[Federal Register Volume 82, Number 187 (Thursday, September 28, 2017)]
[Notices]
[Pages 45325-45329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-20754]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81683; File No. SR-CHX-2017-12]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Order Approving a Proposed Rule Change Regarding Qualified Contingent 
Trades and Related Information Recording Obligations by Certain 
Participants

September 22, 2017.

I. Introduction

    On July 26, 2017, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) \1\ of the 
Securities Exchange Act of 1934 (``Act''),\2\ and Rule 19b-4 
thereunder,\3\ a proposed rule change regarding Qualified Contingent 
Trades (``QCT(s)'') and related recordkeeping obligations for certain 
Exchange participants. The proposed rule change was published for 
comment in the Federal Register on August 10, 2017.\4\ The Commission 
received no comments on the proposal. This order approves the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 81315 (August 4, 
2017), 82 FR 37479 (``Notice'').
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II. Description of the Proposal

    The Exchange permits its participants to submit to the Exchange 
cross orders marked with a QCT modifier (sometimes referred to as ``QCT 
crosses'') to effect transactions that comprise the NMS stock component 
of a QCT.\5\ QCT crosses are submitted to

[[Page 45326]]

the Exchange consistent with an exemption from Rule 611(a) of 
Regulation NMS \6\ that the Commission granted in 2006 and modified in 
2008 (the ``QCT Exemption'').\7\ As described below, the Exchange 
proposes to amend its rules relating to QCTs to permit only 
Institutional Brokers (``IB(s)'') \8\ to effect such transactions on 
the Exchange, to impose additional recordkeeping requirements relating 
to such transactions, and to make additional, clarifying changes to its 
rules.
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    \5\ See id. at 37480. A QCT is ``a transaction consisting of two 
or more component orders, executed as agent or principal where: (1) 
At least one component order is in an NMS stock; (2) all components 
are effected with a product or price contingency that either has 
been agreed to by the respective counterparties or arranged for by a 
broker-dealer as principal or agent; (3) the execution of one 
component is contingent upon the execution of all other components 
at or near the same time; (4) the specific relationship between the 
component orders (e.g., the spread between the prices of the 
component orders) is determined at the time the contingent order is 
placed; (5) the component orders bear a derivative relationship to 
one another, represent different classes of shares of the same 
issuer, or involve the securities of participants in mergers or with 
intentions to merge that have been announced or since cancelled; and 
(6) the transaction is fully hedged (without regard to any prior 
existing position) as a result of the other components of the 
contingent trade. See id. at 37480; see also Securities Exchange Act 
Release No. 57620 (April 4, 2008), 73 FR 19271 (April 9, 2008) 
(``2008 QCT Exemptive Order'').
    \6\ 17 CFR 242.611(a).
    \7\ See Securities Exchange Act Release No. 54389 (August 31, 
2006), 71 FR 52829 (September 7, 2006); see also 2008 QCT Exemptive 
Order, supra note 5.
    \8\ Article 1, Rule 1(n) defines an IB as a member of the 
Exchange that is registered as an IB pursuant to Article 17 of the 
Exchange's rules and has satisfied all Exchange requirements to 
operate as an IB. For the sake of clarity, the Commission notes 
that, unless otherwise specified, references herein to ``Article'' 
and ``Rule'' are references to the Exchange's rules.
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A. QCT Crosses May Only Be Submitted by IBs

