[Federal Register Volume 85, Number 21 (Friday, January 31, 2020)]
[Notices]
[Pages 5764-5766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01781]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88044; File No. SR-CboeBZX-2020-005]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Delete 
Partial Post Only at Limit Orders and References to Those Orders From 
the Rules

January 27, 2020.
    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 January 17, 2020, 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'') proposes to 
delete Partial Post Only at Limit Orders and references to those orders 
from the Rules. 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 delete Partial Post Only at Limit Orders 
and references to those orders from the Rules. Current Rule 11.9(c)(7) 
defines a Partial Post Only at Limit Order as an order to be ranked and 
executed on the Exchange pursuant to Rules 11.12 (regarding the 
priority of orders) and 11.13(a)(4) (regarding the execution and 
routing of orders) or cancelled, as appropriate, without routing away 
to another trading center except that the order will only remove 
liquidity from the BZX Book under the following circumstances:
     A Partial Post Only at Limit Order will remove liquidity 
from the BZX Book up to the full size of the order if, at the time of 
receipt, it can be executed at prices better than its limit price 
(i.e., price improvement).
     Regardless of any liquidity removed from the BZX Book 
under the circumstances described in the previous bulleted paragraph, a 
User may enter a Partial Post Only at Limit Order instructing the 
Exchange to also remove liquidity from the BZX Book at the order's 
limit price up to a designated percentage of the remaining size of the 
order after any execution pursuant to the previous bulleted paragraph 
(``Maximum Remove Percentage'') if, after removing such liquidity at 
the order's limit price, the remainder of such order can then post to 
the BZX Book. If no Maximum Remove Percentage is entered, such order 
will only remove liquidity to the extent such order will obtain price 
improvement as described in the previous bulleted paragraph.
    A Partial Post Only at Limit Order will be subject to the price 
sliding process as set forth in Rule 11.9(g)

[[Page 5765]]

unless a User has entered instructions not to use the price sliding 
process.
    The Exchange proposes to delete Partial Post Only at Limit Order 
from the list of order types in Rule 11.9(c)(7) and references to that 
order type in Rules 11.1(a), 11.9(c)(10), 11.9(g)(1)(D), 11.9(g)(2)(D), 
11.13(b)(4)(C), and 11.23(a)(8)(C)(iv).\5\ The Exchange notes that use 
of Partial Post Only at Limit Orders is voluntary, and there is 
currently limited demand for this order type. Indeed, in December 2019, 
fewer than five Users submitted Partial Post Only at Limit Orders. 
Eliminating this order type would therefore allow the Exchange to 
reduce the complexity of its trading systems, without any significant 
impact on members and investors. Additionally, the Exchange will 
continue to offer a variety of other order types and functionality that 
provide Users with similar opportunities for trading, including BZX 
Post Only Orders offered pursuant to Rule 11.9(c)(6), which similarly 
allow the User to identify their orders as being willing to remove 
liquidity from the BZX Book in specified circumstances.
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    \5\ The proposed rule change renumbers current Rule 
11.23(a)(8)(C)(v) to become Rule 11.23(a)(8)(C)(iv).
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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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    In particular, the Exchange believes that eliminating Partial Post 
Only at Limit Orders will remove impediments to and perfect a national 
market system by reducing the complexity of its orders types, and 
simplifying the functionality offered to members and investors. The 
Exchange also believes that eliminating this order type is consistent 
with the public interest and the protection of investors given the 
minimal demand for and use of this order type. Further, the proposed 
rule change may remove impediments to and perfect the mechanism of a 
free and open market and national market system and protect investors 
by allowing the Exchange to reduce the overall complexity of its 
trading systems and reallocate System capacity and resources to more 
frequently used functionality. The Exchange does not believe 
elimination of this order type will harm investors, as use of this 
order type is voluntary, and the Exchange will continue to offer other 
similar order types, including BZX Post Only Orders. Additionally, the 
Exchange believes that deleting corresponding references to this order 
type in the Rules will further remove impediments to and perfect and 
the mechanism of a free and open market furthering the goal of 
transparency and clarity in the Exchange's Rules regarding the 
availability of order types.

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 is 
not designed to address any competitive issues, but rather to remove 
order functionality that is infrequently used. Additionally, as noted 
above, the use of this order type is voluntary, and the Exchange will 
continue to offer other similar order types.

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) 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. 
The Exchange has satisfied this requirement.
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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 requested that the Commission waive the 30-day operative delay so 
that the proposed rule change may become operative upon filing. The 
Exchange states that waiver of the operative delay would allow it to 
promptly remove an infrequently used order type, thereby reducing the 
overall complexity of its trading system. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest. For this reason, the Commission 
hereby waives the 30-day operative delay and designates the proposed 
rule change 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:

[[Page 5766]]

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-2020-005 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-2020-005. 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-2020-005 and should be submitted 
on or before February 21, 2020.

    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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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-01781 Filed 1-30-20; 8:45 am]
 BILLING CODE 8011-01-P