Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Amend the Fat Finger Check in Rule 5.34 as It Applies to Stop-Limit Orders, 60461-60464 [2019-24362]
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Federal Register / Vol. 84, No. 217 / Friday, November 8, 2019 / Notices
Entities’’) to provide to their
counterparties a trade acknowledgment,
Sunshine Act Meetings
to provide prompt verification of the
terms provided in a trade
TIME AND DATE: 10 a.m., November 20,
acknowledgment of transactions from
2019.
other SBS Entities, and to have written
PLACE: 8th Floor Board Conference
policies and procedures that are
Room, 844 North Rush Street, Chicago,
reasonably designed to obtain prompt
Illinois 60611.
verification of the terms provided in a
STATUS: This meeting will be open to the
trade acknowledgment. The Rule
public.
promotes the efficient operation of the
MATTERS TO BE CONSIDERED:
SBS market and facilitate market
1. Oversight of the National Railroad
participants’ management of their SBSRetirement Investment Trust
related risk.
2. Update from the SCOTUS Working
The Commission estimates that
Group
approximately 50 entities fit within the
3. Fraud Risk Assessment Committee
definition of SBS dealer, and up to five
proposal
entities fit within the definition of major
4. Ninety day deferral (Concurrent
processing of an application for a
SBS participant. Thus, we expect that
disability annuity)
approximately 55 entities will be
5. Update on Chief Medical Officer
required to register with the
search
Commission as SBS Entities and will be
CONTACT PERSON FOR MORE INFORMATION: subject to the trade acknowledgment
Stephanie Hillyard, Secretary to the
provision and verification requirements
Board, Phone No. 312–751–4920.
of Rule 15Fi-2. The total estimated
annual burden of Rule 15Fi-2 is 34,155
Authority: 5 U.S.C. 552b.
hours.
Dated: November 6, 2019.
Written comments are invited on: (a)
Stephanie Hillyard,
Whether the proposed collection of
Secretary to the Board.
information is necessary for the proper
[FR Doc. 2019–24595 Filed 11–6–19; 4:15 pm]
performance of the functions of the
BILLING CODE 7905–01–P
Commission, including whether the
information will have practical utility;
(b) the accuracy of the Commission
SECURITIES AND EXCHANGE
staff’s estimates of the burden of the
COMMISSION
proposed collection of information; (c)
the ways to enhance the quality, utility,
Proposed Collection; Comment
and clarity of the information collected;
Request
and (d) ways to minimize the burden of
Upon Written Request, Copies Available
the collection of information on
From: Securities and Exchange
respondents, including through the use
Commission, Office of FOIA Services,
of automated collection techniques or
100 F Street NE, Washington, DC
other forms of information technology.
20549–2736.
Consideration will be given to
comments and suggestions submitted in
Extension:
Rule 15Fi–2—Trade Acknowledgment and
writing within 60 days of this
Verification of Security-Based Swap
publication.
Transactions; SEC File No. 270–633,
An agency may not conduct or
OMB Control No. 3235–0713.
sponsor, and a person is not required to
Notice is hereby given that pursuant
respond to, a collection of information
to the Paperwork Reduction Act of 1995 under the PRA unless it displays a
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
currently valid OMB control number.
Securities and Exchange Commission
Please direct your written comments
(‘‘Commission’’) is soliciting comments
on the existing collection of information to: Charles Riddle, Acting Director/Chief
Information Officer, Securities and
provided for in Rule 17Ad–22 (17 CFR
Exchange Commission, c/o Cynthia
240.17Ad–22) under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’) Roscoe, 100 F Street NE, Washington,
(15 U.S.C. 78a et seq.). The Commission DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
plans to submit this existing collection
of information to the Office of
Dated: November 5, 2019.
Management and Budget (‘‘OMB’’) for
Jill M. Peterson,
extension and approval.
Assistant Secretary.
Rule 15Fi–2 requires security-based
[FR Doc. 2019–24418 Filed 11–7–19; 8:45 am]
swaps (‘‘SBS’’) dealers and major SBS
participants (collectively, ‘‘SBS
BILLING CODE 8011–01–P
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RAILROAD RETIREMENT BOARD
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SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meetings
Notice is hereby given,
pursuant to the provisions of the
Government in the Sunshine Act, Public
Law 94–409, that the Securities and
Exchange Commission Small Business
Capital Formation Advisory Committee
on Small and Emerging Companies will
hold a public meeting on Tuesday,
November 12, 2019 at 9:30 a.m.
