Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 5.24, 56658-56661 [2020-20133]
Download as PDF
<![CDATA[
56658
Federal Register / Vol. 85, No. 178 / Monday, September 14, 2020 / Notices
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.
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:
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–CboeEDGA–2020–025 and
should be submitted on or before
October 5, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–20121 Filed 9–11–20; 8:45 am]
BILLING CODE 8011–01–P
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–
CboeEDGA–2020–025 on the subject
line.
khammond on DSKJM1Z7X2PROD with NOTICES
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–CboeEDGA–2020–025. 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.
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 fulfilled this requirement.
VerDate Sep<11>2014
17:51 Sep 11, 2020
Jkt 250001
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meetings
2:00 p.m. on Wednesday,
September 16, 2020.
PLACE: The meeting will be held via
remote means and/or at the
Commission’s headquarters, 100 F
Street NE, Washington, DC 20549.
STATUS: This meeting will be closed to
the public.
MATTERS TO BE CONSIDERED:
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the closed meeting. Certain
staff members who have an interest in
the matters also may be present.
In the event that the time, date, or
location of this meeting changes, an
announcement of the change, along with
the new time, date, and/or place of the
meeting will be posted on the
Commission’s website at https://
www.sec.gov.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B)
and (10) and 17 CFR 200.402(a)(3),
(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and
(a)(10), permit consideration of the
scheduled matters at the closed meeting.
The subject matter of the closed
meeting will consist of the following
topic:
Institution and settlement of
injunctive actions;
Institution and settlement of
administrative proceedings;
Resolution of litigation claims; and
Other matters relating to enforcement
proceedings.
At times, changes in Commission
priorities require alterations in the
TIME AND DATE:
10 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00087
Fmt 4703
Sfmt 4703
scheduling of meeting agenda items that
may consist of adjudicatory,
examination, litigation, or regulatory
matters.
CONTACT PERSON FOR MORE INFORMATION:
For further information; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
Dated: September 9, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020–20271 Filed 9–10–20; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89789; File No. SR–CBOE–
2020–081]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 5.24
September 8, 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
31, 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 5.24. The text of the proposed rule
change is provided below.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
Rules of Cboe Exchange, Inc.
*
*
*
*
*
Rule 5.24. Disaster Recovery
(a)—(d) No change.
(e) Loss of Trading Floor. If the
Exchange trading floor becomes
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
E:\FR\FM\14SEN1.SGM
14SEN1
Federal Register / Vol. 85, No. 178 / Monday, September 14, 2020 / Notices
inoperable, the Exchange will continue
to operate in a screen-based only
environment using a floorless
configuration of the System that is
operational while the trading floor
facility is inoperable. The Exchange will
operate using this configuration only
until the Exchange’s trading floor
facility is operational. Open outcry
trading will not be available in the event
the trading floor becomes inoperable,
except in accordance with paragraph (2)
below and pursuant to Rule 5.26, as
applicable.
(1) Applicable Rules. In the event that
the trading floor becomes inoperable,
trading will be conducted pursuant to
all applicable System Rules, except that
open outcry Rules will not be in force,
including but not limited to the Rules
(or applicable portions of the Rules) in
Chapter 5, Section G, and as follows
(subparagraphs (A) through (E) will be
effective until [August 31]N September
30, 2020):
*
*
*
*
*
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/About
CBOE/CBOELegalRegulatory
Home.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 the
Statutory Basis for, the Proposed Rule
Change
khammond on DSKJM1Z7X2PROD with NOTICES
1. Purpose
The Exchange proposes to amend
Rule 5.24 regarding the Exchange’s
business continuity and disaster
recovery plans. Rule 5.24 describes
which Trading Permit Holders (‘‘TPHs’’)
are required to connect to the
Exchange’s backup systems as well as
certain actions the Exchange may take
as part of its business continuity plans
VerDate Sep<11>2014
17:51 Sep 11, 2020
Jkt 250001
so that it may maintain fair and orderly
markets if unusual circumstances
occurred that could impact the
Exchange’s ability to conduct business.