    The Exchange proposes to amend Article 1, Rule 2(b)(2)(E) to 
provide that QCT crosses may be submitted to the Exchange only by 
registered IBs.\9\ Article 1, Rule 2(b)(2) sets forth the order 
execution modifiers that may be attributed to cross orders, and Article 
1, Rule 2(b)(2)(E) defines the QCT cross order modifier.\10\ Under the 
proposal, this definition would be amended to state that only IBs may 
utilize the QCT cross order modifier.\11\ The Exchange notes that, 
currently, CHX rules permit any Exchange participant to submit QCT 
crosses, but in practice non-IB participants do not submit them.\12\ 
The Exchange also notes that its rules currently require only IBs to 
input all orders and related information into Brokerplex--an automated 
Exchange order and trade management system--and that this requirement 
facilitates the Exchange's ability to gather information it considers 
to be crucial to its review of QCT crosses executed on the 
Exchange.\13\
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    \9\ See proposed Article 1, Rule 2(b)(2)(E).
    \10\ See Article 1, Rule 2(b)(2).
    \11\ See proposed Article 1, Rule 2(b)(2)(E). The Exchange also 
proposes to add the acronym ``QCT'' to Article 1, Rule 2(b)(2)(E) to 
make clear that the acronym refers to ``Qualified Contingent 
Trade.'' See id.; see also Notice, supra note 4, at 37481 n.25.
    \12\ See Notice, supra note 4, at 37480 n.12 and 37481.
    \13\ See id. at 37480-81; see also Article 17, Rules 3 and 5 
(describing, among other things, Brokerplex and certain IB 
obligations).
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B. Recordkeeping Requirements for Away Component Trades of QCT Crosses

    The CHX Broker Back Office System (``BBOS'') is an Exchange-
maintained trade management system that, among other things, enables 
the Exchange to review information to identify the specific component 
transactions on away exchanges that are being used to hedge QCT crosses 
executed on the Exchange.\14\ Currently, the Exchange encourages, but 
does not require, IBs to input into BBOS certain information for away 
QCT component orders and trades related to QCT crosses executed on the 
Exchange.\15\ Moreover, Article 11, Rule 3(a)(1)-(3), which sets forth 
recordkeeping obligations for certain Exchange participants, including 
IBs, does not currently impose recordkeeping obligations on Exchange 
participants regarding such away component orders and trades of QCT 
crosses.\16\
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    \14\ See Notice, supra note 4, at 37480. The Exchange notes 
that, currently, the vast majority of such component transactions 
involve exchange-traded options. See Notice, supra note 4, at 37480 
n.17.
    \15\ See id. at 37482.
    \16\ See id.
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    The Exchange has proposed several interrelated amendments to 
Article 11, Rule 3 to require IBs to maintain their own records of, and 
record with the Exchange, certain information regarding away QCT 
component orders and trades. Specifically, the Exchange proposes to 
adopt new Rule 3(a)(4), which would make subject to the Rule 3(a) 
recordkeeping requirements every component order and trade, whether 
handled by the Exchange participant or not, related to a cross order 
marked QCT that is submitted by the Exchange participant and executed 
within the Exchange matching system.\17\
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    \17\ See proposed Article 11, Rule 3(a)(4). Article 11, Rule 
3(a) requires covered Exchange participants to preserve a record, 
meeting the criteria of paragraph (b), of the information enumerated 
in Rule 3(a) for at least three years (or any longer period of time 
required by SEC Rule 17a-4).
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    Relatedly, the Exchange proposes to modify Rule 3(b) to include a 
cross reference to proposed Rule 3(a)(4), and would thereby require 
that, subject to exceptions set out in interpretations to Rule 3, IBs 
accurately record in an electronic system designated by the Exchange 
certain details regarding the away component orders and executions 
identified in proposed Rule 3(a)(4).\18\ The Exchange proposes to set 
forth these details in new Rule 3(b)(27), which would provide that, 
with respect to any cross order marked QCT that is submitted by the 
Exchange participant and executed within the Exchange matching system, 
the date and time of receipt by the Exchange participant of the 
corresponding order from its customer and all information specified by 
the Exchange regarding any related component orders and trades executed 
within the matching system or away shall be entered into BBOS (as 
applicable), in a manner prescribed by the Exchange.\19\
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    \18\ See proposed Article 11, Rule 3(b). The Exchange also 
proposes to add the word ``accurately'' to the Rule 3(b) text so 
that the rule requires covered participants to accurately record the 
specified information in the designated Exchange system(s). See id.
    \19\ See proposed Article 11, Rule 3(b)(27); see also proposed 
Article 17, Rule 7(c) (specifying the information regarding related 
component orders and trades to be entered into the BBOS). The 
Exchange also proposes to relocate the current rule text in Article 
11, Rule 3(b)(27) to proposed Article 11, Rule 3(b)(28). 
Correspondingly, the Exchange proposes to amend the cross references 
in Interpretations and Policies paragraph .06 of Article 11, Rule 3 
to reflect this relocation.
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    In addition, the Exchange has proposed amendments to Article 17 
that dovetail with its proposed changes to Article 11, Rule 3. The 
Exchange proposes to amend Article 17, Rule 3(a) to state that an IB 
must enter all orders it receives for execution and any other 
information required under Article 11 into an automated system approved 
by the Exchange.\20\ The Exchange states that this proposed change is 
necessary to broaden the scope of Article 17, Rule 3(a) beyond just 
orders received by the IB for execution to reflect that proposed 
Article 11, Rule 3(b)(27) may require the recording of information 
related to orders that the IB did not actually receive or otherwise 
handle.\21\
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    \20\ The Exchange also proposes to amend the title of Rule 3(a) 
to reflect that it requires the entry of orders and related 
information into an automated system. See proposed Article 17, Rule 
3(a); see also Notice, supra note 4, at 37482.
    \21\ See Notice, supra note 4, at 37482.
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    The Exchange also proposes to adopt new Article 17, Rule 7, which 
would codify the BBOS into the Exchange's rules.\22\ Specifically, 
proposed Rule 7(a) would state that the BBOS is a trade management 
system developed and maintained by the Exchange that permits IBs to 
input certain information and to generate reports therefrom, and that 
it also is an automated system approved by the Exchange for the 
purposes of amended Article 17, Rule 3(a).\23\ Proposed Rule 7(b) would 
state

