Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Add a Held Order Instruction, 67777-67780 [2021-25893]
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Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices
hour burden is approximately 82,500
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Whether the proposed collection of
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to David Bottom, Director/Chief
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Exchange Commission, C/O John R.
Pezzullo, 100 F Street NE, Washington,
DC 20549; or send an email to: PRA_
Mailbox@sec.gov.
All submissions should refer to File
Number 270–437. This file number
should be included on the subject line
if email is used. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov).
All comments received will be posted
without change; we do not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
Dated: November 23, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
BILLING CODE 8011–01–P
16:55 Nov 26, 2021
[Release No. 34–93646; File No. SR–CBOE–
2021–067]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Add a Held Order
Instruction
November 22, 2021.
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 November
10, 2021, 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 add a
held order instruction. The text of the
proposed rule change is provided
below.
(additions are italicized; deletions are
[bracketed])
*
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Rules of Cboe Exchange, Inc.
*
*
*
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*
Rule 5.6. Order Types, Order
Instructions, and Times-in-Force
(a)–(b) No change.
(c) Order Instructions. An ‘‘Order
Instruction’’ is a processing instruction
a User may apply to an order (multiple
instructions may apply to a single
order), subject to the restrictions set
forth in Rule 6.8(c) with respect to
orders and bulk messages submitted
through bulk ports and any other
restrictions set forth in the Rules, when
entering it into the System for electronic
or open outcry processing and includes:
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1 15
[FR Doc. 2021–25915 Filed 11–26–21; 8:45 am]
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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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Electronic Only
An ‘‘Electronic Only’’ order is an
order a User designates for electronic
processing, but does not route to PAR
for manual handling if not eligible for
electronic processing.
Held
A ‘‘held’’ order is an order marked
‘‘held’’ for which a Floor Broker’s client
does not give the Floor Broker discretion
as to the price or time at which such
order is to be executed or the order was
received by the Exchange electronically
and subsequently routed to a Floor
Broker or PAR Official pursuant to the
User’s instructions.
*
*
*
*
*
Not Held
A ‘‘not held’’ order is an order marked
‘‘not held’’, ‘‘take time’’ or which bears
any qualifying notation giving
discretion as to the price or time at
which such order is to be executed. An
order entrusted to a Floor Broker will be
considered a not held order, unless
[otherwise specified by a Floor Broker’s
client]marked ‘‘held’’ or the order was
received by the Exchange electronically
and subsequently routed to a Floor
Broker or PAR Official pursuant to the
User’s instructions. A User may not
designate a not held order as Electronic
Only.
*
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Rule 5.70. Availability of Orders
(a) Pursuant to Rule 5.6(a), the
Exchange may make order types, Order
Instructions, and Times-in-Force
available on a class basis. The Exchange
may make the following order types,
Order Instructions, and Times-in-Force
available for orders submitted in FLEX
Options (‘‘FLEX Orders’’):
(1) No change.
(2) Order Instructions: All Sessions,
Attributable, DAC (except for FLEX
Options with an exercise price that is a
percentage of the closing value of the
underlying equity security or index
value, as applicable on the trade date or
that is Asian or Cliquet-settled), Direct
to PAR, Electronic Only, Held, NonAttributable, Not Held, and RTH Only.
*
*
*
*
*
Rule 5.83. Availability of Orders
(a) Simple Orders. Pursuant to Rule
5.6(a), the Exchange may make order
types, Order Instructions, and Times-inForce available on a class basis for PAR
routing for manual handling (and open
outcry trading). The Exchange may
make the following order types, Order
Instructions, and Times-in-Force
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available for PAR routing for manual
handling (and open outcry trading):
(1) No change.
(2) Order Instructions: AON,
Attributable, Compression/PCC, Held,
Minimum Quantity, MTP Modifier,
Non-Attributable, Not Held, Penny
Cabinet, RTH Only, and Sub-Penny
Cabinet.
(3) No change.
(b) Complex Orders. The Exchange
may make complex orders, including
security future-option orders, and stockoption orders available for PAR routing
for manual handling. Other than Index
Combo orders, which may be submitted
for electronic and open outcry handling,
a complex order with a ratio less than
one-to-three (.333) or greater than threeto-one (3.00) may only be submitted for
manual handling and open outcry
trading. The Exchange may make the
follow complex order types available for
PAR routing for manual handling (and
open outcry trading):
(1) No change.