This includes what actions the
Exchange would take if its trading floor
became inoperable. Specifically, Rule
5.24(e) states if the Exchange trading
floor becomes inoperable, the Exchange
will continue to operate in a screenbased only environment using a
floorless configuration of the System
that is operational while the trading
floor facility is inoperable. The
Exchange would operate using that
configuration only until the Exchange’s
trading floor facility became
operational. Open outcry trading would
not be available in the event the trading
floor becomes inoperable.5
Rule 5.24(e)(1) currently states in the
event that the trading floor becomes
inoperable, trading will be conducted
pursuant to all applicable System Rules,
except that open outcry Rules would not
be in force, including but not limited to
the Rules (or applicable portions) in
Chapter 5, Section G,6 and that all nontrading rules of the Exchange would
continue to apply. The Exchange
recently adopted several rule changes
that would apply during a time in
which the trading floor in inoperable,
which are effective until August 31,
2020.7 The Exchange believes these
rules were necessary to implement to
maintain a fair and orderly market while
the trading floor was not operable in
order to create an all-electronic trading
environment similar to the otherwise
unavailable open outcry trading
environment.
As of March 16, 2020, the Exchange
suspended open outcry trading to help
prevent the spread of COVID–19.8 The
5 Pursuant to Rule 5.26, the Exchange may enter
into a back-up trading arrangement with another
exchange, which could allow the Exchange to use
the facilities of a back-up exchange to conduct
trading of certain of its products. The Exchange
currently has no back-up trading arrangement in
place with another exchange.
6 Chapter 5, Section G of the Exchange’s rulebook
sets forth the rules and procedures for manual order
handling and open outcry trading on the Exchange.
7 See Securities Exchange Act Release Nos. 88386
(March 13, 2020), 85 FR 15823 (March 19, 2020)
(SR–CBOE–2020–019); 88447 (March 20, 2020), 85
FR 17129 (March 26, 2020) (SR–CBOE–2020–023);
88490 (March 26, 2020), 85 FR 18318 (April 1,
2020) (SR–CBOE–2020–026); 88530 (March 31,
2020), 85 FR 19182 (April 6, 2020) (SR–CBOE–
2020–031); 88886 (May 15, 2020), 85 FR 31008
(May 21, 2020) (SR–CBOE–2020–047); and 89307
(July 14, 2020), 85 FR 43938 (July 20, 2020) (SR–
CBOE–2020–066).
8 On March 11, 2020, the World Health
Organization characterized COVID–19 as a
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
56659
trading floor remained closed until June
15, 2020. During the time when the
trading floor was closed, the Exchange
operated in an all-electronic trading
environment and the temporary rules in
Rule 5.24(e)(1) applied to that electronic
trading environment. The Exchange
believes that, while those temporary
rules did not fully replicate open outcry
trading, they allowed all-electronic
trading to occur more similarly to open
outcry trading.9
The trading floor is currently open for
open outcry trading, and the Exchange
is operating pursuant to its normal
hybrid trading rules. The Exchange
implemented numerous health and
safety measures in connection with the
reopening of the trading floor on June
15, 2020 to help protect the safety and
welfare of the trading floor community
and help prevent the continued spread
of COVID–19.10 However, the Exchange
recognizes the ongoing nature of the
COVID–19 pandemic in the United
States, which may cause the Exchange
to once again close its trading floor.
In the event the Exchange did close its
trading floor again, the Exchange
believes it would be necessary to again
apply the recently adopted temporary
rules in Rule 5.24(e)(1) to maintain a fair
and orderly market while the trading
floor was not operable in order to create
pandemic and to slow the spread of the disease,
federal and state officials implemented socialdistancing measures, placed significant limitations
on large gatherings, limited travel, and closed nonessential businesses.
9 The Exchange continues to consider other
enhancements to the all-electronic trading
configuration that it believes may permit this
configuration to further replicate the open outcry
trading environment. The Exchange would submit
separate rule filings for any such proposed
enhancements. The Exchange notes it recently
submitted a separate rule filing to adopt a virtual
trading floor, which the Exchange may determine
to make available if the trading floor becomes
inoperable. See Securities Exchange Act Release
No. 89131 (June 23, 2020), 85 FR 38951 (June 29,
2020) (SR–CBOE–2020–055). If the Commission
approves that filing, and the trading floor
subsequently becomes inoperable and the Exchange
makes the virtual trading floor available, the
temporary rules in Rule 5.24(e)(1) would not be in
effect (the Exchange submitted partial Amendment
No. 1 to SR–CBOE–2020–055 to make that clear).
Separately, the Exchange believes the temporary
rules in Rule 5.24(e)(1) should be effective for a
period of time while the virtual trading floor is
available, the Exchange will submit a separately
rule filing to propose that change.
