[Federal Register Volume 80, Number 62 (Wednesday, April 1, 2015)]
[Notices]
[Pages 17528-17532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-07364]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74590; File No. SR-CBOE-2015-029]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of a Proposed Rule Change Relating to
Stock-Option Order Handling
March 26, 2015.
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 16, 2014, 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, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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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 its rules regarding the handling and
processing of stock-option orders on the Exchange. The text of the
proposed rule change is 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.
[[Page 17529]]
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 its rules regarding the handling and
processing of stock-option orders represented in open outcry on the
floor of the Exchange. Specifically, the Exchange proposes to adopt
subparagraph (d) to Rule 6.48 (Contract Made on Acceptance of Bid or
Offer) to extend electronic stock component routing functionality
currently only available in the electronic trading environment to
Public Automated Routing (``PAR'') workstation \3\ users and thus,
allow Trading Permit Holders (``TPHs'') or PAR Officials \4\ to
electronically route the stock component of a stock-option order
represented in open outcry on the floor of the Exchange to an Exchange-
designated broker-dealer not affiliated with the Exchange for
electronic execution at a stock trading venue directly from PAR. In
addition, the Exchange proposes to amend Interpretation and Policy .06
to Rule 6.53C to require that the Clearing Trading Permit Holder
(``CTPHs'') (instead of the executing TPH), on a stock-option order,
enter into a brokerage agreement with one or more non-affiliated
Exchange-designated broker-dealers before electronically routing the
stock component a of stock-option order to an Exchange-designated
broker-dealer for execution at a stock-trading venue.\5\ The Exchange
also proposes to add cross-references to the proposed amended stock-
option order handling and processing rules in the Interpretations and
Policies to Rules 6.45A (Priority and Allocation of Equity Option
Trades on the CBOE Hybrid System) and 6.45B (Priority and Allocation of
Trades in Index Options and Options on ETFs on the CBOE Hybrid System).
The Exchange believes that the proposed enhanced functionalities with
respect to the handling and processing of stock-option orders on PAR
will promote more efficient trading and benefit market participants by
eliminating intermediary manual steps currently required for open
outcry stock-option order execution.
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\3\ The PAR workstation (``PAR'') is an Exchange-provided order
management tool for use on the Exchange's trading floor by TPHs and
PAR Officials. See Rule 6.12A; see also Rule 7.12 for a description
of the responsibilities and obligations of PAR Officials. The
Exchange's order handling system allows for orders to be routed to
and from PAR in accordance with TPH and Exchange order routing
parameters and the Rules of the Exchange. See Rule 6.12A.
\4\ A PAR Official is an Exchange employee or independent
contractor whom the Exchange may designate as being responsible for
(i) operating the PAR workstation in a DPM trading crowd with
respect to the classes of options assigned to him/her; (ii) when
applicable, maintaining the book with respect to the classes of
options assigned to him/her; and (iii) effecting proper executions
of orders placed with him/her. See Rule 7.12.
\5\ To enter transactions on the Exchange, a TPH must either be
a CTPH or must have a CTPH agree to accept financial responsibility
for all of its transactions. See Rule 6.21. Every CTPH will be
responsible for the clearance of Exchange transactions of a TPH that
``gives up'' the CTPH pursuant to a Letter of Authorization, Letter
of Guarantee, or other authorization given by the CTPH to the
executing TPH. See id.
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Current Procedures
Under Rule 1.1, a stock-option order is defined as ``an order to
buy or sell a stated number of units of an underlying or a related
security coupled with either (a) the purchase or sale of option
contract(s) on the opposite side of the market representing either the
same number of units of the underlying or related security or the
number of units of the underlying security necessary to create a delta
neutral position or (b) the purchase or sale of an equal number of put
and call option contracts, each having the same exercise price,
expiration date and each representing the same number of units of stock
as, and on the opposite side of the market from, the underlying or
related security portion of the order.'' \6\ Stock-option orders are a
popular with investors (e.g., buy-writes) and are frequently handled
and processed on the Exchange. Currently, eligible stock-option orders
\7\ may be handled and processed on the Exchange either manually in
open outcry or electronically through the Hybrid Trading System.\8\
This proposal seeks to enhance PAR functionality to allow a third
option for handling and processing of a stock-option order on the
Exchange by allowing the stock component of a stock-option order
executed in open outcry to be handled electronically directly from PAR
by a PAR user (i.e. a floor broker or PAR Official) on the floor of the
Exchange.
