[Federal Register Volume 78, Number 55 (Thursday, March 21, 2013)]
[Notices]
[Pages 17454-17462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-06478]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69146; File No. SR-CBOE-2013-027]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of a Proposed Rule Change Relating to
Trading Ahead of Customer Orders and Best Execution and
Interpositioning Requirements
March 15, 2013.
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 5, 2013, Chicago Board Options Exchange, Incorporated (the
``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I and II below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit
[[Page 17455]]
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.
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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 the Rules of CBOE Stock Exchange,
LLC (``CBSX''), CBOE's stock trading facility, by amending the rule
related to trading ahead of customer orders and adopting a rule related
to best execution and interpositioning requirements. The text of the
proposed rule change is provided below.
(additions are italicized; deletions are [bracketed])
* * * * *
Chicago Board Options Exchange, Incorporated Rules
* * * * *
CBOE Stock Exchange (CBSX) Rules
* * * * *
Rule 53.2 [Trading Permit Holders Acting As Brokers]Prohibition
Against Trading Ahead of Customer Orders
(a) [While Holding Unexecuted Market Order. No Trading Permit
Holder shall on the CBSX System (1) personally buy or initiate the
purchase of any security subject to the rules in these Chapters for
his own account or for any account in which he or his TPH
organization or any member, partner, officer, or employee is
directly or indirectly interested, while such Trading Permit Holder
personally holds or has knowledge that his TPH organization or any
member, partner, officer or employee holds an unexecuted market
order to buy such security in the unit of trading for a customer, or
(2) personally sell or initiate the sale of any security subject to
the rules in these Chapters for any such account, while he
personally holds or has knowledge that his TPH organization or any
member, partner, officer or employee holds an unexecuted market
order to sell such security in the unit of trading for a
customer.]Except as provided herein, a Trading Permit Holder that
accepts and holds an order in an equity security from its own
customer or a customer of another broker-dealer without immediately
executing the order is prohibited from trading that security on the
same side of the market for its own account at a price that would
satisfy the customer order, unless it immediately thereafter
executes the customer order up to the size and at the same or better
price at which it traded for its own account.
(b) [While Holding Unexecuted Limit Order. No Trading Permit
Holder shall on CBSX (1) personally buy or initiate the purchase of
any security subject to the rules in these Chapters for any such
account, at or below the price at which he personally holds or has
knowledge that his TPH organization or any member, partner, officer
or employee holds an unexecuted limited price order to buy such
security in the unit of trading for a customer, or (2) personally
sell or initiate the sale of any security for any such account at or
above the price at which he personally holds or has knowledge that
his TPH organization or any member, partner, officer or employee
holds an unexecuted limited price order to sell such security in the
unit of trading for a customer.]A Trading Permit Holder must have
written procedures in place governing the execution and priority of
all pending orders that is consistent with the requirements of this
Rule and Rule 53.8. A Trading Permit Holder also must ensure that
these procedures are consistently applied.
[(c) Special Contract Exemption. The provisions of this Rule
shall not apply to any purchase or sale of a security the delivery
of which is to be upon a day other than the day of delivery provided
in such unexecuted market or limited price order.]
* * * Interpretations and Policies:
.01 Large Orders and Institutional Account Exceptions. With
respect to orders for customer accounts that meet the definition of
an ``institutional account'' (as defined below) or for orders of
10,000 shares or more (unless such orders are less than $100,000 in
value), a Trading Permit Holder is permitted to trade a security on
the same side of the market for its own account at a price that
would satisfy such customer order, provided that the Trading Permit
Holder has provided clear and comprehensive written disclosure to
such customer at account opening and annually thereafter that:
(a) discloses that the Trading Permit Holder may trade
proprietarily at prices that would satisfy the customer order, and
(b) provides the customer with a meaningful opportunity to opt
in to the Rule 53.2 protections with respect to all or any portion
of its order.
If the customer does not opt in to the Rule 53.2 protections
with respect to all or any portion of its order, the Trading Permit
Holder may reasonably conclude that such customer has consented to
the Trading Permit Holder trading a security on the same side of the
market for its own account at a price that would satisfy the
customer's order.
In lieu of providing written disclosure to customers at account
opening and annually thereafter, a Trading Permit Holder may provide
clear and comprehensive oral disclosure to and obtain consent from
the customer on an order-by-order basis, provided that the Trading
Permit Holder documents who provided such consent and such consent
evidences the customer's understanding of the terms and conditions
of the order.
For purposes of this rule, the term ``institutional account''
shall mean the account of:
(A) a bank, savings and loan association, insurance company, or
registered investment company;
(B) an investment adviser registered either with the Securities
and Exchange Commission under Section 203 of the Investment Advisers
Act of 1940 or with a state securities commission (or any agency or
office performing like functions); or
(C) any other entity (whether a natural person, corporation,
partnership, trust, or otherwise) with total assets of at least $50
million.
.02 No-Knowledge Exception. With respect to NMS stocks, as
defined in Rule 600 of SEC Regulation NMS, if a Trading Permit
Holder implements and utilizes an effective system of internal
controls, such as appropriate information barriers, that operate to
prevent one trading unit from obtaining knowledge of customer orders
held by a separate trading unit, those other trading units trading
in a proprietary capacity may continue to trade at prices that would
satisfy the customer orders held by the separate trading unit. A
Trading Permit Holder that structures its order handling practices
in NMS stocks to permit its proprietary and/or market-making desk to
trade at prices that would satisfy customer orders held by a
separate trading unit must disclose in writing to its customers, at
account opening and annually thereafter, a description of the manner
in which customer orders are handled by the Trading Permit Holder
and the circumstances under which the Trading Permit Holder may
trade proprietarily at its proprietary and/or market-making desk at
prices that would satisfy the customer order.
