Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt the Dark Routing Technique Routing Option; To Eliminate References to the ROUD, ROUE, and ROUQ Routing Options; and To Reflect Additional Routing Strategies for Which the Exchange May Route Orders With a Short Sale Instruction, 8327-8331 [2020-02838]
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Federal Register / Vol. 85, No. 30 / Thursday, February 13, 2020 / Notices
Power Plants’’ and it determines that the
Institute of Electrical and Electronic
Engineers (IEEE) Standard (Std.) 622–
1987, ‘‘IEEE Recommended Practice for
the Design and Installation of Electric
Heat Tracing Systems for Nuclear Power
Generating Systems,’’ reaffirmed in
1994, is acceptable for use. The revision
of ANSI/ISA–67.02.01 previously
endorsed by the NRC in RG 1.151 was
revised and corrected by ANSI/ISA in
2014. In addition, this RG revision
discusses recent operating experience,
as described in NRC Information Notice
(IN) 2013–12, ‘‘Improperly Sloped
Instrument Sensing Lines,’’ dated July 3,
2013.
For the Nuclear Regulatory Commission.
Robert Roche-Rivera,
Acting Chief, Regulatory Guidance and
Generic Issues Branch, Division of
Engineering, Office of Nuclear Regulatory
Research.
II. Additional Information
SUMMARY:
The NRC published a notice of the
availability of DG–1352 in the Federal
Register on February 8, 2019 (84 FR
2934) for a 60-day public comment
period. The public comment period
closed on April 9, 2019 and the NRC
received three comment documents.
Public comments on DG–1352 and the
staff responses to the public comments
are available under ADAMS under
Accession No. ML19156A128.
III. Congressional Review Act
This RG is a rule as defined in the
Congressional Review Act (5 U.S.C.
801–808). However, the Office of
Management and Budget has not found
it to be a major rule as defined in the
Congressional Review Act.
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IV. Backfitting and Issue Finality
Revision 2 of RG 1.151 describes an
approach that is acceptable to the NRC
staff for applicants and licensees under
10 CFR parts 50 and 52 to meet
regulatory requirements for instrument
sensing lines in nuclear power plants.
The issuance of this regulatory guide
does not constitute backfitting as
defined in 10 CFR 50.109, ‘‘Backfitting,’’
and as described in NRC Management
Directive 8.4, ‘‘Management of
Backfitting, Forward Fitting, Issue
Finality, and Information Requests,’’ or
affect issue finality of any approval
issued under 10 CFR part 52, ‘‘Licenses,
Certificates, and Approvals for Nuclear
Power Plants,’’ because, as explained in
this regulatory guide, applicants and
licensees are not required to comply
with the positions set forth in this
regulatory guide.
Dated at Rockville, Maryland, this 7th day
of February, 2020.
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[FR Doc. 2020–02874 Filed 2–12–20; 8:45 am]
BILLING CODE 7590–01–P
POSTAL REGULATORY COMMISSION.
8327
It is ordered:
1. United Parcel Service, Inc.’s Motion
for an Extension to File Reply
Comments, filed February 6, 2020, is
granted.
2. Reply comments are now due no on
or before February 18, 2020.
3. The Secretary shall arrange for
publication of this order in the Federal
Register.
[Docket No. ACR2019; Order No. 5420]
By the Commission.
Erica A. Barker,
Secretary.
FY 2019 Annual Compliance Report
[FR Doc. 2020–02840 Filed 2–12–20; 8:45 am]
AGENCY:
Postal Regulatory Commission.
ACTION: Notice.
BILLING CODE 7710–FW–P
The Commission is noticing a
recent procedural schedule change
extending the comment due date for
reply comments in this docket. This
notice informs the public of the new
filing date for reply comments.
DATES: Comments are due: February 18,
2020.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
SECURITIES AND EXCHANGE
COMMISSION
FOR FURTHER INFORMATION CONTACT:
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 February
3, 2020, Cboe EDGX Exchange, Inc.
(‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘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.
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION: On
February 6, 2020, United Parcel Service,
Inc. (UPS) filed a motion requesting an
extension of time to file its reply
comments in the instant docket.1 The
reply comment deadline is February 10,
2020. Motion at 1. UPS requests an
extension until February 18, 2020. Id.
UPS states that pursuant to the
Commission’s Order No. 5416 2 granting
UPS access to certain non-public
information, its counsel and consultants
have collected the non-public
information requested, but will require
additional time to analyze that
information. Id. UPS states that this
request will neither significantly delay
the proceeding nor adversely affect any
participant.
In consideration of UPS’s request, and
to avoid any potential adverse impact
on other participants, the Commission
shall extend the deadline for all reply
comments until February 18, 2020.
1 Motion of United Parcel Service, Inc. for
Extension to File Reply Comments, February 6,
2020 (Motion).
2 Order Granting Motion for Access, January 29,
2020 (Order No. 5416).
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[Release No. 34–88154; File No. SR–
CboeEDGX–2020–006]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Adopt the
Dark Routing Technique Routing
Option; To Eliminate References to the
ROUD, ROUE, and ROUQ Routing
Options; and To Reflect Additional
Routing Strategies for Which the
Exchange May Route Orders With a
Short Sale Instruction
February 7, 2020.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) proposes: To
amend Rule 11.11(g)(2) to adopt the
proposed Dark Routing Technique
(‘‘DRT’’) routing option on the
Exchange; to amend Rule 11.11, as well
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
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Federal Register / Vol. 85, No. 30 / Thursday, February 13, 2020 / Notices
as its Fee Schedule, to eliminate
references to the ROUD, ROUE, and
ROUQ routing options; and to amend
Rule 11.11 to reflect additional routing
strategies for which the Exchange may
route orders with a short sale
instruction when a short sale circuit
breaker pursuant to Rule 201 of
Regulation SHO is in effect. The text of
the proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to: (i) Adopt
the DRT routing option under proposed
Rule 11.11(g)(2); (ii) amend Rule
11.11(g) to eliminate the ROUD, ROUE,
and ROUQ routing options and to
eliminate any such references in its Fee
Schedule; and (iii) amend Rule 11.11(a)
to make clear that if a User 5 selects the
RDOT, RDOX, or INET routing options,
orders with a short sale 6 instruction
when a short sale circuit breaker
pursuant to Rule 201 of Regulation
SHO 7 is in effect are eligible for routing
by the Exchange. The Exchange intends
to implement the proposed rule changes
on February 3, 2020.
