Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 6.7 Concerning Off-Floor Transfers, 45709-45711 [2020-16371]
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Federal Register / Vol. 85, No. 146 / Wednesday, July 29, 2020 / Notices
Plaza SW, Washington, DC 20260–1000.
Telephone: (202) 268–4800.
Michael J. Elston,
Secretary.
[FR Doc. 2020–16502 Filed 7–27–20; 11:15 am]
BILLING CODE 7710–12–P
POSTAL SERVICE
International Product Change—Priority
Mail Express International, Priority Mail
International, First-Class Package
International Service & Commercial
ePacket Agreement: Postal ServiceTM
ACTION:
Notice.
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a Priority
Mail Express International, Priority Mail
International, First-Class Package
International Service & Commercial
ePacket contract to the list of Negotiated
Service Agreements in the Competitive
Product List in the Mail Classification
Schedule.
SUMMARY:
DATES:
Date of notice: July 29, 2020.
FOR FURTHER INFORMATION CONTACT:
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 17,
2020, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
Rule 6.7. The text of the proposed rule
change is provided below.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
Rules of Cboe Exchange, Inc.
*
*
*
*
*
Christopher C. Meyerson, (202) 268–
7820.
Rule 6.7. Off-Floor Transfers of
Positions
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on July 23, 2020,
it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Express International,
Priority Mail International, First-Class
Package International Service &
Commercial ePacket Contract 7 to
Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2020–203 and CP2020–230.
(a)–(c) No change.
(d) Prior Written Notice. A Trading
Permit Holder(s) and its Clearing
Trading Permit Holder(s) (to the extent
that the Trading Permit Holder is not
self-clearing) must submit to the
Exchange, in a manner determined by
the Exchange, written notice prior to
effecting an off-floor transfer from or to
the account(s) of a Trading Permit
Holder(s), except that notification is not
required for transfers [to correct
errors]effected pursuant to subparagraph
(a)(1) or (a)(2) of this Rule.
(1) The notice must indicate (A) the
Exchange-listed options positions to be
transferred, (B) the nature of the
transaction, (C) the enumerated
provision(s) under paragraph (a)
pursuant to which the positions are
being transferred, (D) the name of the
counterparty(ies), (E) the anticipated
transfer date, (F) the method for
determining the transfer price under
paragraph [(d) below](c) above, and (G)
any other information requested by the
Exchange.
*
*
*
*
*
(g) Routine, Recurring Transfers. The
off-floor transfer procedure set forth in
SUPPLEMENTARY INFORMATION:
Joshua J. Hofer,
Attorney, Federal Compliance.
[FR Doc. 2020–16439 Filed 7–28–20; 8:45 am]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89389; File No. SR–CBOE–
2020–067]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 6.7
Concerning Off-Floor Transfers
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).
July 23, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
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17:23 Jul 28, 2020
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45709
this Rule is intended to facilitate nonroutine, non-recurring movements of
positions[. The off-floor transfer
procedure] and is not to be used
repeatedly or routinely[ in
circumvention of the normal auction
market process], except for transfers
between accounts of the same Person
pursuant to subparagraph (a)(2). The
off-floor transfer procedure may not be
used in circumvention of the normal
auction process.
*
*
*
*
*
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Rule 6.7 describes exceptions to the
prohibition against off-floor transactions
set forth in Rule 5.12, subject to certain
conditions. The exception in Rule
6.7(a)(2) provides that off-floor transfers
of positions are permissible if from one
account to another account where no
change in ownership is involved (i.e.,
accounts of the same Person),5 provided
the accounts are not in separate
aggregation units or otherwise subject to
information barrier or account
segregation requirements. These
transfers are subject to, among other
things, the requirement to submit prior
written notice of the transfers to the
Exchange pursuant to paragraph (d) and
5 Rule 1.1 defines ‘‘Person’’ as an individual,
partnership (general or limited), joint stock
company, corporation, limited liability company,
trust, or unincorporated organization, or any
governmental entity or agency or political
subdivision thereof.
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29JYN1
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Federal Register / Vol. 85, No. 146 / Wednesday, July 29, 2020 / Notices
the restriction on effecting these
transfers repeatedly or routinely.
