Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 2.8 Regarding Voluntary Termination of Rights as an Exchange Member, 24054-24057 [2024-07224]

Download as PDF khammond on DSKJM1Z7X2PROD with NOTICES 24054 Federal Register / Vol. 89, No. 67 / Friday, April 5, 2024 / Notices At any time within 60 days of the filing of such 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. you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR–CboeEDGX–2024–018 and should be submitted on or before April 26, 2024. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 J. Matthew DeLesDernier, Deputy Secretary. Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– CboeEDGX–2024–018 on the subject line. SECURITIES AND EXCHANGE COMMISSION 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–CboeEDGX–2024–018. 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 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; 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. VerDate Sep<11>2014 16:44 Apr 04, 2024 Jkt 262001 [FR Doc. 2024–07225 Filed 4–4–24; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–99876; File No. SR– CboeEDGA–2024–010] Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 2.8 Regarding Voluntary Termination of Rights as an Exchange Member April 1, 2024. 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 March 19, 2024, Cboe EDGA Exchange, Inc. (‘‘Exchange’’) 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 Exchange filed the proposal 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 EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) proposes to amend Rule 2.8, related to the voluntary termination of rights as an Exchange Member (‘‘Member’’).5 The text of the proposed rule change is provided below. 18 17 CFR 200.30–3(a)(12). 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). 5 See Exchange Rule 1.5(n). The term ‘‘Member’’ is defined as ‘‘any registered broker or dealer that has been admitted to membership in the Exchange.’’ PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 (additions are italicized; deletions are [bracketed]) * * * * * Rules of Cboe EDGA Exchange, Inc. * * * * * Rule 2.8. Voluntary Termination of Rights as a Member A Member may voluntarily terminate its rights as a Member only by a written resignation addressed to the Exchange’s Secretary or another officer designated by the Exchange. [Such resignation shall not take effect until 30 days after all of the following conditions have been satisfied: (i) receipt of such written resignation; (ii) all indebtedness due the Exchange shall have been paid in full; (iii) any Exchange investigation or disciplinary action brought against the Member has reached a final disposition; and (iv) any examination of such Member in process is completed and all exceptions noted have been reasonably resolved; provided, however, that the Board may declare a resignation effective at any time]Each terminating Member must promptly (a) make any outstanding filings required under the Rules, and (b) pay any outstanding fees, assessments, charges, fines, or other amounts due to the Exchange, the Commission, or the Securities Investor Protection Corporation. * * * * * The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ equities/regulation/rule_filings/edga/), 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 amendments to Rule 2.8 (Voluntary Termination of E:\FR\FM\05APN1.SGM 05APN1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 89, No. 67 / Friday, April 5, 2024 / Notices Rights as a Member). Rule 2.8 sets forth the requirements for a Member’s voluntary termination of its rights as a Member. Currently, Rule 2.8 provides that a Member’s voluntary termination of its rights as a Member shall not take effect until 30 days after all of the following conditions have been satisfied: (i) receipt of such written resignation; (ii) all indebtedness due the Exchange shall have been paid in full; (iii) any Exchange investigation or disciplinary action brought against the Member has reached a final disposition; and (iv) any examination of such Member in process is completed and all exceptions noted have been reasonably resolved. The Rule further provides that the Board may declare a resignation effective at any time. The Exchange proposes to amend Rule 2.8 to remove conditions set forth in Rule 2.8(iii) and (iv), requiring that any Exchange investigation or disciplinary action brought against the Member has reached a final disposition and that any examination of such Member in process is completed and all exceptions noted have been reasonably resolved. The Exchange further proposes to amend Rule 2.8 to align the voluntary termination rules with that of its affiliates, Cboe Exchange, Inc. (‘‘Cboe Options’’) and Cboe C2 Exchange, Inc. (‘‘C2’’). Specifically, Cboe Options Rule 3.16 and C2 Rule 3.7 require a terminating Trading Permit Holder to promptly make any outstanding filings required under the respective Rules and pay any outstanding