Global Trading Hours (``GTH'') appointment
weights in light of the amended rules which will apply a Market-Maker's
selected class appointments across the entire trading day (i.e., both
GTH and Regular Trading Hours (``RTH'')), and inadvertently neglected
to update some instances in which the rules refer to appointment costs.
It also inadvertently did not include language specific to Cboe Options
when conforming Rule 7.6 to the corresponding rules of its affiliated
exchanges, C2, EDGX Options, and BZX Options (collectively, the
``Affiliated Options Exchanges''). The proposed changes intended to
remedy the aforementioned are described in greater detail below. In
order to coincide with the effective date of SR-CBOE-2019-059 and the
migration of the Exchange's trading platform to the same system used by
the Cboe Affiliated Exchanges,\8\ the Exchange also intends to
implement this proposed rule change on October 7, 2019.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 87024 (September 19,
2019) (Notice of Filing and Immediate Effectiveness of a Proposed
Rule Change to Amend Certain Rules Relating To Market-Makers Upon
Migration to the Trading System Used by Cboe Affiliated Exchanges)
(SR-CBOE-2019-059).
\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.
\8\ Id.
---------------------------------------------------------------------------
In particular, SR-CBOE-2019-059 updated Rule 5.50(g) in the shell
Rulebook to reflect the manner in which appointment weights will
function upon migration. SR-CBOE-2019-059 also updated the rules to
allow a Market-Maker to select class appointments that will apply to
classes during all trading sessions beginning October 7, 2019.\9\ In
removing separate class appointments between the two trading sessions,
the Exchange inadvertently failed to remove the separate appointment
weights for options classes during GTH. Therefore, the Exchange now
proposes to remove separate appointment weights for the GTH trading
session from the appointment weight table under Rule 5.50(g). In
addition to this, SR-CBOE-2019-059 updated the term appointment costs
to appointment weights, but inadvertently failed to update all such
references throughout updated Rule 5.50(g). The Exchange now proposes
to update the remaining references to appointment costs in Rule 5.50(g)
to appointment weights.
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\9\ See Rule 5.50(a) in the shell Rulebook.
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SR-CBOE-2019-059 also conformed Rule 7.6 in the shell Rulebook to
the corresponding rules of the Affiliated Options Exchanges. Rule 7.6
governs the identification of a Market-Maker's securities accounts. In
conforming this rule to the Affiliated Options Exchanges' corresponding
rules, the Exchange inadvertently did not
[[Page 54703]]
maintain the language which provides that, in a manner prescribed by
the Exchange, ``upon request'' each Market-Maker must file with the
Exchange a list identifying all accounts enumerated in the same
provision. This specification is not currently in the corresponding
rules of the Affiliated Options Exchanges, but the Exchange intends to
maintain this provision for post-migration. Therefore, the Exchange now
proposes to include the existing language in currently effective Rule
8.9 into shell Rule 7.6(a) in order to continue this account
identification process for Market-Makers post-migration. The proposed
change to include the Exchange request provision will simply allow
Market-Makers to continue to identify accounts in the manner to which
they are accustomed and currently adhere, instead of taking on a
potential additional compliance burden in identifying all accounts to
the Exchange notwithstanding an Exchange request.
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.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ 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) \12\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ Id.
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The proposed rule change to remove separate appointment weights for
the GTH trading session under Rule 5.50(g) will foster cooperation and
coordination with persons facilitating transactions in securities and
remove impediments to and perfect the mechanism of a free and open
market and a national market system because it will mitigate any
potential confusion for Market-Makers upon migration when they will be
able to select class appointments that apply to classes across all
trading sessions. The proposed change protects investors by aligning
the term appointment weight and the appointment weight table with the
correct term that will be used, and the class appointment process that
will be in place, post-migration. Additionally, the proposed change to
incorporate the Cboe Options-specific request language into the rule
governing identification of Market-Maker accounts is substantively the
same as the manner in which the current account identification process
works today. The proposed change is intended to correct an inadvertent
omission from Rule 7.6(a) in the shell Rulebook that currently applies
to Market-Makers and does not alter the manner in which the current
rule functions. Instead, it will remove impediments to and protect the
mechanism of a free and open market and national market system by
allowing Market-Makers to continue to identify accounts upon the
request of the Exchange, without taking on any potential additional
compliance burden notwithstanding an Exchange request.
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 change is not
intended as a competitive filing, but merely aligns the appointment
weight table with the appointment process that will be in effect upon
the October 7, 2019 migration. Additionally, the proposed change amends
the rules to continue to allow for Market-Makers to identify accounts
upon Exchange request post-migration, consistent with the process
currently in place. The Exchange also notes that, as stated above, the
proposed change is intended mitigate any potential compliance burden on
Market-Makers by continuing to allow for account identification upon
Exchange request. The Exchange notes that neither the GTH appointment
weights (because they will not be relevant to the post-migration class
appointment structure and just provides Market-Makers with uniform
quoting ability per appointment across the trading day \13\) nor the
account identification procedures have any impact on trading on the
Exchange.
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\13\ See supra note 9.
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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 \14\ and Rule 19b-
4(f)(6) thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \16\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \17\ 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 this proposed rule change to make additional
changes to conform to changes it recently adopted in SR-CBOE-2019-059
and have both sets of changes operative for its anticipated October 7,
2019 system migration. The Commission believes that waiver of the
operative delay is consistent with the protection of investors and the
public interest because the proposal does not raise any new or novel
issues. Therefore, the Commission hereby waives the operative delay and
designates the proposal as operative upon filing.\18\
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\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such
[[Page 54704]]
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule change
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CBOE-2019-070 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-2019-070. 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 submissions
should refer to File Number SR-CBOE-2019-070, and should be submitted
on or before October 31, 2019.
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\19\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-22146 Filed 10-9-19; 8:45 am]
BILLING CODE 8011-01-P