Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Amend Rule 5.24, 2647-2651 [2023-00655]
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Federal Register / Vol. 88, No. 10 / Tuesday, January 17, 2023 / Notices
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FOR FURTHER INFORMATION CONTACT:
Melissa Rifkin (rifkin.melissa@
pbgc.gov), Attorney, Regulatory Affairs
Division, Office of the General Counsel,
Pension Benefit Guaranty Corporation,
445 12th Street SW, Washington, DC
20024–2101, 202–229–6563. If you are
deaf or hard of hearing, or have a speech
disability, please dial 7–1–1 to access
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SUPPLEMENTARY INFORMATION: Section
4010 of the Employee Retirement
Income Security Act of 1974 (ERISA)
and PBGC’s regulation on Annual
Financial and Actuarial Information
Reporting (29 CFR part 4010) require
each member of a controlled group to
submit financial and actuarial
information to PBGC under certain
circumstances. Section 4010 specifies
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PBGC’s 4010 regulation specifies the
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annual hourly and cost burdens of the
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information collection are 800 hours
and $11,080,000.
Issued in Washington, DC, by
Stephanie Cibinic,
Deputy Assistant General Counsel for
Regulatory Affairs, Pension Benefit Guaranty
Corporation.
[FR Doc. 2023–00691 Filed 1–13–23; 8:45 am]
BILLING CODE 7709–02–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96623; File No. SR–CBOE–
2022–062]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating To Amend Rule
5.24
January 10, 2023.
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 December
27, 2022, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (‘‘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 5.24(e).
(additions are italicized; deletions are
[bracketed])
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Rules of Cboe Exchange, Inc.
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Rule 5.24. Disaster Recovery
(a)–(d) No change.
(e) Loss of Trading Floor or Trading
Pit. If the Exchange trading floor or a
trading pit(s) becomes inoperable and
the Exchange does not make a virtual
trading floor available in [a]the
impacted class(es) pursuant to
subparagraph (3) below, the Exchange
will continue to operate with respect to
the impacted class(es) in a screen-based
only environment using a floorless
configuration of the System that is
operational while the trading floor or
trading pit(s) facility is inoperable. The
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Exchange will operate using this
configuration only until the Exchange’s
trading floor or trading pit(s) facility is
operational. Open outcry trading in the
impacted classes will not be available in
the event the trading floor or trading
pit(s) becomes inoperable, except as
otherwise set forth in this paragraph (e)
below and pursuant to Rule 5.26, as
applicable.
(1) Applicable Rules. In the event that
the trading floor or a trading pit(s)
becomes inoperable, trading in the
impacted class(es) will be conducted
pursuant to all applicable System Rules,
except that open outcry Rules will not
be in force for the impacted class(es),
including but not limited to the Rules
(or applicable portions of the Rules) in
Chapter 5, Section G, and as follows
[(subparagraphs (A) through (C) will be
effective until June 20, 2021)]:
(A) notwithstanding the introductory
paragraphs of Rules 5.37 and 5.73, an
order for the account of a Market-Maker
with an appointment in the applicable
class on the Exchange may be solicited
for the Initiating Order submitted for
execution against an Agency Order in
any exclusively listed index option class
into a simple AIM Auction pursuant to
Rule 5.37 or a simple FLEX AIM
Auction pursuant to Rule 5.73; and
[(B) with respect to complex orders in
any exclusively listed index option
class:
(1) notwithstanding Rule 5.4(b), the
minimum increment for bids and offers
on complex orders with any ratio equal
to or greater than one-to-twenty-five
(0.04) and equal to or less than twentyfive-to-one (25.00) is $0.01 or greater,
which may be determined by the
Exchange on a class-by-class basis, and
the legs may be executed in $0.01
increments; and
(2) notwithstanding the definition of
‘‘complex order’’ in Rule 1.1, for
purposes of Rule 5.33, the term
‘‘complex order’’ means a complex
order with any ratio equal to or greater
than one-to-twenty-five (0.04) and equal
to or less than twenty-five-to-one
(25.00); and]
([C]B) the contract volume a MarketMaker trades electronically in an
impacted class(es) during a time period
in which the Exchange operates with
respect to that class(es) in a screenbased only environment will be
excluded from determination of whether
a Market-Maker executes more than
20% of its contract volume
electronically in an appointed class
during any calendar quarter, and thus is
subject to the continuous electronic
quoting obligation, as set forth in Rule
5.52(d).
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Federal Register / Vol. 88, No. 10 / Tuesday, January 17, 2023 / Notices
All non-trading rules of the Exchange
will continue to apply.
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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.
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
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Rule 5.24(e). 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.3 Rule 5.24(e)(1) also
currently states in the event that the
3 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.