fees, assessments, charges, fines, or other amounts due to each Exchange, the Commission, or the Securities Investor Protection Corporation. The Exchange notes that its affiliates do not maintain a 30-day notice period for terminating members, and now proposes to remove the requirement from the Exchange’s Rules. Under Rule 2.8, as amended, the Exchange would require receipt of written resignation, completion of any outstanding filings required under the Rules, and payment of any outstanding fees, assessments, charges, fines, or other amounts due to the Exchange, the Commission, or the Securities Investor Protection Corporation, in order for a Member’s voluntary termination of its Member rights to take place. The Exchange notes that, under Rule 8.1(b), any Member or person associated with a Member shall continue to be subject to the disciplinary jurisdiction of the Exchange following the termination of such person’s membership or association with a Member with respect to matters that occurred prior to such termination, provided that written notice of the VerDate Sep<11>2014 16:44 Apr 04, 2024 Jkt 262001 commencement of an inquiry into such matters is given by the Exchange to such former Member or former associated person within one year of receipt by the Exchange of the latest written notice of the termination of such person’s status as a Member or person associated with a Member.6 Thus, notwithstanding the proposed amendments to Rule 2.8, the Exchange continues to, under Rule 8.1, maintain disciplinary jurisdiction for matters relevant to any in-process examinations or investigations or disciplinary actions brought against a Member that voluntary terminates its membership rights under Rule 2.8, as amended, so long as the Exchange provides written notice to the former Member (or associated person) within one year of receipt of written notice of termination.7 As such, the Exchange believes the proposed amendments will not result in any practical changes to the Exchange’s disciplinary jurisdiction from an Exchange or Member perspective. Rather, the proposed amendments are designed to facilitate a more efficient voluntary termination process, by allowing Members to terminate their Member status and therefore cease being subject to Member obligations notwithstanding any ongoing disciplinary actions and exams (which may continue for an indeterminate period of time), given the Exchange, via Rule 8.1, maintains jurisdiction over the firm following such termination for disciplinary matters. Further, the Exchange notes there is no provision under the Securities Exchange Act of 1934 (the ‘‘Act’’) which requires that termination be conditioned on final disposition or exam completion. As noted above, the proposed rule change aligns the Exchange’s voluntary termination requirements with those of its affiliates, Cboe Options and C2. Under Cboe Options Rule 3.16 (Obligations of Terminating TPHs), each terminating Trading Permit Holder is obligated to promptly (i) return to the Exchange all Exchange badges, including trading and access badges, that were issued to the Trading Permit Holder by the Exchange with respect to that Trading Permit Holder’s terminating Trading Permit 6 The notice requirement does not apply to a person who at any time after a termination again subjects himself or herself to the disciplinary jurisdiction of the Exchange by becoming a Member or a person associated with a Member. 7 For the avoidance of doubt, if a Member voluntarily terminates its membership rights under Rule 2.8, as amended, while an examination or investigation or disciplinary action is in-process, the Exchange will continue to maintain disciplinary jurisdiction over the Member following their termination, subject to the provisions of Rule 8.1. PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 24055 Holder status, (ii) make any outstanding filings required under Exchange rules, and (iii) pay any outstanding fees, assessments, charges, fines, or other amounts due to the Exchange, the Securities and Exchange Commission, or the Securities Investor Protection Corporation.8 The Exchange further notes that at least one other exchange has similar obligations for terminating members, in that it does not require that termination be conditioned on final disposition or exam completion.9 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.10 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 11 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) 12 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange also believes the proposed rule change is consistent with Section 6(b)(1) of the Act,13 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 Members and persons associated with its Members with the Act, the rules and regulations thereunder, and the rules of the Exchange. In particular, the Exchange believes the proposed amendments to the 8 Cboe Options Rule 3.1(c)(1) requires a Trading Permit Holder seeking to terminate that holder’s Trading Permit must notify the Exchange, prior to the deadline announced by the Exchange and in a form and manner prescribed by the Exchange, that the holder is terminating that Trading Permit at the end of its term. 9 See MIAX Options Exchange Rule 206 (Obligations of Terminating Members). 