Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 6.34 in Connection With Business Continuity and Disaster Recovery Testing, 20553-20556 [2020-07649]
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Federal Register / Vol. 85, No. 71 / Monday, April 13, 2020 / Notices
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
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:
khammond on DSKJM1Z7X2PROD with NOTICES
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–
NYSE–2020–24 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–NYSE–2020–24. 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
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to make available publicly. All
submissions should refer to File
Number SR–NYSE–2020–24 and should
be submitted on or before May 4, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–07658 Filed 4–10–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88577; File No. SR–C2–
2020–003]
Self-Regulatory Organizations; Cboe
C2 Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 6.34 in
Connection With Business Continuity
and Disaster Recovery Testing
April 7, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 26,
2020, Cboe C2 Exchange, Inc.
(‘‘Exchange’’ or ‘‘C2’’) 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 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 C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) proposes to amend
Rule 6.34 in connection with business
continuity and disaster recovery testing.
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/ctwo/),
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
21 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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20553
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 harmonize
Rule 6.34, in connection with business
continuity and disaster recovery testing,
with the corresponding rules of its
affiliated options exchanges, Cboe BZX
Exchange, Inc. (‘‘BZX Options’’) and
Cboe EDGX Exchange, Inc. (‘‘EDGX
Options’’).3
As background, Regulation Systems
Compliance and Integrity (‘‘Regulation
SCI’’) 4 applies to certain self-regulatory
organizations (including the Exchange),
alternative trading systems (‘‘ATSs’’),
plan processors, and exempt clearing
agencies (collectively, ‘‘SCI entities’’).
Specifically, Rule 1004 of Regulation
SCI (‘‘Reg SCI’’) states that each SCI
entity shall establish standards for the
designation of members or participants
that are necessary for the maintenance
of fair and orderly markets in the event
of the activation of the business
continuity and disaster recovery plans,
designate such members or participants
in scheduled functional and
performance testing of the operation of
such plans no less than once every 12
months, and coordinate the testing of
such plans on an industry- or sectorwide basis with other SCI entities.
In order to comply with the
coordination requirement among SCI
entities, the Exchange has conducted
the required operational testing in
parallel with the industry-led testing
program coordinated by the Securities
Industry and Financial Markets
Association (‘‘SIFMA’’), which occurs
on an annual basis. In particular, Rule
6.34(b) requires certain Trading Permit
Holders (‘‘TPHs’’) that contribute a
meaningful percentage of the
Exchange’s overall volume must
connect to the Exchange’s backup
systems and participate in functional
and performance testing as announced
3 The Exchange notes that Cboe Exchange, Inc.
(‘‘Cboe Options’’) is simultaneously filing a rule
change to harmonize certain provisions of its
business continuity and disaster recovery testing
rules with that of BZX Options and EDGX Options.
4 See Securities Exchange Act Release No. 73639
(November 19, 2014), 79 FR 72252 (December 5,
2014) (‘‘SCI Adopting Release’’).
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Federal Register / Vol. 85, No. 71 / Monday, April 13, 2020 / Notices
by the Exchange, which occurs at least
once every 12 months. This is consistent
with Reg SCI and generally occurs in
October. In particular, subparagraph
(b)(1) provides that the Exchange
determines the percentage of volume it
considers to be meaningful for purposes
of Rule 6.34(b), subparagraph (b)(2)
provides that the Exchange measures
volume executed on the Exchange on a
quarterly basis, and that the Exchange
also individually notifies all Trading
Permit Holders quarterly that are subject
to this paragraph (b) based on the prior
calendar quarter’s volume, and
subparagraph (b)(3) provides that if a
Trading Permit Holder has not
previously been subject to the
requirements of this paragraph (b), such
Trading Permit Holder has until the
next calendar quarter before such
requirements are applicable.
In order to harmonize its business
continuity and disaster recovery testing
provisions with that of its affiliated
options exchanges, the Exchange
proposes to amend subparagraph (b)(2)
to allow the Exchange to identify TPHs
designated to test based on trading
activity during a single designated
quarter for a given year. In line with this
proposed rule change, the Exchange also
subsequently updates the timeframe for
notification to TPHs that are designated
for testing in subparagraph (b)(2) and
removes subparagraph (b)(3) as all TPHs
will be subject to the same measurement
quarter selected by the Exchange.
