Self-Regulatory Organizations; Cboe Exchange, Inc.; Order Approving a Proposed Rule Change To Amend CBOE Rule 5.32 With Respect to the Handling of Cancel/Replace Messages, 55053-55054 [2022-19350]
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Federal Register / Vol. 87, No. 173 / Thursday, September 8, 2022 / Notices
the event of a material adverse change.63
As noted above, under Rule 17Ad–
22(a)(14), committed arrangements,
such as repurchase agreements, are only
qualifying liquid resources where such
agreements do not include material
adverse change provisions.64 Moreover,
the non-banks are voluntarily
participating in the facility. These
liquidity providers may consider the
benefits and costs of participation,
including the adverse change provision,
before determining that their
participation in the facility would be
preferable to alternative investments
and would benefit their shareholders
and beneficiaries.
Commenters also raised concerns
regarding the speed with which a
counterparty would be required to
provide funding.65 As discussed above,
a fundamental attribute of liquidity
resources is that OCC can quickly access
liquidity in the event of a Clearing
Member default or market disruption.
By necessity, funds must be made
available to OCC within 60 minutes of
OCC’s delivering Eligible Securities, and
the institutional investor is not
permitted to rehypothecate purchased
securities. Any requirement to allow
liquidity providers to deny or delay
funding would potentially delay OCC’s
access to liquidity resources, which
could negatively affect the safety and
soundness of the U.S. markets.
Accordingly, the Commission believes
that the changes proposed in the
Advance Notice are consistent with
Rule 17Ad–22(e)(7) under the Exchange
Act.66
IV. Conclusion
khammond on DSKJM1Z7X2PROD with NOTICES
It is therefore noticed, pursuant to
Section 806(e)(1)(I) of the Clearing
Supervision Act, that the Commission
does not object to Advance Notice (SR–
OCC–2022–803) and that OCC is
authorized to implement the proposed
change as of the date of this notice.
63 Comments on the Advance Notice are available
at https://www.sec.gov/comments/sr-occ-2022-803/
srocc2022803.htm.
64 17 CFR 240.17Ad–22(a)(14)(ii)(A).
65 Comments on the Advance Notice are available
at https://www.sec.gov/comments/sr-occ-2022-803/
srocc2022803.htm.
66 17 CFR 240.17Ad–22(e)(7).
VerDate Sep<11>2014
18:19 Sep 07, 2022
Jkt 256001
By the Commission.
J. Matthew DeLesDernier,
Deputy Secretary.
55053
change any terms of an order) and of a
cancel/replace message that does not
change the price or size of a resting
order but changes another term of an
[FR Doc. 2022–19417 Filed 9–7–22; 8:45 am]
order. CBOE Rule 5.32(e) describes
BILLING CODE 8011–01–P
whether a resting order’s priority
position may change if it is modified
with a cancel/replace message.
SECURITIES AND EXCHANGE
Specifically, current CBOE Rule 5.32(e)
COMMISSION
states if the price of an order is changed,
[Release No. 34–95657; File No. SR–CBOE–
the order loses position and is placed in
2022–038]
a priority position as if the Exchange’s
system (‘‘System’’) received the order at
Self-Regulatory Organizations; Cboe
the time the order was changed. If the
Exchange, Inc.; Order Approving a
quantity of an order is decreased, it
Proposed Rule Change To Amend
retains its priority position. If the
CBOE Rule 5.32 With Respect to the
Handling of Cancel/Replace Messages quantity of an order is increased, it loses
its priority position and is placed in a
September 1, 2022.
priority position as if the System
received the order at the time the
I. Introduction
quantity of the order is increased.
On July 7, 2022, Cboe Exchange, Inc.
The Exchange explains, however, that
(‘‘Exchange’’ or ‘‘CBOE’’) filed with the
CBOE Rule 5.32(e) is currently silent
Securities and Exchange Commission
regarding how the System handles a
(‘‘Commission’’), pursuant to Section
cancel/replace message comprised of a
19(b)(1) of the Securities Exchange Act
no-change order or an order that
1
of 1934 (‘‘Exchange Act’’) and Rule
changes terms other than price and
19b–4 thereunder,2 a proposed rule
size.5 The Exchange further represents
change to establish that a cancel/replace that it recently determined that the
message received for an order already
System does not handle all no-change
resting on the Exchange’s order book
orders and messages uniformly with
will cause such resting order to lose its
respect to how they affect resting orders.