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(5). 12 Id. 13 15 U.S.C. 78f(b)(1). E:\FR\FM\05APN1.SGM 05APN1 khammond on DSKJM1Z7X2PROD with NOTICES 24056 Federal Register / Vol. 89, No. 67 / Friday, April 5, 2024 / Notices conditional requirements for voluntary termination of Membership will make the termination process more efficient by allowing Members to terminate their Member status and therefore cease being subject to Member obligations notwithstanding any ongoing disciplinary actions and exams (which may continue for an indeterminate period of time), given the Exchange maintains jurisdiction over the firm following such termination for disciplinary matters under Exchange Rules. The Exchange believes the proposed amendments result in a termination process that allows for proper disciplinary jurisdiction while also ensuring that termination is not unduly prolonged due to an administrative technicality within the termination requirements, to the benefit of investors and the public interest. Further, the Exchange believes the proposed changes will serve to avoid wasting Member and Exchange resources on maintaining memberships that are no longer utilized, but unable to be terminated due to ongoing disciplinary action or examination process. As noted above, the Exchange continues to maintain disciplinary jurisdiction over terminated firms following termination for matters that occurred prior to termination, provided written notice of the commencement of an inquiry into such matters is provided to the terminated Member within one year of the Member’s written notice of termination. Therefore, the Exchange believes that the termination requirements set forth in Rule 2.8(iii) and (iv) are unnecessarily duplicative, given the Exchange maintains disciplinary jurisdiction over terminated members via Rule 8.1(b) with respect to matters that occurred prior to such termination, thereby ensuring the Exchange may continue to enforce compliance by the Exchange’s Members and persons associated with its Members with the Act, the rules and regulations thereunder, and the rules of the Exchange. Further, the Exchange believes the proposed rule changes are just, equitable and not unfairly discriminatory because they conform to the process used by its affiliated options exchange, thereby providing consistency across the Cboe family options exchanges in regards to termination requirements. Such consistent requirements may, in turn, simplify the termination process for members of the Exchange that are also participants on Cboe affiliated exchanges. The Exchange believes this VerDate Sep<11>2014 16:44 Apr 04, 2024 Jkt 262001 consistency will promote a fair and orderly national options market system. The proposed changes also apply uniformly to all Members that may choose to voluntarily terminate their membership. As noted above, in addition to the Exchange’s affiliates, at least one other exchange also has similar termination requirements as those proposed by the Exchange.14 As such, the proposed rule change would foster cooperation and coordination with persons engaged in facilitating transactions in securities and would remove impediments to and perfect the mechanism of a free and open market and a national market system. 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. This proposal does not create an unnecessary or inappropriate intra-market burden on competition because the proposed change will apply uniformly to all Members that choose to voluntarily terminate their membership. Further, the proposed change is not designed to address any competitive issues. Indeed, this proposal does not create an unnecessary or inappropriate intermarket burden on competition because it merely amends the requirements for voluntary termination of rights as a Member and conforms to the requirements of the Exchange’s affiliated options exchanges, Cboe Options and C2, as well as at least one other exchange.15 Finally, as noted above, the Exchange believes the proposed rule amendments will not result in any practical changes to the Exchange’s disciplinary jurisdiction from an Exchange or Member perspective, given the Exchange maintains disciplinary jurisdiction over terminated Members following their termination, subject to the provisions of Rule 8.1. 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. 14 See supra note 9. See also Cboe Options Rule 3.16 and C2 Rule 3.7. 15 Id. PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 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 16 and Rule 19b–4(f)(6) thereunder.17 At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– CboeEDGA–2024–010 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–CboeEDGA–2024–010. 