(2) Order Instructions: AON,
Attributable, Complex Only,
Compression/PCC, Held, Index Combo,
MTP Modifier, Multi-Class Spread, NonAttributable, Not Held, RFC, RTH Only,
SPX Combo, and stock-option order.
*
*
*
*
*
Rule 5.91. Floor Broker Responsibilities
(a)–(b) No change.
(c) Discretionary Transactions.
(1) An order entrusted to a Floor
Broker is considered a not held order (as
set forth in the definition of a ‘‘not
held’’ order in Rule 5.6(c)) unless the
order is marked as held.
*
*
*
*
*
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/CBOELegal
RegulatoryHome.aspx), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
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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.
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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 add a held
order instruction. Currently, Rule 5.6(c)
permits the Exchange to offer a not held
order instruction.5 A ‘‘not held’’ order is
an order marked ‘‘not held’’, ‘‘take time’’
or which bears any qualifying notation
giving discretion as to the price or time
at which such order is to be executed.6
An order entrusted to a Floor Broker
will be considered a not held order,
unless otherwise specified by a Floor
Broker’s client or the order was received
by the Exchange electronically and
subsequently routed to a Floor Broker or
PAR Official pursuant to the User’s
instructions.7 In other words, an order
received by a Floor Broker is by default
a not held order unless the Floor Broker
receives instructions to the contrary.8
Currently, there is no standardized
manner in which a User may specify on
an order that the User wants the order
to be handled as held when routed to a
Floor Broker.9
The proposed rule change adopts a
held order instruction. Specifically, the
proposed rule change defines a ‘‘held’’
order as an order marked ‘‘held’’ for
which a Floor Broker’s client does not
give the Floor Broker discretion as to the
price or time at which such order is to
be executed or the order was received
by the Exchange electronically and
subsequently routed to a Floor Broker or
PAR Official pursuant to the User’s
instructions.10 The proposed rule
5 Pursuant to Rules 5.70(a)(2) and 5.83(b)(2), the
Exchange may make the not held order instruction
available for FLEX open outcry trading and nonFLEX open outcry trading, respectively.
6 A ‘‘not held’’ order generally is one where a
customer gives a Floor Broker discretion in
executing the order, both with respect to the time
of execution and the price (though the customer
may specify a limit price), and the Floor Broker
works the order over a period of time to avoid
market impact while seeking best execution of the
order.
7 A User may not designate a not held order as
Electronic Only.
8 See Securities Exchange Act Release Nos. 75299
(June 25, 2015), 80 FR 37700 (July 1, 2015) (SR–
CBOE–2015–047); and 78110 (June 21, 2016), 81 FR
41626 (June 27, 2016) (SR–CBOE–2016–050).
9 See Cboe Options Regulatory Circular RG15–136
(September 30, 2015). Pursuant to that circular, an
order will be considered held if a client instructs
a Floor Broker that the order is held. However,
Cboe’s system does not currently capture in
electronic form whether a Floor Broker received
such instruction from a client.
10 See proposed definition of ‘‘held’’ in Rule
5.6(c). Unlike a not held order, a User may
designate a held order as Electronic Only, as any
order sent for electronic execution is consistent
with the definition of held. Therefore, the System
will accept a held Electronic Only order.
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change makes a corresponding change
to the definition of a not held order in
Rule 5.6(c) and Rule 5.91(1)(c) to
provide that an order entrusted to a
Floor Broker is considered a not held
order (as set forth in the definition of a
‘‘not held’’ order in Rule 5.6(c)) unless
the order is marked as held. The
proposed rule change also provides that
the Exchange may make the held order
instruction available for FLEX open
outcry trading and non-FLEX open
outcry trading, for which the Exchange
may currently make the not held order
instruction available.11 The proposed
rule change is consistent with current
rules, which permit Users to specify that
an order not be handled by a Floor
Broker as ‘‘not held.’’ It merely adopts
a specified manner in which an order
must be marked to indicate the client for
such order does not wish for a Floor
Broker to have price and time discretion
with respect to execution of that order.
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.12 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 13 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) 14 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
protect investors by eliminating any
potential ambiguity regarding how
Users may indicate that they do not
11 See proposed Rules 5.70(a)(2) and 5.83(a)(2)
and (b)(2), respectively.
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(5).
