Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 6, Section 5 (Transfer of Positions), 51809-51811 [2020-18347]
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2. Section 18(c) of the Act provides,
in relevant part, that a closed-end
investment company may not issue or
sell any senior security if, immediately
thereafter, the company has outstanding
more than one class of senior security.
Applicants state that the creation of
multiple classes of Shares of the Funds
may be prohibited by Section 18(c),
which is made applicable to BDCs
through Section 61(a) of the Act, as a
class may have priority over another
class as to payment of dividends
because shareholders of different classes
would pay different fees and expenses.
3. Section 18(i) of the Act provides
that each share of stock issued by a
registered management investment
company will be a voting stock and
have equal voting rights with every
other outstanding voting stock.
Applicants state that multiple classes of
shares of the Funds may violate Section
18(i) of the Act, which is made
applicable to BDCs through Section
61(a) of the Act, because each class
would be entitled to exclusive voting
rights with respect to matters solely
related to that class.
4. Section 6(c) of the Act provides that
the Commission may exempt any
person, security or transaction or any
class or classes of persons, securities or
transactions from any provision of the
Act, or from any rule or regulation
under the Act, if and to the extent such
exemption is necessary or appropriate
in the public interest and consistent
with the protection of investors and the
purposes fairly intended by the policy
and provisions of the Act. Applicants
request an exemption under Section 6(c)
from Sections 18(a)(2), 18(c) and 18(i)
(which are made applicable to BDCs by
Section 61(a) of the Act) to permit the
Funds to issue multiple classes of
Shares.
5. Applicants submit that the
proposed allocation of expenses relating
to distribution and voting rights among
multiple classes is equitable and will
not discriminate against any group or
class of shareholders. Applicants submit
that the proposed arrangements would
permit a Fund to facilitate the
distribution of its Shares and provide
investors with a broader choice of fee
options. Applicants assert that the
proposed BDC multiple class structure
does not raise the concerns underlying
Section 18 of the Act to any greater
degree than open-end management
investment companies’ multiple class
structures that are permitted by Rule
18f–3 under the Act.
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Applicants’ Condition
Applicants agree that any order
granting the requested relief will be
subject to the following condition:
1. Each Fund will comply with the
provisions of Rules 6c–10 (except to the
extent a Fund will comply with FINRA
Rule 2310 rather than FINRA Rule
2341), 12b–1, 17d–3, 18f–3, 22d–1, and,
where applicable, 11a–3 under the Act,
as amended from time to time, or any
successor rules thereto, as if those rules
applied to BDCs. In addition, each Fund
will comply with FINRA Rule 2310, as
amended from time to time, or any
successor rule thereto, and will make
available to any distributor of a Fund’s
shares all of the information necessary
to permit the distributor to prepare
client account statements in compliance
with FINRA Rule 2231.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–18336 Filed 8–20–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89576; File No. SR–GEMX–
2020–19]
Self-Regulatory Organizations; Nasdaq
GEMX, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Options 6,
Section 5 (Transfer of Positions)
August 17, 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 August 6,
2020, Nasdaq GEMX, LLC (‘‘GEMX’’ or
‘‘Exchange’’) 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).
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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51809
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Options 6, Section 5, titled ‘‘Transfer of
Positions.’’
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/gemx/rules, 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
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Options 6, Section 5, titled ‘‘Transfer of
Positions.’’ The proposed rule change is
similar to Cboe Exchange, Inc. (‘‘Cboe’’)
Rule 6.7.5
Options 6, Section 5 permits market
participants to move positions from one
account to another without first
exposure of the transaction on the
Exchange, provided certain exceptions
are met. Specifically, Options 6, Section
5(a)(2) 6 provides that transfers of
positions are permissible if from one
account to another account where no
change in ownership is involved (i.e.,
5 See Securities and Exchange Act Release No.
89389 (July 23, 2020), 85 FR 45709 (July 29, 2020)
(SR–Cboe–2020–067) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change
to Amend Rule 6.7 Concerning Off-Floor Transfers).
6 Options 6, Section 5(a) states, ‘‘Permissible
Transfers. Existing positions in options listed on
the Exchange of a Member or non-Member that are
to be transferred on, from, or to the books of a
Clearing Member may be transferred off the
Exchange if the transfer involves on or more of the
following events: . . . . . (2) the transfer of
positions from one account to another account
where no change in ownership is involved (i.e.,
accounts of the same Person, provided the accounts
are not in separate aggregation units or otherwise
subject to information barrier or account segregation
requirements; . . .’’
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accounts of the same Person),7 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 Options 6,
Section 5(d) and the restriction on
effecting these transfers repeatedly or
routinely.
The proposed rule change excepts
position transfers effected pursuant to
Options 6, Section(a)(2) from the prior
written notice requirement in paragraph
(d) and from repeated, recurring use
restriction in paragraph (g). Position
transfers pursuant to Options 6,
Section(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 position
transfer pursuant to Options 6, Section
5(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 Options 6, Section 5(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 Options 6,
Section 5(b), and thus may not result in
the closing of any positions. While the
position transfers permitted by Options
6, Section 5 were intended to
accommodate non-routine and nonrecurring transfers, the Exchange
believes permitting routine, recurring
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
7 For
purposes of this rule, the term ‘‘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. See Options 6, Section 5(a).