5 See
Exchange Rule 1.5(ee).
Exchange Rule 11.6(o). The term ‘‘short
sale’’ is defined as ‘‘any sale of a security which the
seller does not own or any sale which is
consummated by the delivery of a security
borrowed by, or for the account of, the seller.’’ 17
CFR 242.200(a).
7 See 17 CFR 242.201; Securities Exchange Act
Release No. 61595 (February 26, 2010), 75 FR 11232
(March 10, 2010).
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6 See
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Adopting DRT
The Exchange proposes to adopt the
DRT under subparagraph (g)(2) as a new
routing option available on the
Exchange. As noted in proposed Rule
11.11(g)(2), the DRT routing option
would instruct the System 8 to route to
alternative trading systems (‘‘ATSs’’)
included in the System routing table.9
The proposed description of DRT is
identical to existing Cboe BZX
Exchange, Inc. (‘‘BZX’’) and Cboe BYX
Exchange, Inc. (‘‘BYX’’) Rules
11.13(b)(3)(D). Thus, the proposed
amendment is intended to add certain
system functionality currently offered
by BZX and BYX in order to provide a
consistent technology offering for Users
across the Cboe affiliated exchanges.
Currently, for routing mechanisms
that route orders to ATSs, the Exchange
routes such orders using a preselected
sequence of venues pursuant to the
applicable System routing table and
every order is routed to such venues in
that sequence.10 Stated another way, all
orders entered with a routing strategy
that is eligible for routing to ATSs will
first seek liquidity on the Exchange and
any unexecuted portion of the order will
then be routed in accordance with the
pre-established sequence in the System
routing table.
As proposed, the DRT routing
mechanism would instead use a
randomly generated, weighted
permutation to prioritize off-exchange
venues based on a ‘‘score’’ 11 for each
off-exchange venue, where a higher
score will result in a greater likelihood
that the off-exchange venue will be
selected earlier in the permutation. The
DRT routing mechanism will be
established in the System routing table
and replace the existing routing
mechanism that routes orders to ATSs.
The Exchange believes that converting
from this mechanical, sequential routing
strategy to the more dynamic strategy
8 The
‘‘System’’ is the Exchange’s electronic
communications and trading facility designated by
the Board through which securities orders of Users
are consolidated for ranking, execution and, when
applicable, routing away. See Exchange Rule
1.5(cc).
9 The term ‘‘System routing table’’ refers to the
proprietary process for determining the specific
trading venues to which the System routes orders
and the order in which it routes them. See
Exchange Rule 11.11(g).
10 The Exchange notes that the current routing
mechanism is set forth in the System routing table,
and is not referenced in Exchange Rules.
Nonetheless, the Exchange proposes to adopt the
DRT under subparagraph (g)(2) of Rule 11.11 to
harmonize the Exchange’s rules with BZX/BYX
Rule 11.13(b)(3)(D).
11 ‘‘Scores’’ are assigned to each off-exchange
venue by the Exchange and are determined based
on various factors, such as order fill percentage,
latency, and price improvement.
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applied with DRT will allow an offexchange venue with a lower score to
occasionally be selected before an offexchange venue with a higher score, and
thus provides the Exchange with the
most accurate view of the quality at
each market. As a result, the Exchange
believes that DRT will result in
improved execution quality.
Additionally, converting to DRT will
result in uniformity that will simplify
the Exchange’s routing logic and
management across the Cboe equities
platforms.
Eliminating ROUE, ROUQ, and ROUD
In connection with the adoption of
the DRT mechanism, the Exchange
proposes to amend Rule 11.11(g) and
the Fee Schedule to eliminate any
references to routing options that are
redundant due to such adoption.
Currently, Rule 11.11(g) provides for
a variety of routing options under which
the System will consider the quotations
only of accessible Trading Centers.12
Rules 11.11(g)(2) and 11.11(g)(3)(D)
currently provides for the ROUD and
ROUQ routing options, respectively,
which are detailed in the System
routing table.13 For orders entered with
a ROUD or ROUQ routing options, the
System is first checked for available
shares and then is sent to destinations
on the System routing table. If shares
remain unexecuted after routing, they
are posted on the EDGX Book, unless
otherwise instructed by the User. The
ROUD and ROUQ routing options first
seek liquidity on the Exchange’s book,
and will subsequently route any
unfilled portion of the order pursuant to
the System routing table. Given the
proposed implementation of DRT, the
ROUD and ROUQ routing option will
first seek liquidity on the Exchange’s
book, and will subsequently route any
unfilled portion via DRT. Such a
12 Rule 600(b)(82) of Regulation NMS defines a
‘‘Trading Center’’ as ‘‘a national securities exchange
or national securities association that operates an
SRO trading facility, an alternative trading system,
an exchange market maker, an OTC market maker,
or any other broker or dealer that executes orders
internally by trading as principal or crossing orders
as agent.’’ See 17 CFR 242.201(a)(9); 17 CFR
242.600(b)(82).
13 While the System routing table is not publicly
available, the Cboe affiliated equity markets have
provided a summary document of its available
routing options, which is subject to change at any
time. Such document details the strategies of the
ROUD, ROUQ, ROUE, ROUZ, and ROUT routing
options referenced herein. See https://
cdn.cboe.com/resources/features/cboe_exchange_
routing-strategies.pdf. See also Exchange Rule
11.11(g), which provides that the Exchange reserves
the right to route orders simultaneously or
sequentially, maintain a 124 different System
routing table for different routing options and to
modify the System routing table at any time without
notice.
