Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices 64397 

25 17 CFR 200.30–3(a)(12). 

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). 

5See Exchange Rule 1.5(ee). The term ‘‘User’’ 

means any Member or Sponsored Participant who 

is authorized to obtain access to the System 

pursuant to Rule 11.3. As discussed below, the 

Exchange is proposing to replace references to 

‘‘Users’’ in Rule 21.16 with ‘‘Member’’. 

6See infra discussion accompanying footnotes 6– 

7 [sic]. 7See Securities Exchange Act Release No. 83214 

(May 11, 2018), 83 FR 22796 (May 16, 2018) (SR– 

C2–2018–005). 

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 NSCC and on DTCC’s website 

(http://dtcc.com/legal/sec-rulefilings.aspx). 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–NSCC– 

2018–012 and should be submitted on 

or before January 4, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27081 Filed 12–13–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84777; File No. SRCboeBZX–2018–086] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change Relating To 

Amend Its Provision Related to Its Risk 

Monitor Mechanism 

December 10, 2018. 

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 November 

29, 2018, 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. 

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 

amend its provision related to its Risk 

Monitor Mechanism. 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/CBOELegal

RegulatoryHome.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 

The Exchange proposes to amend 

Rule 21.16 which governs the Risk 

Monitor Mechanism. 

Background 

By way of background, the Risk 

Monitor Mechanism providers Users 5

with the ability to manage their order 

and execution risk. Particularly, Rule 

21.16 provides that the System will 

maintain a counting program for each 

User. A User may configure a single 

counting program or multiple counting 

programs to govern its trading activity 

(i.e., on a per port basis). The counting 

program counts executions, contract 

volume and notional value, within a 

specified time period established by 

each User (‘‘specified time period’’) and 

on an absolute basis for the trading day 

(‘‘absolute limits’’). The specified time 

period will commence for an option 

when a transaction occurs in any series 

in such option. The counting program 

will also count a User’s executions, 

contract volume and notional value 

across all options which a User trades 

(‘‘Firm Category’’). When the system 

determines that a User’s Specified 

Engagement Trigger (i.e., a volume 

trigger, notional trigger, count trigger 

and percentage trigger) has reached its 

established limit, the Risk Monitor 

Mechanism cancels or rejects such 

User’s orders or quotes 6 in all series of 

the class and cancels or rejects any 

additional orders or quotes from the 

User in the class until the counting 

program resets. 

Proposed Rule Change 

The Exchange proposes to amend 

Rule 21.16 to (i) adopt the Risk Monitor 

Mechanism rule language used by its 

affiliated exchange, Cboe C2 Exchange, 

Inc. (‘‘C2’’) (ii) provide the ability for 

Users [sic] to configure limits applicable 

to a group of EFIDs, and (iii) adopt a 

new a new risk parameter. 

Rule Harmonization 

First, the Exchange proposes to 

harmonize its Risk Monitor Mechanism 

Rule to that of its affiliated Exchange, 

C2. Particularly, C2 Rule 6.14 governs, 

among other things, its Risk Monitor 

Mechanism functionality. The Exchange 

notes the functionality of the Risk 

Monitor Mechanism is substantively the 

same as the Risk Monitor Mechanism on 

BZX. Indeed, the Exchange notes that 

C2 just recently adopted Rule 6.14 in 

connection with the technology 

migration of C2 onto the options 

platform of EDGX, and at such time 

conformed its previous Risk Monitor 

Mechanism functionality to the 

functionality that already existed on 

BZX.7 Although the functionality is 

substantively the same, the rule 

structure and terminology used in the 

BZX and C2 rules differ. The Exchange 

wishes to provide harmonization with 

respect to this rule across the two 

exchanges and accordingly proposes to 


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8The Exchange notes that it is not proposing to 

adopt subparagraph (c)(5)(E) of C2 Rule 6.14 as such 

provision relates to complex orders, which 

functionality the Exchange currently does not offer. 

