[Federal Register Volume 80, Number 206 (Monday, October 26, 2015)]
[Notices]
[Pages 65258-65263]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-27086]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76203; File No. SR-CBOE-2015-088]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to Disaster Recovery

October 20, 2015.
    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 October 8, 2015, Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, and II below, which Items have been prepared by the Exchange. 
The Exchange filed the proposal as a ``non-controversial'' proposed 
rule change pursuant to section 19(b)(3)(A)(iii) of the Act \3\ and 
Rule 19b-4(f)(6) thereunder.\4\ The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 6.18 relating to disaster 
recovery. 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.

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 6.18 relating to disaster 
recovery. Specifically, the Exchange proposes to update Rule 6.18 to 
further describe the Exchange's back-up systems, the circumstances 
under which they may be used, and the testing that the Exchange may 
conduct to ensure the availability, functionality and performance of 
such systems. Additionally, the Exchange proposes certain updates to 
Rule 6.18 in response to new disaster recovery regulations and business 
resumption standards recently adopted by the Securities and Exchange 
Commission (``SEC'' or ``Commission'') as promulgated in Regulation 
Systems Compliance and Integrity (``Regulation SCI'') under the Act.\5\
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    \5\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR 72252 (December 5, 2014) (Regulation Systems Compliance 
and Integrity) (File No. S7-01-13).
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Background
    The Exchange adopted Rule 6.18 in 2006 for the limited purpose of 
providing alternative means of operation in the event of a physical 
disaster. In particular, Rule 6.18, as originally adopted, was intended 
to deal with trading floor closures, providing for the operation of a 
``Disaster Recovery Facility'' (``DRF'') in the event that a disaster 
or other unusual circumstance rendered the trading floor inoperable.\6\

[[Page 65259]]