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Federal Register / Vol. 85, No. 30 / Thursday, February 13, 2020 / Notices
strategy is duplicative of the Exchange’s
ROUZ routing option.14 Therefore, the
Exchange proposes to eliminate
subparagraph (g)(2) and (g)(3)(D) of Rule
11.11, as well as Fee Code T from the
Exchange’s Fee Schedule.15
Similarly, the ROUE routing option
provided in Rule 11.11(g)(3)(A) first
seeks liquidity on the Exchange’s book,
second will route any unfilled portion
of the order to ATSs pursuant to the
System routing table, and third will
route any unfilled portion of the order
to other Trading Centers.16 Given the
proposed implementation of DRT, the
ROUE routing option will first seek
liquidity on the Exchange’s book,
second route any unfilled portion via
DRT, and third will route any unfilled
portion of the order to other Trading
centers. Such a strategy is duplicative of
the Exchange’s ROUT routing option.17
Therefore, the Exchange proposes to
eliminate subparagraph (g)(3)(A) of Rule
11.11 and references to the ROUE
routing option in subparagraphs (g)(11)
and (12). The Exchange also proposes to
remove Fee Codes PR and RQ as they
both reference the ROUQ routing option
which is also proposed to be
eliminated.18 The Exchange also
proposes to remove references to the
ROUE trading strategy in Fee Codes BY,
I, and K.
RDOT, RDOX, and INET Routing
Clarification
Under Rule 201 of Regulation SHO, a
short sale order in a covered security 19
generally cannot be executed or
displayed by a Trading Center (such as
the Exchange), at a price that is at or
below the current national best bid
14 See
Exchange Rule 11.11(g)(3)(E). See also id.
Code T references both the ROUD and
ROUE routing options, both of which are proposed
to be eliminated from the Fee Schedule. As such,
the Exchange proposes to eliminate Fee Code T in
its entirety.
16 See supra note 14.
17 See Exchange Rule 11.11(g)(3)(B). See also
supra note 14.
18 As noted above, Fee Code T references both
ROUD and ROUE routing strategies, both of which
the Exchange is proposing to eliminate and, as
such, the Exchange proposed above to eliminate Fee
Code T.
19 Rule 201(a)(1) of Regulation SHO defines the
term ‘‘covered security’’ to mean any ‘‘NMS stock’’
as defined under Rule 600(b)(48) of Regulation
NMS. Rule 600(b)(48) of Regulation NMS defines an
‘‘NMS stock’’ as ‘‘any NMS security other than an
option.’’ Rule 600(b)(47) of Regulation NMS defines
an ‘‘NMS security’’ as ‘‘any security or class of
securities for which transaction reports are
collected, processed, and made available pursuant
to an effective transaction reporting plan, or an
effective national market system plan for reporting
transactions in listed options.’’ See 17 CFR
242.201(a)(1); 17 CFR 242.600(b)(47); and 17 CFR
242.600(b)(48).
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15 Fee
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(‘‘NBB’’) 20 when a short sale circuit
breaker is in effect for the covered
security (the ‘‘SSCB’’). Based on this
rule, there is no reason for a Trading
Center to route an order marked short
when a SSCB is in effect using a routing
option that does not provide for a routed
order to post to another Trading Center’s
book. Post to Away 21 and ROOC 22
routing options are able to post an order
to another Trading Center’s book and,
thus, Exchange Rule 11.11(a) explicitly
provides that the Exchange will route
orders marked short using Post to Away
and ROOC routing options when a SSCB
is in effect.23
Similarly, RDOT,24 RDOX,25 and
INET 26 routing options are able to post
an order to another Trading Center’s
book. Based on this functionality, the
Exchange currently allows orders
marked short while a SSCB is in effect
to be routed using these routing options.
As such, the Exchange is proposing to
amend Rule 11.11(a) in order to codify
that, in addition to Post to Away and
ROOC routing options, short orders
using the RDOT, RDOX, and INET
20 See 17 CFR 242.201(a)(4); 17 CFR
242.600(b)(43).
21 See Exchange Rule 11.11(g)(11). Under the Post
to Away routing option, the remainder of a routed
order is routed to and posted to the order book of
a destination on the ‘‘System routing table’’, as
specified by the User.
22 ROOC is a routing option for orders that the
User wishes to designate for participation in the
opening, re-opening (following a halt, suspension,
or pause), or closing process of a primary listing
market other than the Exchange (e.g., the New York
Stock Exchange, Inc. (‘‘NYSE’’), Nasdaq Stock
Market LLC (‘‘Nasdaq’’), NYSE MKT LLC, NYSE
Arca, Inc. (‘‘NYSE Arca’’), or BZX) if received
before the opening/re-opening/closing time of such
market. If shares remain unexecuted after
attempting to execute in the opening, re-opening, or
closing process, they are either posted to the EDGX
Book, executed, or routed to destinations on the
System routing table. See Exchange Rule
11.11(g)(8).
23 The Exchange notes that orders routed
pursuant to the Post to Away, ROOC, RDOT, RDOX,
and INET routing options that include a short sale
instruction are identified as ‘‘short’’ and are subject
to the receiving Trading Center’s processes for
handling short sale orders in compliance with Rule
201 of Regulation SHO.
24 RDOT is a routing option under which an order
checks the System for available shares and then is
sent to destinations on the System routing table. If
shares remain unexecuted after routing, they are
sent to the NYSE and can be re-routed by the NYSE.
Any remainder will be posted to the NYSE, unless
otherwise instructed by the User.
25 See Exchange Rule 11.11(g)(6). RDOX is a
routing option under which an order checks the
System for available shares, is then sent to the
NYSE and can be re-routed by the NYSE. If shares
remain unexecuted after routing, they are posted on
the NYSE book, unless otherwise instructed by the
User.
26 See Exchange Rule 11.11(g)(4). INET is a
routing option under which an order checks the
System for available shares and then is sent to
Nasdaq. If shares remain unexecuted after routing,
they are posted on the Nasdaq book, unless
otherwise instructed by the User.
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8329
routing strategies are also able to be
routed when a SSCB is in effect. Given
that orders routed via the RDOT, RDOX,
and INET routing options are subjected
to the receiving Trading Center’s
processes for handling short sale orders
in compliance with Rule 201 of
Regulation SHO in substantially the
same manner as the ROOC and Post to
Away routing options, the Exchange
believes such functionality is
appropriate and that Exchange Rules
should be amended to codify such
functionality.