If a Trading Permit Holder intends to rely on this exception by
implementing information barriers, those information barriers (i)
must provide for the organizational separation of a Trading Permit
Holder's customer order trading unit and proprietary trading unit;
(ii) must ensure that one trading unit does not exert influence over
the other trading unit; (iii) must ensure that information relating
to each trading unit's stock positions, trading activities, and
clearing and margin arrangements is not improperly shared (except
with persons in senior management who are involved in exercising
general managerial oversight of one or both entities); (iv) must
require each trading unit to maintain separate books and records
(and separate financial accounting); (v) must require each trading
unit to separately meet all required capital requirements; (vi) must
ensure the confidentiality of the trading unit's book as provided by
Exchange rules; and (vii) must ensure that any other material, non-
public information (e.g. information related to any business
transactions between the trading unit and an issuer or any research
reports or recommendations issued by the trading unit) is not made
improperly available to the other trading unit in any manner that
would allow that trading unit to take undue advantage of that
information while trading on CBSX. A Trading Permit Holder must
submit the proposed information barriers in writing to the Exchange
upon request.
.03 ISO Exception. A Trading Permit Holder shall be exempt from
the obligation to execute a customer order in a manner consistent
with this Rule with regard to trading for its own account that is
the result of an intermarket sweep order routed in compliance with
Rule 600(b)(30)(ii) of SEC Regulation NMS (``ISO'') where the
customer order is received after the Trading Permit Holder routed
the ISO. Where a Trading Permit Holder routes an ISO to facilitate a
customer order and that customer has consented to not receiving the
better prices obtained by the ISO, the Trading Permit Holder also
shall be exempt with respect to any trading for its own account that
is the
[[Page 17456]]
result of the ISO with respect to the consenting customer's order.
.04 Odd Lot and Bona Fide Error Transaction Exceptions. The
obligations under this Rule shall not apply to a Trading Permit
Holder's proprietary trade that is (1) to offset a customer order
that is in an amount less than a normal unit of trading; or (2) to
correct a bona fide error. Trading Permit Holders are required to
demonstrate and document the basis upon which a transaction meets
the bona fide error exception.
.05 Minimum Price Improvement Standards. The minimum amount of
price improvement necessary for a Trading Permit Holder to execute
an order on a proprietary basis when holding an unexecuted limit
order in that same security, and not be required to execute the held
limit order is as follows:
(a) For customer limit orders priced greater than or equal to
$1.00, the minimum amount of price improvement required is $0.01;
(b) For customer limit orders priced greater than or equal to
$0.01 and less than $1.00, the minimum amount of price improvement
required is the lesser of $0.01 or one-half (\1/2\) of the current
inside spread;
(c) For customer limit orders priced less than $0.01 but greater
than or equal to $0.001, the minimum amount of price improvement
required is the lesser of $0.001 or one-half (\1/2\) of the current
inside spread;
(d) For customer limit orders priced less than $0.001 but
greater than or equal to $0.0001, the minimum amount of price
improvement required is the lesser of $0.0001 or one-half (\1/2\) of
the current inside spread;
(e) For customer limit orders priced less than $0.0001 but
greater than or equal to $0.00001, the minimum amount of price
improvement required is the lesser of $0.00001 or one-half (\1/2\)
of the current inside spread;
(f) For customer limit orders priced less than $0.00001, the
minimum amount of price improvement required is the lesser of
$0.000001 or one-half (\1/2\) of the current inside spread; and
(g) For customer limit orders priced outside the best inside
market, the minimum amount of price improvement required must either
meet the requirements set forth above or the Trading Permit Holder
must trade at a price at or inside the best inside market for the
security.
In addition, if the minimum price improvement standards above
would trigger the protection of a pending customer limit order, any
better-priced customer limit order(s) must also be protected under
this Rule, even if those better-priced limit orders would not be
directly triggered under the minimum price improvement standards
above.
.06 Order Handling Procedures. A Trading Permit Holder must make
every effort to execute a marketable customer order that it receives
fully and promptly. A Trading Permit Holder that is holding a
customer order that is marketable and has not been immediately
executed must make every effort to cross such order with any other
order received by the Trading Permit Holder on the other side of the
market up to the size of such order at a price that is no less than
the best bid and no greater than the best offer at the time that the
subsequent order is received by the Trading Permit Holder and that
is consistent with the terms of the orders. In the event that a
Trading Permit Holder is holding multiple orders on both sides of
the market that have not been executed, the Trading Permit Holder
must make every effort to cross or otherwise execute such orders in
a manner that is reasonable and consistent with the objectives of
this Rule and with the terms of the orders. A Trading Permit Holder
can satisfy the crossing requirement by contemporaneously buying
from the seller and selling to the buyer at the same price.
.07 Trading Outside Normal Market Hours. Trading Permit Holder s
generally may limit the life of a customer order to the period of
normal market hours of 8:30 a.m. to 3:00 p.m. Central Time. However,
if the customer and Trading Permit Holder agree to the processing of
the customer's order outside normal market hours, the protections of
this Rule shall apply to that customer's order(s) at all times the
customer order is executable by the Trading Permit Holder.
* * * * *
Rule 53.8. Best Execution and Interpositioning[Reserved]
[Reserved](a)(1) In any transaction for or with a customer or a
customer of another broker-dealer, a Trading Permit Holder and
persons associated with a Trading Permit Holder shall use reasonable
diligence to ascertain the best market for the subject security and
buy or sell in such market so that the resultant price to the
customer is as favorable as possible under prevailing market
conditions. Among the factors that will be considered in determining
whether a Trading Permit Holder or person associated with a Trading
Permit Holder has used ``reasonable diligence'' are:
(A) the character of the market for the security (e.g., price,
volatility, relative liquidity, and pressure on available
communications);
(B) the size and type of transaction;
(C) the number of markets checked;
(D) accessibility of the quotation; and
(E) the terms and conditions of the order which result in the
transaction, as communicated to the Trading Permit Holder and
persons associated with the Trading Permit Holder.