Specifically, the proposed rule change
provides that the Exchange individually
notifies all TPHs (designated for testing)
annually, and at least three months
prior to the scheduled functional and
performance testing. The proposed rule
change is substantively identical to the
language regarding testing notification
provided in Interpretation and Policy
.01 to Rule 2.4 of BZX Options and
EDGX Options. The proposed rule
change is intended to provide the
Exchange with greater flexibility in
selecting the most relevant quarter’s
trade data for which the Exchange may
identify TPHs that will be designated to
participate in annual testing. As such,
the Exchange may identify TPHs
designated for testing based on
potentially the most representative
measure of trading activity. For
example, if the second quarter of the
year in which the test will take place is
generally experiencing high volume and
trading activity, such a quarter would
provide a better, more relevant and/or
accurate sample of overall activity and
trading patterns on the Exchange than a
former, potentially less active quarter or
a quarter farther removed from the test
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date (e.g., the third quarter of the
preceding year) for which a TPH might
have been designated, thus providing a
more relevant and/or accurate, holistic
representation of the TPHs who meet
the requirement set forth in Rules
6.34(b). The proposed rule change
provides additional detail regarding the
timeframe for which the Exchange will
provide notice to TPHs that have been
designated to test based on a single
designated quarter as opposed to a
quarterly basis. The Exchange believes
three months is reasonable advanced
notice.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.5 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 6 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 7 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the proposed change is
intended to harmonize the rules in
connection with business continuity
and disaster recovery testing across the
Exchange and its affiliated options
exchanges, BZX Options and EDGX
Options.8 The proposed rule change
does not propose new or unique
business continuity and disaster
recovery procedures or requirements as
the proposed changes are substantively
similar to rules currently in place on the
Exchange’s affiliated options exchanges
and previously filed with the
Commission. Consistent requirements
and procedures in connection with
business continuity and disaster
recovery testing will simplify the
5 15
6 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
regulatory requirements and increase
the understanding of the Exchange’s
operations for TPHs that are also
participants on the Exchange’s affiliated
options exchanges. Greater
harmonization across the affiliated
options exchanges will result in greater
uniformity, rules that are easier to
follow and understand, and less
burdensome, more efficient regulatory
compliance, thereby contributing to the
protection of investors and the public
interest. Moreover, the proposed rule
change will harmonize Exchange rules
with those of other self-regulatory
organizations in furtherance of the
coordination of testing among SCI
entities required by Rule 1004(c) of
Regulation SCI. As set forth in
Regulation SCI, ‘‘SROs have the
authority, and legal responsibility,
under Section 6 of the Exchange Act, to
adopt and enforce rules (including rules
to comply with Regulation SCI’s
requirements relating to business
continuity and disaster recovery testing)
applicable to their members or
participants that are designed to, among
other things, 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.’’ 9 The Exchange
believes that the proposed rule change
is consistent with such authority and
legal responsibility and will serve to
strengthen the Exchange’s coordination
with other SCI entities to the benefit of
investors and the public interest.
In addition to this, by allowing the
Exchange to identify TPHs that are
subject to testing based on activity
during a single designated quarter and
to issue an annual notification at least
three months prior to testing the
proposed rule change will remove
impediments to and perfect the
mechanism of a free and open market
and national market system, and, in
general, protect investors as it will allow
the Exchange to rely on the trading
activity within a quarter that may be
more relevant or representative of
overall trading activity and patterns on
the Exchange in order to better
determine which TPHs should
participate in testing, provide specificity
as to the timing for which the Exchange
will give notice to TPHs designated to
participate in testing based on the
selection of a single measurement
7 Id.
8 See
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supra note 5.
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9 See
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supra note 6.
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quarter, and, in general, will simplify
the TPH designation and notice process.
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 rule
change is not a competitive proposal as
it is intended to coordinate TPH
notification and designated calendar
quarters in connection with annual
functional and performance testing
participation with the rules of its
affiliated options exchanges.
The Exchange does not believe that
the proposed rule change will impose
any burden on intramarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because the trading activity of TPHs will
be measured during the same Exchangedetermined quarter for all TPHs and
annual notice will be given to each TPH
designated for testing at the same time
at least three months in advance.