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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,4 and that all nontrading rules of the Exchange would
continue to apply, except as set forth in
Rule 5.24(e)(1)(A) through (C).
The Exchange proposes several
changes to Rule 5.24(e). First, the
Exchange amends paragraph (e) in
various places to that it will apply if the
trading floor or a specific trading pit(s)
becomes inoperable. It is possible that
only one or more trading pits may be
inoperable while other trading pits are
unimpacted (and thus operable).
Permitting the Exchange to operate in a
screen-based only environment with a
floorless configuration with respect to
only classes impacted by an event that
causes only part of the trading floor to
become inoperable will minimize the
impact to the Exchange’s market and
trading participants. Amending Rule
5.24(e) apply on a class basis is
consistent with the current Rule—for
example, Rule 5.24(e) would apply if
the Exchange does not make a virtual
trading floor available in a class
pursuant to Rule 5.24(e)(3).
Second, the proposed rule change
deletes Rule 5.24(e)(1)(B). Subparagraph
(1)(B) permitted, when the trading floor
was inoperable, in exclusively listed
index classes, complex orders with any
ratio equal to or greater than one-totwenty-five and equal to or less than
twenty-five-to-one to be submitted for
electronic execution and permitted the
minimum increment for bids and offers
on those complex orders to be $0.01 and
the legs of those complex orders to be
executed in $0.01 increments.5
Currently, however, the Exchange
permits electronic execution of complex
orders of any ratio and their legs in
penny increments. Therefore, the
temporary rule for when the trading
floor is inoperable in current
subparagraph (1)(B) is moot and no
longer necessary.6
4 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.
5 See Rules 1.1(definition of complex order),
5.4(b), and 5.33(f)(1). The Exchange notes complex
orders with ratios greater than three-to-one or less
than one-to-three, whether submitted for execution
electronically or in open outcry, are subject to
separate priority requirements. These priority
requirements would continue to apply in any class
that operates in a screen-based only environment if
its applicable trading pit is inoperable. See Rule
5.33(f)(2).
6 The proposed rule change also amends current
Rule 5.24(e)(1)(C) to become subparagraph (B) in
light of the deletion of current subparagraph (B).
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Third, the proposed rule change
deletes the parenthetical in Rule
5.24(e)(1). Pursuant to that
parenthetical, the rule exceptions set
forth in the subparagraphs of that Rule
that would apply when the trading floor
was inoperable would be effective only
until June 20, 2021. This timeframe was
tied to the Exchange’s closing of its
trading floor in 2020 in response to the
COVID–19 pandemic.7 However, the
Exchange believes it is appropriate to
permit these temporary rules to apply at
any time the trading floor (or a trading
pit) is inoperable to allow it to maintain
fair and orderly markets and facilitate
trading in as continuous manner as
possible in the event extraordinary
circumstances cause the trading floor to
become inoperable. These two rule
exceptions would apply only during
times when the Exchange’s trading
floor, or a trading pit(s) as proposed, is
inoperable and apply only to impacted
classes (and subparagraph (e)(1)(A)
would continue apply only to
exclusively listed classes). The current
Rules would continue to apply when
normal conditions exist, and the
Exchange offers both electronic and
open outcry trading. All non-trading
rules of the Exchange, including
business conduct rules, would continue
to apply.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the and
the rules and regulations thereunder
applicable to the Exchange and, in
particular, the requirements of Section
6(b) of the Act.8 Specifically, the
Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 9 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) 10 requirement that
the rules of an exchange not be designed
7 See Securities Exchange Act Release No. 88386
(March 13, 2020), 85 FR 15823 (March 19, 2020).
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(5).
10 Id.
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to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
the proposed rule change to permit the
Exchange to operate in a screen-based
only environment in a floorless
configuration with respect to impacted
classes if only part of the Exchange’s
trading floor is inoperable will remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. Specifically, if only part
of the Exchange’s trading floor is
inoperable due to extraordinary
circumstances, the Exchange believes it
will allow continued execution
opportunities for impacted classes while
permitted unimpacted classes to trade
in an uninterrupted manner.
The Exchange believes the removal of
the temporary rule related to complex
orders will protect the investors and the
public interest, as the need for this
temporary is moot and no longer
necessary in the rules, as the Exchange
currently permits complex orders with
any ratio to be submitted for electronic
execution in penny increments.
Therefore, deletion of this provision
from the Rules will reduce potential
confusion for investors.