The proposed rule change excepts offfloor position transfers effected
pursuant to Rule 6.7(a)(2) from the prior
written notice requirement in paragraph
(d) and from repeated, recurring use
restriction in paragraph (g). Off-floor
position transfers pursuant to Rule
6.7(a)(2) do not involve a change in
ownership. In other words, such
transfers may only occur between the
same individual or legal entity. These
types of transfers are merely transfers of
positions from one account to another,
both of which accounts are attributable
to the same individual or legal entity,
and thus the transferred option
positions will continue to be
attributable to the same Person. A
market participant effecting an off-floor
position transfer pursuant to Rule
6.7(a)(2) is analogous to an individual
transferring funds from a checking
account to a savings account, or from an
account at one bank to an account at
another bank—the money still belongs
to the same person, who is just holding
it in a different account for personal
financial reasons.
Because there is no change in
ownership of positions transferred
pursuant to Rule 6.7(a)(2), the Exchange
believes it is appropriate to permit them
to occur as routinely and repeatedly as
a market participant would like. These
transfers will continue to be subject to
the prohibition on netting set forth in
Rule 6.7(b), and thus may not result in
the closing of any positions. While the
off-floor position transfers permitted by
Rule 6.7 were intended to accommodate
non-routine and non-recurring transfers,
the Exchange believes permitting
routine, recurring off-floor position
transfers that do not result in a change
in ownership or reduction in open
interest is consistent with the purpose
of not being used to circumvent the
normal auction purpose. Additionally,
given that these transfers may occur on
a regular basis in accordance with a
market participants’ business needs and
procedures, the Exchange believes prior
written notice would be onerous and
would not serve any purpose given the
lack of change in ownership and in
open interest. The Exchange believes
this will provide market participants
with additional flexibility to structure
their option position accounts as they
believe is appropriate and move their
positions between accounts as they
deem necessary and appropriate for
their business and trading needs,
including for risk management
purposes.
The proposed rule change also
corrects an erroneous cross-reference in
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17:23 Jul 28, 2020
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Rule 6.7(d)(1), as the method for
determining the transfer price is in
paragraph (c) rather than paragraph (d)
of Rule 6.7.
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.6 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 7 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) 8 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
the proposed rule change will 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 because it will provide
market participants with a more
efficient process to transfer open
positions between their own accounts in
accordance with their own business and
trading needs, including to respond to
then-current market conditions. Because
these transfers would not result in a
change in ownership or a reduction in
open interest, the Exchange believes the
proposed rule change remains
consistent with the purpose of Rule 6.7,
which was to prohibit use of the offfloor transfer procedure in
circumvention of the normal auction
process, as the normal auction process
involves the opening or closing of
positions through a transaction among
multiple market participants. Market
participants may maintain different
accounts for a variety of reasons, such
as the structure of their businesses, the
manner in which they trade, their risk
management procedures, and for capital
PO 00000
6 15
7 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
8 Id.
Frm 00137
Fmt 4703
Sfmt 4703
purposes. Given that these transfers may
occur on a regular basis in accordance
with a market participants’ business
needs and procedures, the Exchange
believes prior written notice would be
onerous and would not serve any
purpose given the lack of change in
ownership and in open interest.
Therefore, the proposed rule change
will benefit investors by permitting
market participants to manage the open
positions in their accounts in a manner
consistent with their businesses.
The Exchange recognizes the
numerous benefits of executing options
transactions on an exchange, including
price transparency, potential price
improvement, and a clearing guarantee.
However, the Exchange believes it is
appropriate to permit position transfers
among accounts of the same individual
or legal entity where there is no impact
on open interest to occur off the
exchange, as these benefits are
inapplicable to those transfers. These
transfers have a narrow scope and are
intended to permit market participants
to achieve their own business needs.
These transfers are not intended to be a
competitive trading tool. There is no
need for price discovery or
improvement, as the transfer merely
moves positions to different accounts
for the same Person and does not open
or close any positions. These transfers
will result in no change in ownership.
The transactions that resulted in the
open positions to be transferred
pursuant to Rule 6.7(a)(2) were already
guaranteed by a clearing member of The
Options Clearing Corporation (‘‘OCC’’),
and the positions may not be closed
pursuant to the transfer and will
continue to be subject to OCC rules, as
they will continue to be held in an
account with an OCC clearing member.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change is not intended to
address competitive issues. 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 proposed rule change will
apply to all market participants in the
same manner. All market participants
will be able to effect off-floor position
transfers pursuant to Rule 6.7(a)(2) on a
recurring or routine basis without
providing the Exchange with notice of
such transfers. The Exchange does not
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Federal Register / Vol. 85, No. 146 / Wednesday, July 29, 2020 / Notices
believe 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 it relates
solely to the notice required for off-floor
transfers that may occur today, and the
frequency with which those transfers
may occur. These transfers will
continue to not result in a change in
ownership or netting, and thus will
have no impact on outstanding option
positions.