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\6\ Rule 1.1(ii); accord Rule 6.53C(a)(2).
\7\ Eligible stock-option orders must comply with the Qualified
Contingent Trade Exemption under Rule 611(a) of Regulation NMS. See
infra at pages 8-9. TPHs submitting such orders represent that the
orders comply with the QCT Exemption. See Interpretation and Policy
.06 to Rule 6.53C. Certain other eligibility requirements may also
apply to stock-option orders, which may be determined by Exchange
routing parameters or in accordance with the order's terms. For
example, stock-option orders must couple the stated number of units
of an underlying stock or a security convertible into the underlying
stock (``convertible security'') with the purchase or sale of
options contract(s) on the opposite side of the market representing
either (i) the same number of units of the underlying stock or
convertible security, or (ii) the number of units of the underlying
stock necessary to create a delta neutral position, but in no case
in a ratio greater than eight-to-one (8.00), where the ratio
represents the total number of units of the underlying stock or
convertible security in the option leg to the total number of units
of the underlying stock or convertible security in the stock leg (or
such lower ratio as may be determined by the Exchange on a class-by-
class basis). Only those stock-option orders with no more than the
applicable number of legs, as determined by the Exchange on a class-
by-class basis, are eligible for processing. See Rule 6.53C(a)(2).
For electronic orders, the representing TPH must include a tied to
stock indicator on each stock-option order upon systemization. See
Rule 6.53(y); see also Regulatory Circular RG12-088 (Automation of
Stock-Option Strategy Orders).
\8\ The ``Hybrid Trading System'' refers to (i) the Exchange's
trading platform that allows Market-Makers to submit electronic
quotes in their appointed classes and (ii) any connectivity to the
foregoing trading platform that is administered by or on behalf of
the Exchange, such as a communications hub. References to
``Hybrid,'' ``Hybrid System,'' or ``Hybrid Trading System'' in the
Exchange's Rules include all platforms unless otherwise provided by
rule.
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Manual Processing
Stock-option orders may be handled and processed on the Exchange in
open outcry, with the stock portion of the order manually transmitted
(e.g., via telephone) by the PAR user (i.e. a floor broker or PAR
Official) on the floor to a broker on a stock trading venue for
execution.\9\ Trading of a stock-option order in open outcry involves
the stock-option order being represented in open outcry as a strategy
order at a single net price with the option component being traded by a
broker or PAR Official on the floor of the Exchange and the stock
portion being manually transmitted to a broker at a stock trading venue
for execution.\10\ Manual transmission of the stock component of a
stock-option order is accomplished by placing a stock order with a
broker as two paired orders with a designated limit price to be matched
by the broker either on a lit stock exchange, Alternative Trading
System (``ATS''), or over-the-counter. As agent, the broker is
responsible for determining whether the order may be executed in
accordance with all of the rules applicable to the execution of equity
orders, including compliance with the applicable short sale, trade-
through, and reporting rules. In the event that the stock leg of a
stock-option order cannot be executed by the broker, the stock-option
order will remain on
[[Page 17530]]
PAR or, at the order entry firm's discretion, to the order entry firm's
booth.\11\ Stock-option orders have historically been handled and
processed in open outcry on the Exchange. The Exchange continues to
allow TPHs to manually execute stock-option orders in this manner.\12\
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\9\ TPHs are required to comply with the Qualified Contingent
Trade (``QCT'') Exemption of Rule 611(a) of Regulation NMS with
respect to the execution of stock-option orders. See Interpretation
and Policy .06 to Rule 6.53C.
\10\ See Securities and Exchange Release No. 34-66394 (February
14, 2012), 77 FR 10026 (February 21, 2012) (Notice of Filing of a
Proposed Rule Change Related to Stock-Option Processing) (SR-CBOE-
2012-005); see also Rules 6.45A(b) and 6.45B(b).