original priority position, subject to
Specifically, the Exchange explains that
certain exceptions. The proposed rule
currently, when the System receives a
change was published for comment in
no-change order, the resting order
the Federal Register on July 26, 2022.3
would lose its priority position;
The Commission received no comment
however, if the System receives a noletters regarding the proposed rule
change bid or offer in a bulk message,
change. This order approves the
the resting bid or offer would not lose
proposed rule change.
its priority position.6
II. Summary of the Proposal
The Exchange proposes to amend
CBOE Rule 5.32(e) so that it states as
The Exchange proposes to amend
follows: if a User submits a cancel/
CBOE Rule 5.32(e) to describe the
replace message for a resting order,
impact on priority of a ‘‘no-change’’
order 4 (i.e., an order submitted to cancel regardless of whether the cancel/replace
message modifies any terms of the
or replace a resting order that does not
resting order, the order loses its priority
1 15 U.S.C. 78s(b)(1).
position and is placed in a priority
2 17 CFR 240.19b–4.
position based on the time the System
3 See Exchange Act Release No. 95328 (July 20,
receives the cancel/replace message,
2022), 87 FR 44438 (‘‘Notice’’).
unless the User only (1) decreases the
4 In this context, the term ‘‘order’’ includes bids
quantity of an order (as is currently set
and offers submitted in bulk messages. A bulk
forth in the Rules), (2) modifies the Max
message means a single electronic message a user
Floor (if a Reserve Order), or (3)
submits with an M (Market-Maker) capacity to the
Exchange in which the User may enter, modify, or
modifies the stop price (if a Stop or
cancel up to an Exchange-specified number of bids
Stop-Limit order), in which case the
and offers. See CBOE Rule 1.1 (definition of bulk
order retains its priority position.
message, which provides that the System handles
a bulk message bid or offer in the same manner as
it handles an order or quote, unless the Rules
specify otherwise).
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
5 See
6 See
E:\FR\FM\08SEN1.SGM
Notice, supra note 3, at 44439.
id.
08SEN1
55054
Federal Register / Vol. 87, No. 173 / Thursday, September 8, 2022 / Notices
The Exchange states that this change
will harmonize the handling of all nochange orders and quotes so that any
no-change order or bulk message bid or
offer will lose priority.7 Further, the
Exchange states that this proposal will
also codify current System functionality
that causes a resting order to lose its
priority position if any cancel/replace
message is submitted if any term other
than the Max Floor (if a Reserve Order) 8
or the stop price (if a Stop or Stop-Limit
order 9) is modified.10
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the Exchange’s proposal is
consistent with the requirements of the
Exchange Act and the rules and
regulations thereunder applicable to a
national securities exchange.11 In
particular, the Commission finds that
the proposed rule change is consistent
with Sections 6(b)(5) 12 and 6(b)(8) 13 of
the Exchange Act. Section 6(b)(5) of the
Exchange Act requires that the rules of
a national securities exchange be
designed, among other things, to
promote just and equitable principles of
trade, 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, and
not be designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers. Section
6(b)(8) of the Exchange Act requires that
the rules of a national securities
exchange not impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Exchange Act.
The Commission believes that
requiring the System to handle all
cancel/replace orders in a uniform
manner with respect to priority of
affected resting orders is consistent with
the Exchange Act in that such
requirement is designed to promote just
and equitable principles of trade and
remove impediments to and perfect the
mechanism of a free and open market
and a national market system.
Furthermore, the Commission believes
that narrowly restricting when a resting
order retains its priority after the System
receives a subsequent cancel/replace
message (e.g., its only modifies the Max
Floor of the resting order) is designed,
to, among other things, promote just and
equitable principles of trade, 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 without imposing any
unreasonable burdens on competition.
Accordingly, the Commission finds
that the proposed rule change is
consistent with the Exchange Act.
IV. Conclusion
It is therefore ordered that, pursuant
to Section 19(b)(2) of the Exchange
Act,14 the proposed rule change (SR–
CBOE–2022–038) be, and hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–19350 Filed 9–7–22; 8:45 am]
BILLING CODE 8011–01–P
khammond on DSKJM1Z7X2PROD with NOTICES
7 See
id.
8 A ‘‘Reserve Order’’ is a limit order with both a
portion of the quantity displayed and a reserve
portion of the quantity not displayed. See CBOE
Rule 5.6.