9See Exchange Rule 1.5(n). The term ‘‘Member’’ 

shall mean any registered broker or dealer that has 

been admitted to membership in the Exchange. A 

Member will have the status of a ‘‘member’’ of the 

Exchange as that term is defined in Section 3(a)(3) 

of the Act. Membership may be granted to a sole 

proprietor, partnership, corporation, limited 

liability company or other organization which is a 

registered broker or dealer pursuant to Section 15 

of the Act, and which has been approved by the 

Exchange. The Exchange notes that corresponding 

C2 Rule 6.14(c)(5) will use the term ‘‘TPH’’, as 

‘‘Member’’ is not a defined term used by C2. 10See Cboe Options Rule 8.18. 

11The Exchange notes that currently EDGX’s [sic] 

rules refer only to the term ‘‘MPID’’, which is a 

Member’s market participant identifier used for 

equities trading. The Exchange does not utilize 

MPIDs on its options platform and uses EFIDS 

instead. EFIDS are generally equivalent to MPIDs. 

12See subparagraph (b), (c) and (d) of proposed 

EDGX [sic] Rule 21.16. 

conform BZX Rule 21.16 to C2 Rule 

6.14(c)(5) (i.e., delete current Rule 21.16 

in its entirety with the exception of 

subparagraphs (d) and (e), which will be 

relocated as described below, and adopt 

in whole the language from the relevant 

provisions of C2 Rule 6.14).8 As noted 

above, the Exchange is also proposing 

substantive enhancements to its current 

functionality, which is described further 

below. The Exchange notes that C2 is 

simultaneously proposing the same Risk 

Monitor Mechanism enhancements and 

those enhancements are included in the 

new proposed conformed rule language. 

First, the Exchange notes that 

proposed Rule 21.16 will not use the 

term ‘‘User’’, and instead will use the 

term ‘‘Member’’.9 The Exchange notes 

that the definition of User is broader 

than Member, as it specifically captures 

Sponsored Participants. The Exchange 

believes ‘‘Member’’ is the more 

appropriate term to use with respect to 

the Risk Monitor Mechanism as the rule 

describes how the functionality works 

with respect to Members, and not 

necessarily Sponsored Participants. The 

Exchange notes that it currently does 

not have any Sponsored Participants, 

and to the extent it expects to have any 

in the future, it will revise the rule as 

needed to incorporate how the Risk 

Monitor Mechanism would function 

with respect to Sponsored Participants. 

The Exchange notes that ‘‘User’’ will be 

referred to herein as ‘‘Member’’. 

Next, in connection with adopting 

C2’s Risk Monitor Mechanism Rule 

language, the Exchange notes that it will 

be eliminating the term ‘‘class’’ and 

replacing it with ‘‘underlying’’. 

Specifically, the Exchange notes that the 

Risk Monitor Mechanism is configured 

to count the risk parameters (referred to 

as ‘‘Specified Engagement Triggers’’ in 

current BZX Rule 21.16) across 

underlying securities or indexes. As an 

example, any option related to Apple 

(AAPL), would be considered to have 

the same underlying. Accordingly, if a 

corporate action resulted in AAPL1, 

AAPL and APPL1 one [sic] would be 

considered to share the same underlying 

symbol AAPL. Only a single symbollevel rule for underlying AAPL would 

be configurable by the Risk Monitor 

Mechanism. The Exchange notes that 

the term ‘‘underlying’’ is also utilized in 

the Exchange’s technical specification 

documents. The Exchange therefore 

believes underlying is a more accurate 

term to use. 

The Exchange also intends to clarify 

and codify in the new rule language 

what occurs in the event a Member does 

not reactivate its ability to send quotes 

or orders after its configured risk 

parameter limits have been reached. 

Currently, BZX Rule 21.16 explains how 

a Member may reset its counting 

periods. The proposed rule language 

includes a provision that provides that 

if the Exchange cancels all of a 

Member’s quotes and orders resting in 

the Book, and the Member does not 

reactivate its ability to send quotes or 

orders, the block will be in effect only 

for the trading day that the Member 

reached its limits. The Exchange notes 

this is not a substantive change, but 

rather is current practice, and that its 

affiliated Exchange, Cboe Options, 

includes similar language in its rules.10

The Exchange believes adding this 

provision to the rules provides further 

transparency in its rules and reduces 

potential confusion as to what would 

happen in the situation where a Member 

fails to reset the counting program. 