The Exchange does not believe that
the proposed rule change will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed rule changes are
substantively identical to the
corresponding rules of BZX Options and
EDGX Options, which have previously
been filed with the Commission.
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 10 and
subparagraph (f)(6) of Rule 19b–4
thereunder.11
10 15
U.S.C. 78s(b)(3)(A)(iii).
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,
11 17
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A proposed rule change filed under
Rule 19b-4(f)(6) 12 normally does not
become operative prior to 30 days after
the date of the filing. However, Rule
19b–4(f)(6)(iii) 13 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 proposed
rule change may become effective and
operative immediately upon filing. The
Exchange states that waiver of the
operative delay would eliminate
potential confusion in connection with
testing participation in the next annual
functional and performance testing
(October 2020) across the Exchange and
its affiliated options exchanges and in
coordination with other SCI entities.
The Exchange also states that the
proposed rule changes will harmonize
Exchange rules with those of other selfregulatory organizations in furtherance
of the coordination of testing among SCI
entities, thereby contributing the
protection of investors and the public
interest. The Exchange further states
that the proposed rule change will
simplify and streamline the process of
notification to TPHs designated to
participate in the annual test and will
ensure that the Exchange and its
affiliated options exchanges will be able
to base all member participation on the
same designated quarter (e.g., Q1 2020)
for the upcoming annual test, thus
resulting in more efficient regulatory
compliance and operations for investors
across the exchanges. Accordingly, the
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest. Therefore, the
Commission hereby waives the 30-day
operative delay and designates the
proposed rule change as operative upon
filing.14
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: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
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.
12 17 CFR 240.19b–4(f)(6).
13 17 CFR 240.19b–4(f)(6)(iii).
14 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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20555
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
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 rule-comments@
sec.gov. Please include File Number SR–
C2–2020–003 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–C2–2020–003. 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–C2–2020–003 and should
be submitted on or before May 4, 2020.
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20556
Federal Register / Vol. 85, No. 71 / Monday, April 13, 2020 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–07649 Filed 4–10–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88579; File No. SR–NSCC–
2020–009]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Remove Access to the
Fund/SERV Service by Data Services
Only Members in Rule 52 and Revise
the Defined Term for Fund/SERV in the
NSCC Rules
April 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 April 2,
2020, National Securities Clearing
Corporation (‘‘NSCC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the clearing agency. NSCC filed the
proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 3 and
subparagraph (f)(4) of Rule 19b–4
thereunder.4 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
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(a) The proposed rule change of NSCC
is annexed hereto as Exhibit 5 and
consists of modifications to NSCC’s
Rules & Procedures (‘‘Rules’’) in order to
(i) remove access to the Fund/Serv
service (‘‘Fund/SERV’’) by Data Services
Only Members in Rule 52 of the Rules
and (ii) revise the term ‘‘Fund/Serv’’ to
‘‘Fund/SERV’’ in the Rules to reflect
conventional use of the term, as
described in greater detail below.5
15 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)(4).
5 Terms not defined herein are defined in the
Rules, available at https://dtcc.com/∼/media/Files/
Downloads/legal/rules/nscc_rules.pdf.
1 15
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II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency 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
clearing agency 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
1. Purpose
Background—Data Services Only
Members
In 2001, NSCC established a new
membership category, called the Data
Services Only Member.6 Data Services
Only Members are permitted to
participate solely in the transmission of
data and information and have access to
only those services specifically
enumerated under NSCC’s Rules.7 The
Data Services Only Members are not
permitted to settle any transactions
through NSCC.8 Initially the Data
Services Only Members were only
permitted to access Networking services
in Mutual Fund Services.9 Data Services
Only Members were initially granted
permission to access Networking in
order to make inquiries regarding their
customer accounts in an automated
format using a communicationstranslation interface in Extensible
Markup Language or ‘‘XML’’.10
In 2002, the Data Services Only
Member access was expanded to
include access to Fund/SERV.11 Data
6 Securities Exchange Act Release No. 44960
(October 19, 2001), 66 FR 54045 (October 25, 2001)
(SR–NSCC–2001–14) (indicating that the new
membership category is being added at the request
of NSCC’s Fund Members and the Investment
Company Institute in order to permit broker-dealers
who otherwise do not qualify to be NSCC members
to obtain access to customers account data in an
automated format).