Under original Rule 6.18, if the Exchange were forced to halt trading 
due to a disaster or other physical impairment of its trading floor, 
the Exchange and its members \7\ could operate remotely in a screen-
based only environment from the DRF while the trading floor was 
unavailable. While operating from the DRF, open outcry trading would be 
suspended.
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    \6\ See Securities Exchange Act Release No. 54171 (July 19, 
2006), 71 FR 42427 (July 26, 2006) (Order Approving Proposed Rule 
Change and Amendment No. 1 Thereto Regarding a Disaster Recovery 
Facility) (SR-CBOE-2006-001[sic]).
    \7\ Prior to its demutualization in 2010, the Exchange was a 
member-owned organization. See Securities Exchange Act Release No. 
62382 (June 25, 2010), 75 FR 38164 (July 1, 2010) (Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to 
Conforming Changes in Connection With Demutualization) (SR-CBOE-
2010-058).
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    In 2012, Rule 6.18 was amended in connection with the Exchange's 
relocation of its primary data center to the East Coast and the 
consequent conversion of its former primary data center to a back-up 
data center in Chicago.\8\ Specifically, Rule 6.18 was amended to deal 
with newly possible situations in which the primary data center could 
continue to operate despite the trading floor being rendered inoperable 
or in which the back-up data center might be used despite the trading 
floor being operational. Specifically, as amended, Rule 6.18 provided 
that in the event that the Exchange were forced to switch operations to 
the back-up data center, the Exchange's trading floor could still be 
used and that in the event that the trading floor were inoperable, the 
Exchange could still operate using a floorless configuration or screen-
based only environment on the Exchange's primary data center. 
References to the DRF and other irrelevant portions of the original 
rule were eliminated or replaced with references to [sic] Exchange's 
primary and back-up data centers as appropriate.
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    \8\ See Securities Exchange Act Release No. 68301 (November 27, 
2012), 77 FR 71650 (December 3, 2012) (Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change To Amend CBOE 
Rule 6.18 Concerning the Exchange's Disaster Recovery Facility) (SR-
CBOE-2012-111).
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    In addition to adding greater detail to the Exchange's disaster 
recovery rules in Rule 6.18, the Exchange proposes to make updates to 
Rule 6.18 to harmonize its disaster recovery rules with the newly 
implemented disaster recovery-related regulatory imperatives of 
Regulation SCI. Regulation SCI supersedes and replaces the SEC's 
voluntary Automation Review Policy (``ARP''), established by the 
Commission's two policy statements each titled ``Automated Systems of 
Self-Regulatory Organizations,'' issued in 1989 and 1991, expanding 
existing practices and making them mandatory.\9\ As part of Regulation 
SCI, the Exchange is required to maintain back-up and recovery 
capabilities with sufficient resiliency and geographical diversity and 
that are reasonably designed to achieve next business-day resumption of 
trading and two-hour resumption of critical systems following a wide-
scale disruption.\10\ The Exchange must also participate in at least 
annual testing of its business continuity and disaster recovery plans 
and, to that end, develop and adopt standards to designate which of its 
TPHs must participate in testing in order to reasonably ensure the 
maintenance of a fair and orderly market if the Exchange's disaster 
recovery plan must be activated.\11\ Although the Exchange's current 
Rules provide the Exchange sufficient authority to meet its disaster 
recovery-related obligations under Regulation SCI, the Exchange 
believes that certain clarifying updates to the Rules are warranted in 
light of Regulation SCI.
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    \9\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR at 72252 (December 5, 2014) (Regulation Systems 
Compliance and Integrity) (File No. S7-01-13).
    \10\ 17 CFR 242.1001(a)(2)(v).
    \11\ Id. at 242.1004.
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Proposed Rule Changes
    The Exchange proposes to make changes to Rule 6.18 to provide 
additional details regarding the Exchange's back-up trading systems and 
business continuity and disaster recovery plans activation and testing. 
As discussed above, the Exchange also seeks to update its disaster 
recovery rules to ensure consistency with Regulation SCI.
    Current Rule 6.18 is divided into five sections, (a) through (e). 
Rule 6.18(a) authorizes the Exchange to maintain a back-up data center 
to preserve the Exchange's ability to trade options in the event the 
Exchange's primary data center becomes inoperable or otherwise 
unavailable for use. Rule 6.18(a) also authorizes the Exchange to 
operate in a screen-based only environment using a floorless 
configuration in the event that the trading floor becomes inoperable. 
Rule 6.18(b) describes the notice that must be given prior to 
commencing trading on back-up data center systems. Rule 6.18(c) 
describes the rules that would be in effect if the Exchange were to 
switch its trading operations to the back-up data center and the rules 
that would be suspended if the Exchange were to operate in a screen-
based only environment using a floorless configuration in the event 
that the trading floor becomes inoperable. Rule 6.18(d), prescribes 
that TPHs are required to take appropriate actions as instructed by the 
Exchange to accommodate the Exchange's ability to trade options via the 
back-up data center. Finally, current Rule 6.18(e) provides that 
nothing in 6.18 precludes the Exchange from entering into agreements to 
trade options elsewhere in accordance with Rule 6.16 (Back-up Trading 
Arrangements) in the event that the Exchange's trading floor is 
rendered inoperable.
    The Exchange proposes to make rule changes to Rule 6.18 that would 
leave the current rule largely intact, but reorganized with detail 
added to each section of the current rule. Under proposed Rule 6.18(a) 
(General), rather than explaining the Exchange's back-up data center 
and alternative disaster-related trading configurations in the 
introductory section, the Exchange would adopt a general statement 
regarding the purpose of its disaster recovery rules, providing that 
the Exchange maintains business continuity and disaster recovery plans 
that may be effected in the interests of the continued operation of 
fair and orderly markets in the event of a systems failure, disaster, 
or other unusual circumstances that might threaten the ability to 
conduct business on the Exchange. The content of current Rule 6.18(a) 
would be moved from the general section of Rule 6.18(a) to proposed 
Rule 6.18(b) regarding the Exchange's back-up data center.
    Proposed Rule 6.18(b) (Back-up Data Center), would mirror current 
Rule 6.18(a), but would include a definitive statement that the 
Exchange maintains a back-up data center in order to preserve the 
Exchange's ability to conduct business in the event the Exchange's 
primary data center becomes inoperable or otherwise unavailable for 
use, rather than providing that the Exchange may maintain such back-up 
facilities. The Exchange also proposes to change the text of current 
Rule 6.18(a) in proposed Rule 6.18(b) to provide that the Exchange 
maintains a back-up data center in order to preserve the Exchange's 
ability to conduct business in the event the Exchange's primary data 
center becomes inoperable or otherwise unavailable for use, rather than 
to preserve only the Exchange's ability to trade options. This proposed 
rule change reflects the fact that the Exchange is engaged in business 
activities other than just the trading of options, including, but not 
limited to providing market data services and conducting regulatory 
functions.
    Whereas the Exchange's current rules provide that the Exchange may 
determine to switch operations from the primary data center to the 
back-up data