PLACE: The meeting will be held in
Multi-Purpose Room LL–006 at the
Commission’s headquarters, 100 F
Street NE, Washington, DC 20549.
STATUS: This meeting will begin at 9:30
a.m. (ET) and will be open to the public.
Seating will be on a first-come, firstserved basis. Doors will open at 9 a.m.
Visitors will be subject to security
checks. The meeting will be webcast on
the Commission’s website at
www.sec.gov.
MATTERS TO BE CONSIDERED: On
November 1, 2019, the Commission
published notice of the Committee
meeting (Release No. 33–10724),
indicating that the meeting is open to
the public and inviting the public to
submit written comments to the
Committee. This Sunshine Act notice is
being issued because a majority of the
Commission may attend the meeting.
The agenda for the meeting includes
matters relating to rules and regulations
affecting small and emerging companies
under the federal securities laws.
CONTACT PERSON FOR MORE INFORMATION:
For further information and to ascertain
what, if any, matters have been added,
deleted or postponed; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
TIME AND DATE:
Dated: November 5, 2019.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2019–24500 Filed 11–6–19; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87455; File No. SR–CBOE–
2019–102]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating To Amend the
Fat Finger Check in Rule 5.34 as It
Applies to Stop-Limit Orders
November 4, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
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Federal Register / Vol. 84, No. 217 / Friday, November 8, 2019 / Notices
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
29, 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 amend
the fat finger check in Rule 5.34 as it
applies to Stop-Limit orders. 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.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
fat finger check under Rule 5.34(c)(1) as
it applies to Stop-Limit orders.
Currently, Rule 5.34(c)(1) provides that
if a User submits a buy (sell) limit order
to the System with a price that is more
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
5 The Exchange notes that a separate provision
governs a fat finger check specific to bulk messages.
See Rule 5.34(a)(5).
6 See Rule 5.6(c) (definition of Stop-Limit order).
2 17
VerDate Sep<11>2014
16:45 Nov 07, 2019
than a buffer amount above (below) the
NBO (NBB), the System cancels or
rejects the order (i.e., the ‘‘fat finger’’
check). The Exchange determines a
default buffer amount; however, a User
may establish a higher or lower amount
than the Exchange default. This check
generally applies to orders and quotes
with a limit price, subject to certain
exceptions set forth in current Rules
5.34(c)(1)(B) through (D). For example,
current Rule 5.34(c)(1)(D) provides that
the check does not apply to bulk
messages.5
The Exchange proposes to add StopLimit orders to Rule 5.34(c)(1)(D) as an
additional order type to which the fat
finger check does not apply. A ‘‘StopLimit’’ order is an order to buy (sell)
that becomes a limit order when the
consolidated last sale price (excluding
prices from complex order trades if
outside the NBBO) or NBB (NBO) for a
particular option contract is equal to or
above (below) the stop price specified
by the User.6 Stop-Limit orders allow
Users increased control and flexibility
over their transactions and the prices at
which they are willing to execute an
order. The purpose of a Stop-Limit order
is to not execute upon entry, and
instead rest in the System until the
market reaches a certain price level, at
which time the order could be executed.
As such, when a buy (sell) Stop-Limit
order is activated, its limit price may
likely be outside of the buffer amount
above (below) the NBO (NBB) in
anticipation of capturing rapidly
increasing (decreasing) market prices.
The primary purpose of the fat finger
check is to prevent limit orders from
executing at potentially erroneous
prices upon entry, because the limit
prices are ‘‘too far away’’ from the thencurrent NBBO. As noted above, a StopLimit order is not intended to execute
upon entry. Currently, because a StopLimit order does not ‘‘become’’ a limit
order until activated, the limit order fat
finger check applies to a Stop-Limit
order at the time the order is activated.
As noted above, at that time, the limit
price may cross the NBO, and thus may
be cancelled due to the fat finger check
if the limit price crosses the NBO by
more than the buffer. Therefore, the
manner in which the fat finger check
cancels/rejects a Stop-Limit order may
conflict with the intended purpose of a
Stop-Limit order and a User’s control
over the time when and the price at
which it executes. For example, assume
that when the NBBO is 8.00 x 8.05, a
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User submits a Stop-Limit order to buy
at 9.25 and a stop price of 8.15 and the
User has set the fat finger buffer to
$1.00. Assume the NBBO then updates
to 8.15 x 8.20. The updated NBB equals
the stop price of the order will activate
the stop price of the Stop Limit Order,
converting it into a limit order to buy at
9.25, which would be more than the fat
finger buffer of $1.00 above the current
NBO, thus canceled/rejected by the
System in accordance with the fat finger
check. The Exchange also notes that the
System is currently able to apply only
one buffer amount (either the Exchange
default amount or a User’s established
amount) across multiple order types.