7 See Section 2(ii)(a) of Rule 2, supra note 5
(provides that Data Services Only Members
participate ‘‘solely in the transmission of data and
information, and shall utilize only those features of
services that the Corporation may, from time to
time, expressly designate as eligible for access by
a Data Services Only Member.’’).
8 Id.
9 Supra note 6.
10 See Securities Exchange Act Release No. 45560
(March 14, 2002), 67 FR 13200 (March 21, 2002)
(SR–NSCC–2001–18) (‘‘SR–NSCC–2001–18’’). XML
is a programming format that allows for the transfer
of structured data between different applications.
11 Id. Fund/SERV is a service provided by NSCC
to allow Members and certain Limited Members
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Services Only Members were provided
access to Fund/SERV in connection
with a new function of Fund/SERV
called Fund/SPEED which was
launched to provide firms and financial
advisors with an ability to obtain
information on, and transmit, their
clients’ mutual fund purchase and
redemption transactions through Fund/
SERV in an automated format, with
settlement conducted directly between
counterparties and outside of NSCC.12
Fund/SPEED was a combination of the
XML inquiry functionality that had been
provided to Data Services Only
Members for Networking and an XML
communications interface used to
transmit data to Fund/SERV.13
The Fund/SPEED functionality was
discontinued prior to 2013.14 Following
the discontinuation of Fund/SPEED, a
similar functionality has not been added
to Fund/SERV for Data Services Only
Members.
NSCC does not believe that there is a
need to continue to permit Data Services
Only Members to have access to Fund/
SERV because the Fund/SPEED
functionality, which was used by Data
Services Only Members to access and
transmit Fund/SERV data, was
discontinued. NSCC does not believe
that any Data Services Only Members
have utilized Fund/SERV since Fund/
SPEED was discontinued and there are
currently no active Data Services Only
Members that access the Fund/SERV
service. In addition, Fund/SERV is
primarily a service designed for
settlement of mutual fund transactions
and Data Services Only Members are not
permitted to settle transactions through
NSCC.15 As such, NSCC is proposing to
remove the ability of Data Services Only
Members to access Fund/SERV.
Fund/SERV®
NSCC is also proposing to change the
term ‘‘Fund/Serv’’ to ‘‘Fund/SERV’’ in
several places in the Rules to reflect
current conventional use of the name of
the service and the registered trademark
of the service. In addition, the registered
trademark symbol would be placed on
the term in Rule 52 in the heading for
Section A to reflect that it is a registered
trademark.
enumerated in Rule 52 to process and/or settle, as
the case may be, on an automated basis purchase
and redemption orders and transactions in interests
in Fund/Serv Eligible Funds. See Rule 52, supra
note 5.
12 See SR–NSCC–2001–18, supra note 10.
13 Id.
14 See Securities Exchange Act Release No. 68562
(January 2, 2013), 78 FR 1292 (January 8, 2013) (SR–
NSCC–2012–11) (removing the fees relating to
Fund/SPEED because Fund/SPEED was
discontinued).
15 See Section 2(ii)(a) of Rule 2, supra note 5.
E:\FR\FM\13APN1.SGM
13APN1
]]>Agencies
[Federal Register Volume 85, Number 71 (Monday, April 13, 2020)]
[Notices]
[Pages 20553-20556]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07649]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88577; File No. SR-C2-2020-003]
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 6.34 in Connection With Business Continuity and Disaster Recovery
Testing
April 7, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 26, 2020, Cboe C2 Exchange, Inc. (``Exchange'' or ``C2'')
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 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe C2 Exchange, Inc. (the ``Exchange'' or ``C2'') proposes to
amend Rule 6.34 in connection with business continuity and disaster
recovery testing. 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/ctwo/), 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 harmonize Rule 6.34, in connection with
business continuity and disaster recovery testing, with the
corresponding rules of its affiliated options exchanges, Cboe BZX
Exchange, Inc. (``BZX Options'') and Cboe EDGX Exchange, Inc. (``EDGX
Options'').\3\
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\3\ The Exchange notes that Cboe Exchange, Inc. (``Cboe
Options'') is simultaneously filing a rule change to harmonize
certain provisions of its business continuity and disaster recovery
testing rules with that of BZX Options and EDGX Options.