9 A ‘‘Stop (Stop-Loss)’’ order is an order to buy
(sell) that becomes a market order when the
consolidated last sale price (excluding prices from
complex order trades if outside of the NBBO) or
NBB (NBO) for a particular option contract is equal
to or above (below) the stop price specified by the
User. A ‘‘Stop-Limit’’ order is an order to buy (sell)
that becomes a limit order when the consolidated
last sale price (excluding prices from complex order
trades if outside the NBBO) or NBB (NBO) for a
particular option contract is equal to or above
(below) the stop price specified by the User. See
CBOE Rule 5.6.
10 See Notice, supra note 3, at 44439.
11 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
12 15 U.S.C. 78f(b)(5).
13 15 U.S.C. 78f(b)(8).
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18:19 Sep 07, 2022
Jkt 256001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–95650; File No. SR–NSCC–
2022–009]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Designation of
Longer Period for Commission Action
on a Proposed Rule Change To Adopt
Intraday Volatility Charge and
Eliminate Intraday Backtesting Charge
September 1, 2022.
On July 7, 2022, National Securities
Clearing Corporation (‘‘NSCC’’) filed
with the Securities and Exchange
14 15
15 17
PO 00000
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
Frm 00101
Fmt 4703
Sfmt 4703
Commission (‘‘Commission’’) proposed
rule change SR–NSCC–2022–009 (the
‘‘Proposed Rule Change’’) pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder.2 The Proposed Rule
Change was published for comment in
the Federal Register on July 20, 2022,3
and the Commission has received
comments regarding the changes
proposed in the Proposed Rule Change.4
Section 19(b)(2) of the Act 5 provides
that, within 45 days of the publication
of notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the notice for the
Proposed Rule Change is September 3,
2022.
The Commission is extending the 45day period for Commission action on
the Proposed Rule Change. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the Proposed
Rule Change so that it has sufficient
time to consider and take action on the
Proposed Rule Change.
Accordingly, pursuant to Section
19(b)(2) of the Act 6 and for the reasons
stated above, the Commission
designates October 18, 2022, as the date
by which the Commission shall either
approve, disapprove, or institute
proceedings to determine whether to
disapprove proposed rule change SR–
NSCC–2022–009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–19347 Filed 9–7–22; 8:45 am]
BILLING CODE 8011–01–P
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 95286
(July 7, 2022), 87 FR 43355 (July 20, 2022) (File No.
SR–NSCC–2022–009) (‘‘Notice of Filing’’).
4 Comments are available at https://www.sec.gov/
comments/sr-nscc-2022-009/srnscc2022009.htm.
5 15 U.S.C. 78s(b)(2).
6 Id.
7 17 CFR 200.30–3(a)(31).
2 17
E:\FR\FM\08SEN1.SGM
08SEN1
]]>Agencies
[Federal Register Volume 87, Number 173 (Thursday, September 8, 2022)]
[Notices]
[Pages 55053-55054]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19350]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95657; File No. SR-CBOE-2022-038]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Order
Approving a Proposed Rule Change To Amend CBOE Rule 5.32 With Respect
to the Handling of Cancel/Replace Messages
September 1, 2022.
I. Introduction
On July 7, 2022, Cboe Exchange, Inc. (``Exchange'' or ``CBOE'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule
change to establish that a cancel/replace message received for an order
already resting on the Exchange's order book will cause such resting
order to lose its original priority position, subject to certain
exceptions. The proposed rule change was published for comment in the
Federal Register on July 26, 2022.\3\ The Commission received no
comment letters regarding the proposed rule change. This order approves
the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Exchange Act Release No. 95328 (July 20, 2022), 87 FR
44438 (``Notice'').
---------------------------------------------------------------------------
II. Summary of the Proposal
The Exchange proposes to amend CBOE Rule 5.32(e) to describe the
impact on priority of a ``no-change'' order \4\ (i.e., an order
submitted to cancel or replace a resting order that does not change any
terms of an order) and of a cancel/replace message that does not change
the price or size of a resting order but changes another term of an
order. CBOE Rule 5.32(e) describes whether a resting order's priority
position may change if it is modified with a cancel/replace message.
Specifically, current CBOE Rule 5.32(e) states if the price of an order
is changed, the order loses position and is placed in a priority
position as if the Exchange's system (``System'') received the order at
the time the order was changed. If the quantity of an order is
decreased, it retains its priority position. If the quantity of an
order is increased, it loses its priority position and is placed in a
priority position as if the System received the order at the time the
quantity of the order is increased.
---------------------------------------------------------------------------
\4\ In this context, the term ``order'' includes bids and offers
submitted in bulk messages. A bulk message means a single electronic
message a user submits with an M (Market-Maker) capacity to the
Exchange in which the User may enter, modify, or cancel up to an
Exchange-specified number of bids and offers. See CBOE Rule 1.1
(definition of bulk message, which provides that the System handles
a bulk message bid or offer in the same manner as it handles an
order or quote, unless the Rules specify otherwise).