Therefore, a User would not be able to
expand the buffer amount to
accommodate Stop-Limit orders without
potentially over-expanding the buffer
amount for other limit orders that
execute upon entry.
The Exchange notes that a User’s
Stop-Limit orders would still be subject
to other price protections already in
place on the Exchange. In particular,
Rule 5.32(c)(2) specifically applies to
Stop-Limit orders and provides that the
System cancels or rejects a buy (sell)
Stop-Limit order if the NBB (NBO) at
the time the System receives the order
is equal to or above (below) the stop
price.7 Because the purpose of a StopLimit order is to rest in the Book until
a specified price is reached, the
Exchange believes rejecting a stop or
stop-limit order entered above or below,
as applicable, that price may be
erroneous, as entry at that time would
be inconsistent with the purpose of the
order. Additionally, drill-through
protections are in place pursuant to
Rule 5.34(a)(4), such that, if a buy (sell)
order would execute (i.e., when the stop
price for a Stop-Limit order is
activated), the System executes the
order up to a buffer amount (the
Exchange determines the amount on a
class and premium basis) above (below)
the NBO (NBB) that existed at the time
of order entry (‘‘the drill-through
price’’).
The Exchange believes that allowing a
Stop-Limit order, once activated, with a
limit price outside of the NBBO
(notwithstanding any fat finger buffer)
to execute at that limit price (up to the
drill-through buffer amount) is
consistent with the intended purpose of
7 However, the System accepts a buy (sell) StopLimit order if the consolidated last sale price at the
time the System receives the order is equal to or
above (below) the stop price. The Exchange notes
that the System is unable to compare the stop price
of a stop-limit order to the last consolidated sale
price upon receipt of the order, which is why the
order is accepted when the stop price is above
(below) the last consolidated sale price when the
System receives it.
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a Stop-Limit order. As stated, when a
buy (sell) Stop-Limit order is activated,
its limit price is intended to be at a
consequential amount above (below) the
NBO (NBB) in order to capture rapidly
increasing (decreasing) trade prices, to
which the NBBO would as rapidly track
and reflect. To cancel or reject such
orders based on the NBBO at the time
of its activation would inhibit StopLimit orders from capturing favorable
trade prices as a result of a rapidly
shifting market.
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.8 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 9 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) 10 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the proposed rule
change benefits market participants by
ensuring that they are able to use StopLimit orders to achieve their intended
purpose. As stated, Stop-Limit orders
are intended to increase User price
control and flexibility, particularly in
the face of price swings and market
volatility, by resting in the System until
the market reaches a certain price level.
Thus, they are not intended to execute
upon entry. Conversely, the primary
purpose of the fat finger check is to
prevent limit orders from executing at
potentially erroneous prices upon entry,
because the limit prices are ‘‘too far
away’’ from the then-current NBBO. By
excluding Stop-Limit orders from the fat
finger check, which would currently
cancel/reject a Stop-Limit order if its
buy (sell) limit price was above (below)
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
10 Id.
9 15
16:45 Nov 07, 2019
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
proposed rule change will not impose
any burden on intramarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because all Users’ Stop-Limit orders will
be excluded from the fat finger check in
the same manner. Also, all Users’ StopLimit orders will continue to be subject
to other specific price controls in place,
both at the time of their submission and
once their stop prices are activated and
they become limit orders. The proposed
rule change will not impose any burden
on intermarket competition that that is
not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed change is merely
designed to allow Users’ Stop-Limit
orders to execute in a manner that
achieves their intended purpose by
updating a price protection mechanism
already in place on the Exchange and
applicable only to trading on the
Exchange.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
8 15
VerDate Sep<11>2014
the NBO (NBB) upon activation of its
stop limit price, the proposed rule
change removes impediments to and
perfects the mechanism of a free and
open market and national market system
by allowing Users the control and
flexibility to set the limit prices on StopLimit orders so as to capture significant
market fluctuations, which, as stated,
result in corresponding significant
adjustments in the NBBO. Therefore, the
proposed rule change is designed to
protect investors by allowing their StopLimit orders to execute as intended
without being canceled or rejected in
connection with the NBBO that existed
at the time of their activation, and
instead to consider rapid price
movements and corresponding NBBO
adjustments. The Exchange notes that
the proposed rule change will not affect
the protection of investors or the
maintenance of a fair and orderly
market because other price controls
would apply to Stop-Limit orders, both
at the time of their submission and
when their stop prices are activated and
they become limit orders.