10 See Exchange Notice C2020052601, Standards
of Conduct related to the Reopening of the Cboe
Options Trading Floor and COVID–19 (May 26,
2020), available at https://cdn.cboe.com/resources/
release_notes/2020/Standards-of-Conduct-relatedto-the-Reopening-of-the-Cboe-Options-TradingFloor-Notice-Final.pdf.
E:\FR\FM\14SEN1.SGM
14SEN1
56660
Federal Register / Vol. 85, No. 178 / Monday, September 14, 2020 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
an all-electronic trading environment
similar to the otherwise unavailable
open outcry trading environment. As
noted above, Rule 5.24(e)(1) is effective
only until August 31, 2020 (and the
rules became inapplicable upon the
reopening of the trading floor on June
15, 2020). Given the Exchange may
believe it is appropriate to close the
trading floor with little advanced notice
and in a short timeframe to help protect
the safety and welfare of the trading
floor community, the Exchange
proposes to extend the effectiveness of
the temporary rules in Rule 5.24(e)(1) to
September 30, 2020 (unless further
extended). The Exchange believes this
will permit the Exchange to as
seamlessly as possible transition back to
an all-electronic trading environment.
The Exchange notes Rule 5.24(e)(1) will
not apply to trading during times when
the trading floor remains operable.
Previously when the temporary
provisions of Rule 5.24(e)(1) were in
place, the Exchange’s Regulatory
Division has continued its standard
routine surveillance reviews for
electronic trading and implemented a
regulatory plan to surveil the rules in
place in Rule 5.24(e)(1) when operating
in a screen-based only environment. In
the event the Exchange closes its trading
floor again and the temporary
provisions in Rule 5.24(e)(1) become
applicable in an all-electronic trading
environment, the Exchange’s Regulatory
Division would reimplement that
regulatory plan to surveil those rules.
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.11 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 12 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
11 15
12 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
VerDate Sep<11>2014
17:51 Sep 11, 2020
the Section 6(b)(5) 13 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, protect investors and the public
interest by permitting the Exchange to
as seamlessly as possible transition back
to an all-electronic trading environment
in the event the Exchange determines it
is appropriate to again close its trading
floor. The Exchange expects it would
take this action if it believes necessary
and appropriate to help protect the
safety and welfare of the trading
community. Such a determination may
occur with little advance notice, and
closure of the trading floor may need to
occur in a short time frame. The
Exchange continues to believe the
recent amendments to Rule 5.24(e)(1)
allowed all-electronic trading to occur
more similarly to open outcry trading
while the trading floor was closed. The
Exchange believes the proposed rule
change is necessary and appropriate to
provide TPHs with execution
opportunities in an all-electronic
trading environment for orders that
generally execute in open outcry
trading. Additionally, the proposed rule
change will provide TPHs with an allelectronic trading environment to which
they became accustomed when the
trading floor was previously closed, and
therefore will provide investors with
consistent rules that apply when the
Exchange operates in an all-electronic
environment. The proposed rule change
will provide investors with definitive
knowledge of what rules will apply
when the trading floor is closed.
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 as
a competitive filing, but rather extends
the effectiveness of temporary rules as
part of the Exchange’s business
continuity plans, which are intended to
allow the Exchange to continue to
maintain fair and orderly markets while
the Exchange’s trading floor continues
to be inoperable.
13 Id.
Jkt 250001
PO 00000
Frm 00089
Fmt 4703
Sfmt 4703
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 14 and Rule 19b–
4(f)(6) thereunder.15
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 16 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 17
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 operative
immediately. The Exchange believes
extension of the temporary rules put in
place due to the ongoing COVID–19
pandemic will permit the Exchange to
minimize disruptions in the market
during a transition back to an allelectronic trading environment if the
Exchange believes it is necessary and
appropriate to help protect the safety
and welfare of the trading community.
The Commission believes that waiving
the 30-day operative delay is consistent
with the protection of investors and the
public interest as it will allow the
temporary rules to continue with
minimal interruption, thereby avoiding
investor confusion that could result
from an interruption in the effectiveness
of the rules. Accordingly, the
Commission hereby waives the
operative delay and designates the
14 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 Commission
has waived the five business day notification
requirement for this proposed rule change.
16 17 CFR 240.19b–4(f)(6).
17 17 CFR 240.19b–4(f)(6)(iii).
15 17
E:\FR\FM\14SEN1.SGM
14SEN1
khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 85, No. 178 / Monday, September 14, 2020 / Notices
proposed rule change operative upon
filing.18
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CBOE–2020–081 and
should be submitted on or before
October 5, 2020.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
J. Matthew DeLesDernier,
Assistant Secretary.