(2) In any transaction for or with a customer or a customer of
another broker-dealer, no Trading Permit Holder or person associated
with a Trading Permit Holder shall interject a third party between
the Trading Permit Holder or the person associated with a Trading
Permit Holder and the best market for the subject security in a
manner inconsistent with paragraph (a)(1) of this Rule.
(b) When a Trading Permit Holder cannot execute directly with a
market but must employ a broker's broker or some other means in
order to ensure an execution advantageous to the customer, the
burden of showing the acceptable circumstances for doing so is on
the Trading Permit Holder.
(c) Failure to maintain or adequately staff a department
assigned to execute customers' orders cannot be considered
justification for executing away from the best available market; nor
can channeling orders through a third party as described above as
reciprocation for service or business operate to relieve a Trading
Permit Holder of its obligations under this Rule.
(d) A Trading Permit Holder through which an order is channeled
and that knowingly is a party to an arrangement whereby the
initiating Trading Permit Holder has not fulfilled its obligations
under this Rule will also be deemed to have violated this Rule.
(e) The obligations described in paragraphs (a) through (d)
above exist not only when the Trading Permit Holder acts as agent
for the account of its customer but also when transactions are
executed as principal.
* * * Interpretations and Policies:
.01 Execution of Marketable Customer Orders. A Trading Permit
Holder must make every effort to execute a marketable customer order
that it receives fully and promptly.
.02 Definition of ``Market.'' For the purposes of Rule 53.8 and
the accompanying Interpretations and Policies, the term ``market''
or ``markets'' is to be construed broadly, and it encompasses a
variety of different venues, including, but not limited to, market
centers that are trading a particular security. This expansive
interpretation is meant to both inform broker-dealers as to the
breadth of the scope of venues that must be considered in the
furtherance of their best execution obligations and to promote fair
competition among broker-dealers, exchange markets, and markets
other than exchange markets, as well as any other venue that may
emerge, by not mandating that certain trading venues have less
relevance than others in the course of determining a firm's best
execution obligations.
.03 Best Execution and Executing Brokers. A Trading Permit
Holder's duty to provide best execution in any transaction ``for or
with a customer of another broker-dealer'' does not apply in
instances when another broker-dealer is simply executing a customer
order against the Trading Permit Holder's quote. The duty to provide
best execution to customer orders received from other broker-dealers
arises only when an order is routed from the broker-dealer to the
Trading Permit Holder for the purpose of order handling and
execution. This clarification is intended to draw a distinction
between those situations in which the Trading Permit Holder is
acting solely as the buyer or seller in connection with orders
presented by a broker-dealer against the Trading Permit Holder's
quote, as opposed to those circumstances in which the Trading Permit
Holder is accepting order flow from another broker-dealer for the
purpose of facilitating the handling and execution of such orders.
.04 Use of a Broker's Broker. Paragraph (b) of Rule 53.8
provides that when a Trading Permit Holder cannot execute directly
with a market but must employ a broker's broker or some other means
in order to ensure an execution advantageous to the customer, the
burden of showing the acceptable circumstances for doing so is on
the Trading Permit Holder. Examples of acceptable circumstances are
where a customer's order
[[Page 17457]]
is ``crossed'' with another firm that has a corresponding order on
the other side, or where the identity of the firm, if known, would
likely cause undue price movements adversely affecting the cost or
proceeds to the customer.
.05 Orders Involving Securities with Limited Quotations or
Pricing Information. Although the best execution requirements in
Rule 53.8 apply to orders in all securities, markets for securities
differ dramatically. One of the areas in which a Trading Permit
Holder must be especially diligent in ensuring that it has met its
best execution obligations is with respect to customer orders
involving securities for which there is limited pricing information
or quotations available. Each Trading Permit Holder must have
written policies and procedures in place that address how the
Trading Permit Holder will determine the best inter-dealer market
for such a security in the absence of pricing information or
multiple quotations and must document its compliance with those
policies and procedures. For example, a Trading Permit Holder should
analyze pricing information based on other data, such as previous
trades in the security, to determine whether the resultant price to
the customer is as favorable as possible under prevailing market
conditions. In these instances, a Trading Permit Holder should
generally seek out other sources of pricing information or potential
liquidity, which may include obtaining quotations from other sources
(e.g., other firms that the Trading Permit Holder previously has
traded with in the security).
.06 Customer Instructions Regarding Order Handling. If a Trading
Permit Holder receives an unsolicited instruction from a customer to
route that customer's order to a particular market for execution,
the Trading Permit Holder is not required to make a best execution
determination beyond the customer's specific instruction. Trading
Permit Holders are, however, still required to process that
customer's order promptly and in accordance with the terms of the
order. Where a customer has directed that an order be routed to
another specific broker-dealer that is also a Trading Permit Holder,
the receiving Trading Permit Holder to which the order was directed
would be required to meet the requirements of Rule 53.8 with respect
to its handling of the order.
.07 Regular and Rigorous Review of Execution Quality.
(a) No Trading Permit Holder can transfer to another person its
obligation to provide best execution to its customers' orders. A
Trading Permit Holder that routes customer orders to other broker-
dealers for execution on an automated, non-discretionary basis, as
well as a Trading Permit Holder that internalizes customer order
flow, must have procedures in place to ensure the Trading Permit
Holder periodically conducts regular and rigorous reviews of the
quality of the executions of its customers' orders if it does not
conduct an order-by-order review. The review must be conducted on a
security-by-security, type-of-order basis (e.g., limit order, market
order, and market on open order). At a minimum, a Trading Permit
Holder must conduct such reviews on a quarterly basis; however,
Trading Permit Holders should consider, based on the firm's
business, whether more frequent reviews are needed.