[[Page 65260]]

center due to a disaster or other unusual circumstances, proposed Rule 
6.18(b) would add the scenario of a significant systems failure to the 
list of causes that may trigger an operational switch to the Exchange's 
back-up data center. The proposed addition of significant systems 
failures to the list of scenarios that may trigger an operational 
switch to the Exchange's back-up data center is intended to more 
acutely reflect the realities of electronic trading environments and 
contemporary threats posed to the operation of fair and orderly 
markets. The statements in current Rule 6.18(a) regarding contingent 
alternative plans in the event that the Exchange's trading floor 
becomes inoperable would be removed from the section and relocated to 
proposed Rule 6.18(c) (Loss of Trading Floor), which would be dedicated 
to the details of the Exchange's authority in the event that the 
Exchange trading floor becomes inoperable. In addition to the 
reformulation of the description of the Exchange's back-up data center 
in proposed Rule 6.18(b), proposed Rule 6.18(b) would also contain 
subsections setting forth the notice, applicable rules, and Trading 
Permit Holder (``TPH'') preparations provisions currently contained in 
Rules 6.18(b) through (d).
    Proposed Rule 6.18(b)(i) (Back-up Data Center Functionality), would 
make clear the functional and performance standards that the back-up 
data center must be reasonably designed to achieve. Specifically, 
proposed Rule 6.18(b)(i) would provide that the Exchange maintains a 
back-up data center that the Exchange has determined is reasonably 
designed to achieve prompt resumption of systems in [sic] manner 
consistent with the Exchange's obligations under Regulation SCI.\12\ 
Proposed Rule 6.18(b)(i) would also provide that nothing in the 
provisions of proposed Rule 6.18(b) shall be interpreted to require the 
Exchange to develop or maintain a back-up data center designed to fully 
replicate the capacity, latency, and other features of the primary data 
center. This statement attempts to make clear that in order to preserve 
the Exchange's ability to conduct business in the event the Exchange's 
primary data center becomes inoperable or otherwise unavailable for 
use, the Exchange must maintain a back-up data center that is 
reasonably designed achieve resumption of systems in a manner 
consistent with Regulation SCI during a significant systems failure, 
disaster or other unusual circumstances, rather than replicate the 
Exchange's primary data center systems. The Exchange believes that the 
standards set forth in proposed Rule 6.18(b)(i) are reasonable to help 
ensure the maintenance of fair and orderly markets in the event of a 
significant systems failure, disaster or other unusual circumstances 
and are consistent with provisions in the release language of 
Regulation SCI.\13\
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    \12\ Among other things, Regulation SCI requires that the 
Exchange ``establish, maintain, and enforce written policies and 
procedures reasonably designed to ensure that its SCI systems . . . 
have levels of capacity, integrity, resiliency, availability, and 
security, adequate to maintain . . . [sic] [the Exchange's] 
operational capability and promote the maintenance of fair and 
orderly markets.'' See 17 CFR 242.1001(a)(1). With respect to 
business continuity and disaster recovery plans, such standards mean 
that, at a minimum, the Exchange shall maintain ``backup and 
recovery capabilities sufficiently resilient and geographically 
diverse [sic] that they [sic] are reasonably designed to achieve 
next business day resumption of trading and two-hour resumption of 
critical SCI systems following a wide-scale disruption.'' See id. at 
Sec.  242.1001(a)(2)(v).
    \13\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR at 72353 (December 5, 2014) (Regulation Systems 
Compliance and Integrity) (File No. S7-01-13).