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2020–081 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comment:
• 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–2020–081. 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
18 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
VerDate Sep<11>2014
17:51 Sep 11, 2020
Jkt 250001
[FR Doc. 2020–20133 Filed 9–11–20; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–89782; File No. SR–Phlx–
2020–42]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Rule 3304
September 8, 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 August
27, 2020, Nasdaq PHLX LLC (‘‘Phlx’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘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
The Exchange proposes to amend
Rule 3304 (Data Feeds Utilized) to add
the Long-Term Stock Exchange, Inc.
(‘‘LTSE’’), MIAX PEARL, LLC (‘‘MIAX
PEARL’’) and MEMX LLC (‘‘MEMX’’) to
the list of market centers under Rule
3304 and provide that the Exchange will
utilize CQS/UQDF.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00090
Fmt 4703
Sfmt 4703
56661
rulebook/phlx/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
In anticipation of their planned
launches 3 the Exchange proposes to
amend the table in Rule 3304 to include
LTSE, MIAX Pearl and MEMX. The
Exchange will use securities
information processor (‘‘SIP’’) data, i.e.,
CQS SIP data, for securities reported
under the Consolidated Quotation
System and Consolidated Quotation
Plan and UQDF SIP data for securities
reported under the Nasdaq Unlisted
Trading Privileges Plan to obtain LTSE,
MIAX Pearl and MEMX quotation
information for the handling, routing
and execution of orders, as well as for
the regulatory compliance processes
related to those functions. At this stage,
no secondary source for LTSE, MIAX
Pearl or MEMX will be used.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,4 in general, and furthers the
objectives of Section 6(b)(5) of the Act,5
in particular, in that it is designed to
promote just and equitable principles of
3 LTSE plans to begin phase-in production of
securities on August, 28, 2020. See LTSE Market
Announcement available at, https://
assets.ctfassets.net/cchj2z2dcfyd/
rnGvgggJUplaIk6N1xNA7/
41926d3925a177d6455868090c46aeda/MA-2020020__Production_Securities_Launching_August_
28_-_Google_Docs.pdf. MIAX Pearl Equities will
begin trading in September 2020, pending SEC
approval. See MIAX Pearl Alerts available at,
https://www.miaxoptions.com/alerts/2020/02/14/
miax-pearl-equities-exchange-codes-and-importantdates-regarding-launch-new. MEMX is expected to
launch on September 4, 2020. See MEMX Update
from Jonathan Kellner, dated June 11, 2020,
available at https://memx.com/memx-update/.
4 15 U.S.C. 78f(b).
5 15 U.S.C. 78f(b)(5).
E:\FR\FM\14SEN1.SGM
14SEN1
]]>Agencies
[Federal Register Volume 85, Number 178 (Monday, September 14, 2020)]
[Notices]
[Pages 56658-56661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20133]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89789; File No. SR-CBOE-2020-081]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 5.24
September 8, 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 31, 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 5.24. The text of the proposed rule change is provided
below.
(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 5.24. Disaster Recovery
(a)--(d) No change.
(e) Loss of Trading Floor. If the Exchange trading floor becomes
[[Page 56659]]
inoperable, the Exchange will continue to operate in a screen-based
only environment using a floorless configuration of the System that is
operational while the trading floor facility is inoperable. The
Exchange will operate using this configuration only until the
Exchange's trading floor facility is operational. Open outcry trading
will not be available in the event the trading floor becomes
inoperable, except in accordance with paragraph (2) below and pursuant
to Rule 5.26, as applicable.
(1) Applicable Rules. In the event that the trading floor becomes
inoperable, trading will be conducted pursuant to all applicable System
Rules, except that open outcry Rules will not be in force, including
but not limited to the Rules (or applicable portions of the Rules) in
Chapter 5, Section G, and as follows (subparagraphs (A) through (E)
will be effective until [August 31]N September 30, 2020):
* * * * *
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 5.24 regarding the Exchange's
business continuity and disaster recovery plans. Rule 5.24 describes
which Trading Permit Holders (``TPHs'') are required to connect to the
Exchange's backup systems as well as certain actions the Exchange may
take as part of its business continuity plans so that it may maintain
fair and orderly markets if unusual circumstances occurred that could
impact the Exchange's ability to conduct business. This includes what
actions the Exchange would take if its trading floor became inoperable.
