[Federal Register Volume 84, Number 92 (Monday, May 13, 2019)]
[Notices]
[Pages 20915-20917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09726]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85800; File No. SR-CboeEDGX-2019-026]


Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to Amend Rule 11.11 and Rule 11.16, as Well as Its Fee 
Schedule, To Delete References to the SWPB Routing Option

May 7, 2019.
    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 April 25, 2019, Cboe EDGX Exchange, Inc. (the ``Exchange'' or 
`` ``EDGX'' '') filed with the Securities and Exchange Commission (the 
``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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to 
amend Rule 11.11 and Rule 11.16, as well as its Fee Schedule, to delete 
references to the SWPB routing option. 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/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

[[Page 20916]]

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 11.11(g) (Routing Options) to 
delete the SWPB routing option under subparagraph (g)(10), as well as 
references to the SWPB routing option under Rule 11.16(e) (Limit Up-
Limit Down Mechanism). The Exchange also proposes to amend its fee 
schedule to delete references to the SWPB routing options under fee 
code SW and under footnote 8. The Exchange intends to implement the 
proposed rule changes on May 1, 2019.
    Currently, Rule 11.11(g) provides for a variety of routing away 
options under which the System \5\ will consider the quotations only of 
accessible Trading Centers. The term ``System routing table'' refers to 
the proprietary process for determining the specific trading venues to 
which the System routes orders and the order in which it routes 
them.\6\ Rule 11.13(g)(10) currently provides for SWPB as one of such 
routing options. SWPB is a routing option under which an order checks 
the System for available shares and then is sent to only Protected 
Quotations and only for displayed size. To the extent that any portion 
of the routed order is unexecuted, the remainder is posted to the EDGX 
Book at the order's limit price, unless otherwise instructed by the 
User.\7\ Also, if at the time of entry, there is an insufficient share 
quantity in the SWPB order to fulfill the displayed size of all 
Protected Quotations, then the entire SWPB order will be cancelled back 
to the User immediately. Currently, Rule 11.16 provides for the 
Regulation NMS Plan to Address Extraordinary Market Volatility (the 
``Plan'') during a pilot period. Specifically, Rule 11.16(e)(5)(D)(2) 
provides a description of how the two current SWP routing strategies, 
SWPA and SPWB, are handled in accordance with the Plan when an order to 
buy utilizing an SWP routing strategy has a limit price that is greater 
than the Upper Price Band or if a sell order utilizing an SWP routing 
strategy has a limit price that is less than the Lower Price Band. 
Additionally, current fee code SW is yielded on orders routed using 
SWPA or SWPB routing strategies, except for removal of liquidity from 
the New York Stock Exchange (``NYSE'').\8\ Current footnote 8 provides 
that fee code D will be yielded on orders routed using SWPA or SWPB if 
such strategy removes liquidity from NYSE.
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    \5\ The ``System'' is the Exchange's electronic communications 
and trading facility designated by the Board through which 
securities orders of Users are consolidated for ranking, execution 
and, when applicable, routing away. See Exchange Rule 1.5(cc).
    \6\ The Exchange reserves the right to maintain a different 
System routing table for different routing options and to modify the 
System routing table at any time without notice. See Exchange Rule 
11.11(g).
    \7\ The term ``User'' is defined as ``any Member or Sponsored 
Participant who is authorized to obtain access to the System 
pursuant to Rule 11.3.'' See Exchange Rule 1.5(ee).
    \8\ Orders that yield fee code SW receive a discounted fee of 
$0.0031 per share at or above $1.00 and 0.30% of Dollar Value per 
share below $1.00.
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    The Exchange has determined that because few Users elect the SWPB 
routing option, which often experiences no usage for extended periods 
of time, the current demand does not warrant the infrastructure and 
ongoing maintenance expenses required to support these products. 
Therefore, the Exchange now proposes to delete SWPB as a routing option 
under Rule 11.11(g)(10) and references to the SWPB routing option under 
Rule 11.16(e)(5)(D)(2). The Exchange proposes to amend Rule 11.11(g) 
formatting accordingly, changing the numbering of current subparagraphs 
(g)(11) through (g)(14) to subparagraphs (g)(10) through (g)(13). The 
Exchange also proposes to amend its fee schedule to delete references 
to the SWPB routing option under fee code SW, as well as under footnote 
8. The Exchange notes that Users seeking to route only to Protected 
Quotations for displayed size may use the other SWP routing option, 
SWPA.\9\
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    \9\ See Exchange Rule 11.11(g)(9).
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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.\10\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \11\ 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) \12\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ Id.
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    In particular, The Exchange does not believe that this proposal 
will permit unfair discrimination among customers, brokers, or dealers 
because the SWPB routing options will no longer be available to all 
Users. Also, the Exchange believes the proposed rule change to remove 
references to SWPB will remove impediments to the mechanism of a free 
and open market, thereby protecting investors and the public interest. 
As stated, the Exchange noted that few Users elect the SWPB routing 
option and has determined that the current demand does not warrant the 
infrastructure and ongoing maintenance expense required to support 
these products. Therefore, the Exchange is discontinuing this routing 
option. The Exchange notes that routing through the Exchange is 
voluntary and Users are free to designate the alternative SWP routing 
option, SWPA, currently offered by the Exchange.\13\ In addition, the 
SWPB routing option is not a core product offering by the Exchange, nor 
is the Exchange required by the Act to offer such a product. By 
removing references to a routing option that will no longer be offered 
by the Exchange, the Exchange believes the proposed rule change will 
remove impediments to the mechanism of a free and open market and 
protect investors by providing investors with increased transparency 
regarding rules that reflect routing options currently available on the 
Exchange.
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    \13\ See supra note 9.

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[[Page 20917]]

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 to 
remove SWPB is not designed to address any competitive issues but 
rather to increase transparency by eliminating the SWPB routing option 
that is to be discontinued by the Exchange.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \14\ and Rule 19b-4(f)(6) \15\ thereunder. 
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)(iii) of the Act \16\ and Rule 19b-4(f)(6) \17\ 
thereunder.
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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 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 
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 the filing. However, 
Rule 19b-4(f)(6)(iii) \18\ 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 asked the 
Commission to waive the 30-day operative delay. In support of its 
waiver request, the Exchange stated its belief that waiving the 
operative delay would allow the Exchange to modify its rules in a 
timely manner by eliminating rules that account for a service the 
Exchange intends to discontinue on May 1, 2019. The Commission believes 
that waiver of the operative delay is consistent with the protection of 
investors and the public interest, and accordingly, the Commission 
hereby waives the 30-day operative delay and designates the proposed 
rule change operative upon filing.\19\
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    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ 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. 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-CboeEDGX-2019-026 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-CboeEDGX-2019-026. 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-CboeEDGX-2019-026 and should be 
submitted on or before June 3, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-09726 Filed 5-10-19; 8:45 am]
 BILLING CODE 8011-01-P