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60463
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 11 and Rule 19b–
4(f)(6) thereunder.12
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 13 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 14
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has asked
the Commission to waive the 30-day
operative delay. The Exchange believes
that waiver of the operative delay is
appropriate because, as the Exchange
discussed above, excluding Stop-Limit
orders from the fat finger check, which
would currently cancel/reject a StopLimit order if its buy (sell) limit price
was above (below) the NBO (NBB) upon
activation of its stop limit price, will
benefit market participants by ensuring
that they are able to use Stop-Limit
orders to achieve their intended
purpose. Thus, the Exchange believes
that the proposed rule change is
designed to protect investors by
allowing their Stop-Limit orders to
execute as intended without being
canceled or rejected due to the
application of the fat finger check
provision.
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 will permit StopLimit orders to execute as intended and
not be inadvertently cancelled in certain
situation, as discussed above, by the fat
finger check provision. Therefore, the
Commission hereby waives the
11 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.
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii).
12 17
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operative delay and designates the
proposal as operative upon filing.15
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
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–2019–102 and
should be submitted on or before
November 29, 2019.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Jill M. Peterson,
Assistant Secretary.
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–2019–102 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
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–2019–102. 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
15 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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16:45 Nov 07, 2019
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BILLING CODE 8011–01–P
[Release No. 34–87450; File No. SR–ICEEU–
2019–023]
Self-Regulatory Organizations; ICE
Clear Europe Limited; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Adopt
Revised Clearing Fees
November 4, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
28, 2019, ICE Clear Europe Limited
(‘‘ICE Clear Europe’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
changes described in Items I, II and III
below, which Items have been prepared
by ICE Clear Europe. ICE Clear Europe
filed the proposed rule change pursuant
to Section 19(b)(3)(A) of the Act,3 and
Rule 19b–4(f)(2) 4 thereunder, so that the
proposed rule change was effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The principal purpose of the
proposed rule change is to revise
clearing fees applicable to certain ICE
16 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).
4 17 CFR 240.19b–4(f)(2).
Futures Europe Limited (‘‘IFEU’’)
Financial Contracts. The revisions do
not involve any changes to the ICE Clear
Europe Clearing Rules or Procedures.5
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change, Security-Based
Swap Submission or Advance Notice
In its filing with the Commission, ICE
Clear Europe included statements
concerning the purpose of and basis for
the proposed rule change. The text of
these statements may be examined at
the places specified in Item IV below.
ICE Clear Europe has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change, Security-Based
Swap Submission or Advance Notice
(a) Purpose
The purpose of the proposed rule
change is for ICE Clear Europe to modify
certain clearing fees relating to certain
IFEU Products as set out below:
Æ One Month Euro Overnight Rate
Index Futures Contract (Block Only):
The clearing fee will increase from GBP
0.20 to GBP 0.45 per lot.
Æ One Month Euro Overnight Rate
Index Futures Contract (Block with
Delayed Publication): The clearing fee
will increase from GBP 0.34 to GBP 0.90
per lot.
Æ One Month Euro Overnight Rate
Index Futures Contract (Cash
Settlement): The clearing fee will
increase from GBP 0.25 to GBP 0.56 per
lot.
Æ One Month Euro Overnight Rate
Index Futures Contract (Futures
Contracts): The clearing fee will
increase from GBP 0.20 to GBP 0.45 per
lot.
(b) Statutory Basis
ICE Clear Europe has determined that
the proposed fee changes set forth above
are reasonable and appropriate. In
particular, ICE Clear Europe believes
that the fees have been set at an
appropriate level given the costs and
expenses to ICE Clear Europe in offering
clearing of such IFEU Products, taking
into account the investments ICE Clear
Europe has made in clearing the markets
for these products. The fees will apply
to all F&O Clearing Members. ICE Clear
Europe believes that imposing such
charges thus provides for the equitable
allocation of reasonable dues, fees, and
1 15
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
5 Capitalized terms used but not defined herein
have the meanings specified in the ICE Clear
Europe Clearing Rules.