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    Proposed Rule 6.18(b)(ii) (Notice), would be the same as current 
Rule 6.18(b) and provide that prior to commencing trading on the back-
up data center, the Exchange shall announce publicly the classes that 
will be available for trading. Proposed Rule 6.18(b)(iii) (Applicable 
Rules) would be the same as current Rule 6.18(c) and provide that the 
same rules that apply to trading using primary data center systems 
would be applicable to trading on back-up data center systems. The 
applicable rule exceptions with respect to the suspension of open 
outcry trading on the floor, however, would be removed from proposed 
Rule 6.18(b)(iii) and relocated to proposed Rule 6.18(c) (Loss of 
Trading Floor). Accordingly, proposed Rule 6.18(b)(iii) would provide 
that in the event the primary data center becomes inoperable, trading 
will continue using the back-up data center and all trading rules will 
remain in effect. Consistent with current Rule 6.18(c), the proposed 
rule would also contain the provisions that only conduct permissible 
pursuant to trading rules that are in force shall be allowed via the 
back-up data center and that all non-trading rules of the Exchange 
shall continue to apply.
    Proposed Rule 6.18(b)(iv) (Trading Permit Holder Participation) 
regarding testing of the Exchange's back-up data center would contain 
provisions similar to current Rule 6.18(d) (Trading Permit Holder 
Preparations), but add subparagraphs to more clearly articulate the 
Exchange's authority to conduct testing of its back-up data center 
systems. Thus, similar to current Rule 6.18(d), proposed Rule 
6.18(b)(iv) would provide that TPHs are required to take appropriate 
actions as instructed by the Exchange to accommodate the Exchange's 
ability to trade options via the back-up data center. Similar to the 
proposed changes to the text of current Rule 6.18(a) with respect to 
the purpose for which the Exchange maintains a back-up data center, for 
the reasons discussed above, the Exchange also proposes changing the 
rule text in proposed Rule 6.18(b)(iv) to provide that TPHs are 
required to take appropriate actions as instructed by the Exchange to 
accommodate the Exchange's ability to conduct business via the back-up 
data center, rather than solely to accommodate the Exchange's ability 
to conduct business [sic]. Under the proposed rule change, the title of 
current Rule 6.18(d) (Trading Permit Holder Preparations) would also be 
changed in proposed Rule 6.18(b)(iv) (Trading Permit Holder 
Participation) to better describe the purpose of the rule provisions.
    Subsections (A) through (C) of proposed Rule 6.18(b)(iv) are 
designed to harmonize the Exchange's back-up data center testing rules 
with certain provisions of Regulation SCI. Under proposed Rule 
6.18(b)(iv)(A) (Designated BCP/DR Participants), the Exchange shall 
designate those Trading Permit Holders that the Exchange determines 
are, as a whole, necessary for the maintenance of fair and orderly 
markets in the event of the activation of the Exchange's business 
continuity and disaster recovery plans (``Designated BCP/DR 
Participants''). Under proposed Rule 6.18(b)(iv)(A)(1), Designated BCP/
DR Participants will be identified based on criteria determined by the 
Exchange and announced via Regulatory Circular, which may include 
whether the Trading Permit Holder (``TPH'') is an appointed Designated 
Primary Market-Maker (``DPM''), Lead Market-Maker (``LMM'') or Market-
Maker in a class and the quality of markets provided by the DPM, LMM, 
or Market-Maker,\14\ the amount of volume transacted by the market 
participant in a class or on the Exchange in general, operational 
capacity, trading experience, and historical contribution to fair and 
orderly markets on the Exchange. Under proposed Rule 6.18(b)(iv)(A)(2), 
Designated BCP/DR Participants shall include, at a minimum, all Market-
Makers in option