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As background, Regulation Systems Compliance and Integrity
(``Regulation SCI'') \4\ applies to certain self-regulatory
organizations (including the Exchange), alternative trading systems
(``ATSs''), plan processors, and exempt clearing agencies
(collectively, ``SCI entities''). Specifically, Rule 1004 of Regulation
SCI (``Reg SCI'') states that each SCI entity shall establish standards
for the designation of members or participants that are necessary for
the maintenance of fair and orderly markets in the event of the
activation of the business continuity and disaster recovery plans,
designate such members or participants in scheduled functional and
performance testing of the operation of such plans no less than once
every 12 months, and coordinate the testing of such plans on an
industry- or sector-wide basis with other SCI entities.
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\4\ See Securities Exchange Act Release No. 73639 (November 19,
2014), 79 FR 72252 (December 5, 2014) (``SCI Adopting Release'').
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In order to comply with the coordination requirement among SCI
entities, the Exchange has conducted the required operational testing
in parallel with the industry-led testing program coordinated by the
Securities Industry and Financial Markets Association (``SIFMA''),
which occurs on an annual basis. In particular, Rule 6.34(b) requires
certain Trading Permit Holders (``TPHs'') that contribute a meaningful
percentage of the Exchange's overall volume must connect to the
Exchange's backup systems and participate in functional and performance
testing as announced
[[Page 20554]]
by the Exchange, which occurs at least once every 12 months. This is
consistent with Reg SCI and generally occurs in October. In particular,
subparagraph (b)(1) provides that the Exchange determines the
percentage of volume it considers to be meaningful for purposes of Rule
6.34(b), subparagraph (b)(2) provides that the Exchange measures volume
executed on the Exchange on a quarterly basis, and that the Exchange
also individually notifies all Trading Permit Holders quarterly that
are subject to this paragraph (b) based on the prior calendar quarter's
volume, and subparagraph (b)(3) provides that if a Trading Permit
Holder has not previously been subject to the requirements of this
paragraph (b), such Trading Permit Holder has until the next calendar
quarter before such requirements are applicable.
In order to harmonize its business continuity and disaster recovery
testing provisions with that of its affiliated options exchanges, the
Exchange proposes to amend subparagraph (b)(2) to allow the Exchange to
identify TPHs designated to test based on trading activity during a
single designated quarter for a given year. In line with this proposed
rule change, the Exchange also subsequently updates the timeframe for
notification to TPHs that are designated for testing in subparagraph
(b)(2) and removes subparagraph (b)(3) as all TPHs will be subject to
the same measurement quarter selected by the Exchange. Specifically,
the proposed rule change provides that the Exchange individually
notifies all TPHs (designated for testing) annually, and at least three
months prior to the scheduled functional and performance testing. The
proposed rule change is substantively identical to the language
regarding testing notification provided in Interpretation and Policy
.01 to Rule 2.4 of BZX Options and EDGX Options. The proposed rule
change is intended to provide the Exchange with greater flexibility in
selecting the most relevant quarter's trade data for which the Exchange
may identify TPHs that will be designated to participate in annual
testing. As such, the Exchange may identify TPHs designated for testing
based on potentially the most representative measure of trading
activity. For example, if the second quarter of the year in which the
test will take place is generally experiencing high volume and trading
activity, such a quarter would provide a better, more relevant and/or
accurate sample of overall activity and trading patterns on the
Exchange than a former, potentially less active quarter or a quarter
farther removed from the test date (e.g., the third quarter of the
preceding year) for which a TPH might have been designated, thus
providing a more relevant and/or accurate, holistic representation of
the TPHs who meet the requirement set forth in Rules 6.34(b). The
proposed rule change provides additional detail regarding the timeframe
for which the Exchange will provide notice to TPHs that have been
designated to test based on a single designated quarter as opposed to a
quarterly basis. The Exchange believes three months is reasonable
advanced notice.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\5\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \6\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
\7\ Id.