\11\ See Interpretation and Policy .06 to Rule 6.53C(b)(1).
\12\ See Interpretation and Policy .06 to Rule 6.53C.
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Electronic Processing
Stock-option orders may also be handled electronically on the
Exchange, with the stock portion of the order being electronically
transmitted by the Exchange to a non-affiliated third party Exchange-
designated broker-dealer for execution at an away stock trading
venue.\13\ Generally, the stock component of a stock-option order is
transmitted to an Exchange-designated broker-dealer \14\ as two paired
orders with a designated limit price after the Exchange's trading
system has determined that a stock-option order is executable at the
designated net price. Once transmitted to the Exchange-designated
broker-dealer, the Exchange-designated broker dealer acts as agent for
the stock leg of the stock-option order and is responsible for the
proper execution, trade reporting, and submission to clearing of the
stock trade. Specifically, the Exchange-designated broker-dealer will
be responsible for determining whether the orders may be executed in
accordance with all of the rules applicable to the execution of equity
orders, including compliance with the applicable short sale, trade-
through, and reporting rules. In the event that the stock component of
a stock-option order cannot be executed by the Exchange-designated
broker-dealer, the stock-option order execution will be nullified and
parties to the trade will be notified by the Exchange.\15\
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\13\ See Interpretation and Policy .06 to Rule 6.53C (Complex
Orders on the Hybrid System); see also Securities and Exchange
Release No. 34-66759 (April 6, 2012), 77 FR 22027 (April 12, 2012)
(Order Approving a Proposed Rule Change Relating to Stock-Option
Orders) (SR-CBOE-2012-005); Securities and Exchange Release No. 34-
66394 (February 14, 2012), 77 FR 10026 (February 21, 2012) (Notice
of Filing of a Proposed Rule Change Related to Stock-Option
Processing) (SR-CBOE-2012-005); Securities and Exchange Release No.
34-56903 (December 5, 2007), 72 FR 70356 (December 11, 2007) (Order
Approving Proposed Rule Change, as Modified by Amendment No. 1,
Relating to Stock-Option Orders) (SR-CBOE-2007-068).
\14\ Currently, ConvergEx Execution Services, LLC
(``ConvergEx'') is the only Exchange-designated broker-dealer that
the Exchange uses for executions of stock components of stock-option
orders on away stock trading venues. The Exchange, however, may
require TPHs to enter into a brokerage agreement with one or more
Exchange-designated broker-dealers that are not affiliated with the
Exchange to electronically execute the stock component of the stock-
option order at a stock trading venue. See Interpretation and Policy
.06 to Rule 6.53C.
\15\ See generally id. [sic]; see also Rule 6.25(a)(3).
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Currently, TPHs that wish to participate in electronic stock-option
order processing must enter into a customer agreement with one or more
designated broker-dealer that is not affiliated with the Exchange.\16\
In addition, to be eligible for electronic processing, TPHs must
validate that they have executed a brokerage agreement with an
Exchange-designated broker-dealer in order to obtain activation of
stock-option order entry functionality on the Floor Broker Workstation
(``FBW'').\17\ TPHs may only submit complex orders with a stock
component for electronic processing if such orders comply with the
Qualified Contingent Trade (``QCT'') Exemption of Rule 611(a) of
Regulation NMS.\18\ A QCT is a transaction consisting of two or more
component orders, executed as agent or principal, that satisfies the
six elements enumerated in the Commission's Order exempting QCTs from
the requirements of 611(a), which requires trading centers to
establish, maintain, and enforce written policies and procedures that
are reasonably designed to prevent trade-throughs. TPHs submitting
stock-option orders for electronic processing must represent that the
orders' terms comply with the QCT Exemption of Rule 611(a) of
Regulation NMS.\19\
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\16\ See Interpretation and Policy .06 to Rule 6.53C; see also
Regulatory Circular RG12-088 (Automation of Stock-Option Strategy
Orders).
\17\ FBW is a system for electronically entering and
electronically managing orders on the floor of the Exchange. FBW is
a third-party facility of the Exchange supplied and managed by
LiquidPoint, LLC.
