[Federal Register Volume 84, Number 85 (Thursday, May 2, 2019)]
[Notices]
[Pages 18899-18901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08914]
[[Page 18899]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85729; File No. SR-CboeBZX-2019-030]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Replace Obsolete Terminology
April 26, 2019.
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 April 17, 2019, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'')
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
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') is filing
with the Securities and Exchange Commission (``Commission'') a proposed
rule change to replace obsolete terminology. The text of the proposed
rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), 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 its rules to replace certain
obsolete terms and correct an inaccurate reference within its rules.
Specifically, on November 29, 2018, the Exchange filed rule filing SR-
CboeBZX-2018-086 which, among other things, adopted the definition of
``EFID'' in Rule 21.1(k). More specifically, ``EFID'' is an executing
firm ID and refers to what the automated trading system used by BZX
Options for the trading of options contracts (``System'') uses to
identify the Member and the clearing number for the execution of orders
and quotes submitted to the System on its options platform.\5\ At the
time, the Exchange noted that BZX's rules had referred only to the term
``MPID'', which is a Member's market participant identifier and
generally equivalent to an EFID. The Exchange also noted however, that
MPIDs are only used for equities trading and that the Exchange does not
utilize MPIDs on its options platform, but rather uses EFIDs. As such,
the Exchange now proposes to update all references to ``market
participant ID'' and ``MPID'' to ``executing Firm ID'' and ``EFID'',
respectively under Chapter XXI, which chapter relates to the trading of
options listed on BZX Options (i.e., update terms in Rule 21.1(c)(1),
Rule 21.1(g), and Rule 21.10(a)). In addition to this, the Exchange
proposed to update an inaccurate reference within Rule 21.1(g) to
restrictions with respect to bulk messaging in paragraph (j) to
paragraph (l), in which bulk messaging restrictions are currently set
forth.
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\5\ See Securities Exchange Act Release No. 84777 (December 10,
2018), 83 FR 64397 (December 14, 2018) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change Relating To Amend
Its Provision Related to Its Risk Monitor Mechanism) (SR-CboeBZX-
2018-086).
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The Exchange also proposes to further clarify Rule 21.1(c)(1),
which rule defines ``Attributable Orders''. Particularly, an
Attributable Order is currently defined as orders that are designated
for display (price and size) including the User's market participant
identifier (``MPID''). As discussed above, the Exchange proposes to
replace the reference to ``market participant identifier (``MPID'')''
to ``executing Firm ID (``EFID'')''. The Exchange proposes to also make
clear that User's may use other unique identifiers on Attributable
Orders in addition to, or in lieu of, EFIDs. More specifically, unique
identifiers are other identifiers chosen by a User and currently
comprised of a combination of four alpha characters appended to an
Attributable Order. These identifiers allow users to apply a more
granular, user-defined identifier on an Attributable Order to better
track their orders. The Exchange notes that Attributable Orders are
optional order designations and Users are currently able to allocate a
user-defined unique identifier for internal, order tracking purposes.
Additionally, the Exchange notes regardless of whether a User uses an
Attributable Order and regardless of whether a User determines to
display its EFID and/or another unique identifier on such Attributable
Order, there is no impact on the Exchange's audit trail, its ability to
surveil, its ability to match or clear trades, its ability to
disseminate real-time or near real time trade information or any risk
control functionality. Indeed, such identifiers on Attributable Orders
are for display purposes only. Even where a User determines to append a
unique identifier and not an EFID on an Attributable Order, the User's
EFID will still be associated with such order and the Exchange's system
will continue to be able to identify the Member and the clearing number
for the execution of the order. The Exchange further notes that the
proposed definition under Rule 21.1(c)(1) is consistent with the
definition of Attributable Orders on its affiliate, Cboe C2 Exchange,
Inc. (``C2'').\6\ The proposed rule change to Rule 21.1(c)(1) provides
Members flexibility in what identifiers it may use on Attributable
Orders and also makes clear that User's may use unique identifiers
other than EFIDs. The Exchange notes no substantive change is being
made by this rule change. The Exchange is merely updating its options
rules to reflect the accurate terminology relating to market
participant identifiers and clarifying the current ways in which a User
may designate an optional display feature.
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\6\ See C2 Rule 6.10.
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Lastly, the Exchange notes that although rule filing SR-CboeBZX-086
proposed to replace references to ``User'' with ``Member'', it
inadvertently failed to update this reference in Rule 21.1(k)(3). The
Exchange therefore seeks to correct this oversight and update the
reference to ``Users'' in Rule 21.1(k)(3) to ``Members''. No
substantive changes are being made by the proposed rule change.
[[Page 18900]]
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.\7\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \8\ 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) \9\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ Id.
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The Exchange believes its proposed rule change to update
inaccurately defined terms or references under Rule 21.1(c)(1), Rule
21.1(g), Rule 21.1(k)(3), and Rule 21.10(a) will provide consistency
and transparency in the rules and alleviate potential confusion,
thereby removing impediments to and perfecting the mechanism of a free
and open market and a national market system and protecting investors
and the public interest. Additionally, the Exchange believes that the
proposed change to the definition of Attributable Orders provides
consistency across the corresponding C2 Rule 6.10 and makes clear that
User's may use other unique identifiers, which, as discussed above, are
defined by the User and are currently comprised of a combination of
four alpha characters. As a result, the proposed change to this
definition provides further consistency and transparency in the
Exchange's rules and with that of its affiliate's rules and alleviates
potential confusion surrounding the designation of Attributable Orders,
which protects investors and the public interest. The Exchange also
believes that providing Users the option of using identifiers other
than EFIDs provides Users more flexibility and ability to better track
their orders. As noted above, the proposed filing does not
substantively change any Member abilities under the rules, nor does it
impact the Exchange's audit trail, its ability to surveil, its ability
to match or clear trades, its ability to disseminate real-time or near
real time trade information or any risk control functionality. The
proposed change merely corrects inadvertent oversights with respect to
terminology and makes explicit that a User may designate Attributable
Orders by using EFIDs and/or other unique identifiers, which is an
optional feature for display purposes only and that is currently
available to all Users.
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 proposed rule change
does not address competitive issues, but rather, as discussed above, is
merely intended to correct inadvertent uses of inaccurate or obsolete
terms, which will alleviate potential confusion.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not:
A. Significantly affect the protection of investors or the public
interest;
B. impose any significant burden on competition; and
C. 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 \10\ and
Rule 19b-4(f)(6) \11\ thereunder.\12\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 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) \13\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The
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 immediately update its rulebook to
reflect current terminology and reflect how Users can designate
Attributable Orders. The Exchange has represented that no substantive
changes are being made to its rules and further, that the proposed rule
change will have no impact on (i) its ability to surveil, match or
clear trades, and disseminate trade information; (ii) risk control
functionality; or (iii) the Exchange's audit trail. Accordingly, the
Commission waives the 30-day operative delay and designates the
proposed rule change operative upon filing.\15\
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will 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-2019-030 on the subject line.
[[Page 18901]]
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-2019-030. 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 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-2019-030 and should be submitted
on or before May 23, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-08914 Filed 5-1-19; 8:45 am]
BILLING CODE 8011-01-P