[[Page 65261]]

classes exclusively listed on the Exchange that stream quotes in such 
classes and all DPMs in multiply listed option classes. Although under 
the proposed rule, Designated BCP/DR Participants would definitively 
include all Market-Makers in option classes exclusively listed on the 
Exchange that stream quotes in such classes and all DPMs in multiply 
listed option classes, the proposed rule would leave open the 
possibility that other market participants might be designated by the 
Exchange as Designated BCP/DR Participants based on certain of the 
criteria listed in proposed Rule 6.18(b)(iv)(A)(1) and announced via 
Regulatory Circular. Any changes to the standards by which a market 
participant might be determined to be a Designated BCP/DR Participant 
would be applied prospectively with reasonable advance notice as 
announced via Regulatory Circular. The Exchange would first announce 
the criteria by which market participants would be determined to be 
Designated BCP/DR Participants by November 1, 2015.
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    \14\ Among other things, quality of markets provided refers to 
the average size quoted in a class, percentage quoting on NBBO, how 
many series are quoted in a class, and how many calendar months out 
from present day a participant normally quotes.
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    The Exchange has attempted to model the provisions of proposed Rule 
6.18(b)(iv)(A) based on provisions of Regulation SCI, which require the 
Exchange to establish standards for the designation of those members or 
participants that the Exchange reasonably determines are, taken as a 
whole, the minimum number of members or participants necessary for the 
maintenance of fair and orderly markets in the event of the activation 
of its business continuity and disaster recovery plans.\15\ Also 
consistent with Regulation SCI, proposed Rule 6.18(b)(iv)(B) (Fair and 
Orderly Market Conditions) would make clear that nothing in proposed 
Rule 6.18(b) would require the Exchange to assume that average levels 
of liquidity, depth, or other characteristics of a usual trading 
session must be present in order to achieve a fair and orderly market 
in the event of the activation of the Exchange's business continuity 
and disaster recovery plans.\16\
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    \15\ See 17 CFR 242.1004(a)-(b).
    \16\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR at 72353 (December 5, 2014) (Regulation Systems 
Compliance and Integrity) (File No. S7-01-13).
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    Proposed Rule 6.18(b)(iv)(C) (Business Continuity and Disaster 
Recovery Plans Testing), would provide that The [sic] Exchange shall 
require Designated BCP/DR Participants and may require other market 
participants to participate in scheduled business continuity and 
disaster recovery plans tests in the manner and frequency prescribed by 
the Exchange. Proposed Rule 6.18(b)(iv)(C) would set forth the 
Exchange's authority to conduct testing of business continuity and 
disaster recovery plans and obtain assistance from Designated BCP/DR 
Participants and other market participants in conducting such tests. 
The Exchange notes that the provisions of proposed Rule 6.18(b)(iv)(C) 
are consistent with the Exchange's current rules \17\ as well as 
provisions of Regulation SCI pertaining to business continuity and 
disaster recovery plan testing.\18\ Proposed Rule 6.18(b)(iv)(C)(1) 
(Documentation and Reports), would provide that the Exchange may 
require Designated BCP/DR Participants and/or other market participants 
to provide documentation and reports regarding tests conducted pursuant 
to Rule 6.18, including related data and information, as may be 
requested by the Exchange, and in the manner and frequency prescribed 
by the Exchange. Proposed Rule 6.18(b)(iv)(C)(2) (Notice), would 
provide that the Exchange will provide reasonable prior notice of 
scheduled business continuity and disaster recovery plans tests to 