14 Id.
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want their orders to be treated as not
held by Floor Brokers. The proposed
rule change is consistent with the
current not held order instruction and
makes a corresponding held order
instruction available. The proposed rule
change is consistent with current Rules,
which permit a User to specify that an
order not be handled by a Floor Broker
as ‘‘not held’’ but do not describe how
Users may make such a specification.
The proposed rule change merely
adopts a specified manner in which a
client must mark an order to indicate
the client does not wish for a Floor
Broker to have price and time discretion
with respect to execution of that order.
The proposed rule change to make the
held order instruction available for
FLEX open outcry trading and nonFLEX open outcry trading will benefit
investors, as it will permit the Exchange
to make this order instruction available
for the same trading for which the
Exchange may currently make the not
held order instruction available. This, as
well as other conforming changes
described above, will provide
consistency throughout the Rules.15 The
proposed rule change is consistent with
current rules, which permit Users to
specify that an order not be handled by
a Floor Broker as ‘‘not held.’’
Additionally, the proposed rule
change will promote just and equitable
principles of trading by enhancing the
Exchange’s audit trail, which will now
capture held instructions in a
standardized manner and assist the
Exchange’s regulatory review of orders
executed in open outcry. The Exchange
also believes the proposed rule change
is consistent with Section 6(b)(1) of the
Act,16 which provides that the Exchange
be organized and have the capacity to be
able to carry out the purposes of the Act
and to enforce compliance by the
Exchange’s TPHs and persons
associated with its TPHs with the Act,
the rules and regulations thereunder,
and the rules of the Exchange. With an
enhanced audit trail of orders executed
in open outcry, the Exchange believes it
will be able to monitor more
comprehensively the trading of these
orders.
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
15 See proposed Rules 5.70(a)(2) and 5.83(a)(2)
and (b)(2), respectively.
16 15 U.S.C. 78f(b)(1).
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address competitive issues, as it relates
solely to how certain orders routed to a
Floor Broker on the Exchange’s floor for
open outcry trading should be marked.
Additionally, as discussed above, the
Exchange believes the proposed rule
change will enhance the Exchange’s
audit trail with respect to orders
executed in open outcry.
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 held order
instruction (like the current not held
order instruction) will be available to all
Users that route held client orders to a
Floor Broker for open outcry trading on
the Exchange’s trading floor. Currently,
a held order instruction must be
communicated in some way to a Floor
Broker, when applicable, and the
proposed rule change provides a clear,
specific, and more streamlined way to
do so. The Exchange does not believe
that the proposed rule change will
impose any burden on intermarket
competition, as it relates solely to how
orders routed for execution on the
Exchange’s trading floor should be
marked. Additionally, as noted above,
the proposed held order instruction is
merely the converse of the already
available not held order instruction that
Users may apply to orders.
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 17 and Rule 19b–
4(f)(6) thereunder.18
17 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.
18 17
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A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 19 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 20
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 states that
waiver of the operative delay would
protect investors and the public interest
by eliminating, as soon as possible, any
potential confusion regarding how a
User may indicate that an order is held.
The Exchange further states that the
proposed change does not raise any new
or novel issues. For these reasons, the
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest. Accordingly, the
Commission hereby waives the 30-day
operative delay and designates the
proposed rule change operative upon
filing.21
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 rule-comments@
sec.gov. Please include File Number SR–
CBOE–2021–067 on the subject line.
19 17
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6)(iii).
21 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).
20 17
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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–2021–067. 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.
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–2021–067 and
should be submitted on or before
December 20, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–25893 Filed 11–26–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
khammond on DSKJM1Z7X2PROD with NOTICES
[SEC File No. 270–523, OMB Control No.
3235–0585]
Submission for OMB Review;
Comment Request, Extension: Rule
206(4)–7
Upon Written Request, Copies Available
From: Securities and Exchange
22 17
1 See section 210(b) of the Advisers Act (15 U.S.C.
80b–10(b)).
CFR 200.30–3(a)(12).
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17:34 Nov 26, 2021
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
The title for the collection of
information is ‘‘Investment Advisers Act
rule 206(4)–7, 17 CFR 275.206(4)–7,
Compliance procedures and practices.’’