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 filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 9 and Rule
19b–4(f)(6) thereunder.10 Because the
foregoing proposed rule change does
not: (i) Significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 11 and Rule 19b–
4(f)(6) 12 thereunder.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
11 15 U.S.C. 78s(b)(3)(A).
12 17 CFR 240.19b–4(f)(6).
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CBOE–2020–067. 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;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–CBOE–
2020–067 and should be submitted on
or before August 19, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
J. Matthew DeLesDernier,
Assistant Secretary.
BILLING CODE 8011–01–P
10 17
17:23 Jul 28, 2020
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2020–067 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89388; File No. SR–
NYSENAT–2020–23]
Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Rule 7.37 To
Add the Data Source for MEMX
July 23, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on July 14,
2020, NYSE National, Inc. (‘‘NYSE
National’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. 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
The Exchange proposes to amend
Rule 7.37 to update the Exchange’s
source of data feeds from MEMX LLC
(‘‘MEMX’’) for purposes of order
handling, order execution, order
routing, and regulatory compliance. The
proposed rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, 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
self-regulatory organization 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 those 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 parts of such
statements.
[FR Doc. 2020–16371 Filed 7–28–20; 8:45 am]
9 15
VerDate Sep<11>2014
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1 15
U.S.C.78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
13 17
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CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 85, Number 146 (Wednesday, July 29, 2020)]
[Notices]
[Pages 45709-45711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16371]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89389; File No. SR-CBOE-2020-067]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 6.7 Concerning Off-Floor Transfers
July 23, 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 July 17, 2020, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend Rule 6.7. The text of the proposed rule change is provided
below.
(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 6.7. Off-Floor Transfers of Positions
(a)-(c) No change.
(d) Prior Written Notice. A Trading Permit Holder(s) and its
Clearing Trading Permit Holder(s) (to the extent that the Trading
Permit Holder is not self-clearing) must submit to the Exchange, in a
manner determined by the Exchange, written notice prior to effecting an
off-floor transfer from or to the account(s) of a Trading Permit
Holder(s), except that notification is not required for transfers [to
correct errors]effected pursuant to subparagraph (a)(1) or (a)(2) of
this Rule.
(1) The notice must indicate (A) the Exchange-listed options
positions to be transferred, (B) the nature of the transaction, (C) the
enumerated provision(s) under paragraph (a) pursuant to which the
positions are being transferred, (D) the name of the counterparty(ies),
(E) the anticipated transfer date, (F) the method for determining the
transfer price under paragraph [(d) below](c) above, and (G) any other
information requested by the Exchange.
* * * * *
(g) Routine, Recurring Transfers. The off-floor transfer procedure
set forth in this Rule is intended to facilitate non-routine, non-
recurring movements of positions[. The off-floor transfer procedure]
and is not to be used repeatedly or routinely[ in circumvention of the
normal auction market process], except for transfers between accounts
of the same Person pursuant to subparagraph (a)(2). The off-floor
transfer procedure may not be used in circumvention of the normal
auction process.
* * * * *
The text of the proposed rule change is also available on the
Exchange's website (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Rule 6.7 describes exceptions to the prohibition against off-floor
transactions set forth in Rule 5.12, subject to certain conditions. The
exception in Rule 6.7(a)(2) provides that off-floor transfers of
positions are permissible if from one account to another account where
no change in ownership is involved (i.e., accounts of the same
Person),\5\ provided the accounts are not in separate aggregation units
or otherwise subject to information barrier or account segregation
requirements. These transfers are subject to, among other things, the
requirement to submit prior written notice of the transfers to the
Exchange pursuant to paragraph (d) and
[[Page 45710]]
the restriction on effecting these transfers repeatedly or routinely.
---------------------------------------------------------------------------
\5\ Rule 1.1 defines ``Person'' as an individual, partnership
(general or limited), joint stock company, corporation, limited
liability company, trust, or unincorporated organization, or any
governmental entity or agency or political subdivision thereof.
---------------------------------------------------------------------------
The proposed rule change excepts off-floor position transfers
effected pursuant to Rule 6.7(a)(2) from the prior written notice
requirement in paragraph (d) and from repeated, recurring use
restriction in paragraph (g). Off-floor position transfers pursuant to
Rule 6.7(a)(2) do not involve a change in ownership. In other words,
such transfers may only occur between the same individual or legal
entity. These types of transfers are merely transfers of positions from
one account to another, both of which accounts are attributable to the
same individual or legal entity, and thus the transferred option
positions will continue to be attributable to the same Person. A market
participant effecting an off-floor position transfer pursuant to Rule
6.7(a)(2) is analogous to an individual transferring funds from a
checking account to a savings account, or from an account at one bank
to an account at another bank--the money still belongs to the same
person, who is just holding it in a different account for personal
financial reasons.