(b) In conducting its regular and rigorous review, a Trading
Permit Holder must determine whether any material differences in
execution quality exist among the markets trading the security and,
if so, modify the Trading Permit Holder's routing arrangements or
justify why it is not modifying its routing arrangements. To assure
that order flow is directed to markets providing the most beneficial
terms for their customers' orders, the Trading Permit Holder must
compare, among other things, the quality of the executions the
Trading Permit Holder is obtaining via current order routing and
execution arrangements (including the internalization of order flow)
to the quality of the executions that the Trading Permit Holder
could obtain from competing markets. In reviewing and comparing the
execution quality of its current order routing and execution
arrangements to the execution quality of other markets, a Trading
Permit Holder should consider the following factors:
(1) price improvement opportunities (i.e., the difference
between the execution price and the best quotes prevailing at the
time the order is received by the market);
(2) differences in price disimprovement (i.e., situations in
which a customer receives a worse price at execution than the best
quotes prevailing at the time the order is received by the market);
(3) the likelihood of execution of limit orders;
(4) the speed of execution;
(5) the size of execution;
(6) transaction costs;
(7) customer needs and expectations; and
(8) the existence of internalization or payment for order flow
arrangements.
(c) A Trading Permit Holder that routes its order flow to
another Trading Permit Holder that has agreed to handle that order
flow as agent for the customer (e.g., a clearing firm or other
executing broker-dealer) can rely on that Trading Permit Holder's
regular and rigorous review as long as the statistical results and
rationale of the review are fully disclosed to the Trading Permit
Holder and the Trading Permit Holder periodically reviews how the
review is conducted, as well as the results of the review.
* * * * *
The text of the proposed rule change is also available on the
Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 53.2 of the CBSX Rules, which
governs the treatment of customer orders and prohibits a CBSX Trading
Permit Holder from proprietarily trading ahead of a customer order, and
to adopt Rule 53.8 in the CBSX Rules to govern Trading Permit Holders'
best execution and interpositioning requirements. This proposed rule
change is consistent with Financial Industry Regulatory Authority
(``FINRA'') Rules 5320 (Prohibition Against Trading Ahead of Customer
Orders) \3\ and 5310 (Best Execution and Interpositioning),\4\
respectively, in the Consolidated FINRA Rulebook. The purpose of these
rules is to enhance customer order protection and help customers
receive efficient executions of their transactions at the best market
prices.
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\3\ See Securities Exchange Act Release No. 63895 (February 11,
2011), 76 FR 9386 (February 17, 2011) (SR-FINRA-2009-090) (order
approving FINRA Rule 5320, ``Prohibition Against Trading Ahead of
Customer Orders''). Other exchanges have adopted substantially
similar rules prohibiting trading ahead of customer orders. See,
e.g., Securities Exchange Act Release No. 64418 (May 6, 2011), 76 FR
27735 (May 12, 2011) (SR-CHX-2011-008) (notice of filing and
immediate effectiveness of proposed rule change of Chicago Stock
Exchange, Inc. to adopt customer order protection language
consistent with FINRA Rule 5320); Securities Exchange Act Release
No. 65165 (August 18, 2011), 76 FR 53009 (August 24, 2011) (SR-
NYSEAmex-2011-059) (notice of filing and immediate effectiveness of
proposed rule change of NYSE Amex LLC (now known as NYSE MKT LLC) to
adopt customer order protection language substantially the same as
FINRA Rule 5320); and Securities Exchange Act Release No. 65166
(August 18, 2011), 76 FR 53012 (August 24, 2011) (SR-NYSEArca-2011-
057) (notice of filing and immediate effectiveness of proposed rule
change of NYSE Arca, Inc. to adopt customer order protection
language substantially the same as FINRA Rule 5320).
\4\ See Securities Exchange Act Release No. 65895 (December 5,
2011), 76 FR 77042 (December 9, 2011) (SR-FINRA-2011-052) (order
approving FINRA Rule 5310, ``Best Execution and Interpositioning'').
Other exchanges have similar best execution and interpositioning
rules. See, e.g., NASDAQ Stock Market LLC Rule 2320 (Best Execution
and Interpositioning) and IM-2320; and NASDAQ OMX PHLX LLC Rule 764
(Best Execution and Interpositioning).
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Rule 53.2--Prohibition Against Trading Ahead of Customer Orders
Currently, Rule 53.2 prohibits a Trading Permit Holder on the CBSX
[[Page 17458]]
System \5\ from trading for its own account any security subject to the
CBSX Rules while the Trading Permit Holder personally holds or has
knowledge that his Trading Permit Holder organization (or any member,
partner, officer or employee) holds an unexecuted market order to buy
or sell that security in the unit of trading for a customer.\6\ Rule
53.2 also prohibits a Trading Permit Holder on the CBSX System from
trading for its own account any security subject to the CBSX Rules at a
price that is equal to or better [sic] the price at which the Trading
Permit Holder personally holds or has knowledge that his Trading Permit
Holder organization (or any member, partner, officer or employee) holds
an unexecuted limit order to buy or sell that security in the unit of
trading for a customer.
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\5\ The ``CBSX System'' means the electronic system that
performs the functions set out in the CBSX Rules, including
controlling, monitoring, and recording trading by Trading Permit
Holders through CBSX Workstations and trading between Trading Permit
Holders. See Rule 50.1.
\6\ Rule 53.2 currently also provides a special contract
exemption, stating that the provisions of the Rule do not apply to
any purchase or sale of a security the delivery of which is to be
upon a day other than the day of delivery provided in the unexecuted
market or limit order.