[[Page 45327]]

that users of the BBOS are responsible for entering all transactional, 
order and other information into the system as required by CHX Rules, 
in an accurate, timely and complete manner; the Exchange, as the 
operator of BBOS, retains information entered into BBOS on behalf of 
the user in conformity with applicable rules and regulations; and the 
Exchange will provide such information to IBs in a format designated by 
the Exchange to assist IBs in conducting research regarding their own 
trading activities, responding to requests for information from 
customers, regulatory authorities or by process of law, and for other 
legitimate business purposes.\24\ Further, proposed Rule 7(b) would 
state that the Exchange charges IBs the fees specified in its published 
Schedule of Fees and Assessments for the collection and retrieval of 
such information.\25\ Proposed Rule 7(c) would list the specific 
information regarding component orders and trades related to QCT 
crosses that IBs are required to enter into the BBOS, as applicable. 
Specifically, proposed Rule 7(c) would provide that for all orders and 
trades described under amended Article 11, Rule 3(b)(27), IBs must 
record the following information into the BBOS, as applicable: (1) QCT 
Type; (2) Related Exchange; (3) Print Time; (4) Expiration Year; (5) 
Expiration Month; (6) Price; (7) Contracts; (8) Strike Price; (9) Call/
Put; (10) Volume; and (11) Short Sale Indicator.\26\
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    \22\ See proposed Article 17, Rule 7.
    \23\ See proposed Article 17, Rule 7(a).
    \24\ See proposed Article 17, Rule 7(b).
    \25\ See id. The Exchange states that it is not proposing to 
assess a fee for use of the BBOS in addition to the current fees 
related to costs incurred by the Exchange in creating any requested 
reports, which shall be rebilled to Exchange participants at cost. 
See Notice, supra note 4, at 37482 n.38.
    \26\ See proposed Article 17, Rule 7(c). The Exchange notes that 
this required information would be identical to the current data 
fields available in the BBOS. See Notice, supra note 4, at 37482 
n.37.
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C. Proposed Clarification Regarding IB Trading Accounts