Finally, the Exchange believes the
proposed rule change to permit the
temporary rules set forth in proposed
Rule 5.24(e)(1)(A) and (B) to be effective
any time the Exchange’s trading floor or
a trading pit(s) (as proposed) is
inoperable remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest,
because these Rules minimize any
impact on liquidity that may otherwise
occur when the trading floor (or a
trading pit) is in operable. As set forth
when adopted,11 with respect to the
provision to permit appointed MarketMakers to be solicited to trade against
an Agency Order submitted into a
simple AIM Auction (both for FLEX and
non-FLEX Options in exclusively listed
index option classes), the majority of
liquidity provided to orders executed as
part of an open outcry cross is provided
by appointed Market-Makers. If this
liquidity was not available to TPHs in
an all-electronic environment, there
would be significant risk that these
orders may not receive full execution in
a timely manner (or at all) and may
trade at worse prices than would have
otherwise been available on the trading
floor. The Exchange believes this
11 See Securities Exchange Act Release No. 88386
(March 13, 2020), 85 FR 15823 (March 19, 2020).
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provision minimizes this risk and
provide electronic execution and price
improvement opportunities for these
orders, similar to the opportunities that
are generally available to them on the
trading floor, which protects customers
seeking execution of these orders. As set
forth in the Rules, all TPHs may submit
responses to AIM Auctions, all Agency
Orders will continue to have an
opportunity for price improvement, and
priority customer orders will continue
to have priority at each price level.
Additionally, the Exchange believes
the provision to exclude volume
executed during a time when the trading
floor is inoperable from the
determination of whether a MarketMaker is subject to continuous
electronic quoting obligations promotes
just and equitable principles of trade. If
this volume were included in this
determination, a Market-Maker not
otherwise subject to these obligations
may become subject to them for reasons
outside of the Market-Maker’s control.
As a result, a Market-Maker may become
subject to additional obligations that
would not apply during normal
circumstances. This provision has no
impact on Market-Makers currently
subject to continuous electronic quoting
obligations, as once a Market-Maker
becomes subject to that obligation, it
remains subject to that obligation, even
if it executes less than 20% of its
contract volume electronically in a
subsequent calendar quarter. This
provision is solely intended to impact
those Market-Makers who currently are
not subject to continuous electronic
quoting obligations. Without this
provision, depending on the length of
time the trading floor is inoperable, a
Market-Maker that has not previously
exceeded the 20% contract volume
threshold and thus is not currently
subject to continuous electronic quoting
obligation could exceed that threshold
for a calendar quarter, which would
then subject it to a new obligation that
was not in place when the trading floor
was operable. The Exchange believes it
would be unduly burdensome to impose
obligations on a Market-Maker that are
inconsistent with the Market-Maker’s
standard business practices as a result of
extraordinary circumstances outside of
the Market-Maker’s control, particularly
when the Exchange expects those
circumstances to be temporary. The
Exchange notes all Market-Makers must
comply with the other obligations set
forth in Rules 5.51 and 5.52, including
the obligations related to size, two-sided
quotes, and competitive quotes.
The Exchange believes the presence of
these temporary rules were beneficial to
liquidity and thus to investors during
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2649
the three-month closure of the
Exchange’s trading floor in 2020 and
observed no harm to investors as a
result of these temporary rules. The
Exchange believes it is appropriate for
these two temporary rules to apply any
time the trading floor or a trading pit is
inoperable so that it may maintain fair
and orderly markets with sufficient
liquidity for investors in the event any
extraordinary circumstances cause the
Exchange to close its trading floor (or
any part thereof).
The Exchange’s Regulatory Division
will continue its standard routine
surveillance reviews for electronic
trading as it does today and has put
together a regulatory plan to surveil the
additional changes being proposed
when any class is operating in a screenbased only environment.
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 is
proposed as part of its business
continuity plans intended to allow it to
maintain fair and orderly markets if
unusual circumstances cause the
Exchange’s trading floor or a trading
pit(s) to become inoperable. The
Exchange believes the proposed rule
change will not burden intramarket
competition, as any closure of the
trading floor (or trading pit) and
resulting operation in a screen-based
only environment in a floorless
configuration for any class will apply in
the same manner to all market
participants, as all market participants
would be able to submit orders for
electronic execution only in impacted
classes. Additionally, the Exchange
believe the proposed rule change will
not burden intermarket competition, as
it applies solely to the operation of the
Exchange’s trading floor. Other than the
two temporary rules (one of which
applies only to exclusively listed
classes), any trading in any class in a
screen-based only environment would
occur in the same manner as it does
today. Permitting the Exchange to
operate in a floorless configuration with
respect to only impacted classes rather
than the entire floor (and all classes) if
some classes may continue to operate in
hybrid environment will permit the
Exchange to operate its market with as
minimal interruption as possible in the
event extraordinary circumstances cause
only part of its trading floor to be
inoperable.