Trading Permit Holders, which notice shall describe the general nature 
of the test(s) and identify the Trading Permit Holders required to 
participate and shall be announced via Regulatory Circular.
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    \17\ See Rules 6.23A (Trading Permit Holder Connectivity); 
6.18(d) (Trading Permit Holder Preparations).
    \18\ See 17 CFR 242.1004(a)-(b).
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    Proposed Rule 6.18(c) (Loss of Trading Floor), would be 
substantially similar to provisions in current Rule 6.18(a) (General), 
regarding loss of the trading floor, which would be removed from 
proposed Rule 6.18(b) (Back-up Data Center) and more appropriately 
placed in a separate section regarding the Exchange's trading floor 
facilities. Under proposed Rule 6.18(c), if the Exchange trading floor 
were to become inoperable, the Exchange would have the authority to 
continue to operate in a screen-based only environment using a 
floorless configuration of the Hybrid Trading System located in the 
primary data center that is operational while the trading floor is 
inoperable. The Exchange would operate using this configuration only 
until the Exchange's trading floor facility is operational and open 
outcry trading would not be available in the event the trading floor 
becomes inoperable, except in accordance with Rule 6.16 (Back-up 
Trading Arrangements), as applicable.
    Proposed Rule 6.18(c)(i) (Applicable Rules), would mirror current 
Rule 6.18(c) (Applicable Rules), except that the current rule would be 
updated in proposed Rule 6.18(c)(i) to include additional rules 
pertaining to open outcry trading, including, but not limited to Rule 
6.12A (Public Automated Routing System (PAR)) and Rule 7.12 (PAR 
Official). Thus, under proposed Rule 6.18(c)(i), in the event that the 
trading floor becomes inoperable, trading would be conducted pursuant 
to all applicable Hybrid System rules, except that open-outcry rules 
would not be in force. In these circumstances, a non-exclusive list of 
open outcry trading rules that would not apply would include either 
all, or some portion of, Rules 6.2, 6.2A, 6.8, 6.8B, 6.9, 6.12; 6.12A, 
6.13A, 6.20, 6.22, 6.23, 6.45, 6.47, 6.54, 6.74, 7.12, 8.15, and 
8.17.\19\ Proposed Rule 6.18(c)(ii) (Other Back-up Trading 
Arrangements), would be similar to current Rule 6.18(e), making clear 
that proposed Rule 6.18 would not preclude the Exchange from conducting 
business on the floor of another exchange pursuant to Rule 6.16 (Back-
up Trading Arrangements), in the event the trading floor is rendered 
inoperable.
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    \19\ In an effort to shorten and simply [sic] the Exchange's 
disaster recovery rule, the Exchange proposes to eliminate redundant 
parenthetical information referencing the titles of each of the 
rules cited in Rule 6.18. The rules and respective titles of the 
rules cited in proposed Rule 6.18(c)(i) include the following: 6.2 
(Trading Rotations); 6.2A (Rapid Opening System); 6.8 (RAES 
Operations); 6.8B (Automatic ORS Order Execution Against Booked 
Orders); 6.9 (Solicited Transactions); 6.12 (CBOE Hybrid Order 
Handling System); 6.12A (Public Automated Routing System (PAR)); 
6.13A (Simple Auction Liaison (SAL)); 6.20 (Admission to and Conduct 
on the Trading Floor; Trading Permit Holder Education); 6.22 
(Trading by Trading Permit Holders on the Floor); 6.23 (Trading 
Permit Holder Wires from Floor [sic]); 6.45 (Priority of Bids and 
Offers--Allocation of Trades); 6.47 (Priority on Split-Price 
Transactions Occurring in Open Outcry); 6.54 (Accommodation 
Liquidations (Cabinet Trades)); 6.74 (Crossing Orders); 7.12 (PAR 
Official); 8.15 (Lead Market-Makers and Supplemental Market-Makers 
in Hybrid 3.0 Classes); and 8.17 (Stopping of Option Orders).
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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 \20\ and Regulation SCI.\21\ Specifically, the Exchange believes 
the proposed rule change is consistent with the section 6(b)(5) \22\ 
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