\18\ See 17 CFR 242.611(a); Rule 6.53C.06(a); see also
Securities and Exchange Release No. 34-57620 (April 4, 2008), 73 FR
19271 (April 9, 2008) (Order Modifying the Exemption for Qualified
Contingent Trades from Rule 611(a) of Regulation NMS under the
Securities Exchange Act of 1934); Securities Exchange Act Release
No. 34-54389 (August 31, 2006), 71 FR 52829 (September 7, 2006)
(Order Granting an Exemption for Qualified Contingent Trades from
Rule 611(a) of Regulation NMS under the Securities Exchange Act of
1934).
\19\ See Interpretation and Policy .06(a) to Rule 6.53C. In
addition, the Exchange has built certain checks into the Hybrid
Trading System to validate certain aspects of compliance with the
QCT Exemption of Rule 611(a) of Regulation NMS for stock-option
orders. Those QCT validating checks are described in SR-CBOE-2012-
005. See Securities and Exchange Release No. 34-66394 (February 14,
2012), 77 FR 10026 (February 21, 2012) (Notice of Filing of a
Proposed Rule Change Related to Stock-Option Processing) (SR-CBOE-
2012-005).
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Proposed Rule Changes
The Exchange proposes to introduce enhanced PAR functionality that
would allow TPHs and PAR Officials to route the stock portion of a
stock-option order directly to an Exchange-designated broker-dealer for
electronic execution at a stock trading facility. Under proposed Rule
6.48(d), TPHs and PAR Officials would be able to transmit stock
portions of stock-option orders represented in open outcry directly
from PAR to an Exchange-designated broker-dealer not affiliated with
the Exchange for electronic execution at a stock trading venue. Thus,
rather than executing stock orders manually via telephone, PAR users
would be able to electronically send the stock portion of the stock-
option order from PAR directly to an Exchange-designated broker-dealer
for immediate execution at a stock trading venue. The Exchange notes
that this functionality (electronic stock component order routing,
processing, and handling), is already in use for electronic stock-
option orders submitted into the Hybrid Trading System. The Exchange is
merely proposing to extend this functionality to stock-option orders
handled on the floor of the Exchange. The Exchange believes this added
functionality will support more efficient stock-option order execution,
streamline the steps required for open outcry stock-option order
trading, and enhance the Exchange's audit trail by creating a more
robust record of the stock component of stock option order executions
on the floor of the Exchange.
Proposed Rule 6.48(d) would also provide that stock portions of
stock-option orders represented in open outcry may be routed to a
designated broker-dealer not affiliated with the Exchange for
electronic execution at a stock trading venue as single orders or as
paired orders (including with orders transmitted from separate PAR
workstations). Consistent with current practices, the Exchange-
designated broker-dealer would be responsible for the proper execution,
trade reporting, and submission to clearing of the stock trade that is
part of the stock-option order. Stock-option order executions for which
the stock portion of the order could not be executed at the designated
price would be nullified and the parties to the trade would be notified
by the Exchange.\20\ In addition, consistent with current
Interpretation and Policy .06(a) to Rule 6.53C, TPHs' compliance with
the Qualified Contingent Trade (``QCT'') Exemption of Rule 611(a) of
Regulation NMS would continue to be required for stock-option orders
where the stock component of the stock-option order is routed from PAR
to an Exchange-designated broker-dealer not affiliated with the
Exchange for electronic
[[Page 17531]]
execution at a stock trading venue selected by the Exchange-designated
broker-dealer.
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\20\ See Rule 6.25(a)(3).
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The Exchange also proposes to amend Interpretation and Policy
.06(a) to Rule 6.53C. Under current Interpretation and Policy .06(a) to
Rule 6.53C, the stock portion of a stock-option order cannot be
processed automatically unless the executing TPH has entered into a
brokerage agreement with one or more Exchange-designated broker-dealers
that are not affiliated with the Exchange that can electronically
execute the equity order on a stock trading venue. The Exchange
proposes to change Interpretation and Policy .06 to Rule 6.53C to
provide that the Trading Permit Holder shall give up a Clearing Trading
Permit Holder previously identified to, and processed by the Exchange
as a Designated Give Up for that Trading Permit Holder in accordance
with Rule 6.21 and which has entered into a brokerage agreement with
one or more Exchange-designated broker-dealers that are not affiliated
with the Exchange to electronically execute the stock component of the
stock-option order at a stock trading venue selected by the Exchange-
designated broker-dealer on behalf of the Trading Permit Holder. The
Exchange believes that the proposed rule change would bring
Interpretation and Policy .06(a) to Rule 6.53C in line with the
Exchange's give up rules in Rule 6.21.