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The Exchange does not believe the
proposed rule change to permit the
temporary provision related to AIM
contra-parties to apply any time the
Exchange’s trading floor (or trading pit)
is inoperable will impose any burden on
intramarket competition, as it will
permit all market participants to be
solicited to participate in AIM
transactions in exclusively listed index
options. Additionally, the Exchange
does not believe this proposed rule
change will impose any burden on
intermarket competition, as this
provision would apply only to an
exclusively listed index option(s)
impacted by the trading floor or trading
pit closure, which are available for
trading solely on the Exchange. By
limiting this provision to exclusively
listed index options, the Exchange
believes this will permit competition
with other options exchange with
respect to multi-listed options to
continue in the same manner as it
occurs during normal trading
circumstances. The Exchange believes
the proposed rule change is necessary
and appropriate to allow it to provide
trading in these products (which are
only able to trade on the Exchange) in
an uninterrupted manner to the extent
practicable under any extraordinary
circumstances (not just the ongoing
pandemic).
The Exchange does not believe the
proposed rule change to permit the
temporary provision to exclude contract
volume executed during a time when
the trading floor is inoperable from the
determination of whether a MarketMaker is subject to continuous quoting
obligations at any time will not burden
intramarket competition, as it will apply
in the same manner to all MarketMakers. As noted above, this provision
will have no impact on Market-Makers
currently subject to continuous
electronic quoting obligations, as those
will continue to apply. This provision
will prevent Market-Makers not
currently subject to continuous
electronic quoting obligations who
could exceed the 20% threshold
triggering those obligations solely
because the trading floor was
inoperable. The Exchange believes it
would be unduly burdensome to subject
a Market-Maker to additional
obligations because of the unavailability
of the Exchange facility where that
Market-Maker conducts the vast
majority of its business under normal
trading circumstances. The Exchange
believes this proposed rule change will
not burden intermarket competition, as
it applies solely to continuous
electronic quoting obligations
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applicable to Market-Makers of the
Exchange.
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)(iii) of the Act 12 and
subparagraph (f)(6) of Rule 19b–4
thereunder.13
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 14 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 15
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 proposal may
become operative immediately upon
filing. The Exchange represents that one
of its trading pits on the Exchange’s
trading floor recently experienced
weather-related water damage, causing
the Exchange to operate in a screenbased only environment with a floorless
configuration in one class. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest. The Exchange represents
that waiver of the operative delay would
permit the Exchange to operate in an
uninterrupted manner as much as
practicable if any extraordinary
circumstance causes a part of the
trading floor to become inoperable. The
Commission notes that the Exchange
represents that the Exchange operated
all classes in a floorless configuration
for approximately three months in 2020,
12 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
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 fiveday prefiling requirement in this case.
14 17 CFR 240.19b–4(f)(6).
15 17 CFR 240.19b–4(f)(6)(iii).
13 17
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with temporary rules applying to all
classes as applicable and observed no
negative impact on the market or market
participants. Accordingly, the
Commission hereby waives the
operative delay and designates the
proposal operative upon filing.16
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) 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
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–2022–062 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CBOE-2022–062. 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
16 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
E:\FR\FM\17JAN1.SGM
17JAN1
Federal Register / Vol. 88, No. 10 / Tuesday, January 17, 2023 / Notices
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–2022–062 and
should be submitted on or before
February 7, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–00655 Filed 1–13–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96628; File No. SR–
EMERALD–2023–01]
Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change by MIAX Emerald, LLC To
Amend the Fee Schedule To Modify
Certain Connectivity and Port Fees
January 10, 2023.
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 January 9,
2023, MIAX Emerald, LLC (‘‘MIAX
Emerald’’ or ‘‘Exchange’’), filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
as described in Items I, II, and III 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.
khammond on DSKJM1Z7X2PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend the MIAX Emerald Fee Schedule
(the ‘‘Fee Schedule’’) to amend its Fee
Schedule (the ‘‘Fee Schedule’’) to
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
18:16 Jan 13, 2023
Jkt 259001
amend certain connectivity and port
fees.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/emerald, at MIAX’s principal
office, and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Fee Schedule as follows: (1) increase the
fees for a 10 gigabit (‘‘Gb’’) ultra-low
latency (‘‘ULL’’) fiber connection for
Members 3 and non-Members; and (2)
adopt a tiered-pricing structure for
Limited Service MIAX Emerald Express
Interface (‘‘MEI’’) Ports 4 available to
Market Makers.5 The Exchange last
increased the fees for both 10Gb ULL
fiber connections and Limited Service
MEI Ports beginning with a series of
filings on October 1, 2020 (with the final
filing made on March 24, 2021).6 Prior
to that fee change, the Exchange
provided Limited Service MEI Ports for
3 The term ‘‘Member’’ means an individual or
organization approved to exercise the trading rights
associated with a Trading Permit. Members are
deemed ‘‘members’’ under the Exchange Act. See
Exchange Rule 100.