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The proposed rule change replaces in its entirety the text of Rule
53.2 and adds a number of exceptions. Proposed Rule 53.2 includes
customer order protection language similar to the current Rule that
states if a Trading Permit Holder holds an order in an equity security
from its own customer or a customer of another broker-dealer, the
Trading Permit Holder is prohibited from trading that security on the
same side of the market for its own account at a price that would
satisfy the customer order. The proposed rule change adds that this
prohibition does not apply if a Trading Permit Holder, who has traded
proprietarily ahead of a customer order, immediately thereafter
executes the customer order up to the size and at the same or better
price at which it traded for its own account. In other words, in the
event that a Trading Permit Holder trades ahead of an unexecuted
customer order at a price that is equal to or better than the
unexecuted customer order on the CBSX System, the Trading Permit Holder
is required to execute the customer order at the price received by the
Trading Permit Holder or better; otherwise the Trading Permit Holder
will be in violation of improperly trading ahead of the customer
order.\7\ The proposed rule change also establishes the minimum amount
of price improvement necessary for a Trading Permit Holder to execute
an order on a proprietary basis when holding an unexecuted limit
order.\8\
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\7\ For example, if a Trading Permit Holder buys 100 shares of a
security at $10 per share while holding customer limit orders in the
same security to buy at $10 per share equaling, in aggregate, 1000
shares, the Trading Permit Holder is required to fill 100 shares of
the customer limit orders at $10 per share or better.
\8\ See proposed Rule 53.2, Interpretation and Policy .05. For
example, for customer limit orders priced greater than or equal to
$1.00, the minimum amount of price improvement required is $0.01.
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The Exchange also proposes to establish that a Trading Permit
Holder must have written procedures in place governing the execution
and priority of all pending orders that is consistent with proposed
Rule 53.2 and the best execution requirements of proposed Rule 53.8 and
ensure that these procedures are consistently applied.
In furtherance of ensuring customer order protection on CBSX, the
proposed rule change clarifies Trading Permit Holder obligations in
handling marketable customer orders. In meeting these obligations, a
Trading Permit Holder must make every effort to execute a marketable
customer order that it receives fully and promptly. A Trading Permit
Holder that is holding a customer order that is marketable and has not
been immediately executed must make every effort to cross the order
with any other order received by the Trading Permit Holder on the other
side of the market up to the size of such order at a price that is no
less than the best bid and no greater than the best offer at the time
that the subsequent order is received by the Trading Permit Holder and
that is consistent with the terms of the orders. In the event that a
Trading Permit Holder is holding multiple orders on both sides of the
market that have not been executed, the Trading Permit Holder must make
every effort to cross or otherwise execute these orders in a manner
that is reasonable and consistent with the objects of the proposed rule
change and with the terms of the orders. A Trading Permit Holder can
satisfy the crossing requirement by contemporaneously buying from the
seller and selling to the buyer at the same price.\9\
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\9\ See proposed Rule 53.2, Interpretation and Policy .06.
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Large Orders and Institutional Accounts Exception \10\
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\10\ See proposed Rule 53.2, Interpretation and Policy .01.
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The most notable proposed exception to the prohibition on trading
ahead of customer orders permits Trading Permit Holders to negotiate
terms and conditions on the acceptance of certain large-sized orders
(orders of 10,000 shares or more and greater than or equal to $100,000
in value) or orders from institutional accounts.\11\ These terms and
conditions would permit Trading Permit Holders to continue to trade
along side or ahead of these customer orders if the customer agrees.
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\11\ Proposed Rule 53.2, Interpretation and Policy .01 defines
``institutional account'' as an account of: (a) A bank, savings and
loan association, insurance company, or registered investment
company; (b) an investment adviser registered either with the
Commission under Section 203 of the Investment Advisers Act of 1940
or with a state securities commission (or any agency or office
performing like functions); or (c) any other entity (whether a
natural person, corporation, partnership, trust, or otherwise) with
total assets of at least $50 million.
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Specifically, under the proposed rule, a Trading Permit Holder
would be permitted to trade a security on the same side of the market
for its own account at a price that would satisfy a customer order
provided that the Trading Permit Holder provides clear and
comprehensive written disclosure to each customer at account opening
and annually thereafter that: (1) Discloses that the Trading Permit
Holder may trade proprietarily at prices that would satisfy the
customer order, and (b) provides the customer with a meaningful
opportunity to opt in to the Rule 53.2 protections with respect to all
or any portion of its order(s).
If a customer does not opt in to the Rule 53.2 protections with
respect to all or any portion of its order(s), the Trading Permit
Holder may reasonably conclude that the customer has consented to the
Trading Permit Holder trading a security on the same side of the market
for its own account at a price that would satisfy the customer's
order.\12\
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\12\ As is always the case, customers retain the right to
withdraw consent at any time. Therefore, a Trading Permit Holder's
reasonable conclusion that a customer has consented to the Trading
Permit Holder trading along with the customer's order is subject to
further instruction and modification from the customer.
---------------------------------------------------------------------------
In lieu of providing written disclosure to customers at account
opening and annually thereafter, the proposed rule would permit Trading
Permit Holders to provide clear and comprehensive oral disclosure to,
and obtain consent from, a customer on an order-by-order basis,
provided that the Trading Permit Holder documents who provided that
consent and that the consent evidences the customer's understanding of
the terms and conditions of the order. In addition, where a customer
has opted in to the Rule 53.2 protections, a Trading Permit Holder may
still obtain consent on an order-by-order basis to trade ahead of or
along with an order from that customer, provided that the Trading
Permit Holder documents who provided the consent
[[Page 17459]]
and that the consent evidences the customer's understanding of the
terms and conditions of the order.\13\
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\13\ While a Trading Permit Holder organization relying on this
or any exception must be able to proffer evidence of its eligibility
for and compliance with the exception, the Exchange believes that
when obtaining consent on an order-by-order basis, Trading Permit
Holders must, at a minimum, document not only the terms and
conditions of the order (e.g., the relative price and size of the
allocated order/percentage split with the customer), but also the
identity of the person at the customer who approved the trade-along
request. For example, the identity of the person must be noted in a
manner that will enable subsequent contact with that person if a
question as to the consent arises (i.e., first names only, initials,
and nicknames will not suffice). A ``trade along'' request would be
when a Trading Permit Holder asks to trade for his/her proprietary
account while simultaneously holding and working a customer order in
that same stock.