    Currently, Article 17, Rule 3(c) provides that each IB must 
maintain separate accounts for handling agency transactions, principal 
transactions, and transactions involving errors, and must enter 
transactions into the appropriate accounts.\27\ The Exchange states it 
is proposing to amend this rule to clarify that the required accounts 
relate to special recordkeeping accounts that must be maintained at the 
Exchange, which, the Exchange represents, is necessary for the Exchange 
to adequately surveil and examine the relevant IB trading activity, as 
well as to provide additional detail as to the types of transactions 
that must be recorded in the respective accounts.\28\ Accordingly, the 
Exchange has proposed to amend Article 17, Rule 3(c) to state that each 
IB must establish and maintain separate CHX recordkeeping accounts at 
the Exchange for the sole purpose of recording the following activity: 
(1) An agency recordkeeping account for agency transactions; (2) a 
principal recordkeeping account for principal and riskless principal 
transactions; and (3) an error recordkeeping account for transactions 
involving only bona fide errors.\29\ The proposed rule also would state 
that an IB must record each above-mentioned transaction into the 
appropriate CHX recordkeeping account.\30\
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    \27\ See Article 17, Rule 3(c); see also Notice, supra note 4, 
at 37482.
    \28\ See Notice, supra note 4, at 37482.
    \29\ See proposed Article 17, Rule 3(c).
    \30\ See id.
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D. Additional Proposed Rule Clarifications--Article 11, Rule 3

    The Exchange proposes various clarifying amendments to Article 11, 
Rule 3 regarding certain recordkeeping requirements concerning orders 
and executions by certain types of Exchange participants, including, 
but not limited to, IBs.\31\ Specifically, the Exchange proposes to 
amend Article 11, Rule 3(a) to state that the provisions of Rule 3 only 
apply to the Exchange participants described in paragraph (e) of the 
rule--namely, registered IBs and registered market makers, as well as 
any Exchange participant for which the Exchange is the Designated 
Examining Authority.\32\ The Exchange also proposes to amend paragraph 
(e) to state that any other Exchange participant also is required to 
maintain the information specified in Rule 3 to the extent such 
information is required to be maintained pursuant to the Exchange Act 
and the rules thereunder or, as previously set forth in the pre-
existing version of paragraph (e), pursuant to the rules of the other 
self-regulatory organizations of which they are members.\33\
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    \31\ The Exchange also proposes to add the phrase ``by Certain 
Participants'' to the title of the rule so that it reads ``Records 
of Orders and Executions by Certain Participants.'' See proposed 
Article 11, Rule 3. The Exchange states that this change is meant to 
better distinguish Article 11, Rule 3 from Article 11, Rule 2, which 
requires all Exchange participants to comply with the requirements 
of SEC Rules 17a-3 and 17a-4. See Notice, supra note 4, at 37481.
    \32\ See proposed Article 11, Rule 3(a).
    \33\ See proposed Article 11, Rule 3(e).
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    In addition, the Exchange proposes to clarify that proprietary 
orders fall under the purview of Article 11, Rule 3.\34\ To accomplish 
this, the Exchange proposes to delete from paragraph .01 under the 
Interpretations and Policies of Article 11, Rule 3 the sentence stating 
that a decision by a participant to buy or sell securities for his or 
her own account on the Exchange shall not constitute an order for which 
a record must be made under the rule.\35\ The Exchange notes that that 
sentence excluded from the scope of Article 11, Rule 3(a) the decision 
to purchase or sell a security on a proprietary basis, and not the 
proprietary order itself.\36\ The Exchange states, however, that it 
believes the sentence could be misconstrued to exclude all proprietary 
orders from the scope of Article 11, Rule 3.\37\ The Exchange also 
believes that current Article 11, Rule 3(a)(1)-(3) adequately describes 
the types of orders subject to current Article 11, Rule 3.\38\
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    \34\ See Notice, supra note 4, at 37481.
    \35\ See proposed Interpretation and Policy .01 to Article 11, 
Rule 3.
    \36\ See Notice, supra note 4, at 37481.
    \37\ See id.
    \38\ See id.
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    Further, the Exchange proposes to amend paragraph .03 under the 
Interpretations and Policies of Article 11, Rule 3. Currently, 
paragraph .03 states that the rule shall not apply to orders sent or 
received through the matching system or through any other electronic 
system that the Exchange expressly recognizes as providing the required 
information in a format acceptable to the Exchange. The Exchange states 
that it believes the current provision could be misconstrued to exclude 
such orders from the scope of Article 11, Rule 3, which is not the 
Exchange's intent.\39\ Accordingly, the Exchange proposes to amend 
paragraph .03 to state that a participant that sends or receives 
orders, cancellations and executions through the matching system or 
through any other electronic system that the Exchange expressly 
recognizes as providing the required information in a format acceptable 
to the Exchange is not required to maintain separate records of such 
orders, cancellations and executions.\40\
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    \39\ See id. The Exchange also notes that the amendments would 
have no impact on a Participant's recordkeeping obligations under 
Article 11, Rule 2, which requires, among other things, that 
Participants comply with the recordkeeping requirements of SEC Rule 
17a-3. See id. at 37481-82, n.33.
    \40\ See id.
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E. Additional Proposed Rule Clarifications--Cross Orders