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In particular, the proposed change is intended to harmonize the
rules in connection with business continuity and disaster recovery
testing across the Exchange and its affiliated options exchanges, BZX
Options and EDGX Options.\8\ The proposed rule change does not propose
new or unique business continuity and disaster recovery procedures or
requirements as the proposed changes are substantively similar to rules
currently in place on the Exchange's affiliated options exchanges and
previously filed with the Commission. Consistent requirements and
procedures in connection with business continuity and disaster recovery
testing will simplify the regulatory requirements and increase the
understanding of the Exchange's operations for TPHs that are also
participants on the Exchange's affiliated options exchanges. Greater
harmonization across the affiliated options exchanges will result in
greater uniformity, rules that are easier to follow and understand, and
less burdensome, more efficient regulatory compliance, thereby
contributing to the protection of investors and the public interest.
Moreover, the proposed rule change will harmonize Exchange rules with
those of other self-regulatory organizations in furtherance of the
coordination of testing among SCI entities required by Rule 1004(c) of
Regulation SCI. As set forth in Regulation SCI, ``SROs have the
authority, and legal responsibility, under Section 6 of the Exchange
Act, to adopt and enforce rules (including rules to comply with
Regulation SCI's requirements relating to business continuity and
disaster recovery testing) applicable to their members or participants
that are designed to, among other things, 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.'' \9\ The Exchange believes
that the proposed rule change is consistent with such authority and
legal responsibility and will serve to strengthen the Exchange's
coordination with other SCI entities to the benefit of investors and
the public interest.
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\8\ See supra note 5.
\9\ See supra note 6.
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In addition to this, by allowing the Exchange to identify TPHs that
are subject to testing based on activity during a single designated
quarter and to issue an annual notification at least three months prior
to testing the proposed rule change will remove impediments to and
perfect the mechanism of a free and open market and national market
system, and, in general, protect investors as it will allow the
Exchange to rely on the trading activity within a quarter that may be
more relevant or representative of overall trading activity and
patterns on the Exchange in order to better determine which TPHs should
participate in testing, provide specificity as to the timing for which
the Exchange will give notice to TPHs designated to participate in
testing based on the selection of a single measurement
[[Page 20555]]
quarter, and, in general, will simplify the TPH designation and notice
process.
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 rule change is not a competitive proposal as it is intended to
coordinate TPH notification and designated calendar quarters in
connection with annual functional and performance testing participation
with the rules of its affiliated options exchanges.
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
trading activity of TPHs will be measured during the same Exchange-
determined quarter for all TPHs and annual notice will be given to each
TPH designated for testing at the same time at least three months in
advance.
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed rule changes are substantively identical to the corresponding
rules of BZX Options and EDGX Options, which have previously been filed
with the Commission.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
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)(iii) of the Act \10\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 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 under Rule 19b-4(f)(6) \12\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \13\ 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 proposed
rule change may become effective and operative immediately upon filing.
The Exchange states that waiver of the operative delay would eliminate
potential confusion in connection with testing participation in the
next annual functional and performance testing (October 2020) across
the Exchange and its affiliated options exchanges and in coordination
with other SCI entities. The Exchange also states that the proposed
rule changes will harmonize Exchange rules with those of other self-
regulatory organizations in furtherance of the coordination of testing
among SCI entities, thereby contributing the protection of investors
and the public interest. The Exchange further states that the proposed
rule change will simplify and streamline the process of notification to
TPHs designated to participate in the annual test and will ensure that
the Exchange and its affiliated options exchanges will be able to base
all member participation on the same designated quarter (e.g., Q1 2020)
for the upcoming annual test, thus resulting in more efficient
regulatory compliance and operations for investors across the
exchanges. Accordingly, the Commission believes that waiver of the 30-
day operative delay is consistent with the protection of investors and
the public interest. Therefore, the Commission hereby waives the 30-day
operative delay and designates the proposed rule change as operative
upon filing.\14\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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 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-C2-2020-003 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-C2-2020-003. 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-C2-2020-003 and should be submitted on
or before May 4, 2020.
[[Page 20556]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07649 Filed 4-10-20; 8:45 am]
BILLING CODE 8011-01-P