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No-Knowledge Exception \14\
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\14\ See proposed Rule 53.2, Interpretation and Policy .02.
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The Exchange also proposes to add a ``no-knowledge'' exception to
CBSX's customer order protection rule. This proposed exception would
allow a proprietary trading unit of a Trading Permit Holder
organization to continue trading in a proprietary capacity and at
prices that would satisfy customer orders that were being held by
another, separate trading unit at the Trading Permit Holder
organization. The ``no-knowledge'' exception would be applicable with
respect to NMS stocks, as defined in Rule 600 of SEC Regulation NMS. In
order to avail itself of the ``no-knowledge'' exception, a Trading
Permit Holder organization must first implement and utilize an
effective system of internal controls (such as appropriate information
barriers) that operate to prevent the proprietary trading unit from
obtaining knowledge of the customer orders that are held at a separate
trading unit. For example, a CBSX Broker \15\ that conducts both a
proprietary and agency brokerage business and has implemented and
utilized an effective system of internal controls, the ``walled off''
proprietary desk(s) of the CBSX Broker would be permitted to trade at
prices that would satisfy the customer orders held by the agency
brokerage desk without any requirement that these proprietary
executions trigger an obligation to fill pending customer orders at the
same price. The ``no-knowledge'' exception would also apply to a
Trading Permit Holder organization's market-making unit.
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\15\ A ``CBSX Broker'' is a Trading Permit Holder who enters
orders as an agent. See Rule 50.3(5).
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A Trading Permit Holder organization that structures its order
handling practices in NMS stocks to permit its proprietary and/or
market-making desk to trade at prices that would satisfy customer
orders held as a separate trading unit must disclose in writing to its
customers, at account opening and annually thereafter, a description of
the manner in which customer orders are handled by the Trading Permit
Holder and the circumstances under which the Trading Permit Holder may
trade proprietarily at its market-making desk at prices that would
satisfy the customer order. This proposed disclosure may be combined
with the disclosure and negative consent statement permitted in
connection with the proposed large order and institutional account
exceptions.
If a Trading Permit Holder intends to rely on the no-knowledge
exception by implementing information barriers, those information
barriers must (1) provide for the organizational separation of a
Trading Permit Holder's trading unit that holds customer orders and a
proprietary trading unit; (2) ensure that one trading unit does not
exert influence over the other trading unit; (3) ensure that
information relating to each trading unit's stock positions, trading
activities, and clearing and margin arrangements is not improperly
shared (except with persons in senior management who are involved in
exercising general managerial oversight of one or both entities); (4)
require each trading unit to maintain separate books and records (and
separate financial accounting); (5) require each trading unit to
separately meet all required capital requirements; (6) ensure the
confidentiality of each trading unit's book as provided by Exchange
rules; and (7) ensure that any other material, non-public information
(e.g. information related to any business transactions between a
trading unit and an issuer or any research reports or recommendations
issued by the trading unit) is not made improperly available to the
other trading unit in any manner that would allow that trading unit to
take undue advantage of that information while trading on CBSX. A
Trading Permit Holder must submit the proposed information barriers in
writing to the Exchange upon request.
Similar to FINRA Rule 5320, the proposed rule change requires
Trading Permit Holders that intend to rely on the no-knowledge
exception by implementing information barriers to have ``appropriate''
information barriers. The Exchange believes that including these
specific information barrier requirements will clarify for Trading
Permit Holders what types of information barriers would be deemed
appropriate information barriers and thus better allow Trading Permit
Holders to rely on this exception. The Exchange notes that its
surveillance procedures will continue to include a review of all orders
for compliance with the prohibition on trading ahead of customer
orders, and part of that will review [sic] include review of Trading
Permit Holders' information barriers to determine whether they are
sufficient for the Trading Permit Holders to avail themselves of the
no-knowledge exception for each applicable order. These requirements
regarding information barriers are substantially similar to those set
forth in CBOE Rule 54.8, which includes special provisions for trading
commodity-based trust shares on CBSX, except that the proposed rule
change provides that information barriers must be submitted upon
request while CBOE Rule 54.8 provides that information barriers must be
submitted and approved in advance. The Exchange believes it is
appropriate and efficient to request from a Trading Permit Holder its
information barriers as part of its surveillance procedures with
respect to the customer order protection rule.
ISO Exception \16\
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\16\ See proposed Rule 53.2, Interpretation and Policy .03.
---------------------------------------------------------------------------
The proposed rule change also clarifies that a Trading Permit
Holder will be exempt from the obligation to execute a customer order
in a manner consistent with CBSX's customer order protection rule with
regard to trading for its own account that is the result of an
intermarket sweep order routed in compliance with Rule 600(b)(30)(ii)
of SEC Regulation NMS (``ISO'') where the customer order is received
after the Trading Permit Holder routed the ISO. Where a Trading Permit
Holder routes an ISO to facilitate a customer order and that customer
has consented to not receiving the better prices obtained by the ISO,
the Trading Permit Holder also will be exempt with respect to any
trading for its own account that is the result of the ISO with respect
to the consenting customer's order.
Odd Lot and Bona Fide Error Transaction Exception \17\
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\17\ See proposed Rule 53.2, Interpretation and Policy .04.
---------------------------------------------------------------------------
The Exchange also proposes applying an exception for a firm's
proprietary trade that (1) offsets a customer odd lot order (i.e., an
order less than one round lot, which is typically 100 shares); or (2)
corrects a bona fide error. With respect to bona fide errors, Trading
Permit Holder would be required to demonstrate and document the basis
[[Page 17460]]
upon which a transaction meets the bona fide error exception. For
purposes of this proposed Rule, the definition of a ``bona fide error''
is as defined in SEC Regulation NMS's exemption for error correction
transactions.\18\
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\18\ See Securities Exchange Act Release No. 55884 (June 8,
2007), 72 FR 32926 (June 14, 2007) (Order Exempting Certain Error
Correction Transactions from Rule 611 of Regulation NMS under the
Securities Exchange Act of 1934).