E:\FR\FM\08NON1.SGM
08NON1
]]>Agencies
[Federal Register Volume 84, Number 217 (Friday, November 8, 2019)]
[Notices]
[Pages 60461-60464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24362]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87455; File No. SR-CBOE-2019-102]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Amend the Fat Finger Check in Rule 5.34 as It Applies to Stop-Limit
Orders
November 4, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the
[[Page 60462]]
``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 29, 2019, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, and
II below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend the fat finger check in Rule 5.34 as it applies to Stop-Limit
orders. 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
The Exchange proposes to amend its fat finger check under Rule
5.34(c)(1) as it applies to Stop-Limit orders. Currently, Rule
5.34(c)(1) provides that if a User submits a buy (sell) limit order to
the System with a price that is more than a buffer amount above (below)
the NBO (NBB), the System cancels or rejects the order (i.e., the ``fat
finger'' check). The Exchange determines a default buffer amount;
however, a User may establish a higher or lower amount than the
Exchange default. This check generally applies to orders and quotes
with a limit price, subject to certain exceptions set forth in current
Rules 5.34(c)(1)(B) through (D). For example, current Rule
5.34(c)(1)(D) provides that the check does not apply to bulk
messages.\5\
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\5\ The Exchange notes that a separate provision governs a fat
finger check specific to bulk messages. See Rule 5.34(a)(5).
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The Exchange proposes to add Stop-Limit orders to Rule
5.34(c)(1)(D) as an additional order type to which the fat finger check
does not apply. A ``Stop-Limit'' order is an order to buy (sell) that
becomes a limit order when the consolidated last sale price (excluding
prices from complex order trades if outside the NBBO) or NBB (NBO) for
a particular option contract is equal to or above (below) the stop
price specified by the User.\6\ Stop-Limit orders allow Users increased
control and flexibility over their transactions and the prices at which
they are willing to execute an order. The purpose of a Stop-Limit order
is to not execute upon entry, and instead rest in the System until the
market reaches a certain price level, at which time the order could be
executed. As such, when a buy (sell) Stop-Limit order is activated, its
limit price may likely be outside of the buffer amount above (below)
the NBO (NBB) in anticipation of capturing rapidly increasing
(decreasing) market prices.
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\6\ See Rule 5.6(c) (definition of Stop-Limit order).
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The primary purpose of the fat finger check is to prevent limit
orders from executing at potentially erroneous prices upon entry,
because the limit prices are ``too far away'' from the then-current
NBBO. As noted above, a Stop-Limit order is not intended to execute
upon entry. Currently, because a Stop-Limit order does not ``become'' a
limit order until activated, the limit order fat finger check applies
to a Stop-Limit order at the time the order is activated. As noted
above, at that time, the limit price may cross the NBO, and thus may be
cancelled due to the fat finger check if the limit price crosses the
NBO by more than the buffer. Therefore, the manner in which the fat
finger check cancels/rejects a Stop-Limit order may conflict with the
intended purpose of a Stop-Limit order and a User's control over the
time when and the price at which it executes. For example, assume that
when the NBBO is 8.00 x 8.05, a User submits a Stop-Limit order to buy
at 9.25 and a stop price of 8.15 and the User has set the fat finger
buffer to $1.00. Assume the NBBO then updates to 8.15 x 8.20. The
updated NBB equals the stop price of the order will activate the stop
price of the Stop Limit Order, converting it into a limit order to buy
at 9.25, which would be more than the fat finger buffer of $1.00 above
the current NBO, thus canceled/rejected by the System in accordance
with the fat finger check. The Exchange also notes that the System is
currently able to apply only one buffer amount (either the Exchange
default amount or a User's established amount) across multiple order
types. Therefore, a User would not be able to expand the buffer amount
to accommodate Stop-Limit orders without potentially over-expanding the
buffer amount for other limit orders that execute upon entry.
The Exchange notes that a User's Stop-Limit orders would still be
subject to other price protections already in place on the Exchange. In
particular, Rule 5.32(c)(2) specifically applies to Stop-Limit orders
and provides that the System cancels or rejects a buy (sell) Stop-Limit
order if the NBB (NBO) at the time the System receives the order is
equal to or above (below) the stop price.\7\ Because the purpose of a
Stop-Limit order is to rest in the Book until a specified price is
reached, the Exchange believes rejecting a stop or stop-limit order
entered above or below, as applicable, that price may be erroneous, as
entry at that time would be inconsistent with the purpose of the order.
Additionally, drill-through protections are in place pursuant to Rule
5.34(a)(4), such that, if a buy (sell) order would execute (i.e., when
the stop price for a Stop-Limit order is activated), the System
executes the order up to a buffer amount (the Exchange determines the
amount on a class and premium basis) above (below) the NBO (NBB) that
existed at the time of order entry (``the drill-through price'').