4 The MIAX Emerald Express Interface (‘‘MEI’’) is
a connection to the MIAX Emerald System that
enables Market Makers to submit simple and
complex electronic quotes to MIAX Emerald. See
the Definitions Section of the Fee Schedule.
5 The term ‘‘Market Makers’’ refers to Lead Market
Makers (‘‘LMMs’’), Primary Lead Market Makers
(‘‘PLMMs’’), and Registered Market Makers
(‘‘RMMs’’) collectively. See the Definitions Section
of the Fee Schedule and Exchange Rule 100.
6 See Securities Exchange Act Release Nos. 91460
(April 1, 2021), 86 FR 18349 (April 8, 2021) (SR–
EMERALD–2021–11); 90184 (October 14, 2020), 85
FR 66636 (October 20, 2020) (SR–EMERALD–2020–
12); 90600 (December 8, 2020), 85 FR 80831
(December 14, 2020) (SR–EMERALD–2020–17);
91032 (February 1, 2021), 86 FR 8428 (February 5,
2021) (SR–EMERALD–2021–02); and 91200
(February 24, 2021), 86 FR 12221 (March 2, 2021)
(SR–EMERALD–2021–07).
PO 00000
Frm 00053
Fmt 4703
Sfmt 4703
2651
$50 per port, after the first two Limited
Service MEI Ports that are provided free
of charge, and the Exchange incurred all
the costs associated to provide those
first two Limited Service MEI Ports
since it commenced operations in
March 2019. The Exchange then
increased the fee by $50 to a modest
$100 fee per Limited Service MEI Port
and increased the fee for 10Gb ULL fiber
connections from $6,000 to $10,000 per
month.
Also, in that fee change, the Exchange
adopted fees for providing five different
types of ports for the first time. These
ports were FIX Ports, MEI Ports,
Clearing Trade Drop Ports, FIX Drop
Copy Ports, and Purge Ports.7 Again, the
Exchange absorbed all costs associated
with providing these ports since its
launch in March 2019. As explained in
that filing, expenditures, as well as
research and development (‘‘R&D’’) in
numerous areas resulted in a material
increase in expense to the Exchange and
were the primary drivers for that
proposed fee change. In that filing, the
Exchange allocated a total of $9.3
million in expenses to providing 10Gb
ULL fiber connectivity, additional
Limited Service MEI Ports, FIX Ports,
MEI Ports, Clearing Trade Drop Ports,
FIX Drop Copy Ports, and Purge Ports.8
Since the time of 2021 increase
discussed above, the Exchange
experienced ongoing increases in
expenses, particularly internal
expenses. As discussed more fully
below, the Exchange recently calculated
increased annual aggregate costs of
$11,361,586 for providing 10Gb ULL
connectivity and $1,779,066 for
providing Limited Service MEI Ports.
Much of the cost relates to monitoring
and analysis of data and performance of
the network via the subscriber’s
connection with nanosecond
granularity, and continuous
improvements in network performance
with the goal of improving the
subscriber’s experience. The costs
associated with maintaining and
enhancing a state-of-the-art network is a
significant expense for the Exchange,
and thus the Exchange believes that it
is reasonable and appropriate to help
offset those increased costs by amending
fees for connectivity services.
Subscribers expect the Exchange to
provide this level of support so they
continue to receive the performance
they expect. This differentiates the
Exchange from its competitors.
The Exchange now proposes to amend
the Fee Schedule to amend the fees for
10Gb ULL connectivity and Limited
7 See
id. for a description of each of these ports.
8 Id.
E:\FR\FM\17JAN1.SGM
17JAN1
]]>Agencies
[Federal Register Volume 88, Number 10 (Tuesday, January 17, 2023)]
[Notices]
[Pages 2647-2651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-00655]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96623; File No. SR-CBOE-2022-062]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Amend Rule 5.24
January 10, 2023.
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 December 27, 2022, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission
(``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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 5.24(e).
(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 or Trading Pit. If the Exchange trading
floor or a trading pit(s) becomes inoperable and the Exchange does not
make a virtual trading floor available in [a]the impacted class(es)
pursuant to subparagraph (3) below, the Exchange will continue to
operate with respect to the impacted class(es) in a screen-based only
environment using a floorless configuration of the System that is
operational while the trading floor or trading pit(s) facility is
inoperable. The Exchange will operate using this configuration only
until the Exchange's trading floor or trading pit(s) facility is
operational. Open outcry trading in the impacted classes will not be
available in the event the trading floor or trading pit(s) becomes
inoperable, except as otherwise set forth in this paragraph (e) below
and pursuant to Rule 5.26, as applicable.