All trades are finalized not when they are executed, but when they
clear. It is the CTPH, not the order entry TPH that guarantees
authorization of a trade and accepts financial responsibility for all
Exchange transactions made by the executing TPH. Because the CTPH is
the party guaranteeing the transaction, the Exchange believes that it
is reasonable to require that the CTPH enter into a brokerage agreement
with an Exchange-designated broker-dealer not affiliated with the
Exchange in order to route the stock portion of a stock-option order
for electronic processing rather than requiring an executing TPH (that
may be acting as agent or broker) to enter into such an agreement on
the CTPH's behalf. Consistent with Rule 6.21, the CTPH should be
responsible for order handling and processing requirements for trades
that it guarantees.\21\
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\21\ See Rule 6.21; see also Securities and Exchange Release No.
34-72668 (July 24, 2014), 79 FR 44229 (July 30, 2014) (Order
Granting Approval of a Proposed Rule Change Relating to the Give Up
of a Clearing Trading Permit Holder) (SR-CBOE-2014-048).
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Furthermore, under current Interpretation and Policy .06(a) to Rule
6.53C, the stock portion of a stock-option order cannot be processed
automatically unless the executing TPH has entered into a brokerage
agreement with one or more Exchange-designated broker-dealers that are
not affiliated with the Exchange that can electronically execute the
equity order on a stock trading venue. Accordingly, even when acting as
agent or broker, a TPH cannot submit the stock portion of a stock-
option order for electronic processing unless the TPH has entered into
a brokerage agreement with an Exchange-designated broker-dealer that is
not affiliated with the Exchange. The Exchange believes that current
Interpretation and Policy .06(a) has a chilling effect on market
activity because it prohibits TPHs from entering orders when acting as
a broker for the account of a CTPH or a CTPH customer account. Brokers
that represent a stock-option order merely as an executing agent rather
than on behalf of their own customers may be less willing to enter into
a brokerage agreement with one or more Exchange-designated broker-
dealers and accept counterparty risk for a one-time fee. On the other
hand, a CTPH that submits such an order to a floor broker on behalf of
its own customer and has already accepted counterparty risk on behalf
of its customer as clearing agent and would likely enter such a
brokerage agreement willing as it would extend counterparty risk
current parameters.\22\
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\22\ Notably, CTPHs have indicated support this proposal. The
Exchange believes that the proposed rule change will allow for more
efficient handling and processing of stock-option orders on the
Exchange and that adoption of the proposal would remove impediments
to, and perfect the mechanisms, of a national market system across
stock and options trading venues.
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Accordingly, the Exchange proposes to amend Interpretation and
Policy .06(a) to Rule 6.53C to provide that TPHs shall give up a CTPH
previously identified to, and processed by the Exchange as a Designated
Give Up in accordance with Rule 6.21 and which has entered into a
brokerage agreement with one or more Exchange-designated broker-dealers
that are not affiliated with the Exchange to electronically execute the
stock portion of the stock-option order at a stock trading venue
selected by the Exchange-designated broker-dealer.\23\
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\23\ Validations of the required brokerage agreements between
CTPHs and an Exchange-designated broker-dealer would be conducted by
the Exchange. Access to electronic processing of stock option orders
would be systematically limited to those CTPHs identified as having
a brokerage agreement with an Exchange-designated broker-dealer in
place. In addition further validation will be ensured through market
participant identifiers provided by CTPHs. MPIDs are firm
identifiers issued by the NASDAQ Market Center for electronic
securities order processing. All electronic stock option order
messages sent to the Exchange must contain an MPID. The Exchange's
designed broker-dealer would also use MPIDs to process and clear the
stock component of electronically executed stock option orders.