Based on the above proposed changes
the Exchange also proposes to realphabetize paragraph (g)(3) of Rule
11.11, and make conforming changes to
various subparagraphs under paragraph
(g) of Rule 11.11. Additionally, the
Exchange proposes non-substantive
changes to Rule 11.11(g)(7) and (g)(13)
to properly reflect the name of Cboe
BZX Exchange, Inc. and remove the
Investors Exchange as a primary listing
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.27 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 28 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) 29 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The proposed rule change also is
designed to support the principles of
Section 11A(a)(1) 30 of the Act in that it
seeks to assure fair competition among
brokers and dealers and among
exchange markets.
27 15
28 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
29 Id.
30 15
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Federal Register / Vol. 85, No. 30 / Thursday, February 13, 2020 / Notices
In particular, the proposed rule
change to add the DRT routing option is
generally intended to provide a
consistent technology offering for the
Cboe affiliated exchanges, which the
Exchange believes is designed to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system. Further to
this point, a consistent technology
offering, in turn, will simplify the
technology implementation, changes
and maintenance by Users of the
Exchange that are also participants on
BYX and/or BZX. The proposed rule
changes would also provide Users with
access to functionality that is intended
to result in the efficient execution of
such orders and will provide additional
flexibility as well as increased
functionality to the Exchange’s System
and its Users. As a result, the
Exchange’s proposal will further remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and will
also introduce the DRT routing strategy
on the Exchange which will provide
market participants with greater
flexibility in routing orders without
developing order routing strategies on
their own.
The Exchange believes the proposed
rule change to remove references to
ROUD, ROUQ, and ROUE from
Exchange Rules and the Fee Schedule
will remove impediments to the
mechanism of a free and open market,
thereby protecting investors and the
public interest. As stated above, the
Exchange is proposing that its routing
functionality to ATSs will use the DRT
routing mechanism in the System
routing table effective February 3, 2020.
As a result, the ROUD, ROUQ, and
ROUE routing options will function in
the same manner as other existing
routing options. By removing routing
options that are duplicative of other
existing routing options and amending
Exchange Rules to reflect a new routing
option, the Exchange believes the
proposed rule change will remove
impediments to the mechanism of a free
and open market and protect investors
by providing investors with increased
transparency regarding rules that reflect
routing options currently available on
the Exchange. Also, as it pertains to the
proposed changes to Exchange Rule
11.11(g) and the Fee Schedule, the
Exchange does not believe the proposed
amendments will permit unfair
discrimination among customers,
brokers, or dealers because the ROUD,
ROUQ, and ROUE routing options will
no longer be available to all Users.
Finally, the proposed changes to Rule
11.11(a) are designed to ensure clarity in
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the Exchange’s rulebook with respect to
the routing of orders in compliance with
Rule 201 of Regulation SHO. In
addition, providing Users the ability to
send short sale orders that are routable
pursuant to RDOT, RDOX, and INET
routing options provides them
additional flexibility with regard to the
handling of their orders. The Exchange
notes that orders that include a short
sale instruction routed pursuant to the
RDOT, RDOX, or INET routing options
are identified ‘‘short’’ and, therefore,
subject to the receiving Trading Center’s
processes for handling short sale orders
in compliance with Regulation SHO.
The Exchange also notes that the Post to
Away and ROOC routing options are
similar to the RDOT, RDOX, and INET
routing options in that they route orders
to other Trading Centers for posting
and/or later execution. Rule 11.11(a)
currently provides that orders including
a short sale instruction routed pursuant
to the Post to Away or ROOC routing
options are eligible for routing when a
short sale circuit breaker is in effect.
Thus, the proposed amendments to Rule
11.11(a) is directly targeted at removing
impediments to and perfecting the
mechanism of a free and open market
and national market system, as well as
to assure fair competition among
brokers and dealers and among
exchange markets.
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 notes that the proposed
amendment to allow orders with a short
sale instruction and a RDOX, RDOT, or
INET routing option to be eligible to
route when a short sale circuit breaker
is in effect will promote consistency
between other routing strategies (i.e.,
Post to Away and ROOC) that are
similarly eligible to route when a short
sale circuit breaker is in effect and are
designed to route orders to other
Trading Centers for posting and/or later
execution. The Exchange does not
believe the proposed change will have
any impact on intermarket competition
as the RDOX, RDOT, and INET routing
strategies are and will continue to be
available to all Users.
The Exchange notes that the proposed
amendments to add a reference to the
DRT routing option and eliminate
references to the ROUD, ROUE, and
ROUQ routing options in Exchange
Rules and the Fee Schedule will
eliminate any potential confusion to
investors, as those routing options will
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
be duplicative of existing routing
options after the implementation of the
DRT routing mechanism.
The Exchange does not believe that
the proposed amendments will impose
any burden on intra-market competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange provides routing services
in a highly competitive market in which
participants may avail themselves of a
wide variety of routing options offered
by self-regulatory organizations, other
broker-dealers, market participants’ own
proprietary routing systems, and service
bureaus. In such an environment,
system enhancements such as the
changes proposed in this rule filing do
not burden competition, because they
can succeed in attracting order flow to
the Exchange only if they offer investors
higher quality and better value than
services offered by others. The Exchange
reiterates that the proposed rule change
to adopt DRT and eliminate the ROUE,
ROUQ, and ROUD strategies is being
proposed in an effort to add a consistent
technology offering across the Cboe
affiliated Exchanges.
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
The Exchange has designated this rule
filing as non-controversial under
Section 19(b)(3)(A) of the Act 31 and
Rule 19b–4(f)(6) thereunder.32 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 and Rule 19b–
4(f)(6) thereunder.
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 33 normally does not become
31 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.
33 17 CFR 240.19b–4(f)(6).
32 17
E:\FR\FM\13FEN1.SGM
13FEN1
Federal Register / Vol. 85, No. 30 / Thursday, February 13, 2020 / Notices
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 34
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 proposal may
become operative immediately upon
filing. The Exchange has represented
that adopting the DRT routing
functionality and eliminating references
to certain duplicative routing options
will conform its routing strategies to its
affiliated exchanges and will eliminate
any potential confusion for its Members.