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 16 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires the Exchange 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. 17 17 E:\FR\FM\05APN1.SGM 05APN1 Federal Register / Vol. 89, No. 67 / Friday, April 5, 2024 / Notices 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 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR–CboeEDGA–2024–010 and should be submitted on or before April 26, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2024–07224 Filed 4–4–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.8A and Article 9, Rule 7 khammond on DSKJM1Z7X2PROD with NOTICES April 1, 2024. 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 March 25, 2024, the NYSE Chicago, Inc. (‘‘NYSE Chicago’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 16:44 Apr 04, 2024 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 self-regulatory organization 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 those 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 parts of such statements. 1. Purpose On March 6, 2023, the Commission adopted amendments to Rule 15c6–1(a) of the Act to shorten the standard settlement cycle for most broker-dealer transactions from T+2 to T+1.3 Accordingly, the Exchange proposes to amend Rule 7.8A and Article 9, Rule 7 to conform with the amendments to Rule 15c6–1(a) and reflect a standard settlement cycle of T+1. Rule 7.8A currently provides that Cross Orders settle ‘‘regular way’’ unless designated with one of two ‘‘non-regular way’’ settlement terms: Cash or Next Day. A Cross Order designated for ‘‘nonregular way’’ settlement may execute at any price without regard to the PBBO or any orders on the Exchange Book. Rule 7.8A defines ‘‘Cash’’ settlement as a transaction for delivery on the day of 3 See Securities Exchange Act Release No. 96930, 88 FR 13872 (March 6, 2023) (‘‘T+1 Adopting Release’’). 1 15 VerDate Sep<11>2014 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 7.8A (Cross Order Settlement Terms) and Article 9, Rule 7 (Transactions ‘‘Ex-Dividend’’ and ‘‘ExWarrants’’) to conform to amendments to Rule 15c6–1(a) of the Act to shorten the standard settlement cycle for most broker-dealer transactions from two business days after the trade date (‘‘T+2’’) to one business day after the trade date (‘‘T+1’’). The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change [Release No. 34–99874; File No. SR– NYSECHX–2024–14] 18 17 comments on the proposed rule change from interested persons. Jkt 262001 PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 24057 the contract and ‘‘Next Day’’ settlement as a transaction for delivery on the next business day following the day of the contract. Article 9, Rule 7(a) currently provides that transactions in stocks are exdividend or ex-rights on the business day immediately preceding the date of record fixed by the corporation for the determination of stockholders entitled to receive such dividends or rights, with certain exceptions. First, as provided in Rule 7(a)(1), when the record date occurs on a holiday or half-holiday, transactions in the stock will be exdividend or ex-rights two full business days immediately preceding the record date. Rule 7(a)(2) further provides that ‘‘cash’’ transactions are ex-dividend or ex-rights on the day following the record date. Finally, Rule 7(a)(3) provides that the Committee on Exchange Procedure may direct that transactions be ex-dividend or ex-rights on a day other than that fixed by this Rule. Rule 7(b) currently provides that transactions in securities which have subscription warrants attached, except those made for ‘‘cash,’’ will be exwarrants on the business day preceding the date of expiration of the warrants, with certain exceptions. First, as provided in Rule 7(b)(1), when the day of expiration occurs on a holiday or Sunday, such transactions will be exwarrants on the second full business day preceding the day of expiration. Rule 7(b)(2) further provides that ‘‘cash’’ transactions are ex-warrants on the day following the record date. Finally, Rule 7(b)(c) provides that, notwithstanding the provisions of Rule 7(b) and subparagraphs (1) and (2) thereunder, the Committee on Exchange Procedure may direct otherwise in any specific case. Proposed Rule Change To conform Rule 7.8A and Article 9, Rule 7 with the amendments to Rule 15c6–1(a) of the Act adopted by the Commission, the Exchange proposes the following changes: • The Exchange proposes to amend Rule 7.8A to eliminate Next Day as a ‘‘non-regular way’’ settlement option in light of the amendments to Rule 15c6– 1(a), because under a T+1 settlement cycle, next day settlement would be considered standard or ‘‘regular way’’ settlement. • The Exchange proposes to amend Rule 7(a) to provide that transactions in stocks, except as provided in the subparagraphs thereunder, will be exdividend or ex-rights on the record date, rather than on the business day preceding the record date. E:\FR\FM\05APN1.SGM 05APN1

