[Federal Register Volume 78, Number 192 (Thursday, October 3, 2013)]
[Notices]
[Pages 61425-61427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-24158]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70540; File No. SR-CBOE-2013-089]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend CBSX Rule 53.22 Related to CBSX Remote
Market-Maker Appointments
September 27, 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 September 17, 2013, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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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 the
Substance of the Proposed Rule Change
The Exchange proposes to amend CBOE Stock Exchange, LLC (``CBSX'')
Rule 53.22 related to CBSX Remote Market-Maker (``RMM'') appointments.
The text of the proposed rule change is provided below.
(additions are italicizeded; deletions are [bracketed])
* * * * *
Chicago Board Options Exchange, Incorporated Rules
* * * * *
Rule 53.22 Appointment of CBSX Remote Market-Makers
(a) [On a form or forms]In a manner prescribed by CBSX, a
registered CBSX Remote Market-Maker (other than CBSX DPMs and CBSX
LMMs) may [apply for]select an Appointment (having the obligations of
Rule 53.23) in one or more non-option securities traded on CBSX. CBSX
may also appoint a registered CBSX Remote Market-Maker in one or more
non-option securities traded on CBSX. In making such Appointments, CBSX
shall give attention to (1) the preference of registrants; (2) the
maintenance and enhancement of competition among CBSX Remote Market-
Makers in each security; and (3) assuring that financial resources
available to a CBSX Remote Market-Maker enable it to satisfy the
obligations set forth in Rule 53.23 with respect to each security for
which it is appointed. CBSX may arrange two or more securities into
groupings and make Appointments to those groupings rather than to
individual securities. CBSX may suspend or terminate any Appointment of
a CBSX Remote Market-Maker under this Rule and may make additional
Appointments whenever the interests of a fair and orderly market are
best served by such action.
(b)-(c) No changes.
* * * * *
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 CBSX Rule 53.22 related to RMM
appointments. A ``CBSX Remote Market-Maker'' or ``RMM'' is a CBSX
Trading Permit Holder that has agreed to fulfill certain market-making
obligations thus qualifying for defined benefits as set forth in the
CBSX Rules.\3\ An RMM is an individual (either a Trading Permit Holder
or nominee of a Trading Permit Holder organization) who is registered
with CBSX for the purpose of making transactions as a dealer-specialist
in the CBSX electronic trading system in accordance with the CBSX
Rules. Registered RMMs are designated as specialists on CBSX for all
purposes under the Securities Exchange Act of 1934 (the ``Act'') and
the rules and regulations thereunder. RMMs may only operate in a remote
capacity.\4\
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\3\ See CBSX Rule 50.3(2).
\4\ See CBSX Rule 53.20.
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CBSX Rule 53.22 currently provides, among other things, that RMMs
may apply for an appointment (having the obligations of CBSX Rule
53.23) \5\ in one or more non-option securities traded on CBSX on a
form or forms prescribed by CBSX. It further provides that in making
such appointments, CBSX must give
[[Page 61426]]
attention to (1) the preference of registrants; (2) the maintenance and
enhancement of competition among RMMs in each security; and (3) whether
the financial resources available to an RMM enable it to satisfy the
obligations set forth in Rule 53.23 with respect to each security in
which it holds an appointment.
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\5\ Under CBSX Rule 53.23, RMMs must, among other things:
enter into transactions that constitute a course of
dealings reasonably calculated to contribute to the maintenance of a
fair and orderly market;
not enter into transactions or make bids or offers that
are inconsistent with such a course of dealings;
with respect to each security for which it holds an
appointment, continuously engage in, to a reasonable degree under
the existing circumstances, in dealings for its own account when
there exists, or it is reasonably anticipated that there will exist,
a lack of price continuity, or a temporary disparity between the
supply of and demand for a particular security;
compete with other CBSX Market-Makers to improve
markets;
make markets which, absent changed market conditions,
will be honored for the number of shares entered into the CBSX
electronic trading system;
engage in trading activity of which at least 75% of its
total dollar amount traded on CBSX is in securities to which it has
an appointment;
with respect to securities in which an RMM does not
hold an appointment, not engage in transactions for an account in
which it has an interest that are disproportionate in relation to,
or in derogation of, the performance of its obligations with respect
to those securities in which it does hold an appointment;
satisfy RMM obligations in a security in which it does
not hold an appointment whenever an RMM submits a two-sided quote in
that security; and
comply with two-sided and minimum size obligations and
pricing obligations for bids and offers.
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The proposed rule change amends Rule 53.22 to allow RMMs to select
appointments rather than apply for them and to allow CBSX to appoint
RMMs in one or more securities (considering the same factors listed
above). The proposed rule change will enable RMMs to manage their
appointments with more flexibility and in a timelier manner. The
Exchange believes this will provide RMMs with more efficient access to
the securities in which they want to make markets and disseminate
competitive quotations, which will provide additional liquidity and
enhance competition in those securities. CBSX will retain the ability
to appoint RMMs in order to maintain a fair and orderly market.\6\ RMMs
will continue to be subject to the obligations set forth in Rule 53.23
with respect to their appointments.
