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]
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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.
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[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.’’
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(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
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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
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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.
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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).
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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
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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.
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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
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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
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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.
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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]
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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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe 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.
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\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.
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\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.
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\15\ Id.
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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.
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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