In connection with adopting C2’s Risk 

Monitor Mechanism Rule language, the 

Exchange also proposes to include 

language regarding a reset limit. 

Particularly, C2 Rule 6.14(c)(5)(d)(iii) 

[sic] (which will be renumbered to C2 

Rule 6.14(c)(5)(d)(iv) [sic]) provides that 

the Exchange may restrict the number of 

Member underlying, EFID and EFID 

Group resets per second. The Exchange 

believes adding this provision to its 

rules provides transparency in the rules 

that the Exchange can impose such a 

restriction. The Exchange notes this is 

not a substantive change, but rather 

current practice. 

In connection with the harmonization 

of C2 Rue [sic] 6.14, the Exchange notes 

that certain terminology is also 

changing. For example, current BZX 

Rule 21.16, provides that the counting 

program counts a Member’s executions, 

contract volume and notional value 

across all options which a Member 

trades (‘‘Firm Category’’). Going 

forward, this concept will be restated to 

provide generally that the System will 

count the risk parameters across all 

underlyings of an EFID (‘‘EFID limit’’). 

The Exchange reiterates the concept is 

the same, but the language conforms to 

C2 rules and makes the rule easier to 

read. 

The Exchange also proposes to adopt 

a definition of EFID as it proposes to 

reference EFIDs in proposed BZX Rule 

21.16. Particularly, the Exchange 

proposes to add Rule 21.1(k) to define 

and describe EFIDs. Specifically, a 

Member may obtain one or more EFIDs 

from the Exchange (in a form and 

manner determined by the Exchange). 

The Exchange assigns an EFID to a 

Member, which the System uses to 

identify the Member and clearing 

number for the execution of orders and 

quotes submitted to the System with 

that EFID.11 Each EFID corresponds to a 

single Member and a single clearing 

number of a Clearing Member with the 

Clearing Corporation. A Member may 

obtain multiple EFIDs, which may be for 

the same or different clearing numbers. 

A Member may only identify for any of 

its EFIDs the clearing number of a 

Clearing Member that is a Designated 

Give Up or Guarantor of the Trading 

Permit Holder as set forth in Rule 21.12. 

[sic] A Member is able (in a form and 

manner determined by the Exchange) to 

designate which of its EFIDs may be 

used for each of its ports. If a Member 

submits an order or quote through a port 

with an EFID not enabled for that port, 

the System cancels or rejects the order 

or quote. The proposed rule change 

regarding EFIDs is not a substantive 

change but rather codifies current 

functionality and mirrors current C2 

Rule 6.8(b). The Exchange believes 

including a description of the use of 

EFIDs in the Rules adds transparency to 

the Rules. 

The Exchange also notes that the new 

harmonized rule language incorporates 

the use of the term ‘‘quote’’ and 

‘‘quotes’’.12 Currently, however, when 

describing what happens when a 

Specified Engagement Trigger is 

reached, Rule 21.16(b)(i) only references 

what happens to a Member’s ‘‘orders’’. 

The Exchange notes however, that the 

term ‘‘order’’ as is used in Rule 21.16 

was intended to capture both orders and 

quotes. Particularly, an ‘‘order’’ is 

defined as a firm commitment to buy or 

sell option contracts submitted to the 

System by a Member, and a ‘‘quote’’ is 

defined as a bid or offer entered by a 

Market-Maker as a firm order that 

updates the Market-Maker’s previous 


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13See BZX Rules 16.1(a)(42) and (51) and 21.1(c). 

14The Exchange notes that C2 is also proposing 

to add this provision to its C2 Rule 6.14 in order 

to provide further transparency in its rules 

governing the Risk Monitor Mechanism. 

15The Exchange notes that C2 is proposing to also 

add this provision to its C2 Rule 6.14 in order to 

provide further transparency in its rules governing 

the Risk Monitor Mechanism. 16An EFID may not belong to more than one EFID 

Group. The Exchange notes that the Members 

determine how many, if any, EFID Groups to 

establish and determine which EFIDs belong to a 

particular EFID Group, if any. 17See Cboe Options Rule 8.18. 