This collection of information is found
at 17 CFR 275.206(4)–7, and is
mandatory. Rule 206(4)–7 under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’) requires each
investment adviser registered with the
Commission to (1) adopt and implement
written policies and procedures
reasonably designed to prevent
violations of the Advisers Act and its
rules, (2) review those compliance
policies and procedures annually, and
(3) designate a chief compliance officer
who is responsible for administering the
compliance policies and procedures.
The rule is designed to protect investors
by fostering better compliance with the
securities laws. The collection of
information under rule 206(4)–7 is
necessary to help ensure that
investment advisers maintain
comprehensive internal programs that
promote the advisers’ compliance with
the Advisers Act and its rules. The
Commission’s examination and
oversight staff may review the
information collected to assess
investment advisers’ compliance
programs. Responses provided to the
Commission pursuant to the rule in the
context of the Commission’s
examination and oversight program are
generally kept confidential.1 An agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a currently valid control
number.
The respondents to this information
collection are investment advisers
registered with the Commission.
Updated data indicate that there were
14,376 advisers registered with the
Commission as of August 2021. Each
respondent would produce one
response, per year. Commission staff has
estimated that compliance with rule
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206(4)–7 imposes an annual burden of
approximately 90 hours per response.
Based on this figure, Commission staff
estimates a total annual burden of
1,293,840 hours for this collection of
information.
Written comments are invited on: (1)
Whether the collection of information is
necessary for the proper performance of
the functions of the agency, including
whether the information will have
practical utility; (2) the accuracy of the
agency’s estimate of the burden of the
collection of information; (3) ways to
enhance the quality, utility, and clarity
of the information collected; and (4)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication. An agency may not conduct
or sponsor a collection of information
unless it displays a currently valid OMB
control number. No person shall be
subject to any penalty for failing to
comply with a collection of information
subject to the PRA that does not display
a valid OMB control number.
Please direct your written comments
to David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, C/O John R.
Pezzullo, 100 F Street NE, Washington,
DC 20549; or send an email to: PRA_
Mailbox@sec.gov.
Dated: November 23, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–25912 Filed 11–26–21; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice: 11589]
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[Federal Register Volume 86, Number 226 (Monday, November 29, 2021)]
[Notices]
[Pages 67777-67780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25893]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93646; File No. SR-CBOE-2021-067]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Add a
Held Order Instruction
November 22, 2021.
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 November 10, 2021, 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.
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\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).
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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 add a held order instruction. The text of the proposed rule change
is provided below.
(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 5.6. Order Types, Order Instructions, and Times-in-Force
(a)-(b) No change.
(c) Order Instructions. An ``Order Instruction'' is a processing
instruction a User may apply to an order (multiple instructions may
apply to a single order), subject to the restrictions set forth in Rule
6.8(c) with respect to orders and bulk messages submitted through bulk
ports and any other restrictions set forth in the Rules, when entering
it into the System for electronic or open outcry processing and
includes:
* * * * *
Electronic Only
An ``Electronic Only'' order is an order a User designates for
electronic processing, but does not route to PAR for manual handling if
not eligible for electronic processing.
Held
A ``held'' order is an order marked ``held'' for which a Floor
Broker's client does not give the Floor Broker discretion as to the
price or time at which such order is to be executed or the order was
received by the Exchange electronically and subsequently routed to a
Floor Broker or PAR Official pursuant to the User's instructions.
* * * * *
Not Held
A ``not held'' order is an order marked ``not held'', ``take time''
or which bears any qualifying notation giving discretion as to the
price or time at which such order is to be executed. An order entrusted
to a Floor Broker will be considered a not held order, unless
[otherwise specified by a Floor Broker's client]marked ``held'' or the
order was received by the Exchange electronically and subsequently
routed to a Floor Broker or PAR Official pursuant to the User's
instructions. A User may not designate a not held order as Electronic
Only.
* * * * *
Rule 5.70. Availability of Orders
(a) Pursuant to Rule 5.6(a), the Exchange may make order types,
Order Instructions, and Times-in-Force available on a class basis. The
Exchange may make the following order types, Order Instructions, and
Times-in-Force available for orders submitted in FLEX Options (``FLEX
Orders''):
(1) No change.
(2) Order Instructions: All Sessions, Attributable, DAC (except for
FLEX Options with an exercise price that is a percentage of the closing
value of the underlying equity security or index value, as applicable
on the trade date or that is Asian or Cliquet-settled), Direct to PAR,
Electronic Only, Held, Non-Attributable, Not Held, and RTH Only.