(1) Applicable Rules. In the event that the trading floor or a
trading pit(s) becomes inoperable, trading in the impacted class(es)
will be conducted pursuant to all applicable System Rules, except that
open outcry Rules will not be in force for the impacted class(es),
including but not limited to the Rules (or applicable portions of the
Rules) in Chapter 5, Section G, and as follows [(subparagraphs (A)
through (C) will be effective until June 20, 2021)]:
(A) notwithstanding the introductory paragraphs of Rules 5.37 and
5.73, an order for the account of a Market-Maker with an appointment in
the applicable class on the Exchange may be solicited for the
Initiating Order submitted for execution against an Agency Order in any
exclusively listed index option class into a simple AIM Auction
pursuant to Rule 5.37 or a simple FLEX AIM Auction pursuant to Rule
5.73; and
[(B) with respect to complex orders in any exclusively listed index
option class:
(1) notwithstanding Rule 5.4(b), the minimum increment for bids and
offers on complex orders with any ratio equal to or greater than one-
to-twenty-five (0.04) and equal to or less than twenty-five-to-one
(25.00) is $0.01 or greater, which may be determined by the Exchange on
a class-by-class basis, and the legs may be executed in $0.01
increments; and
(2) notwithstanding the definition of ``complex order'' in Rule
1.1, for purposes of Rule 5.33, the term ``complex order'' means a
complex order with any ratio equal to or greater than one-to-twenty-
five (0.04) and equal to or less than twenty-five-to-one (25.00); and]
([C]B) the contract volume a Market-Maker trades electronically in
an impacted class(es) during a time period in which the Exchange
operates with respect to that class(es) in a screen-based only
environment will be excluded from determination of whether a Market-
Maker executes more than 20% of its contract volume electronically in
an appointed class during any calendar quarter, and thus is subject to
the continuous electronic quoting obligation, as set forth in Rule
5.52(d).
[[Page 2648]]
All non-trading rules of the Exchange will continue to apply.
* * * * *
The text of the proposed rule change is also available on the
Exchange's website (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 5.24(e). 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.\3\ Rule 5.24(e)(1) also 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,\4\ and that all non-
trading rules of the Exchange would continue to apply, except as set
forth in Rule 5.24(e)(1)(A) through (C).
---------------------------------------------------------------------------
\3\ 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.
\4\ 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.
---------------------------------------------------------------------------
The Exchange proposes several changes to Rule 5.24(e). First, the
Exchange amends paragraph (e) in various places to that it will apply
if the trading floor or a specific trading pit(s) becomes inoperable.
It is possible that only one or more trading pits may be inoperable
while other trading pits are unimpacted (and thus operable). Permitting
the Exchange to operate in a screen-based only environment with a
floorless configuration with respect to only classes impacted by an
event that causes only part of the trading floor to become inoperable
will minimize the impact to the Exchange's market and trading
participants. Amending Rule 5.24(e) apply on a class basis is
consistent with the current Rule--for example, Rule 5.24(e) would apply
if the Exchange does not make a virtual trading floor available in a
class pursuant to Rule 5.24(e)(3).
Second, the proposed rule change deletes Rule 5.24(e)(1)(B).
Subparagraph (1)(B) permitted, when the trading floor was inoperable,
in exclusively listed index classes, complex orders with any ratio
equal to or greater than one-to-twenty-five and equal to or less than
twenty-five-to-one to be submitted for electronic execution and
permitted the minimum increment for bids and offers on those complex
orders to be $0.01 and the legs of those complex orders to be executed
in $0.01 increments.\5\ Currently, however, the Exchange permits
electronic execution of complex orders of any ratio and their legs in
penny increments. Therefore, the temporary rule for when the trading
floor is inoperable in current subparagraph (1)(B) is moot and no
longer necessary.\6\
---------------------------------------------------------------------------
\5\ See Rules 1.1(definition of complex order), 5.4(b), and
5.33(f)(1). The Exchange notes complex orders with ratios greater
than three-to-one or less than one-to-three, whether submitted for
execution electronically or in open outcry, are subject to separate
priority requirements. These priority requirements would continue to
apply in any class that operates in a screen-based only environment
if its applicable trading pit is inoperable. See Rule 5.33(f)(2).
\6\ The proposed rule change also amends current Rule
5.24(e)(1)(C) to become subparagraph (B) in light of the deletion of
current subparagraph (B).