Specifically, Rule 5.24(e) states if the Exchange trading floor becomes
inoperable, the Exchange will continue to operate in a screen-based
only environment using a floorless configuration of the System that is
operational while the trading floor facility is inoperable. The
Exchange would operate using that configuration only until the
Exchange's trading floor facility became operational. Open outcry
trading would not be available in the event the trading floor becomes
inoperable.\5\
---------------------------------------------------------------------------
\5\ Pursuant to Rule 5.26, the Exchange may enter into a back-up
trading arrangement with another exchange, which could allow the
Exchange to use the facilities of a back-up exchange to conduct
trading of certain of its products. The Exchange currently has no
back-up trading arrangement in place with another exchange.
---------------------------------------------------------------------------
Rule 5.24(e)(1) currently states in the event that the trading
floor becomes inoperable, trading will be conducted pursuant to all
applicable System Rules, except that open outcry Rules would not be in
force, including but not limited to the Rules (or applicable portions)
in Chapter 5, Section G,\6\ and that all non-trading rules of the
Exchange would continue to apply. The Exchange recently adopted several
rule changes that would apply during a time in which the trading floor
in inoperable, which are effective until August 31, 2020.\7\ The
Exchange believes these rules were necessary to implement to maintain a
fair and orderly market while the trading floor was not operable in
order to create an all-electronic trading environment similar to the
otherwise unavailable open outcry trading environment.
---------------------------------------------------------------------------
\6\ Chapter 5, Section G of the Exchange's rulebook sets forth
the rules and procedures for manual order handling and open outcry
trading on the Exchange.
\7\ See Securities Exchange Act Release Nos. 88386 (March 13,
2020), 85 FR 15823 (March 19, 2020) (SR-CBOE-2020-019); 88447 (March
20, 2020), 85 FR 17129 (March 26, 2020) (SR-CBOE-2020-023); 88490
(March 26, 2020), 85 FR 18318 (April 1, 2020) (SR-CBOE-2020-026);
88530 (March 31, 2020), 85 FR 19182 (April 6, 2020) (SR-CBOE-2020-
031); 88886 (May 15, 2020), 85 FR 31008 (May 21, 2020) (SR-CBOE-
2020-047); and 89307 (July 14, 2020), 85 FR 43938 (July 20, 2020)
(SR-CBOE-2020-066).
---------------------------------------------------------------------------
As of March 16, 2020, the Exchange suspended open outcry trading to
help prevent the spread of COVID-19.\8\ The trading floor remained
closed until June 15, 2020. During the time when the trading floor was
closed, the Exchange operated in an all-electronic trading environment
and the temporary rules in Rule 5.24(e)(1) applied to that electronic
trading environment. The Exchange believes that, while those temporary
rules did not fully replicate open outcry trading, they allowed all-
electronic trading to occur more similarly to open outcry trading.\9\
---------------------------------------------------------------------------
\8\ On March 11, 2020, the World Health Organization
characterized COVID-19 as a pandemic and to slow the spread of the
disease, federal and state officials implemented social-distancing
measures, placed significant limitations on large gatherings,
limited travel, and closed non-essential businesses.
\9\ The Exchange continues to consider other enhancements to the
all-electronic trading configuration that it believes may permit
this configuration to further replicate the open outcry trading
environment. The Exchange would submit separate rule filings for any
such proposed enhancements. The Exchange notes it recently submitted
a separate rule filing to adopt a virtual trading floor, which the
Exchange may determine to make available if the trading floor
becomes inoperable. See Securities Exchange Act Release No. 89131
(June 23, 2020), 85 FR 38951 (June 29, 2020) (SR-CBOE-2020-055). If
the Commission approves that filing, and the trading floor
subsequently becomes inoperable and the Exchange makes the virtual
trading floor available, the temporary rules in Rule 5.24(e)(1)
would not be in effect (the Exchange submitted partial Amendment No.
1 to SR-CBOE-2020-055 to make that clear). Separately, the Exchange
believes the temporary rules in Rule 5.24(e)(1) should be effective
for a period of time while the virtual trading floor is available,
the Exchange will submit a separately rule filing to propose that
change.
---------------------------------------------------------------------------
The trading floor is currently open for open outcry trading, and
the Exchange is operating pursuant to its normal hybrid trading rules.
The Exchange implemented numerous health and safety measures in
connection with the reopening of the trading floor on June 15, 2020 to
help protect the safety and welfare of the trading floor community and
help prevent the continued spread of COVID-19.\10\ However, the
Exchange recognizes the ongoing nature of the COVID-19 pandemic in the
United States, which may cause the Exchange to once again close its
trading floor.