[[Page 65262]]

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) \23\ requirement that the rules 
of an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \20\ 15 U.S.C. 78f(b).
    \21\ See 17 CFR 242.1001(a) and 1004.
    \22\ 15 U.S.C. 78f(b)(5).
    \23\ Id.
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    In particular, the proposed rule change is designed to promote the 
Exchange's ability to ensure the continued operation of a fair and 
orderly market in the event of a systems failure, disaster, or other 
unusual circumstances that might threaten the ability to conduct 
business on the Exchange. The Exchange recognizes that switching 
operations to the back-up data center may occur in times of uncertainty 
or great volatility in the markets. It is at these times that the 
investors may have the greatest need for viable, trustworthy 
marketplaces. The proposed rule changes seek to ensure that such a 
marketplace will exist when most needed. Accordingly, the Exchange 
believes that the proposed rule protects investors in the most 
fundamental sense by helping to ensure that a fair and orderly market 
will exist at a time when such a market may be most needed.
    The Exchange also believes that the proposed rule change promotes 
just and equitable principles of trade by adding detail and clarity to 
the Rules. The proposed rule change seeks to provide additional clarity 
to the Exchange's disaster recovery rules, putting all market 
participants on notice as to how the Exchange will function in case of 
significant systems disruption or other disaster situation. The 
Exchange is continuously updating the Rules to provide additional 
detail, clarity, and transparency regarding its operations and trading 
systems and regulatory authority. The Exchange believes that the 
adoption of detailed, clear, and transparent rules reduces burdens on 
competition and promotes just and equitable principles of trade. The 
Exchange also believes that adding greater detail to the Rules 
regarding the Exchange's ability to ensure the continuous operation of 
the market and preserve the ability to conduct business on the Exchange 
will increase confidence in the markets and encourage wider 
participation in the markets and greater investment. Finally, the 
Exchange notes that proposed Rule 6.18 is designed to harmonize the 
Exchange's disaster recovery rules with Regulation SCI under 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. Rather, the proposed rule 
change will help ensure that competitive markets remain operative in 
the event of a systems failure or other disaster event. The Exchange 
notes that the proposed rule change is designed to clarify the 
Exchange's authority to require market participants to participate in, 
and provide necessary liquidity to ensure fair and orderly markets. The 
Exchange further notes that the proposed rule change is designed to 
ensure competitive markets in that it is designed around the mandates 
of Regulation SCI, which each of the national securities exchanges is 
required to satisfy.

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

    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 from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to section 19(b)(3)(A) of the Act \24\ and Rule 19b-4(f)(6) 
thereunder.\25\
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    \24\ 15 U.S.C. 78s(b)(3)(A).
    \25\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Commission deems this requirement to have been met.
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    A proposed rule change filed under Rule 19b-4(f)(6) \26\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii) \27\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \26\ 17 CFR 240.19b-4(f)(6).
    \27\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. According to the Exchange, the proposed rule change does not 
present any novel or controversial issues. Rather, the Exchange is 
merely reorganizing its existing rule, updating cross-references to 
incorporate previously adopted rules, or adding provisions that are 
consistent with or required by Regulation SCI. In addition, the 
Exchange has represented that much of the proposed rule change is 
already permitted under the Exchange's existing rule. Accordingly, the 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest as 
it will allow the Exchange to incorporate changes required under 
Regulation SCI, such as establishing standards for designating BCP/DR 
Participants, prior to the November 3, 2015 compliance date. Therefore, 
the Commission designates the proposed rule change to be operative upon 
filing.\28\
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    \28\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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.

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-2015-088 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities

[[Page 65263]]

and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2015-088. 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-2015-088, and should be 
submitted on or before November 16, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-27086 Filed 10-23-15; 8:45 am]
 BILLING CODE 8011-01-P