* * * * *
Rule 5.83. Availability of Orders
(a) Simple Orders. Pursuant to Rule 5.6(a), the Exchange may make
order types, Order Instructions, and Times-in-Force available on a
class basis for PAR routing for manual handling (and open outcry
trading). The Exchange may make the following order types, Order
Instructions, and Times-in-Force
[[Page 67778]]
available for PAR routing for manual handling (and open outcry
trading):
(1) No change.
(2) Order Instructions: AON, Attributable, Compression/PCC, Held,
Minimum Quantity, MTP Modifier, Non-Attributable, Not Held, Penny
Cabinet, RTH Only, and Sub-Penny Cabinet.
(3) No change.
(b) Complex Orders. The Exchange may make complex orders, including
security future-option orders, and stock-option orders available for
PAR routing for manual handling. Other than Index Combo orders, which
may be submitted for electronic and open outcry handling, a complex
order with a ratio less than one-to-three (.333) or greater than three-
to-one (3.00) may only be submitted for manual handling and open outcry
trading. The Exchange may make the follow complex order types available
for PAR routing for manual handling (and open outcry trading):
(1) No change.
(2) Order Instructions: AON, Attributable, Complex Only,
Compression/PCC, Held, Index Combo, MTP Modifier, Multi-Class Spread,
Non-Attributable, Not Held, RFC, RTH Only, SPX Combo, and stock-option
order.
* * * * *
Rule 5.91. Floor Broker Responsibilities
(a)-(b) No change.
(c) Discretionary Transactions.
(1) An order entrusted to a Floor Broker is considered a not held
order (as set forth in the definition of a ``not held'' order in Rule
5.6(c)) unless the order is marked as held.
* * * * *
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 add a held order instruction. Currently,
Rule 5.6(c) permits the Exchange to offer a not held order
instruction.\5\ A ``not held'' order is an order marked ``not held'',
``take time'' or which bears any qualifying notation giving discretion
as to the price or time at which such order is to be executed.\6\ An
order entrusted to a Floor Broker will be considered a not held order,
unless otherwise specified by a Floor Broker's client or the order was
received by the Exchange electronically and subsequently routed to a
Floor Broker or PAR Official pursuant to the User's instructions.\7\ In
other words, an order received by a Floor Broker is by default a not
held order unless the Floor Broker receives instructions to the
contrary.\8\ Currently, there is no standardized manner in which a User
may specify on an order that the User wants the order to be handled as
held when routed to a Floor Broker.\9\
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\5\ Pursuant to Rules 5.70(a)(2) and 5.83(b)(2), the Exchange
may make the not held order instruction available for FLEX open
outcry trading and non-FLEX open outcry trading, respectively.
\6\ A ``not held'' order generally is one where a customer gives
a Floor Broker discretion in executing the order, both with respect
to the time of execution and the price (though the customer may
specify a limit price), and the Floor Broker works the order over a
period of time to avoid market impact while seeking best execution
of the order.
\7\ A User may not designate a not held order as Electronic
Only.
\8\ See Securities Exchange Act Release Nos. 75299 (June 25,
2015), 80 FR 37700 (July 1, 2015) (SR-CBOE-2015-047); and 78110
(June 21, 2016), 81 FR 41626 (June 27, 2016) (SR-CBOE-2016-050).
\9\ See Cboe Options Regulatory Circular RG15-136 (September 30,
2015). Pursuant to that circular, an order will be considered held
if a client instructs a Floor Broker that the order is held.
However, Cboe's system does not currently capture in electronic form
whether a Floor Broker received such instruction from a client.
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The proposed rule change adopts a held order instruction.
Specifically, the proposed rule change defines a ``held'' order as an
order marked ``held'' for which a Floor Broker's client does not give
the Floor Broker discretion as to the price or time at which such order
is to be executed or the order was received by the Exchange
electronically and subsequently routed to a Floor Broker or PAR
Official pursuant to the User's instructions.\10\ The proposed rule
change makes a corresponding change to the definition of a not held
order in Rule 5.6(c) and Rule 5.91(1)(c) to provide that an order
entrusted to a Floor Broker is considered a not held order (as set
forth in the definition of a ``not held'' order in Rule 5.6(c)) unless
the order is marked as held. The proposed rule change also provides
that the Exchange may make the held order instruction available for
FLEX open outcry trading and non-FLEX open outcry trading, for which
the Exchange may currently make the not held order instruction
available.\11\ The proposed rule change is consistent with current
rules, which permit Users to specify that an order not be handled by a
Floor Broker as ``not held.'' It merely adopts a specified manner in
which an order must be marked to indicate the client for such order
does not wish for a Floor Broker to have price and time discretion with
respect to execution of that order.