---------------------------------------------------------------------------
Third, the proposed rule change deletes the parenthetical in Rule
5.24(e)(1). Pursuant to that parenthetical, the rule exceptions set
forth in the subparagraphs of that Rule that would apply when the
trading floor was inoperable would be effective only until June 20,
2021. This timeframe was tied to the Exchange's closing of its trading
floor in 2020 in response to the COVID-19 pandemic.\7\ However, the
Exchange believes it is appropriate to permit these temporary rules to
apply at any time the trading floor (or a trading pit) is inoperable to
allow it to maintain fair and orderly markets and facilitate trading in
as continuous manner as possible in the event extraordinary
circumstances cause the trading floor to become inoperable. These two
rule exceptions would apply only during times when the Exchange's
trading floor, or a trading pit(s) as proposed, is inoperable and apply
only to impacted classes (and subparagraph (e)(1)(A) would continue
apply only to exclusively listed classes). The current Rules would
continue to apply when normal conditions exist, and the Exchange offers
both electronic and open outcry trading. All non-trading rules of the
Exchange, including business conduct rules, would continue to apply.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 88386 (March 13,
2020), 85 FR 15823 (March 19, 2020).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the and the rules and regulations thereunder applicable to the Exchange
and, in particular, the requirements of Section 6(b) of the Act.\8\
Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \9\ 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) \10\ requirement that the rules of
an exchange not be designed
[[Page 2649]]
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ Id.
---------------------------------------------------------------------------
In particular, the Exchange believes the proposed rule change to
permit the Exchange to operate in a screen-based only environment in a
floorless configuration with respect to impacted classes if only part
of the Exchange's trading floor is inoperable will remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest. Specifically, if only part of the Exchange's trading floor is
inoperable due to extraordinary circumstances, the Exchange believes it
will allow continued execution opportunities for impacted classes while
permitted unimpacted classes to trade in an uninterrupted manner.
The Exchange believes the removal of the temporary rule related to
complex orders will protect the investors and the public interest, as
the need for this temporary is moot and no longer necessary in the
rules, as the Exchange currently permits complex orders with any ratio
to be submitted for electronic execution in penny increments.
Therefore, deletion of this provision from the Rules will reduce
potential confusion for investors.
Finally, the Exchange believes the proposed rule change to permit
the temporary rules set forth in proposed Rule 5.24(e)(1)(A) and (B) to
be effective any time the Exchange's trading floor or a trading pit(s)
(as proposed) is inoperable remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest, because these
Rules minimize any impact on liquidity that may otherwise occur when
the trading floor (or a trading pit) is in operable. As set forth when
adopted,\11\ with respect to the provision to permit appointed Market-
Makers to be solicited to trade against an Agency Order submitted into
a simple AIM Auction (both for FLEX and non-FLEX Options in exclusively
listed index option classes), the majority of liquidity provided to
orders executed as part of an open outcry cross is provided by
appointed Market-Makers. If this liquidity was not available to TPHs in
an all-electronic environment, there would be significant risk that
these orders may not receive full execution in a timely manner (or at
all) and may trade at worse prices than would have otherwise been
available on the trading floor. The Exchange believes this provision
minimizes this risk and provide electronic execution and price
improvement opportunities for these orders, similar to the
opportunities that are generally available to them on the trading
floor, which protects customers seeking execution of these orders. As
set forth in the Rules, all TPHs may submit responses to AIM Auctions,
all Agency Orders will continue to have an opportunity for price
improvement, and priority customer orders will continue to have
priority at each price level.
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 88386 (March 13,
2020), 85 FR 15823 (March 19, 2020).
---------------------------------------------------------------------------
Additionally, the Exchange believes the provision to exclude volume
executed during a time when the trading floor is inoperable from the
determination of whether a Market-Maker is subject to continuous
electronic quoting obligations promotes just and equitable principles
of trade. If this volume were included in this determination, a Market-
Maker not otherwise subject to these obligations may become subject to
them for reasons outside of the Market-Maker's control. As a result, a
Market-Maker may become subject to additional obligations that would
not apply during normal circumstances. This provision has no impact on
Market-Makers currently subject to continuous electronic quoting
obligations, as once a Market-Maker becomes subject to that obligation,
it remains subject to that obligation, even if it executes less than
20% of its contract volume electronically in a subsequent calendar
quarter. This provision is solely intended to impact those Market-
Makers who currently are not subject to continuous electronic quoting
obligations. Without this provision, depending on the length of time
the trading floor is inoperable, a Market-Maker that has not previously
exceeded the 20% contract volume threshold and thus is not currently
subject to continuous electronic quoting obligation could exceed that
threshold for a calendar quarter, which would then subject it to a new
obligation that was not in place when the trading floor was operable.
The Exchange believes it would be unduly burdensome to impose
obligations on a Market-Maker that are inconsistent with the Market-
Maker's standard business practices as a result of extraordinary
circumstances outside of the Market-Maker's control, particularly when
the Exchange expects those circumstances to be temporary. The Exchange
notes all Market-Makers must comply with the other obligations set
forth in Rules 5.51 and 5.52, including the obligations related to
size, two-sided quotes, and competitive quotes.