The Commission believes that waiver of
the 30-day operative delay is consistent
with the protection of investors and the
public interest and hereby waives the
operative delay and designates the
proposal as operative upon filing.35
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
under Section 19(b)(2)(B) of the Act 36 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:
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeEDGX–2020–006 on the subject
line.
Paper Comments:
jbell on DSKJLSW7X2PROD with NOTICES
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
34 17
CFR 240.19b–4(f)(6)(iii).
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).
36 15 U.S.C. 78s(b)(2)(B).
35 For
18:34 Feb 12, 2020
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.37
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–02838 Filed 2–12–20; 8:45 am]
Electronic Comments:
VerDate Sep<11>2014
All submissions should refer to File
Number SR–CboeEDGX–2020–006. 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–CboeEDGX–2020–006 and
should be submitted on or before March
5, 2020.
Jkt 250001
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
Data Collection Available for Public
Comments
60-day notice and request for
comments.
ACTION:
The Small Business
Administration (‘‘SBA’’) intends to
request approval from the Office of
Management and Budget (‘‘OMB’’) for
the collection of information authorized
under OMB Control Number 3245–0071.
The Paperwork Reduction Act (‘‘PRA’’)
requires federal agencies to publish a
notice in the Federal Register
SUMMARY:
37 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00087
Fmt 4703
Sfmt 4703
8331
concerning each proposed collection of
information before submission to OMB,
and to allow 60 days for public
comment in response to the notice.
DATES: Submit comments on or before
April 13, 2020.
ADDRESSES: Send all comments to Mary
Frias, Loan Specialist, Office of
Financial Assistance, Small Business
Administration, 409 3rd Street, 8th
Floor, Washington, DC 20416.
FOR FURTHER INFORMATION CONTACT:
Mary Frias, Loan Specialist, Office of
Financial Assistance, (202) 401–8234,
mary.frias@sba.gov, or Curtis B. Rich,
Management Analyst, (202) 205–7030,
curtis.rich@sba.gov.
SUPPLEMENTARY INFORMATION: The 504
Loan Program is an SBA financing
program authorized under Title V of the
Small Business Investment Act of 1958,
15 U.S.C. 695 et seq. The core mission
of the 504 Loan Program is to provide
long-term financing to eligible small
businesses for the purchase or
improvement of land, buildings, and
major equipment in an effort to facilitate
the creation or retention of jobs and
local economic development. Under the
504 Loan Program, 504 loans are made
to small businesses by Certified
Development Companies (‘‘CDCs’’), and
the 504 loans are funded with proceeds
from the sale of debentures issued by
CDCs and guaranteed by SBA. The
information collection that is approved
under OMB Control Number 3245–0071
facilitates the ongoing administration of
the 504 Loan Program. This information
collection currently consists of SBA
Form 1244, Application for Section 504
Loans; and SBA Form 2450, Eligibility
Information Required for 504
Submission (Non PCLP). SBA
recognizes that this information
collection needs to be modernized to
meet the needs of small business
applicants and CDCs. As a result, SBA
intends to make revisions to this
information collection that would
streamline the process and reduce
duplication for CDCs and the small
business applicants. These revisions
will result in SBA Form 2450 being
cancelled and its contents substantially
incorporated into SBA Form 1244.
Additionally, three of the forms
currently approved under OMB Control
Number 3245–0346 (Form 2234 (Part A),
Premier Certified Lenders Program
(PCLP) Guarantee Request; Form 2234
(Part B), Supplemental Information for
Premier Certified Lender Program
(PCLP) Processing; and Form 2234 (Part
C), Eligibility Information Required for
504 Submission (PCLP) will also be
incorporated into SBA Form 1244. SBA
is publishing a separate Federal
E:\FR\FM\13FEN1.SGM
13FEN1
]]>Agencies
[Federal Register Volume 85, Number 30 (Thursday, February 13, 2020)]
[Notices]
[Pages 8327-8331]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-02838]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88154; File No. SR-CboeEDGX-2020-006]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Adopt the Dark Routing Technique Routing Option; To Eliminate
References to the ROUD, ROUE, and ROUQ Routing Options; and To Reflect
Additional Routing Strategies for Which the Exchange May Route Orders
With a Short Sale Instruction
February 7, 2020.
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 February 3, 2020, Cboe EDGX Exchange, Inc. (``Exchange'') filed with
the Securities and Exchange Commission (``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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes:
To amend Rule 11.11(g)(2) to adopt the proposed Dark Routing Technique
(``DRT'') routing option on the Exchange; to amend Rule 11.11, as well
[[Page 8328]]
as its Fee Schedule, to eliminate references to the ROUD, ROUE, and
ROUQ routing options; and to amend Rule 11.11 to reflect additional
routing strategies for which the Exchange may route orders with a short
sale instruction when a short sale circuit breaker pursuant to Rule 201
of Regulation SHO is in effect. The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to: (i) Adopt the DRT routing option under
proposed Rule 11.11(g)(2); (ii) amend Rule 11.11(g) to eliminate the
ROUD, ROUE, and ROUQ routing options and to eliminate any such
references in its Fee Schedule; and (iii) amend Rule 11.11(a) to make
clear that if a User \5\ selects the RDOT, RDOX, or INET routing
options, orders with a short sale \6\ instruction when a short sale
circuit breaker pursuant to Rule 201 of Regulation SHO \7\ is in effect
are eligible for routing by the Exchange. The Exchange intends to
implement the proposed rule changes on February 3, 2020.
---------------------------------------------------------------------------
\5\ See Exchange Rule 1.5(ee).
\6\ See Exchange Rule 11.6(o). The term ``short sale'' is
defined as ``any sale of a security which the seller does not own or
any sale which is consummated by the delivery of a security borrowed
by, or for the account of, the seller.'' 17 CFR 242.200(a).
\7\ See 17 CFR 242.201; Securities Exchange Act Release No.
61595 (February 26, 2010), 75 FR 11232 (March 10, 2010).