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\10\ See proposed definition of ``held'' in Rule 5.6(c). Unlike
a not held order, a User may designate a held order as Electronic
Only, as any order sent for electronic execution is consistent with
the definition of held. Therefore, the System will accept a held
Electronic Only order.
\11\ See proposed Rules 5.70(a)(2) and 5.83(a)(2) and (b)(2),
respectively.
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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.\12\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \13\ 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) \14\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ 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 protect investors by
eliminating any potential ambiguity regarding how Users may indicate
that they do not
[[Page 67779]]
want their orders to be treated as not held by Floor Brokers. The
proposed rule change is consistent with the current not held order
instruction and makes a corresponding held order instruction available.
The proposed rule change is consistent with current Rules, which permit
a User to specify that an order not be handled by a Floor Broker as
``not held'' but do not describe how Users may make such a
specification. The proposed rule change merely adopts a specified
manner in which a client must mark an order to indicate the client does
not wish for a Floor Broker to have price and time discretion with
respect to execution of that order. The proposed rule change to make
the held order instruction available for FLEX open outcry trading and
non-FLEX open outcry trading will benefit investors, as it will permit
the Exchange to make this order instruction available for the same
trading for which the Exchange may currently make the not held order
instruction available. This, as well as other conforming changes
described above, will provide consistency throughout the Rules.\15\ The
proposed rule change is consistent with current rules, which permit
Users to specify that an order not be handled by a Floor Broker as
``not held.''
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\15\ See proposed Rules 5.70(a)(2) and 5.83(a)(2) and (b)(2),
respectively.
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Additionally, the proposed rule change will promote just and
equitable principles of trading by enhancing the Exchange's audit
trail, which will now capture held instructions in a standardized
manner and assist the Exchange's regulatory review of orders executed
in open outcry. The Exchange also believes the proposed rule change is
consistent with Section 6(b)(1) of the Act,\16\ which provides that the
Exchange be organized and have the capacity to be able to carry out the
purposes of the Act and to enforce compliance by the Exchange's TPHs
and persons associated with its TPHs with the Act, the rules and
regulations thereunder, and the rules of the Exchange. With an enhanced
audit trail of orders executed in open outcry, the Exchange believes it
will be able to monitor more comprehensively the trading of these
orders.
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\16\ 15 U.S.C. 78f(b)(1).
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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, as it relates solely to how
certain orders routed to a Floor Broker on the Exchange's floor for
open outcry trading should be marked. Additionally, as discussed above,
the Exchange believes the proposed rule change will enhance the
Exchange's audit trail with respect to orders executed in open outcry.
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 held order instruction (like the current not held order
instruction) will be available to all Users that route held client
orders to a Floor Broker for open outcry trading on the Exchange's
trading floor. Currently, a held order instruction must be communicated
in some way to a Floor Broker, when applicable, and the proposed rule
change provides a clear, specific, and more streamlined way to do so.
The Exchange does not believe that the proposed rule change will impose
any burden on intermarket competition, as it relates solely to how
orders routed for execution on the Exchange's trading floor should be
marked. Additionally, as noted above, the proposed held order
instruction is merely the converse of the already available not held
order instruction that Users may apply to orders.
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 \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \19\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \20\ 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
states that waiver of the operative delay would protect investors and
the public interest by eliminating, as soon as possible, any potential
confusion regarding how a User may indicate that an order is held. The
Exchange further states that the proposed change does not raise any new
or novel issues. For these reasons, the Commission believes that waiver
of the 30-day operative delay is consistent with the protection of
investors and the public interest. Accordingly, the Commission hereby
waives the 30-day operative delay and designates the proposed rule
change operative upon filing.\21\
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\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6)(iii).
\21\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings 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-2021-067 on the subject line.
[[Page 67780]]
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-2021-067. 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. 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-2021-067 and should be submitted on
or before December 20, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25893 Filed 11-26-21; 8:45 am]
BILLING CODE 8011-01-P