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Trading Outside Normal Market Hours \19\
---------------------------------------------------------------------------
\19\ See proposed Rule 53.2, Interpretation and Policy .07.
---------------------------------------------------------------------------
This proposed rule change also expands CBSX's customer order
protection requirements to apply at all times that a customer order is
executable by the Trading Permit Holder, even outside the period of
normal market hours. Thus, customers would have the benefit of the
customer order protection rules at all times where such order is
executable by the Trading Permit Holder, subject to any applicable
exceptions. This exception will apply to those Trading Permit Holders
that accept customer orders after normal market hours.
Rule 53.8--Best Execution and Interpositioning
The Exchange proposes to adopt a new rule to govern Trading Permit
Holders' best execution and interpositioning requirements. Proposed
Rule 53.8(a)(1) requires a Trading Permit Holder or person associated
with a Trading Permit Holder, in any transaction for or with a customer
or a customer of another broker-dealer, to use ``reasonable diligence''
to ascertain the best market for a security and to buy or sell in that
market so that the resultant price to the customer is as favorable as
possible under prevailing market conditions. The rule identifies five
factors that are among those to be considered in determining whether
the Trading Permit Holder or person associated with a Trading Permit
Holder has used reasonable diligence:
(1) the character of the market for the security;
(2) the size and type of transaction;
(3) the number of markets checked;
(4) the accessibility of the quotation; and
(5) the terms and conditions of the order as communicated to the
Trading Permit Holder or person associated with the Trading Permit
Holder.
Proposed Rule 53.8(a)(2) relates to interpositioning and prohibits
a Trading Permit Holder or person associated with a Trading Permit
Holder, in any transaction for or with a customer or a customer of
another broker-dealer, from interjecting a third party between the
Trading Permit Holder or person associated with a Trading Permit Holder
and the best market for the subject security in a manner inconsistent
with the best execution requirements in subparagraph (a)(1) of proposed
Rule 53.8.
Proposed Rule 53.8 also includes provisions related to the use of a
broker's broker, the staffing of order rooms, and the application of
the best execution requirements to other parties. Proposed paragraph
(b) provides that when a Trading Permit Holder cannot execute directly
with a market but must employ a broker's broker or some other means in
order to ensure an execution advantageous to the customer, the burden
of showing the acceptable circumstances for doing so is on the Trading
Permit Holder. Proposed paragraph (c) provides that failure to maintain
or adequately staff a department assigned to execute customers' orders
cannot be considered justification for executing away from the best
available market; nor can channeling orders through a third party as
reciprocation for service or business operate to relieve a Trading
Permit Holder of its obligations under proposed Rule 53.8. Proposed
paragraph (d) provides that a Trading Permit Holder through which an
order is channeled and that knowingly is a party to an arrangement
whereby the initiating Trading Permit Holder has not fulfilled its
obligations under Rule 53.8 will also be deemed to have violated Rule
53.8. Proposed paragraph (e) provides that the obligations in
paragraphs (a) through (d) apply when the Trading Permit Holder acts as
agent for the account of its customer as well as when transactions are
executed as principal.
Proposed Rule 53.8 includes several Interpretations and Policies to
provide additional guidance and clarity regarding Trading Permit
Holders' obligations with respect to the best execution and
interpositioning requirements. Proposed Interpretation and Policy .01
reinforces a Trading Permit Holder's duty to make every effort to
execute a marketable customer order that it receives fully and
promptly. Proposed Interpretation and Policy .02 defines the term
``market'' for the purposes of proposed Rule 53.8.\20\
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\20\ For purposes of proposed Rule 53.8 and the accompanying
Interpretations and Policies, the term ``market'' or ``markets'' is
to be construed broadly, and it encompasses a variety of different
venues, including, but not limited to, market centers that are
trading a particular security. This expansive interpretation is
meant to both inform broker-dealers as to the breadth of the scope
of venues that must be considered in the furtherance of their best
execution obligations and to promote fair competition among broker-
dealers, exchange markets, and markets other than exchange markets,
as well as any other venue that may emerge, by not mandating that
certain trading venues have less relevance than others in the course
of determining a firm's best execution obligations.
---------------------------------------------------------------------------
Proposed Interpretation and Policy .03 addresses broker-dealers
that are executing a customer's order against the Trading Permit
Holder's quote. It provides that a Trading Permit Holder's duty to
provide best execution in any transaction ``for or with a customer of
another broker-dealer'' does not apply in instances when another
broker-dealer is simply executing a customer order against the Trading
Permit Holders' quote. The duty to provide best execution to customer
orders received from other broker-dealers arises only when an order is
routed from the broker-dealer to the Trading Permit Holder for the
purpose of order handling and execution. This clarification is intended
to draw a distinction between those situations in which the Trading
Permit Holder is acting solely as the buyer or seller in connection
with orders presented by a broker-dealer against the Trading Permit
Holder's quote, as opposed to those circumstances in which the Trading
Permit Holder is accepting order flow from another broker-dealer for
the purpose of facilitating the handling and execution of such orders.
Proposed Interpretation and Policy .04 provides that when a Trading
Permit Holder cannot execute directly with a market but must employ a
broker's broker or some other means in order to ensure an execution
advantageous to the customer, the burden of showing the acceptable
circumstances for doing so is on the Trading Permit Holder. Examples of
acceptable circumstances are where a customer's order is crossed with
another firm that has a corresponding order on the other side, or where
the identity of the firm, if known, would likely cause undue price
movements adversely affecting the cost or proceeds to the customer.