---------------------------------------------------------------------------
Adopting DRT
The Exchange proposes to adopt the DRT under subparagraph (g)(2) as
a new routing option available on the Exchange. As noted in proposed
Rule 11.11(g)(2), the DRT routing option would instruct the System \8\
to route to alternative trading systems (``ATSs'') included in the
System routing table.\9\ The proposed description of DRT is identical
to existing Cboe BZX Exchange, Inc. (``BZX'') and Cboe BYX Exchange,
Inc. (``BYX'') Rules 11.13(b)(3)(D). Thus, the proposed amendment is
intended to add certain system functionality currently offered by BZX
and BYX in order to provide a consistent technology offering for Users
across the Cboe affiliated exchanges.
---------------------------------------------------------------------------
\8\ The ``System'' is the Exchange's electronic communications
and trading facility designated by the Board through which
securities orders of Users are consolidated for ranking, execution
and, when applicable, routing away. See Exchange Rule 1.5(cc).
\9\ The term ``System routing table'' refers to the proprietary
process for determining the specific trading venues to which the
System routes orders and the order in which it routes them. See
Exchange Rule 11.11(g).
---------------------------------------------------------------------------
Currently, for routing mechanisms that route orders to ATSs, the
Exchange routes such orders using a preselected sequence of venues
pursuant to the applicable System routing table and every order is
routed to such venues in that sequence.\10\ Stated another way, all
orders entered with a routing strategy that is eligible for routing to
ATSs will first seek liquidity on the Exchange and any unexecuted
portion of the order will then be routed in accordance with the pre-
established sequence in the System routing table.
---------------------------------------------------------------------------
\10\ The Exchange notes that the current routing mechanism is
set forth in the System routing table, and is not referenced in
Exchange Rules. Nonetheless, the Exchange proposes to adopt the DRT
under subparagraph (g)(2) of Rule 11.11 to harmonize the Exchange's
rules with BZX/BYX Rule 11.13(b)(3)(D).
---------------------------------------------------------------------------
As proposed, the DRT routing mechanism would instead use a randomly
generated, weighted permutation to prioritize off-exchange venues based
on a ``score'' \11\ for each off-exchange venue, where a higher score
will result in a greater likelihood that the off-exchange venue will be
selected earlier in the permutation. The DRT routing mechanism will be
established in the System routing table and replace the existing
routing mechanism that routes orders to ATSs. The Exchange believes
that converting from this mechanical, sequential routing strategy to
the more dynamic strategy applied with DRT will allow an off-exchange
venue with a lower score to occasionally be selected before an off-
exchange venue with a higher score, and thus provides the Exchange with
the most accurate view of the quality at each market. As a result, the
Exchange believes that DRT will result in improved execution quality.
Additionally, converting to DRT will result in uniformity that will
simplify the Exchange's routing logic and management across the Cboe
equities platforms.
---------------------------------------------------------------------------
\11\ ``Scores'' are assigned to each off-exchange venue by the
Exchange and are determined based on various factors, such as order
fill percentage, latency, and price improvement.
---------------------------------------------------------------------------
Eliminating ROUE, ROUQ, and ROUD
In connection with the adoption of the DRT mechanism, the Exchange
proposes to amend Rule 11.11(g) and the Fee Schedule to eliminate any
references to routing options that are redundant due to such adoption.
Currently, Rule 11.11(g) provides for a variety of routing options
under which the System will consider the quotations only of accessible
Trading Centers.\12\ Rules 11.11(g)(2) and 11.11(g)(3)(D) currently
provides for the ROUD and ROUQ routing options, respectively, which are
detailed in the System routing table.\13\ For orders entered with a
ROUD or ROUQ routing options, the System is first checked for available
shares and then is sent to destinations on the System routing table. If
shares remain unexecuted after routing, they are posted on the EDGX
Book, unless otherwise instructed by the User. The ROUD and ROUQ
routing options first seek liquidity on the Exchange's book, and will
subsequently route any unfilled portion of the order pursuant to the
System routing table. Given the proposed implementation of DRT, the
ROUD and ROUQ routing option will first seek liquidity on the
Exchange's book, and will subsequently route any unfilled portion via
DRT. Such a
[[Page 8329]]
strategy is duplicative of the Exchange's ROUZ routing option.\14\
Therefore, the Exchange proposes to eliminate subparagraph (g)(2) and
(g)(3)(D) of Rule 11.11, as well as Fee Code T from the Exchange's Fee
Schedule.\15\
---------------------------------------------------------------------------
\12\ Rule 600(b)(82) of Regulation NMS defines a ``Trading
Center'' as ``a national securities exchange or national securities
association that operates an SRO trading facility, an alternative
trading system, an exchange market maker, an OTC market maker, or
any other broker or dealer that executes orders internally by
trading as principal or crossing orders as agent.'' See 17 CFR
242.201(a)(9); 17 CFR 242.600(b)(82).
\13\ While the System routing table is not publicly available,
the Cboe affiliated equity markets have provided a summary document
of its available routing options, which is subject to change at any
time. Such document details the strategies of the ROUD, ROUQ, ROUE,
ROUZ, and ROUT routing options referenced herein. See https://cdn.cboe.com/resources/features/cboe_exchange_routing-strategies.pdf. See also Exchange Rule 11.11(g), which provides that
the Exchange reserves the right to route orders simultaneously or
sequentially, maintain a 124 different System routing table for
different routing options and to modify the System routing table at
any time without notice.
\14\ See Exchange Rule 11.11(g)(3)(E). See also id.
\15\ Fee Code T references both the ROUD and ROUE routing
options, both of which are proposed to be eliminated from the Fee
Schedule. As such, the Exchange proposes to eliminate Fee Code T in
its entirety.