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\6\ CBSX also retains the authority under Rule 53.22(a) to
suspend or terminate any RMM appointment if in the interest of a
fair and orderly market.
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The proposed rule change is substantially similar in all material
respects to the rules of other self-regulatory organizations.\7\
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\7\ See, e.g. CBOE Rule 8.3(a)(i) and C2 Options Exchange,
Incorporated Rule 8.2(b).
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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.\8\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \9\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \10\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ Id.
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In particular, the proposed rule change removes impediments to a
free and open market, because it will enable RMMs to manage their
appointments with more flexibility and in a timelier manner. The
Exchange believes this will provide RMMs with more efficient access to
the securities in which they want to make markets and thus more quickly
begin disseminating competitive quotations in those securities, which
will provide additional liquidity and enhance competition in those
securities. CBSX will still have authority to suspend or terminate any
RMM appointment in the interest of a fair and orderly market, including
if necessary to prevent fraudulent and manipulative acts and practices
and protect investors or if an RMM does not satisfy its obligations
with respect to an appointment.
The proposed rule change does not result in unfair discrimination,
as it applies to all RMMs. The proposed rule change reduces the burden
on RMMs to manage their appointments and thus provide liquidity to
CBSX; however, RMMs must still comply with the obligations set forth in
CBSX Rule 53.23, which will ensure continuous, two-sided quotations in
its appointed securities. CBSX believes it is appropriate to provide
RMMs with the ability to select appointments but not Designated Primary
Market-Makers (``DPMs'') or Lead Market-Makers (``LMMs''). Because DPMs
and LMMs are subject to more stringent obligations, for which they
receive additional benefits, with respect to their appointments than
RMMs, the Exchange believes it is appropriate to continue to approve
DPMs and LMMs after a thorough application process to ensure that they
have sufficient resources and capabilities to satisfy those
obligations.
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE 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 because it provides the same
relief to a group of similarly situated market participants--RMMs. The
proposed rule change reduces the burden on RMMs to manage their
appointments and thus provide liquidity to CBSX; however, RMMs must
still comply with the obligations set forth in CBSX Rule 53.23, which
will ensure continuous, two-sided quotations in its appointed
securities. CBSX believes it is appropriate to provide RMMs with the
ability to select appointments but not Designated Primary Market-Makers
(``DPMs'') or Lead Market-Makers (``LMMs''). Because DPMs and LMMs are
subject to more stringent obligations, for which they receive
additional benefits, with respect to their appointments than RMMs, the
Exchange believes it is appropriate to continue to approve DPMs and
LMMs after a thorough application process to ensure that they have
sufficient resources and capabilities to satisfy those obligations.
The proposed rule change is substantially similar in all material
respects to rules of other self-regulatory organizations. The Exchange
does not believe the proposed rule change will help RMMs to the
detriment of market participants on other exchanges. RMMs are still
subject to the same obligations with respect to its appointments; the
proposed rule change is making the appointment process more efficient
for RMMs.
CBOE believes that the proposed rule change will relieve any burden
on, or otherwise promote, competition, as it will enable RMMs to manage
their appointments with more flexibility and in a timelier manner. The
Exchange believes this will provide RMMs with more efficient access to
the securities in which they want to make markets and thus more quickly
begin disseminating competitive quotations in those securities, which
will provide additional liquidity and enhance competition in those
securities.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) \12\ thereunder.
Because the 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 after the date of the filing, or such shorter time as the
Commission
[[Page 61427]]
may designate, the proposed rule change has become effective pursuant
to 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder.
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The Exchange
believes that waiver of the operative delay is appropriate because the
proposed rule change does not present any new, unique or substantive
issues, but rather only changes the manner by which RMMs may obtain
appointments. The Exchange also states that RMMs will continue to be
subject to the same obligations with respect to their appointments.
According to the Exchange, waiver of the operative delay will provide
RMMs with more efficient access to the securities in which they want to
make markets so that RMMs may more quickly begin disseminating
competitive quotations in those securities, which will provide
additional liquidity and enhance competition in those securities. The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest, as
doing so will allow RMMs to manage their appointments in a more
flexible and timely manner. For this reason, the Commission designates
the proposed rule change to be operative upon filing.\15\
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\13\ Id.
\14\ 17 CFR 240.19b-4(f)(6).
\15\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CBOE-2013-089 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-2013-089. 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, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such 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-2013-089, and should be
submitted on or before October 24, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24158 Filed 10-2-13; 8:45 am]
BILLING CODE 8011-01-P