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The Exchange also proposes to change Interpretation and Policy .06
to Rule 6.53C to provide that stock-option orders may be executed
against other electronic stock-option orders rather than state that
such orders may be executed against other stock-option orders through
the COB or COA. This change reflects the fact that such orders may be
subjected to the Automated Improvement Mechanism (``AIM'') as well as
executed through the COB or COA. Finally, the Exchange proposes
conforming administrative changes to the Rules to include the language
describing these functionality enhancements in Rules 6.45A and 6.45B.
The proposed administrative changes would provide reference to this new
technology within the priority rules for stock-option orders. Thus,
these administrative changes merely add clarity to the Rules regarding
the functionality available to TPHs on PAR.
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.\24\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \25\ 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) \26\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\24\ 15 U.S.C. 78f(b).
\25\ 15 U.S.C. 78f(b)(5).
\26\ Id.
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In particular, the Exchange believes the proposed rule change
removes impediments to and perfects the mechanism of a free and open
market by eliminating steps involved in stock-option order execution on
the Exchange which allows for more efficient trading.
[[Page 17532]]
By allowing PAR users to route the stock portion of a stock-option
order to a broker at a stock trading venue directly from PAR, the
Exchange is attempting to allow stock-option orders to be matched
faster and more efficiently. Creating a more streamlined approach to
the execution of stock-option orders allows for less complicated and,
thus, less confusing trading on the Exchange. In addition, as a
consequence, the proposed rule change will promote more liquidity on
the national market system by allowing TPHs to more easily use stock-
option orders and more quickly send stock leg portions of complex order
to stock trading venues for execution. The Exchange also believes that
the proposed rule would enhance the Exchange's audit trail by creating
a more robust record of the stock component of stock option order
executions on the floor of the Exchange.
The Exchange also believes that the proposed changes to
Interpretation and Policy .06 to Rule 6.53C to provide that the Trading
Permit Holder shall give up a Clearing Trading Permit Holder previously
identified to, and processed by the Exchange as a Designated Give Up
for that Trading Permit Holder in accordance with Rule 6.21 and which
has entered into a brokerage agreement with one or more Exchange-
designated broker-dealers that are not affiliated with the Exchange to
electronically execute the stock component of the stock-option order at
a stock trading venue selected by the Exchange-designated broker-dealer
on behalf of the Trading Permit Holder would help create a more robust
market for stock-option orders and protect investors interests
consistent with the Act. The Exchange believes that the proposed rule
change would bring Interpretation and Policy .06(a) to Rule 6.53C in
line with the Exchange's give up rules in Rule 6.21. Consistent with
Rule 6.21, the CTPH should be responsible for order handling and
processing requirements for trades that it guarantees. The proposed
amendments are reasonable and provide certainty that a CTPH will always
be responsible for a trade, which protects investors and the public
interest.
Finally, the Exchange believes that the proposed change to
Interpretation and Policy .06 to Rule 6.53C providing that stock-option
orders may be executed against other electronic stock-option orders and
the proposed amendments to Rules 6.45A and 6.45B would add additional
clarity and transparency to the Rules. The Exchange continues to
evaluate its Rules to add additional clarity and transparency whenever
possible. The Exchange believes that its efforts to clarify the Rules
are in the interests of market participants and the general public and
that providing added transparency in the Rules is consistent with the
Act.
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. Specifically, the Exchange
already offers such orders and is merely introducing new functionality
to execute such orders. Thus, the Exchange does not believe that the
proposed changes will pose a burden on intramarket competition or
intermarket competition as these orders are already available on the
Exchange. The functionality is available to all TPHs that choose to
enter into the necessary agreements with the Exchange designated
broker-dealer that is not affiliated with the Exchange. To the
contrary, the Exchange believes that the proposed rule change will
relieve any burden on, or otherwise promote, competition as it allows
for market participants to more quickly execute stock-option orders via
the Exchange's Hybrid System.
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 written 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-2015-029 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2015-029. 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 offices 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-2015-029,
and should be submitted on or before April 22, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-07364 Filed 3-31-15; 8:45 am]
BILLING CODE 8011-01-P