---------------------------------------------------------------------------
The Exchange explains, however, that CBOE Rule 5.32(e) is currently
silent regarding how the System handles a cancel/replace message
comprised of a no-change order or an order that changes terms other
than price and size.\5\ The Exchange further represents that it
recently determined that the System does not handle all no-change
orders and messages uniformly with respect to how they affect resting
orders. Specifically, the Exchange explains that currently, when the
System receives a no-change order, the resting order would lose its
priority position; however, if the System receives a no-change bid or
offer in a bulk message, the resting bid or offer would not lose its
priority position.\6\
---------------------------------------------------------------------------
\5\ See Notice, supra note 3, at 44439.
\6\ See id.
---------------------------------------------------------------------------
The Exchange proposes to amend CBOE Rule 5.32(e) so that it states
as follows: if a User submits a cancel/replace message for a resting
order, regardless of whether the cancel/replace message modifies any
terms of the resting order, the order loses its priority position and
is placed in a priority position based on the time the System receives
the cancel/replace message, unless the User only (1) decreases the
quantity of an order (as is currently set forth in the Rules), (2)
modifies the Max Floor (if a Reserve Order), or (3) modifies the stop
price (if a Stop or Stop-Limit order), in which case the order retains
its priority position.
[[Page 55054]]
The Exchange states that this change will harmonize the handling of
all no-change orders and quotes so that any no-change order or bulk
message bid or offer will lose priority.\7\ Further, the Exchange
states that this proposal will also codify current System functionality
that causes a resting order to lose its priority position if any
cancel/replace message is submitted if any term other than the Max
Floor (if a Reserve Order) \8\ or the stop price (if a Stop or Stop-
Limit order \9\) is modified.\10\
---------------------------------------------------------------------------
\7\ See id.
\8\ A ``Reserve Order'' is a limit order with both a portion of
the quantity displayed and a reserve portion of the quantity not
displayed. See CBOE Rule 5.6.
\9\ A ``Stop (Stop-Loss)'' order is an order to buy (sell) that
becomes a market order when the consolidated last sale price
(excluding prices from complex order trades if outside of the NBBO)
or NBB (NBO) for a particular option contract is equal to or above
(below) the stop price specified by the User. A ``Stop-Limit'' order
is an order to buy (sell) that becomes a limit order when the
consolidated last sale price (excluding prices from complex order
trades if outside the NBBO) or NBB (NBO) for a particular option
contract is equal to or above (below) the stop price specified by
the User. See CBOE Rule 5.6.
\10\ See Notice, supra note 3, at 44439.
---------------------------------------------------------------------------
III. Discussion and Commission Findings
After careful review, the Commission finds that the Exchange's
proposal is consistent with the requirements of the Exchange Act and
the rules and regulations thereunder applicable to a national
securities exchange.\11\ In particular, the Commission finds that the
proposed rule change is consistent with Sections 6(b)(5) \12\ and
6(b)(8) \13\ of the Exchange Act. Section 6(b)(5) of the Exchange Act
requires that the rules of a national securities exchange be designed,
among other things, to promote just and equitable principles of trade,
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, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers. Section
6(b)(8) of the Exchange Act requires that the rules of a national
securities exchange not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Exchange
Act.
---------------------------------------------------------------------------
\11\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\12\ 15 U.S.C. 78f(b)(5).
\13\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
The Commission believes that requiring the System to handle all
cancel/replace orders in a uniform manner with respect to priority of
affected resting orders is consistent with the Exchange Act in that
such requirement is designed to promote just and equitable principles
of trade and remove impediments to and perfect the mechanism of a free
and open market and a national market system. Furthermore, the
Commission believes that narrowly restricting when a resting order
retains its priority after the System receives a subsequent cancel/
replace message (e.g., its only modifies the Max Floor of the resting
order) is designed, to, among other things, promote just and equitable
principles of trade, 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 without imposing any
unreasonable burdens on competition.
Accordingly, the Commission finds that the proposed rule change is
consistent with the Exchange Act.
IV. Conclusion
It is therefore ordered that, pursuant to Section 19(b)(2) of the
Exchange Act,\14\ the proposed rule change (SR-CBOE-2022-038) be, and
hereby is, approved.
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\14\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------
\15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19350 Filed 9-7-22; 8:45 am]
BILLING CODE 8011-01-P