Agencies

[Federal Register Volume 89, Number 67 (Friday, April 5, 2024)]
[Notices]
[Pages 24054-24057]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07224]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99876; File No. SR-CboeEDGA-2024-010]


Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Rule 2.8 Regarding Voluntary Termination of Rights as an Exchange 
Member

April 1, 2024.
    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 March 19, 2024, Cboe EDGA Exchange, Inc. (``Exchange'') 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 Exchange filed the proposal pursuant to 
Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder.\4\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe EDGA Exchange, Inc. (the ``Exchange'' or ``EDGA'') proposes to 
amend Rule 2.8, related to the voluntary termination of rights as an 
Exchange Member (``Member'').\5\ The text of the proposed rule change 
is provided below.
---------------------------------------------------------------------------

    \5\ See Exchange Rule 1.5(n). The term ``Member'' is defined as 
``any registered broker or dealer that has been admitted to 
membership in the Exchange.''

(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe EDGA Exchange, Inc.
* * * * *
Rule 2.8. Voluntary Termination of Rights as a Member
    A Member may voluntarily terminate its rights as a Member only by a 
written resignation addressed to the Exchange's Secretary or another 
officer designated by the Exchange. [Such resignation shall not take 
effect until 30 days after all of the following conditions have been 
satisfied: (i) receipt of such written resignation; (ii) all 
indebtedness due the Exchange shall have been paid in full; (iii) any 
Exchange investigation or disciplinary action brought against the 
Member has reached a final disposition; and (iv) any examination of 
such Member in process is completed and all exceptions noted have been 
reasonably resolved; provided, however, that the Board may declare a 
resignation effective at any time]Each terminating Member must promptly 
(a) make any outstanding filings required under the Rules, and (b) pay 
any outstanding fees, assessments, charges, fines, or other amounts due 
to the Exchange, the Commission, or the Securities Investor Protection 
Corporation.
* * * * *
    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/edga/), 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 amendments to Rule 2.8 (Voluntary Termination 
of

[[Page 24055]]

