[Federal Register Volume 84, Number 109 (Thursday, June 6, 2019)]
[Notices]
[Pages 26496-26498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11804]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85985; File No. SR-CboeBZX-2019-046]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Amending
Rule 21.7 Concerning Openings Following Trading Halts
May 31, 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 May 22, 2019, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') 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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX Options'')
proposes to amend Rule 21.7. 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.
[[Page 26497]]
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 proposed rule change harmonizes how the opening auction process
will be used following all trading halts. Currently, the Exchange opens
trading following a Regulatory Halt (as defined below) in a different
manner than it opens trading following a non-Regulatory Halt.
Specifically, current Rule 21.7(a) provides that the Exchange will
accept market and limit orders and quotes for inclusion in the opening
process (the ``Opening Process'') immediately upon trading being halted
in an option series due to the primary listing market for the
applicable underlying security declaring a regulatory trading halt,
suspension, or pause with respect to such security (a ``Regulatory
Halt''), with respect to equity options. For equity options, where a
User has entered instructions not to cancel its open orders upon a halt
pursuant to Rule 20.3(b), such orders will be queued for participation
in the Opening Process for a Regulatory Halt or will be cancelled for a
halt that is not a Regulatory Halt. Where trading is halted pursuant to
Rule 20.3, but it is not due to a Regulatory Halt, there will be no
Order Entry Period and trading shall be resumed upon the determination
by the Exchange that the conditions which led to the halt are no longer
present or that the interests of a fair and orderly market are best
served by a resumption of trading.
The Exchange has determined to eliminate the distinction between
how the opening auction process applies following a Regulatory Halt and
a non-Regulatory Halt. The proposed rule change provides that the
opening auction process following any trading halt will apply in the
manner it currently applies following a Regulatory Halt. In other
words, following a non-Regulatory Halt, there will be an Order Entry
Period that begins immediately when the Exchange halts trading in a
class. Additionally, in the event of a non-Regulatory Halt, the System
will queue a User's orders and quotes resting on the book at the time
of the trading halt for participation in the Opening Process following
the trading halt, unless the User entered instructions to cancels its
resting orders and quotes. This will provide Users with the ability to
decide how its resting orders and quotes should be handled in the event
of a non-Regulatory Halt, as they are currently able to do in the event
of a Regulatory Halt. The Exchange also believes elimination of this
distinction will eliminate potential investor confusion regarding how
the System will handle orders and quotes in the event of a trading
halt.\5\
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\5\ The proposed rule change also makes conforming changes
throughout Rule 21.7, and other nonsubstantive changes to Rule 21.7.
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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.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ 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) \8\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. In particular, the proposed rule change will
protect investors by eliminating potential confusion regarding how the
Exchange will open series following trading halts, and by providing
Users with flexibility regarding how the System will handle their
orders and quotes following a non-Regulatory Halt (as they currently
have following a Regulatory Halt).
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
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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
will not impose any burden on intramarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act. All
Users will have the same flexibility regarding how the System will
handle their orders and quotes following non-Regulatory Halts, which is
the same flexibility currently available to Users following Regulatory
Halts. If a User wants its orders and quotes to be handled following a
non-Regulatory Halt in the manner they are today, that User can
instruct the Exchange to do so. The proposed rule change will not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The proposed
rule change only impacts how the Exchange will open series following a
non-Regulatory Halt. The proposed change is not intended to be a
competitive change, but rather to provide Users with flexibility with
respect to the handling of their orders and quotes following a non-
Regulatory Halt.
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: (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 \9\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 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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[[Page 26498]]
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-2019-046 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-2019-046. 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-2019-046 and should be submitted
on or before June 27, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-11804 Filed 6-5-19; 8:45 am]
BILLING CODE 8011-01-P