    The Exchange has also proposed to adopt amendments to clarify its 
rules regarding the operation of cross orders and Cross With Size 
handling and to eliminate redundant language in those

[[Page 45328]]

rules.\41\ Specifically, the Exchange proposes to amend the definition 
of ``cross order'' to state that a cross order may only execute within 
the Exchange's matching system if it is priced better than the working 
price, as defined under Article 1, Rule 1(pp), of all resting orders on 
the CHX Book.\42\ The Exchange notes that the amended definition is 
intended to clarify that while the pricing requirement is a 
prerequisite for executing a cross order within the matching system, a 
cross order that does not meet the pricing requirement is still by 
definition a cross order for purposes of the Exchange's rules.\43\ The 
Exchange also proposes to amend Article 1, Rule 2(g)(1), which defines 
and sets forth special order handling requirements for Cross With Size 
orders, to state that a cross order that meets the Cross With Size 
definition will execute if there are no resting orders on the CHX Book 
with a working price better than the cross order.\44\ In addition, the 
Exchange has proposed to amend Article 20, Rule 8(e)(1), which 
specifies how certain order types will be executed in the matching 
system, to remove references to Cross With Size and to state that cross 
orders are to be handled pursuant to Article 1, Rule 2(a)(2) and Rule 
2(g)(1).\45\ The Exchange states it is proposing to remove references 
to Cross With Size from Article 20, Rule 8(e)(1) because Cross With 
Size is a special handling for cross orders, and not itself an order 
type or order modifier.\46\
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    \41\ See Notice, supra note 4, at 37480-81.
    \42\ See proposed Article 1, Rule 2(a)(2).
    \43\ See Notice, supra note 4, at 37480-81.
    \44\ See proposed Article 1, Rule 2(g)(1). The Exchange also 
proposes to remove from this rule, as well Article 1, Rule 2(a)(2), 
language that states that cross and Cross With Size orders will 
execute so long as it would not constitute a trade-through under 
Regulation NMS (including all applicable exceptions and exemptions). 
See id.; see also proposed Article 1, Rule 2(a)(2). The Exchange 
notes that it is proposing to remove this language because it is 
redundant. See Notice, supra note 4, at 37481.
    \45\ See proposed Article 20, Rule 8(e)(1).
    \46\ See Notice, supra note 4, at 37481.
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F. Operative Date