Rights as a Member). Rule 2.8 sets forth the requirements for a 
Member's voluntary termination of its rights as a Member. Currently, 
Rule 2.8 provides that a Member's voluntary termination of its rights 
as a Member shall not take effect until 30 days after all of the 
following conditions have been satisfied: (i) receipt of such written 
resignation; (ii) all indebtedness due the Exchange shall have been 
paid in full; (iii) any Exchange investigation or disciplinary action 
brought against the Member has reached a final disposition; and (iv) 
any examination of such Member in process is completed and all 
exceptions noted have been reasonably resolved. The Rule further 
provides that the Board may declare a resignation effective at any 
time.
    The Exchange proposes to amend Rule 2.8 to remove conditions set 
forth in Rule 2.8(iii) and (iv), requiring that any Exchange 
investigation or disciplinary action brought against the Member has 
reached a final disposition and that any examination of such Member in 
process is completed and all exceptions noted have been reasonably 
resolved. The Exchange further proposes to amend Rule 2.8 to align the 
voluntary termination rules with that of its affiliates, Cboe Exchange, 
Inc. (``Cboe Options'') and Cboe C2 Exchange, Inc. (``C2''). 
Specifically, Cboe Options Rule 3.16 and C2 Rule 3.7 require a 
terminating Trading Permit Holder to promptly make any outstanding 
filings required under the respective Rules and pay any outstanding 
fees, assessments, charges, fines, or other amounts due to each 
Exchange, the Commission, or the Securities Investor Protection 
Corporation. The Exchange notes that its affiliates do not maintain a 
30-day notice period for terminating members, and now proposes to 
remove the requirement from the Exchange's Rules. Under Rule 2.8, as 
amended, the Exchange would require receipt of written resignation, 
completion of any outstanding filings required under the Rules, and 
payment of any outstanding fees, assessments, charges, fines, or other 
amounts due to the Exchange, the Commission, or the Securities Investor 
Protection Corporation, in order for a Member's voluntary termination 
of its Member rights to take place.
    The Exchange notes that, under Rule 8.1(b), any Member or person 
associated with a Member shall continue to be subject to the 
disciplinary jurisdiction of the Exchange following the termination of 
such person's membership or association with a Member with respect to 
matters that occurred prior to such termination, provided that written 
notice of the commencement of an inquiry into such matters is given by 
the Exchange to such former Member or former associated person within 
one year of receipt by the Exchange of the latest written notice of the 
termination of such person's status as a Member or person associated 
with a Member.\6\ Thus, notwithstanding the proposed amendments to Rule 
2.8, the Exchange continues to, under Rule 8.1, maintain disciplinary 
jurisdiction for matters relevant to any in-process examinations or 
investigations or disciplinary actions brought against a Member that 
voluntary terminates its membership rights under Rule 2.8, as amended, 
so long as the Exchange provides written notice to the former Member 
(or associated person) within one year of receipt of written notice of 
termination.\7\
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    \6\ The notice requirement does not apply to a person who at any 
time after a termination again subjects himself or herself to the 
disciplinary jurisdiction of the Exchange by becoming a Member or a 
person associated with a Member.
    \7\ For the avoidance of doubt, if a Member voluntarily 
terminates its membership rights under Rule 2.8, as amended, while 
an examination or investigation or disciplinary action is in-
process, the Exchange will continue to maintain disciplinary 
jurisdiction over the Member following their termination, subject to 
the provisions of Rule 8.1.
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    As such, the Exchange believes the proposed amendments will not 
result in any practical changes to the Exchange's disciplinary 
jurisdiction from an Exchange or Member perspective. Rather, the 
proposed amendments are designed to facilitate a more efficient 
voluntary termination process, by allowing Members to terminate their 
Member status and therefore cease being subject to Member obligations 
notwithstanding any ongoing disciplinary actions and exams (which may 
continue for an indeterminate period of time), given the Exchange, via 
Rule 8.1, maintains jurisdiction over the firm following such 
termination for disciplinary matters.
    Further, the Exchange notes there is no provision under the 
Securities Exchange Act of 1934 (the ``Act'') which requires that 
termination be conditioned on final disposition or exam completion. As 
noted above, the proposed rule change aligns the Exchange's voluntary 
termination requirements with those of its affiliates, Cboe Options and 
C2. Under Cboe Options Rule 3.16 (Obligations of Terminating TPHs), 
each terminating Trading Permit Holder is obligated to promptly (i) 
return to the Exchange all Exchange badges, including trading and 
access badges, that were issued to the Trading Permit Holder by the 
Exchange with respect to that Trading Permit Holder's terminating 
Trading Permit Holder status, (ii) make any outstanding filings 
required under Exchange rules, and (iii) pay any outstanding fees, 
assessments, charges, fines, or other amounts due to the Exchange, the 
Securities and Exchange Commission, or the Securities Investor 
Protection Corporation.\8\ The Exchange further notes that at least one 
other exchange has similar obligations for terminating members, in that 
it does not require that termination be conditioned on final 
disposition or exam completion.\9\
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    \8\ Cboe Options Rule 3.1(c)(1) requires a Trading Permit Holder 
seeking to terminate that holder's Trading Permit must notify the 
Exchange, prior to the deadline announced by the Exchange and in a 
form and manner prescribed by the Exchange, that the holder is 
terminating that Trading Permit at the end of its term.
    \9\ See MIAX Options Exchange Rule 206 (Obligations of 
Terminating Members).
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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.\10\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \11\ 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) \12\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange also believes the proposed rule 
change is consistent with Section 6(b)(1) of the Act,\13\ 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 Members and persons associated with its Members with the 
Act, the rules and regulations thereunder, and the rules of the 
Exchange.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ Id.
    \13\ 15 U.S.C. 78f(b)(1).
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    In particular, the Exchange believes the proposed amendments to the