The Exchange believes the presence of these temporary rules were
beneficial to liquidity and thus to investors during the three-month
closure of the Exchange's trading floor in 2020 and observed no harm to
investors as a result of these temporary rules. The Exchange believes
it is appropriate for these two temporary rules to apply any time the
trading floor or a trading pit is inoperable so that it may maintain
fair and orderly markets with sufficient liquidity for investors in the
event any extraordinary circumstances cause the Exchange to close its
trading floor (or any part thereof).
The Exchange's Regulatory Division will continue its standard
routine surveillance reviews for electronic trading as it does today
and has put together a regulatory plan to surveil the additional
changes being proposed when any class is operating in a screen-based
only environment.
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 is proposed as part of
its business continuity plans intended to allow it to maintain fair and
orderly markets if unusual circumstances cause the Exchange's trading
floor or a trading pit(s) to become inoperable. The Exchange believes
the proposed rule change will not burden intramarket competition, as
any closure of the trading floor (or trading pit) and resulting
operation in a screen-based only environment in a floorless
configuration for any class will apply in the same manner to all market
participants, as all market participants would be able to submit orders
for electronic execution only in impacted classes. Additionally, the
Exchange believe the proposed rule change will not burden intermarket
competition, as it applies solely to the operation of the Exchange's
trading floor. Other than the two temporary rules (one of which applies
only to exclusively listed classes), any trading in any class in a
screen-based only environment would occur in the same manner as it does
today. Permitting the Exchange to operate in a floorless configuration
with respect to only impacted classes rather than the entire floor (and
all classes) if some classes may continue to operate in hybrid
environment will permit the Exchange to operate its market with as
minimal interruption as possible in the event extraordinary
circumstances cause only part of its trading floor to be inoperable.
[[Page 2650]]
The Exchange does not believe the proposed rule change to permit
the temporary provision related to AIM contra-parties to apply any time
the Exchange's trading floor (or trading pit) is inoperable will impose
any burden on intramarket competition, as it will permit all market
participants to be solicited to participate in AIM transactions in
exclusively listed index options. Additionally, the Exchange does not
believe this proposed rule change will impose any burden on intermarket
competition, as this provision would apply only to an exclusively
listed index option(s) impacted by the trading floor or trading pit
closure, which are available for trading solely on the Exchange. By
limiting this provision to exclusively listed index options, the
Exchange believes this will permit competition with other options
exchange with respect to multi-listed options to continue in the same
manner as it occurs during normal trading circumstances. The Exchange
believes the proposed rule change is necessary and appropriate to allow
it to provide trading in these products (which are only able to trade
on the Exchange) in an uninterrupted manner to the extent practicable
under any extraordinary circumstances (not just the ongoing pandemic).
The Exchange does not believe the proposed rule change to permit
the temporary provision to exclude contract volume executed during a
time when the trading floor is inoperable from the determination of
whether a Market-Maker is subject to continuous quoting obligations at
any time will not burden intramarket competition, as it will apply in
the same manner to all Market-Makers. As noted above, this provision
will have no impact on Market-Makers currently subject to continuous
electronic quoting obligations, as those will continue to apply. This
provision will prevent Market-Makers not currently subject to
continuous electronic quoting obligations who could exceed the 20%
threshold triggering those obligations solely because the trading floor
was inoperable. The Exchange believes it would be unduly burdensome to
subject a Market-Maker to additional obligations because of the
unavailability of the Exchange facility where that Market-Maker
conducts the vast majority of its business under normal trading
circumstances. The Exchange believes this proposed rule change will not
burden intermarket competition, as it applies solely to continuous
electronic quoting obligations applicable to Market-Makers of the
Exchange.
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)(iii) of the Act \12\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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-day prefiling requirement in this
case.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \14\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \15\ 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 proposal may become operative immediately upon filing. The Exchange
represents that one of its trading pits on the Exchange's trading floor
recently experienced weather-related water damage, causing the Exchange
to operate in a screen-based only environment with a floorless
configuration in one class. The Commission believes that waiving the
30-day operative delay is consistent with the protection of investors
and the public interest. The Exchange represents that waiver of the
operative delay would permit the Exchange to operate in an
uninterrupted manner as much as practicable if any extraordinary
circumstance causes a part of the trading floor to become inoperable.
The Commission notes that the Exchange represents that the Exchange
operated all classes in a floorless configuration for approximately
three months in 2020, with temporary rules applying to all classes as
applicable and observed no negative impact on the market or market
participants. Accordingly, the Commission hereby waives the operative
delay and designates the proposal operative upon filing.\16\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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 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-2022-062 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2022-062. 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
[[Page 2651]]
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-2022-062 and should be submitted on or before February 7, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-00655 Filed 1-13-23; 8:45 am]
BILLING CODE 8011-01-P