    The Exchange has proposed to provide notice to its participants of 
the operative date of the proposed change in the event that the 
proposed rule change is approved by the Commission.\47\
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    \47\ See Notice, supra note 4, at 37482.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of Section 6 of the Act \48\ 
and the rules and regulations thereunder applicable to the 
Exchange.\49\ Specifically, the Commission finds that the proposed rule 
change is consistent with Section 6(b)(1) of the Act,\50\ which 
requires that an exchange be so organized and have the capacity to 
carry out the purposes of the Act and to comply, and to enforce 
compliance by its members and persons associated with its members, with 
the provisions of the Act, the rules and regulations thereunder, and 
the rules of the exchange; and Section 6(b)(5) of the Act,\51\ which 
requires, among other things, 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 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, 
and not be designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \48\ 15 U.S.C. 78f(b).
    \49\ In approving these proposed rule changes, the Commission 
has considered the proposed rules' impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \50\ 15 U.S.C. 78f(b)(1).
    \51\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the Exchange's proposal to permit only 
registered IBs to submit QCT crosses to the Exchange is consistent with 
the Act. The Exchange has noted that, currently, while other types of 
Exchange participants are permitted to submit QCT crosses, only IBs do 
so in practice.\52\ As such, the Commission believes that this aspect 
of the proposal is designed to codify existing practice with respect to 
QCT crosses and not designed to alter the status quo with respect to 
the type of Exchange participant that submits them to the Exchange. In 
addition, the Exchange has represented that any Exchange participant 
that has satisfied the applicable requirements may register as an 
IB.\53\ Further, the Exchange has noted that IBs have experience in 
ensuring that QCT crosses are submitted to the Exchange matching system 
in a manner consistent with Exchange rules and the QCT Exemption, the 
Exchange's surveillance and examination program is optimized with 
respect to the submission of QCT crosses by IBs in particular, and the 
Exchange believes that the most effective way for it to surveil QCT 
cross activity for compliance with Exchange rules and the QCT Exemption 
is to limit the submission of QCTs to IBs.\54\ Accordingly, the 
Commission believes that the Exchange's proposal to amend Article 1, 
Rule 2(b)(2)(E) to reflect current practice on the Exchange and permit 
only IBs to submit QCT crosses is consistent with Section 6(b)(5) of 
the Act in that it is reasonably designed to help prevent fraudulent 
and manipulative acts and practices, and to protect investors and the 
public interest, and is not designed to permit unfair discrimination. 
The Commission also notes in this regard that it received no comments 
on the proposal.
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    \52\ See Notice, supra note 4, at 37481, 37483.
    \53\ See id. at 37483.
    \54\ See id.
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    In addition, the Commission believes that the Exchange's proposed 
rule amendments to require IBs to maintain records of, and record with 
the Exchange, appropriate information regarding QCT cross transactions, 
and in particular the away component orders and trades of such 
transactions, are consistent with the Act. As the Exchange noted, 
currently, its recordkeeping rules do not require the recording of 
information regarding the away component orders and trades related to 
QCT crosses submitted to the Exchange, and IBs instead are encouraged, 
but not required, to enter such information into the BBOS.\55\ In 
addition, the BBOS currently is not described in the Exchange's rules. 
The Commission believes that the Exchange's proposal to require 
reporting of relevant information regarding away component orders and 
trades related to QCT crosses and subject that information to the 
Exchange's recordkeeping requirements in Article 11, Rule 3 and Article 
17, Rule 3, as well as the Exchange's proposal to codify the BBOS in 
Article 17, Rule 7, will strengthen the Exchange's recordkeeping 
requirements with respect to QCT crosses and should enhance the 
Exchange's ability to monitor for compliance with relevant Exchange 
rules and the QCT Exemption.\56\ Moreover, the Commission does not 
believe that these additional recordkeeping obligations would be unduly 
burdensome to IBs, and in this regard again notes that it received no 
comments on the proposal. Accordingly, the Commission believes that the 
Exchange's proposed amendments to Article 11, Rule 3 and Article 17, 
Rules 3 and 7 to require additional recordkeeping regarding QCT crosses 
is designed to support CHX's regulatory oversight of QCT crosses and 
thereby should help protect investors and the public interest, 
consistent with Section 6(b)(5) of the Act.
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    \55\ See id. at 37482.
    \56\ See Notice, supra note 4, at 37483.

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[[Page 45329]]

    Lastly, the Commission believes that the Exchange's additional 
proposed amendments to clarify its rules regarding IB recordkeeping 
accounts (Article 17, Rule 3(c)), the recordkeeping requirements for 
certain Exchange participants (Article 11, Rule 3), and the operation 
of the cross order type and Cross With Size handling (Article 1, Rule 
2(a)(2), Article 1, Rule 2(g)(1) and Article 20, Rule 8(e)) add 
transparency and remove any potential ambiguity in those rules and 
reduce the potential for confusion as to their meaning and intended 
application, which should help protect investors consistent with 
Section 6(b)(5) of the Act. In addition, the Commission believes that 
these proposed changes are reasonably designed to clarify the scope and 
meaning of those rules, which should help the Exchange assure 
compliance by Exchange participants with the Exchange's rules, 
consistent with Section 6(b)(1) of the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\57\ that the proposed rule change (SR-CHX-2017-12), be, and hereby is, 
approved.
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    \57\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\58\
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    \58\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-20754 Filed 9-27-17; 8:45 am]
 BILLING CODE 8011-01-P