Proposed Interpretation and Policy .05 addresses the fact that
markets for securities differ dramatically and provides additional
guidance regarding a Trading Permit Holder's best execution obligations
when handling an order involving any security for which there is
limited pricing information or other quotations available. The
Interpretation and Policy emphasizes that Trading Permit Holders must
be especially diligent with respect to best execution obligations where
there is limited quotation or other pricing
[[Page 17461]]
information available regarding the security that is the subject of the
order and requires Trading Permit Holders to have written policies and
procedures in place to address the steps the Trading Permit Holder will
take to determine the best interdealer market for such a security in
the absence of multiple quotations or pricing information and to
document how they have complied with those policies and procedures. The
Interpretation and Policy specifically notes that, when handling orders
for these securities, Trading Permit Holders should generally seek out
other sources of pricing information or potential liquidity, which may
include obtaining quotations from other sources (e.g., other firms that
the Trading Permit Holder previously has traded with in the security).
For example, in many instances, particularly in the context of equity
securities with limited quotation information available, contacting
other broker-dealers may be necessary to comply with a Trading Permit
Holder's best execution obligations.
When placing an order with a Trading Permit Holder, customers may
specifically instruct the Trading Permit Holder to route the order to a
particular market for execution.\21\ Proposed Interpretation and Policy
.06 addresses situations where the customer has, on an unsolicited
basis, specifically instructed the Trading Permit Holder to route that
customer's order to a particular market for execution.\22\ Under those
circumstances, the Trading Permit Holder would not be required to make
a best execution determination beyond that specific instruction;
however, the Interpretation and Policy mandates that Trading Permit
Holders process that customer's order promptly and in accordance with
the terms of the order. The Interpretation and Policy also makes clear
that where a customer has directed the Trading Permit Holder to route
an order to another specific broker-dealer that is also a Trading
Permit Holder, the exception would not apply to the receiving Trading
Permit Holder to which the order was directed.\23\
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\21\ When the order is for an NMS security, these orders are
often referred to as ``directed orders.'' See 17 CFR 242.600(b)(19).
Of note, directed orders are excluded from the order routing
statistics required to be produced under Rule 606 of SEC Regulation
NMS. See 17 CFR 242.606.
\22\ The Interpretation and Policy also clarifies that a Trading
Permit Holder's best execution obligations extend to all customer
orders and is intended to avoid the potential misimpression that the
paragraph limits the scope of the rule's requirements.
\23\ For example, if a customer of Trading Permit Holder Firm A
directs Trading Permit Holder Firm A to route an order to Trading
Permit Holder Firm B, Trading Permit Holder Firm B would continue to
have best execution obligations to that customer order received from
Trading Permit Holder Firm A.
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Proposed Interpretation and Policy .07 codifies a Trading Permit
Holder's obligation when it undertakes a regular and rigorous review of
execution quality likely to be obtained from different market centers.
These longstanding obligations are set forth and explained in various
SEC releases and NASD Notices to Members.\24\
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\24\ See, e.g., Securities Exchange Act Release No. 37619A
(September 6, 1996), 61 FR 48290 (September 12, 1996); and NASD
Notice to Members 01-22 (April 2001).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\25\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \26\ 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
facilitation 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) \27\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\25\ 15 U.S.C. 78f(b).
\26\ 15 U.S.C. 78f(b)(5).
\27\ Id.
---------------------------------------------------------------------------
In particular, the Exchange believes that amending CBSX's customer
order protection rule and adopting a best execution and
interpositioning rule will promote just and equitable principles of
trade and protect investors and the public interest by bringing CBSX's
Rules more in line with industry standards, most notably FINRA Rules
5320 and 5310, respectively. Additionally, the requirement to have
certain information barriers in place to take advantage of the no-
knowledge exception to the prohibition on trading ahead of customer
orders is substantially similar to the information barrier requirement
set forth in CBOE Rule 54.8 regarding trading commodity-based trust
shares on CBSX. The Exchange believes it will be efficient to review
the information barriers upon request in connection with its overall
surveillances procedures related to the customer order protection rule.
The Exchange believes this consistency among Rules of different
self-regulatory organizations will in turn reduce the complexity of
customer order protection for those firms subject to the rules of
multiple trading venues. It will also contribute to investor protection
by defining important parameters by which Trading Permit Holders must
abide when trading proprietarily and when handling customer orders. In
addition, the Exchange believes harmonizing customer order protection,
best execution and interpositioning rules across self-regulatory
organizations will foster cooperation and contribute to perfecting the
mechanism of a free and open market and national market system. The
Exchange also believes that including these rules in CBSX's rules will
reinforce the importance of these requirements and ensure that Trading
Permit Holders are aware of these requirements. The Interpretations and
Policies for each Rule will provide Trading Permit Holders with
additional guidance and clarification on their obligations under these
Rules and thus potentially increase compliance with those obligations.
The proposed rule change will impose the same requirements on all
Trading Permit Holders. Finally, the Exchange believes that the
proposed rule change will maintain the necessary protection and
priority of customer orders designed to prevent fraudulent and
manipulative acts, without imposing any undue regulatory costs on
industry participants.
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes the
proposed rule change will reduce the burdens on market participants
that result from their having to comply with varying rules related to
customer order protection, thus reducing the complexity of customer
order protection rules, particularly for those firms subject to the
rules of multiple trading venues. Overall, the Exchange believes the
proposed rule change enhances customer order protection by harmonizing
customer order protection, best execution and interpositioning rules
across self-regulatory organizations, which ultimately benefits
[[Page 17462]]
market participants and does not impose a burden on competition.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
A. By order approve or disapprove such proposed rule change, or
B. Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CBOE-2013-027 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2013-027. 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 Web site (http://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 Web site viewing and
printing in the Commission's Public Reference Room on official business
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing
also will be available for inspection and copying at the principal
office of the Exchange. All comments received will be posted without
change; the Commission does not edit personal identifying information
from submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to File Number
SR-CBOE-2013-027, and should be submitted on or before April 11, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-06478 Filed 3-20-13; 8:45 am]
BILLING CODE 8011-01-P