[[Page 24056]]

conditional requirements for voluntary termination of Membership will 
make the termination process more efficient by allowing Members to 
terminate their Member status and therefore cease being subject to 
Member obligations notwithstanding any ongoing disciplinary actions and 
exams (which may continue for an indeterminate period of time), given 
the Exchange maintains jurisdiction over the firm following such 
termination for disciplinary matters under Exchange Rules. The Exchange 
believes the proposed amendments result in a termination process that 
allows for proper disciplinary jurisdiction while also ensuring that 
termination is not unduly prolonged due to an administrative 
technicality within the termination requirements, to the benefit of 
investors and the public interest. Further, the Exchange believes the 
proposed changes will serve to avoid wasting Member and Exchange 
resources on maintaining memberships that are no longer utilized, but 
unable to be terminated due to ongoing disciplinary action or 
examination process.
    As noted above, the Exchange continues to maintain disciplinary 
jurisdiction over terminated firms following termination for matters 
that occurred prior to termination, provided written notice of the 
commencement of an inquiry into such matters is provided to the 
terminated Member within one year of the Member's written notice of 
termination. Therefore, the Exchange believes that the termination 
requirements set forth in Rule 2.8(iii) and (iv) are unnecessarily 
duplicative, given the Exchange maintains disciplinary jurisdiction 
over terminated members via Rule 8.1(b) with respect to matters that 
occurred prior to such termination, thereby ensuring the Exchange may 
continue to enforce compliance by the Exchange's Members and persons 
associated with its Members with the Act, the rules and regulations 
thereunder, and the rules of the Exchange.
    Further, the Exchange believes the proposed rule changes are just, 
equitable and not unfairly discriminatory because they conform to the 
process used by its affiliated options exchange, thereby providing 
consistency across the Cboe family options exchanges in regards to 
termination requirements. Such consistent requirements may, in turn, 
simplify the termination process for members of the Exchange that are 
also participants on Cboe affiliated exchanges. The Exchange believes 
this consistency will promote a fair and orderly national options 
market system.
    The proposed changes also apply uniformly to all Members that may 
choose to voluntarily terminate their membership. As noted above, in 
addition to the Exchange's affiliates, at least one other exchange also 
has similar termination requirements as those proposed by the 
Exchange.\14\ As such, the proposed rule change would foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities and would remove impediments to and perfect 
the mechanism of a free and open market and a national market system.
---------------------------------------------------------------------------

    \14\ See supra note 9. See also Cboe Options Rule 3.16 and C2 
Rule 3.7.
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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. This proposal does not 
create an unnecessary or inappropriate intra-market burden on 
competition because the proposed change will apply uniformly to all 
Members that choose to voluntarily terminate their membership. Further, 
the proposed change is not designed to address any competitive issues. 
Indeed, this proposal does not create an unnecessary or inappropriate 
inter-market burden on competition because it merely amends the 
requirements for voluntary termination of rights as a Member and 
conforms to the requirements of the Exchange's affiliated options 
exchanges, Cboe Options and C2, as well as at least one other 
exchange.\15\ Finally, as noted above, the Exchange believes the 
proposed rule amendments will not result in any practical changes to 
the Exchange's disciplinary jurisdiction from an Exchange or Member 
perspective, given the Exchange maintains disciplinary jurisdiction 
over terminated Members following their termination, subject to the 
provisions of Rule 8.1.
---------------------------------------------------------------------------

    \15\ Id.
---------------------------------------------------------------------------

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 \16\ and Rule 
19b-4(f)(6) thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange 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.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

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-CboeEDGA-2024-010 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-CboeEDGA-2024-010. 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

[[Page 24057]]

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 a.m. and 3 p.m. 
Copies of the filing also will be available for inspection and copying 
at the principal office of the Exchange. Do not include personal 
identifiable information in submissions; you should submit only 
information that you wish to make available publicly. We may redact in 
part or withhold entirely from publication submitted material that is 
obscene or subject to copyright protection. All submissions should 
refer to file number SR-CboeEDGA-2024-010 and should be submitted on or 
before April 26, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-07224 Filed 4-4-24; 8:45 am]
BILLING CODE 8011-01-P


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