[Federal Register Volume 83, Number 98 (Monday, May 21, 2018)]
[Notices]
[Pages 23513-23515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10712]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83247; File No. SR-CboeBZX-2018-035]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 2.12 To Add References to Cboe Options and C2

May 15, 2018.
    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 May 14, 2018, Cboe BZX Exchange, Inc. (``BZX'' or the 
``Exchange'') 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 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with 
the Commission. 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).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend Rule 2.12 to add references 
to Cboe Exchange, Inc. (``Cboe Options'') and Cboe C2 Exchange, Inc. 
(``C2''). The Exchange does not propose to amend the requirements of 
this rule.
(additions are italicized; deletions are [bracketed])
* * * * *

Cboe BZX Exchange, Inc.

Rules

* * * * *

Rule 2.12. Cboe Trading, Inc. as Inbound Router

    (a) For so long as the Exchange is affiliated with Cboe Exchange, 
Inc., Cboe C2 Exchange, Inc., Cboe BYX Exchange, Inc., Cboe EDGA 
Exchange, Inc. or Cboe EDGX Exchange Inc., (each, a ``Cboe [Bats 
]Exchange''), and Cboe Trading, Inc. in its capacity as a facility of 
each Cboe [Bats ]Exchange is utilized for the routing of orders from 
each Cboe [Bats ]Exchange to the Exchange, (such function of Cboe 
Trading, Inc. is referred to as the ``Inbound Router''), the Exchange 
undertakes as follows:
    (1)-(4) No change.
    (b) Provided the above conditions are complied with, and provided 
further that Cboe Trading, Inc. operates as an outbound router on 
behalf of each Cboe [Bats ]Exchange on the same terms and conditions as 
it does for the Exchange, and in accordance with the Rules of each Cboe 
[Bats ]Exchange, Cboe Trading, Inc. may provide inbound routing 
services to the Exchange from each Cboe [Bats ]Exchange.
* * * * *
    The text of the proposed rule change is available at the Exchange's 
website at www.markets.cboe.com, at the principal office of the 
Exchange, 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 parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In December 2016, the Exchange and its affiliates \5\ received 
approval to effect a merger (the ``Merger'') of the Exchange's parent 
company, Bats Global Markets, Inc. with CBOE Holdings, Inc. (now known 
as Cboe Global Markets, Inc.), the parent company of Cboe Options and 
C2.\6\ Hereinafter, the Exchange, BYX, EDGA, EDGX, Cboe Options, and C2 
will be collectively referred to as the ``Cboe Affiliated Exchanges.''
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    \5\ As of December 2016, the Exchange's affiliates included Cboe 
BYX Exchange, Inc. (formerly Bats BYX Exchange. Inc.) (``BYX''), 
Cboe EDGA Exchange, Inc. (formerly Bats EDGA Exchange, Inc.) 
(``EDGA''), and Cboe EDGX Exchange, Inc. (formerly Bats EDGX 
Exchange, Inc.) (``EDGX'').
    \6\ See Securities Exchange Act Release No. 79585 (December 16, 
2016), 81 FR 93988 (December 22, 2016) (SR-BatsBZX-2016-68; SR-
BatsBYX-2016-29; SR-BatsEDGA-2016-24; SR-BatsEDGX-2016-60).
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    In connection with the Merger, the Cboe Affiliated Exchanges are 
working to migrate Cboe Options and C2 onto the Bats technology 
platform, and align certain system functionality, retaining only 
intended differences between the Cboe Affiliated Exchanges.\7\ The 
Exchange proposes to amend Rule 2.12 to reflect that Cboe Options and 
C2 are affiliated with the Exchange and that upon completion of the 
migration, Cboe Trading, Inc. (``Cboe Trading'') may also act as the 
inbound router for routing orders from Cboe Options and C2 to the 
Exchange. The Exchange also proposes to amend Rule 2.12 to update the 
defined term ``Cboe Bats Exchange'' to ``Cboe Exchange'' to reflect 
that all Cboe Affiliated Exchanges, not just BYX, EDGA, and EDGX, are 
included in the definition. The Exchange previously implemented 
limitations and conditions on Cboe Trading's affiliation with the 
Exchange in order to permit the Exchange to accept inbound orders that 
Cboe Trading routes in its capacity as a facility of the Exchange, BYX, 
EDGA, and EDGX.\8\ Those same conditions and limitations will apply to 
any inbound orders that Cboe Trading routes in its capacity as a 
facility of Cboe Options and C2.
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    \7\ It is anticipated that the C2 migration onto the Bats 
technology platform will be completed on May 14, 2018, and the Cboe 
Options migration onto the Bats technology platform will be 
completed on October 7, 2019.
    \8\ See Securities Exchange Act Release No. 62901 (September 13, 
2010), 75 FR 57097 (September 17, 2010) (SR-BATS-2010-024) (notice 
of filing and immediate effectiveness of proposed rule change to 
adopt BATS Exchange, Inc. (currently named Cboe BZX Exchange, Inc.) 
Rule 2.12).
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    Cboe Trading currently provides Members of the Exchange, BYX, EDGA, 
and EDGX with optional routing services to other market centers. In 
certain circumstances, Cboe Trading provides inbound routing from BYX, 
EDGA, or EDGX to the Exchange. Exchange Rule 2.12 governs this inbound 
routing of orders by Cboe Trading to the Exchange in Cboe Trading's 
capacity as a facility of the Exchange. The Exchange proposes to amend 
Rule 2.12 to reflect that Cboe Options and C2 are affiliated with the 
Exchange and that Cboe Trading may also act as the inbound router for 
routing orders from Cboe Options and C2 to the Exchange upon migration 
of Cboe Options and C2 onto the Bats technology platform. The Exchange 
does not propose to amend the requirements of this rule. Therefore, the 
conditions and limitations set forth in Exchange Rule 2.12(a) will 
remain the same. The Exchange believes that Rule 2.12 will continue to 
adequately manage the potential for conflicts of interest that could 
arise from Cboe Trading routing orders to the Exchange.

