[Federal Register Volume 84, Number 194 (Monday, October 7, 2019)]
[Notices]
[Pages 53520-53522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21728]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87189; File No. SR-CBOE-2019-069]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Move
the Rules in Chapter XII, Which Governs Margin Requirements, of the
Currently Effective Rulebook to Proposed Chapter 10 of the Shell
Structure for the Exchange's Rulebook
October 1, 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 September 30, 2019, Cboe Exchange, Inc. (the ``Exchange'' or
``Cboe Options'') 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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to move the Rules in Chapter XII, which governs margin requirements, of
the currently effective Rulebook (``current Rulebook'') to proposed
Chapter 10 of the shell structure for the Exchange's Rulebook that will
become effective upon the migration of the Exchange's trading platform
to the same system used by the Cboe Affiliated Exchanges (as defined
below) (``shell Rulebook''). 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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
In 2016, the Exchange's parent company, Cboe Global Markets, Inc.
(formerly named CBOE Holdings, Inc.) (``Cboe Global''), which is also
the parent company of Cboe C2 Exchange, Inc. (``C2''), acquired Cboe
EDGA Exchange, Inc. (``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX'' or
``EDGX Options''), Cboe BZX Exchange, Inc. (``BZX'' or ``BZX
Options''), and Cboe BYX Exchange, Inc. (``BYX'' and, together with
Cboe Options, C2, EDGX, EDGA, and BZX, the ``Cboe Affiliated
Exchanges''). The Cboe Affiliated
[[Page 53521]]
Exchanges are working to align certain system functionality, retaining
only intended differences, between the Cboe Affiliated Exchanges, in
the context of a technology migration. Cboe Options intends to migrate
its trading platform to the same system used by the Cboe Affiliated
Exchanges, which the Exchange expects to complete on October 7, 2019.
In connection with this technology migration, the Exchange has a shell
Rulebook that resides alongside its current Rulebook, which shell
Rulebook will contain the Rules that will be in place upon completion
of the Cboe Options technology migration.
The Exchange proposes to relocate current Chapter XII which governs
margin requirements, as well as current Rule 21.25 which governs margin
requirements specifically for Government security options, to proposed
Chapter 10 in the shell Rulebook. The Exchange notes that in addition
to relocating the margin requirement rules to proposed shell Chapter
10, the proposed rule change deletes the rules from the current
Rulebook. The proposed rule change relocates the rules as follows:
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Shell rule Current rule
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10.1 Margin............................ 12.1 General Rule.
10.2 Time Margin Must be Obtained...... 12.2 Time Margin Must be
Obtained.
10.3 Margin Requirements............... 12.3 Margin Requirements.
10.4 Portfolio Margin.................. 12.4 Portfolio Margin.
10.5 Determination of Value for Margin 12.5 Determination of Value for
Purposes. Margin Purposes.\5\
10.6 ``When Issued'' and ``When 12.7 ``When Issued'' and ``When
Distributed'' Securities. Distributed'' Securities.
10.7 Guaranteed Accounts............... 12.8 Guaranteed Accounts.
10.8 Meeting Margin Calls by 12.9 Meeting Margin Calls by
Liquidation Prohibited. Liquidation Prohibited.
10.9 Margin Required is Minimum........ 12.10 Margin Required is
Minimum.
10.10 Compliance with Margin 12.11 Compliance with Margin
Requirements of NYSE. Requirements of NYSE.
10.11 Daily Margin Records............. 12.12 Daily Margin Records.
10.12 Government Security Options 21.25 Margin Requirements.
Margin Requirements.
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The proposed changes are of a non-substantive nature and will not
amend the relocated rules other than to update their numbers, conform
paragraph structure and number/lettering format to that of the shell
Rulebook, and make cross-reference changes to shell rules. The Exchange
changes only the heading of shell Rule 10.12, as it believes that
without such change, shell Chapter 10 would be exceedingly confusing to
investors because shell Rule 10.2 could be easily conflated with shell
Rule 10.3.
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\5\ The Exchange notes that Rule 12.6 was deleted January 15,
1975.
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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.
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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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As stated, the proposed rule change makes no substantive changes to
the rules. The proposed rule change is merely intended to relocate the
Exchange's rules to the shell Rulebook and update their numbers,
paragraph structure, including number and lettering format, and cross-
references to conform to the shell Rulebook as a whole in anticipation
of the technology migration on October 7, 2019. It also changes one
rule heading so as to prevent investor confusion that would result from
having the same rule headings for multiple rules under a single
chapter. As such, the proposed rule change is designed 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, by
improving the way the Exchange's Rulebook is organized, making it
easier to read, and, particularly, helping market participants better
understand the rules of the Exchange, which will also result in less
burdensome and more efficient regulatory compliance.
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 not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change is not
intended as a competitive change, but rather, seeks to make non-
substantive rule changes in relocating the rules and updating cross-
references to shell rules in anticipation of the October 7, 2019
technology migration, as well as updating one rule heading as to
prevent investor confusion that would result from having rules with the
same headings under a single chapter. The Exchange also does not
believe that the proposed rule change will impose any undue burden on
competition because the relocated rule text is exactly the same as the
Exchange's current rules, all of which have all been previously filed
with the Commission.
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
[[Page 53522]]
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\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.
Because this proposal does not make any substantive changes to the
rules but only moves them into the shell Rulebook, the Commission
designates a shorter time under Rule 19b-4(f)(6)(iii) by waiving the
five business prefiling period for this proposal.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \11\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \12\ 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. The
Exchange believes that waiver of the operative delay is appropriate
because, as the Exchange discussed above, its proposal does not make
any substantive changes to the Exchange Rules, but merely relocates
Chapter XII, which governs margin requirements, to the shell Rulebook
that the Exchange wishes to maintain post migration. Accordingly, its
proposal is designed to preserve its hearings and review process rules
after October 7, 2019. The Commission believes that waiver of the 30-
day operative delay is consistent with the protection of investors and
the public interest because the proposal does not raise any new or
novel issues and makes only non-substantive changes to the rules.
Therefore, the Commission hereby waives the operative delay and
designates the proposal as operative upon filing.\13\
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ 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 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 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-CBOE-2019-069 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-CBOE-2019-069.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-CBOE-2019-069 and should be submitted on
or before October 28, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-21728 Filed 10-4-19; 8:45 am]
BILLING CODE 8011-01-P