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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 Options 6, Section 5(d)(1), as the
method for determining the transfer
price is in paragraph (c) rather than
paragraph (e) of Options 6, Section 5.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,8 in general, and furthers the
objectives of Section 6(b)(5) of the Act.9
Specifically, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 10 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) 11 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
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
10 Id.
11 Id.
9 15
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open interest, the Exchange believes the
proposed rule change remains
consistent with the purpose of Options
6, Section 5, which was to prohibit use
of the 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 Options 6, Section 5(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
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Federal Register / Vol. 85, No. 163 / Friday, August 21, 2020 / Notices
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 position transfers
pursuant to Options 6, Section 5(a)(2)
on a recurring or routine basis without
providing the Exchange with notice of
such transfers. The Exchange does not
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 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
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 12 and Rule 19b–
4(f)(6) thereunder.13
A proposed rule change filed under
Rule 19b–4(f)(6) 14 normally does not
become operative for 30 days after the
date of the filing. However, pursuant to
Rule 19b–4(f)(6)(iii),15 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
12 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.
14 17 CFR 240.19b–4(f)(6).
15 17 CFR 240.19b–4(f)(6)(iii).
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13 17
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Exchange has asked the Commission to
waive the 30-day operative delay to so
that it may adopt the proposed position
transfer rules as soon as possible which,
according to the Exchange, would
benefit investors and the general public
because it will provide Participants with
the ability to request a transfer, for
limited, non-recurring types of transfers,
without the need for exposing those
orders on the Exchange. The proposed
rule change does not present any unique
or novel regulatory issues and is
substantively identical to provisions in
Cboe Rule 6.7. Accordingly, the
Commission hereby waives the
operative delay and designates the
proposal operative upon filing.16
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 rule-comments@
sec.gov. Please include File Number SR–
GEMX–2020–19 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–GEMX–2020–19. 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/
16 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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51811
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–GEMX–
2020–19 and should be submitted on or
before September 11, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–18347 Filed 8–20–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89585; File No. SR–CBOE–
2020–076]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating to Adopt Fees
for a Recently Adopted Data Product
Known as Intraday Open-Close Data
August 17, 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 August 3,
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
Commission is publishing this notice to
17 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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]]>Agencies
[Federal Register Volume 85, Number 163 (Friday, August 21, 2020)]
[Notices]
[Pages 51809-51811]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18347]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89576; File No. SR-GEMX-2020-19]
Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 6,
Section 5 (Transfer of Positions)
August 17, 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 August 6, 2020, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'')
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
The Exchange proposes to amend Options 6, Section 5, titled
``Transfer of Positions.''
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/gemx/rules, 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 Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Options 6, Section 5, titled
``Transfer of Positions.'' The proposed rule change is similar to Cboe
Exchange, Inc. (``Cboe'') Rule 6.7.\5\
---------------------------------------------------------------------------
\5\ See Securities and Exchange Act Release No. 89389 (July 23,
2020), 85 FR 45709 (July 29, 2020) (SR-Cboe-2020-067) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Amend Rule 6.7 Concerning Off-Floor Transfers).
---------------------------------------------------------------------------
Options 6, Section 5 permits market participants to move positions
from one account to another without first exposure of the transaction
on the Exchange, provided certain exceptions are met. Specifically,
Options 6, Section 5(a)(2) \6\ provides that transfers of positions are
permissible if from one account to another account where no change in
ownership is involved (i.e.,
[[Page 51810]]
accounts of the same Person),\7\ 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 Options 6, Section 5(d) and
the restriction on effecting these transfers repeatedly or routinely.
---------------------------------------------------------------------------
\6\ Options 6, Section 5(a) states, ``Permissible Transfers.
Existing positions in options listed on the Exchange of a Member or
non-Member that are to be transferred on, from, or to the books of a
Clearing Member may be transferred off the Exchange if the transfer
involves on or more of the following events: . . . . . (2) the
transfer of positions from one account to another account where no
change in ownership is involved (i.e., accounts of the same Person,
provided the accounts are not in separate aggregation units or
otherwise subject to information barrier or account segregation
requirements; . . .''
\7\ For purposes of this rule, the term ``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. See Options 6, Section 5(a).
---------------------------------------------------------------------------
The proposed rule change excepts position transfers effected
pursuant to Options 6, Section(a)(2) from the prior written notice
requirement in paragraph (d) and from repeated, recurring use
restriction in paragraph (g). Position transfers pursuant to Options 6,
Section(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 position transfer pursuant to Options 6,
Section 5(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 Options 6, Section 5(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 Options 6, Section
5(b), and thus may not result in the closing of any positions. While
the position transfers permitted by Options 6, Section 5 were intended
to accommodate non-routine and non-recurring transfers, the Exchange
believes permitting routine, recurring 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 Options 6, Section 5(d)(1), as the method for determining the
transfer price is in paragraph (c) rather than paragraph (e) of Options
6, Section 5.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Section
6(b)(5) of the Act.\9\ Specifically, the Exchange believes the proposed
rule change is consistent with the Section 6(b)(5) \10\ 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) \11\ requirement that the rules of an exchange not be designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ Id.
\11\ 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 Options 6, Section 5,
which was to prohibit use of the 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 Options 6, Section 5(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
[[Page 51811]]
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 position transfers pursuant to Options 6, Section 5(a)(2) on
a recurring or routine basis without providing the Exchange with notice
of such transfers. The Exchange does not 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 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
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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) \14\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission may
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 to so that it may
adopt the proposed position transfer rules as soon as possible which,
according to the Exchange, would benefit investors and the general
public because it will provide Participants with the ability to request
a transfer, for limited, non-recurring types of transfers, without the
need for exposing those orders on the Exchange. The proposed rule
change does not present any unique or novel regulatory issues and is
substantively identical to provisions in Cboe Rule 6.7. Accordingly,
the Commission hereby waives the operative delay and designates the
proposal operative upon filing.\16\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ 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 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-GEMX-2020-19 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-GEMX-2020-19. 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-GEMX-2020-19 and should be
submitted on or before September 11, 2020.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-18347 Filed 8-20-20; 8:45 am]
BILLING CODE 8011-01-P