---------------------------------------------------------------------------
\10\ See Exchange Notice C2020052601, Standards of Conduct
related to the Reopening of the Cboe Options Trading Floor and
COVID-19 (May 26, 2020), available at https://cdn.cboe.com/resources/release_notes/2020/Standards-of-Conduct-related-to-the-Reopening-of-the-Cboe-Options-Trading-Floor-Notice-Final.pdf.
---------------------------------------------------------------------------
In the event the Exchange did close its trading floor again, the
Exchange believes it would be necessary to again apply the recently
adopted temporary rules in Rule 5.24(e)(1) to maintain a fair and
orderly market while the trading floor was not operable in order to
create
[[Page 56660]]
an all-electronic trading environment similar to the otherwise
unavailable open outcry trading environment. As noted above, Rule
5.24(e)(1) is effective only until August 31, 2020 (and the rules
became inapplicable upon the reopening of the trading floor on June 15,
2020). Given the Exchange may believe it is appropriate to close the
trading floor with little advanced notice and in a short timeframe to
help protect the safety and welfare of the trading floor community, the
Exchange proposes to extend the effectiveness of the temporary rules in
Rule 5.24(e)(1) to September 30, 2020 (unless further extended). The
Exchange believes this will permit the Exchange to as seamlessly as
possible transition back to an all-electronic trading environment. The
Exchange notes Rule 5.24(e)(1) will not apply to trading during times
when the trading floor remains operable.
Previously when the temporary provisions of Rule 5.24(e)(1) were in
place, the Exchange's Regulatory Division has continued its standard
routine surveillance reviews for electronic trading and implemented a
regulatory plan to surveil the rules in place in Rule 5.24(e)(1) when
operating in a screen-based only environment. In the event the Exchange
closes its trading floor again and the temporary provisions in Rule
5.24(e)(1) become applicable in an all-electronic trading environment,
the Exchange's Regulatory Division would reimplement that regulatory
plan to surveil those rules.
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.\11\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \12\ 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) \13\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ Id.
---------------------------------------------------------------------------
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, protect investors
and the public interest by permitting the Exchange to as seamlessly as
possible transition back to an all-electronic trading environment in
the event the Exchange determines it is appropriate to again close its
trading floor. The Exchange expects it would take this action if it
believes necessary and appropriate to help protect the safety and
welfare of the trading community. Such a determination may occur with
little advance notice, and closure of the trading floor may need to
occur in a short time frame. The Exchange continues to believe the
recent amendments to Rule 5.24(e)(1) allowed all-electronic trading to
occur more similarly to open outcry trading while the trading floor was
closed. The Exchange believes the proposed rule change is necessary and
appropriate to provide TPHs with execution opportunities in an all-
electronic trading environment for orders that generally execute in
open outcry trading. Additionally, the proposed rule change will
provide TPHs with an all-electronic trading environment to which they
became accustomed when the trading floor was previously closed, and
therefore will provide investors with consistent rules that apply when
the Exchange operates in an all-electronic environment. The proposed
rule change will provide investors with definitive knowledge of what
rules will apply when the trading floor is closed.
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 as a competitive filing, but rather extends the
effectiveness of temporary rules as part of the Exchange's business
continuity plans, which are intended to allow the Exchange to continue
to maintain fair and orderly markets while the Exchange's trading floor
continues to be inoperable.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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 Commission has waived the five business day notification
requirement for this proposed rule change.
---------------------------------------------------------------------------
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \16\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \17\ 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 operative immediately. The Exchange
believes extension of the temporary rules put in place due to the
ongoing COVID-19 pandemic will permit the Exchange to minimize
disruptions in the market during a transition back to an all-electronic
trading environment if the Exchange believes it is necessary and
appropriate to help protect the safety and welfare of the trading
community. The Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest as it will allow the temporary rules to continue with minimal
interruption, thereby avoiding investor confusion that could result
from an interruption in the effectiveness of the rules. Accordingly,
the Commission hereby waives the operative delay and designates the
[[Page 56661]]
proposed rule change operative upon filing.\18\
---------------------------------------------------------------------------
\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CBOE-2020-081 on the subject line.
Paper Comment:
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-2020-081. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CBOE-2020-081 and should be submitted on
or before October 5, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------
\19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-20133 Filed 9-11-20; 8:45 am]
BILLING CODE 8011-01-P