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Implementation Date
    With respect to C2, the Exchange intends to implement the proposed 
rule change on or about May 14, 2018, which is the anticipated date 
upon which the migration of C2 onto the Bats technology platform will 
be complete. With respect to Cboe Options, the Exchange intends to 
implement the proposed rule change on or about October 7, 2019, which 
is the anticipated date upon which the migration of Cboe Options onto 
the Bats technology platform will be complete.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\9\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \10\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \11\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ Id.
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    The Exchange does not propose to amend the requirements of the rule 
and the proposed rule change is intended only to reflect that Cboe 
Options and C2 are affiliated with the Exchange and that Cboe Trading 
may also route inbound orders from Cboe Options and C2 to the Exchange 
upon migration of Cboe Options and C2 onto the Bats technology 
platform. A consistent technology offering through the use of Cboe 
Trading by each of the Cboe Affiliated Exchanges will, in turn, 
simplify the technology implementation, changes, and maintenance by 
users of the Exchange that are also participants on BYX, EDGA, EDGX, 
Cboe Options, and C2. As such, the proposed rule change would foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities and would remove impediments to and perfect 
the mechanism of a free and open market and a national market system.

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. The Exchange reiterates that 
the proposed rule change is being proposed in the context of the 
technology integration of the Cboe Affiliated Exchanges. Thus, the 
Exchange believes this proposed rule change is necessary to permit fair 
competition among national securities exchanges. In addition, the 
Exchange believes the proposed rule change will benefit Exchange 
participants in that it is one of several changes necessary to achieve 
a consistent technology offering by the Cboe Affiliated Exchanges.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any written comments from members or other interested parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing 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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its 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 Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of its filing. However, 
Rule 19b-4(f)(6)(iii) \14\ permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay so that the proposed rule 
change will become operative on filing. Waiver of the operative delay 
would allow the Exchange to implement the proposed rule change on May 
14, 2018, which is same day as the anticipated date for the migration 
of C2 to the Bats technology platform. The Exchange stated that the 
proposed rule change promotes the protection of investors and the 
public interest because it would minimize the amount of disruption as 
C2 (and eventually Cboe Options) migrates to the Bats technology 
platform. Therefore, the Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Accordingly, the Commission hereby waives the 
operative delay and designates the proposed rule change operative upon 
filing.\15\
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    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CboeBZX-2018-035 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-CboeBZX-2018-035. This

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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 website (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 website 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 the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-CboeBZX-2018-035, and should be 
submitted on or before June 11, 2018.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10712 Filed 5-18-18; 8:45 am]
 BILLING CODE 8011-01-P