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\7\ However, the System accepts a buy (sell) Stop-Limit order if
the consolidated last sale price at the time the System receives the
order is equal to or above (below) the stop price. The Exchange
notes that the System is unable to compare the stop price of a stop-
limit order to the last consolidated sale price upon receipt of the
order, which is why the order is accepted when the stop price is
above (below) the last consolidated sale price when the System
receives it.
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The Exchange believes that allowing a Stop-Limit order, once
activated, with a limit price outside of the NBBO (notwithstanding any
fat finger buffer) to execute at that limit price (up to the drill-
through buffer amount) is consistent with the intended purpose of
[[Page 60463]]
a Stop-Limit order. As stated, when a buy (sell) Stop-Limit order is
activated, its limit price is intended to be at a consequential amount
above (below) the NBO (NBB) in order to capture rapidly increasing
(decreasing) trade prices, to which the NBBO would as rapidly track and
reflect. To cancel or reject such orders based on the NBBO at the time
of its activation would inhibit Stop-Limit orders from capturing
favorable trade prices as a result of a rapidly shifting market.
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.\8\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \9\ 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) \10\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ Id.
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In particular, the proposed rule change benefits market
participants by ensuring that they are able to use Stop-Limit orders to
achieve their intended purpose. As stated, Stop-Limit orders are
intended to increase User price control and flexibility, particularly
in the face of price swings and market volatility, by resting in the
System until the market reaches a certain price level. Thus, they are
not intended to execute upon entry. Conversely, the primary purpose of
the fat finger check is to prevent limit orders from executing at
potentially erroneous prices upon entry, because the limit prices are
``too far away'' from the then-current NBBO. By excluding Stop-Limit
orders from the fat finger check, which would currently cancel/reject a
Stop-Limit order if its buy (sell) limit price was above (below) the
NBO (NBB) upon activation of its stop limit price, the proposed rule
change removes impediments to and perfects the mechanism of a free and
open market and national market system by allowing Users the control
and flexibility to set the limit prices on Stop-Limit orders so as to
capture significant market fluctuations, which, as stated, result in
corresponding significant adjustments in the NBBO. Therefore, the
proposed rule change is designed to protect investors by allowing their
Stop-Limit orders to execute as intended without being canceled or
rejected in connection with the NBBO that existed at the time of their
activation, and instead to consider rapid price movements and
corresponding NBBO adjustments. The Exchange notes that the proposed
rule change will not affect the protection of investors or the
maintenance of a fair and orderly market because other price controls
would apply to Stop-Limit orders, both at the time of their submission
and when their stop prices are activated and they become limit orders.
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 proposed rule change
will not impose any burden on intramarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act
because all Users' Stop-Limit orders will be excluded from the fat
finger check in the same manner. Also, all Users' Stop-Limit orders
will continue to be subject to other specific price controls in place,
both at the time of their submission and once their stop prices are
activated and they become limit orders. The proposed rule change will
not impose any burden on intermarket competition that that is not
necessary or appropriate in furtherance of the purposes of the Act
because the proposed change is merely designed to allow Users' Stop-
Limit orders to execute in a manner that achieves their intended
purpose by updating a price protection mechanism already in place on
the Exchange and applicable only to trading on the Exchange.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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 \13\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \14\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay. The
Exchange believes that waiver of the operative delay is appropriate
because, as the Exchange discussed above, excluding Stop-Limit orders
from the fat finger check, which would currently cancel/reject a Stop-
Limit order if its buy (sell) limit price was above (below) the NBO
(NBB) upon activation of its stop limit price, will benefit market
participants by ensuring that they are able to use Stop-Limit orders to
achieve their intended purpose. Thus, the Exchange believes that the
proposed rule change is designed to protect investors by allowing their
Stop-Limit orders to execute as intended without being canceled or
rejected due to the application of the fat finger check provision.
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
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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 will permit Stop-Limit orders to execute as
intended and not be inadvertently cancelled in certain situation, as
discussed above, by the fat finger check provision. Therefore, the
Commission hereby waives the
[[Page 60464]]
operative delay and designates the proposal as operative upon
filing.\15\
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\15\ 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 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-2019-102 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-2019-102. 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-2019-102 and should be submitted on
or before November 29, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-24362 Filed 11-7-19; 8:45 am]
BILLING CODE 8011-01-P