---------------------------------------------------------------------------
Similarly, the ROUE routing option provided in Rule 11.11(g)(3)(A)
first seeks liquidity on the Exchange's book, second will route any
unfilled portion of the order to ATSs pursuant to the System routing
table, and third will route any unfilled portion of the order to other
Trading Centers.\16\ Given the proposed implementation of DRT, the ROUE
routing option will first seek liquidity on the Exchange's book, second
route any unfilled portion via DRT, and third will route any unfilled
portion of the order to other Trading centers. Such a strategy is
duplicative of the Exchange's ROUT routing option.\17\ Therefore, the
Exchange proposes to eliminate subparagraph (g)(3)(A) of Rule 11.11 and
references to the ROUE routing option in subparagraphs (g)(11) and
(12). The Exchange also proposes to remove Fee Codes PR and RQ as they
both reference the ROUQ routing option which is also proposed to be
eliminated.\18\ The Exchange also proposes to remove references to the
ROUE trading strategy in Fee Codes BY, I, and K.
---------------------------------------------------------------------------
\16\ See supra note 14.
\17\ See Exchange Rule 11.11(g)(3)(B). See also supra note 14.
\18\ As noted above, Fee Code T references both ROUD and ROUE
routing strategies, both of which the Exchange is proposing to
eliminate and, as such, the Exchange proposed above to eliminate Fee
Code T.
---------------------------------------------------------------------------
RDOT, RDOX, and INET Routing Clarification
Under Rule 201 of Regulation SHO, a short sale order in a covered
security \19\ generally cannot be executed or displayed by a Trading
Center (such as the Exchange), at a price that is at or below the
current national best bid (``NBB'') \20\ when a short sale circuit
breaker is in effect for the covered security (the ``SSCB''). Based on
this rule, there is no reason for a Trading Center to route an order
marked short when a SSCB is in effect using a routing option that does
not provide for a routed order to post to another Trading Center's
book. Post to Away \21\ and ROOC \22\ routing options are able to post
an order to another Trading Center's book and, thus, Exchange Rule
11.11(a) explicitly provides that the Exchange will route orders marked
short using Post to Away and ROOC routing options when a SSCB is in
effect.\23\
---------------------------------------------------------------------------
\19\ Rule 201(a)(1) of Regulation SHO defines the term ``covered
security'' to mean any ``NMS stock'' as defined under Rule
600(b)(48) of Regulation NMS. Rule 600(b)(48) of Regulation NMS
defines an ``NMS stock'' as ``any NMS security other than an
option.'' Rule 600(b)(47) of Regulation NMS defines an ``NMS
security'' as ``any security or class of securities for which
transaction reports are collected, processed, and made available
pursuant to an effective transaction reporting plan, or an effective
national market system plan for reporting transactions in listed
options.'' See 17 CFR 242.201(a)(1); 17 CFR 242.600(b)(47); and 17
CFR 242.600(b)(48).
\20\ See 17 CFR 242.201(a)(4); 17 CFR 242.600(b)(43).
\21\ See Exchange Rule 11.11(g)(11). Under the Post to Away
routing option, the remainder of a routed order is routed to and
posted to the order book of a destination on the ``System routing
table'', as specified by the User.
\22\ ROOC is a routing option for orders that the User wishes to
designate for participation in the opening, re-opening (following a
halt, suspension, or pause), or closing process of a primary listing
market other than the Exchange (e.g., the New York Stock Exchange,
Inc. (``NYSE''), Nasdaq Stock Market LLC (``Nasdaq''), NYSE MKT LLC,
NYSE Arca, Inc. (``NYSE Arca''), or BZX) if received before the
opening/re-opening/closing time of such market. If shares remain
unexecuted after attempting to execute in the opening, re-opening,
or closing process, they are either posted to the EDGX Book,
executed, or routed to destinations on the System routing table. See
Exchange Rule 11.11(g)(8).
\23\ The Exchange notes that orders routed pursuant to the Post
to Away, ROOC, RDOT, RDOX, and INET routing options that include a
short sale instruction are identified as ``short'' and are subject
to the receiving Trading Center's processes for handling short sale
orders in compliance with Rule 201 of Regulation SHO.
---------------------------------------------------------------------------
Similarly, RDOT,\24\ RDOX,\25\ and INET \26\ routing options are
able to post an order to another Trading Center's book. Based on this
functionality, the Exchange currently allows orders marked short while
a SSCB is in effect to be routed using these routing options. As such,
the Exchange is proposing to amend Rule 11.11(a) in order to codify
that, in addition to Post to Away and ROOC routing options, short
orders using the RDOT, RDOX, and INET routing strategies are also able
to be routed when a SSCB is in effect. Given that orders routed via the
RDOT, RDOX, and INET routing options are subjected to the receiving
Trading Center's processes for handling short sale orders in compliance
with Rule 201 of Regulation SHO in substantially the same manner as the
ROOC and Post to Away routing options, the Exchange believes such
functionality is appropriate and that Exchange Rules should be amended
to codify such functionality.
---------------------------------------------------------------------------
\24\ RDOT is a routing option under which an order checks the
System for available shares and then is sent to destinations on the
System routing table. If shares remain unexecuted after routing,
they are sent to the NYSE and can be re-routed by the NYSE. Any
remainder will be posted to the NYSE, unless otherwise instructed by
the User.
\25\ See Exchange Rule 11.11(g)(6). RDOX is a routing option
under which an order checks the System for available shares, is then
sent to the NYSE and can be re-routed by the NYSE. If shares remain
unexecuted after routing, they are posted on the NYSE book, unless
otherwise instructed by the User.
\26\ See Exchange Rule 11.11(g)(4). INET is a routing option
under which an order checks the System for available shares and then
is sent to Nasdaq. If shares remain unexecuted after routing, they
are posted on the Nasdaq book, unless otherwise instructed by the
User.
---------------------------------------------------------------------------
Based on the above proposed changes the Exchange also proposes to
re-alphabetize paragraph (g)(3) of Rule 11.11, and make conforming
changes to various subparagraphs under paragraph (g) of Rule 11.11.
Additionally, the Exchange proposes non-substantive changes to Rule
11.11(g)(7) and (g)(13) to properly reflect the name of Cboe BZX
Exchange, Inc. and remove the Investors Exchange as a primary listing
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.\27\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \28\ 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) \29\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The proposed rule change also is designed to
support the principles of Section 11A(a)(1) \30\ of the Act in that it
seeks to assure fair competition among brokers and dealers and among
exchange markets.
---------------------------------------------------------------------------
\27\ 15 U.S.C. 78f(b).