Because there is no change in ownership of positions transferred
pursuant to Rule 6.7(a)(2), the Exchange believes it is appropriate to
permit them to occur as routinely and repeatedly as a market
participant would like. These transfers will continue to be subject to
the prohibition on netting set forth in Rule 6.7(b), and thus may not
result in the closing of any positions. While the off-floor position
transfers permitted by Rule 6.7 were intended to accommodate non-
routine and non-recurring transfers, the Exchange believes permitting
routine, recurring off-floor position transfers that do not result in a
change in ownership or reduction in open interest is consistent with
the purpose of not being used to circumvent the normal auction purpose.
Additionally, given that these transfers may occur on a regular basis
in accordance with a market participants' business needs and
procedures, the Exchange believes prior written notice would be onerous
and would not serve any purpose given the lack of change in ownership
and in open interest. The Exchange believes this will provide market
participants with additional flexibility to structure their option
position accounts as they believe is appropriate and move their
positions between accounts as they deem necessary and appropriate for
their business and trading needs, including for risk management
purposes.
The proposed rule change also corrects an erroneous cross-reference
in Rule 6.7(d)(1), as the method for determining the transfer price is
in paragraph (c) rather than paragraph (d) of Rule 6.7.
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.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ 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) \8\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
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In particular, the Exchange believes the proposed rule change will
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 because it will provide market
participants with a more efficient process to transfer open positions
between their own accounts in accordance with their own business and
trading needs, including to respond to then-current market conditions.
Because these transfers would not result in a change in ownership or a
reduction in open interest, the Exchange believes the proposed rule
change remains consistent with the purpose of Rule 6.7, which was to
prohibit use of the off-floor transfer procedure in circumvention of
the normal auction process, as the normal auction process involves the
opening or closing of positions through a transaction among multiple
market participants. Market participants may maintain different
accounts for a variety of reasons, such as the structure of their
businesses, the manner in which they trade, their risk management
procedures, and for capital purposes. Given that these transfers may
occur on a regular basis in accordance with a market participants'
business needs and procedures, the Exchange believes prior written
notice would be onerous and would not serve any purpose given the lack
of change in ownership and in open interest. Therefore, the proposed
rule change will benefit investors by permitting market participants to
manage the open positions in their accounts in a manner consistent with
their businesses.
The Exchange recognizes the numerous benefits of executing options
transactions on an exchange, including price transparency, potential
price improvement, and a clearing guarantee. However, the Exchange
believes it is appropriate to permit position transfers among accounts
of the same individual or legal entity where there is no impact on open
interest to occur off the exchange, as these benefits are inapplicable
to those transfers. These transfers have a narrow scope and are
intended to permit market participants to achieve their own business
needs. These transfers are not intended to be a competitive trading
tool. There is no need for price discovery or improvement, as the
transfer merely moves positions to different accounts for the same
Person and does not open or close any positions. These transfers will
result in no change in ownership. The transactions that resulted in the
open positions to be transferred pursuant to Rule 6.7(a)(2) were
already guaranteed by a clearing member of The Options Clearing
Corporation (``OCC''), and the positions may not be closed pursuant to
the transfer and will continue to be subject to OCC rules, as they will
continue to be held in an account with an OCC clearing member.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not intended to address competitive issues. 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 proposed rule change
will apply to all market participants in the same manner. All market
participants will be able to effect off-floor position transfers
pursuant to Rule 6.7(a)(2) on a recurring or routine basis without
providing the Exchange with notice of such transfers. The Exchange does
not
[[Page 45711]]
believe 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 it relates solely to the notice required
for off-floor transfers that may occur today, and the frequency with
which those transfers may occur. These transfers will continue to not
result in a change in ownership or netting, and thus will have no
impact on outstanding option positions.
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 filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
Because the foregoing proposed rule change does not: (i) Significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\
thereunder.
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
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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 will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CBOE-2020-067 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2020-067. 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; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2020-067 and should be
submitted on or before August 19, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
J. Matthew DeLesDernier,
Assistant Secretary.
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\13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2020-16371 Filed 7-28-20; 8:45 am]
BILLING CODE 8011-01-P