\28\ 15 U.S.C. 78f(b)(5).
\29\ Id.
\30\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------
[[Page 8330]]
In particular, the proposed rule change to add the DRT routing
option is generally intended to provide a consistent technology
offering for the Cboe affiliated exchanges, which the Exchange believes
is designed to remove impediments to and perfect the mechanism of a
free and open market and a national market system. Further to this
point, a consistent technology offering, in turn, will simplify the
technology implementation, changes and maintenance by Users of the
Exchange that are also participants on BYX and/or BZX. The proposed
rule changes would also provide Users with access to functionality that
is intended to result in the efficient execution of such orders and
will provide additional flexibility as well as increased functionality
to the Exchange's System and its Users. As a result, the Exchange's
proposal will further remove impediments to and perfect the mechanism
of a free and open market and a national market system, and will also
introduce the DRT routing strategy on the Exchange which will provide
market participants with greater flexibility in routing orders without
developing order routing strategies on their own.
The Exchange believes the proposed rule change to remove references
to ROUD, ROUQ, and ROUE from Exchange Rules and the Fee Schedule will
remove impediments to the mechanism of a free and open market, thereby
protecting investors and the public interest. As stated above, the
Exchange is proposing that its routing functionality to ATSs will use
the DRT routing mechanism in the System routing table effective
February 3, 2020. As a result, the ROUD, ROUQ, and ROUE routing options
will function in the same manner as other existing routing options. By
removing routing options that are duplicative of other existing routing
options and amending Exchange Rules to reflect a new routing option,
the Exchange believes the proposed rule change will remove impediments
to the mechanism of a free and open market and protect investors by
providing investors with increased transparency regarding rules that
reflect routing options currently available on the Exchange. Also, as
it pertains to the proposed changes to Exchange Rule 11.11(g) and the
Fee Schedule, the Exchange does not believe the proposed amendments
will permit unfair discrimination among customers, brokers, or dealers
because the ROUD, ROUQ, and ROUE routing options will no longer be
available to all Users.
Finally, the proposed changes to Rule 11.11(a) are designed to
ensure clarity in the Exchange's rulebook with respect to the routing
of orders in compliance with Rule 201 of Regulation SHO. In addition,
providing Users the ability to send short sale orders that are routable
pursuant to RDOT, RDOX, and INET routing options provides them
additional flexibility with regard to the handling of their orders. The
Exchange notes that orders that include a short sale instruction routed
pursuant to the RDOT, RDOX, or INET routing options are identified
``short'' and, therefore, subject to the receiving Trading Center's
processes for handling short sale orders in compliance with Regulation
SHO. The Exchange also notes that the Post to Away and ROOC routing
options are similar to the RDOT, RDOX, and INET routing options in that
they route orders to other Trading Centers for posting and/or later
execution. Rule 11.11(a) currently provides that orders including a
short sale instruction routed pursuant to the Post to Away or ROOC
routing options are eligible for routing when a short sale circuit
breaker is in effect. Thus, the proposed amendments to Rule 11.11(a) is
directly targeted at removing impediments to and perfecting the
mechanism of a free and open market and national market system, as well
as to assure fair competition among brokers and dealers and among
exchange markets.
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 notes that the
proposed amendment to allow orders with a short sale instruction and a
RDOX, RDOT, or INET routing option to be eligible to route when a short
sale circuit breaker is in effect will promote consistency between
other routing strategies (i.e., Post to Away and ROOC) that are
similarly eligible to route when a short sale circuit breaker is in
effect and are designed to route orders to other Trading Centers for
posting and/or later execution. The Exchange does not believe the
proposed change will have any impact on intermarket competition as the
RDOX, RDOT, and INET routing strategies are and will continue to be
available to all Users.
The Exchange notes that the proposed amendments to add a reference
to the DRT routing option and eliminate references to the ROUD, ROUE,
and ROUQ routing options in Exchange Rules and the Fee Schedule will
eliminate any potential confusion to investors, as those routing
options will be duplicative of existing routing options after the
implementation of the DRT routing mechanism.
The Exchange does not believe that the proposed amendments will
impose any burden on intra-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
provides routing services in a highly competitive market in which
participants may avail themselves of a wide variety of routing options
offered by self-regulatory organizations, other broker-dealers, market
participants' own proprietary routing systems, and service bureaus. In
such an environment, system enhancements such as the changes proposed
in this rule filing do not burden competition, because they can succeed
in attracting order flow to the Exchange only if they offer investors
higher quality and better value than services offered by others. The
Exchange reiterates that the proposed rule change to adopt DRT and
eliminate the ROUE, ROUQ, and ROUD strategies is being proposed in an
effort to add a consistent technology offering across the Cboe
affiliated Exchanges.
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
The Exchange has designated this rule filing as non-controversial
under Section 19(b)(3)(A) of the Act \31\ and Rule 19b-4(f)(6)
thereunder.\32\ 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 and Rule 19b-
4(f)(6) thereunder.
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\31\ 15 U.S.C. 78s(b)(3)(A).
\32\ 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 \33\ normally does not become
[[Page 8331]]
operative for 30 days after the date of its filing. However, Rule 19b-
4(f)(6)(iii) \34\ 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 proposal may become operative
immediately upon filing. The Exchange has represented that adopting the
DRT routing functionality and eliminating references to certain
duplicative routing options will conform its routing strategies to its
affiliated exchanges and will eliminate any potential confusion for its
Members. The Commission believes that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest and hereby waives the operative delay and designates the
proposal as operative upon filing.\35\
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\33\ 17 CFR 240.19b-4(f)(6).
\34\ 17 CFR 240.19b-4(f)(6)(iii).
\35\ 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 under
Section 19(b)(2)(B) of the Act \36\ to determine whether the proposed
rule change should be approved or disapproved.
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\36\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments:
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeEDGX-2020-006 on the subject line.
Paper Comments:
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CboeEDGX-2020-006. 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-CboeEDGX-2020-006 and should be
submitted on or before March 5, 2020.
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\37\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-02838 Filed 2-12-20; 8:45 am]
BILLING CODE 8011-01-P