18See Cboe Options Rule 8.18, which provides 

that a Hybrid Market Maker or a TPH Organization 

may specify a maximum number of Quote Risk 

Monitor Mechanism (‘‘QRM’’) QRM Incidents on an 

Exchange-wide basis. 

19 15 U.S.C. 78f(b). 

20 15 U.S.C. 78f(b)(5). 

21 Id. 

22 15 U.S.C. 78f(b). 

23 15 U.S.C. 78f(b)(5). 

bid or offer, if any.13 Indeed, the 

Exchange notes that the proposed 

reference to ‘‘quote’’ and ‘‘quotes’’ is not 

a substantive change to how the Risk 

Monitor Mechanism currently works or 

will work going forward. Accordingly, 

the Exchange believes incorporating the 

term ‘‘quote’’ and ‘‘quotes’’ alleviates 

confusion and better reflects how the 

Risk Monitor Mechanism operates (i.e., 

both orders and quotes, as defined, can 

be affected). Similarly, the Exchange 

believes the proposal to eliminate the 

references to a ‘‘User’s order size’’, 

‘‘Market-Maker’s quote size’’ and 

‘‘displayed and non-displayed size’’, 

with respect to how the percentage 

trigger is calculated is not a substantive 

change. The Exchange notes the trigger 

is calculated the same on BZX and C2, 

and although proposed BZX Rule 

21.16(a)(iv) doesn’t reference orders and 

Market-Maker quotes in particular, the 

calculation will not be changing and the 

Exchange doesn’t believe a reference to 

orders and Market-Maker quote size in 

particular under this provision is 

necessary. Similarly, the Exchange does 

not believe maintaining a reference to 

‘‘displayed’’ and ‘‘non-displayed’’ size 

is necessary, as the Exchange believes 

the proposed language is broad enough 

to capture both types of orders. The 

Exchange also reiterates the absence of 

such references is not a substantive 

change and the calculation of the 

percentage trigger is not changing. 

As noted above, the Exchange is not 

proposing to eliminate subparagraphs 

(d) or (e) of current BZX Rule 21.16, but 

rather relocate these provisions. The 

Exchange proposes to first relocate the 

contents of current subparagraph (d) to 

new subparagraph (d)(vi) of proposed 

BZX Rule 21.16 and clarify that the 

proposed provision governs ‘‘other 

resets’’ (i.e., resets that are not a result 

from a limit being reached).14

Particularly, the provision provides the 

System will reset the counting period 

for absolute limits when a Member 

refreshes its risk limit thresholds. The 

System will also reset the counting 

program and commence a new specified 

time period when (i) a previous 

specified time period has expired and a 

transaction occurs in any series of an 

underlying or (ii) a Member refreshes its 

risk limit thresholds prior to the 

expiration of the specified time period. 

The Exchange proposes to keep this 

language as it provides transparency in 

the rules as to when other resets occur 

without limits being reached. Lastly, the 

Exchange notes that that current 

subparagraph (e) will be included under 

subparagraph (e) of the new proposed 

Rule 21.16. Particularly, ‘‘new’’ 

subparagraph (e) provides that a 

Member may also engage the Risk 

Monitor Mechanism to cancel resting 

bids and offers, as well as subsequent 

orders as set forth in BZX Rule 22.11.15

EFID Groups 

The Exchange next proposes to 

provide in the rules that in addition to 

underlying limits and EFID limits, the 

System will be able to count each of the 

risk parameters across all underlyings 

for a group of EFIDs (‘‘EFID 

Group’’)(‘‘EFID Group limit’’).16 Similar 

to when a underlying limit or EFID limit 

are reached, when a Member’s EFID 

Group limit is reached, the Risk Monitor 

Mechanism will cancel or reject such 

Member’s orders or quotes in all 

underlying and cancel or reject any 

additional orders or quotes from any 

EFID within that EFID Group in all 

underlyings until the counting program 

resets. The System will not accept new 

orders or quotes from any EFID within 

an EFID Group after an EFID Group 

limit is reached until the Member 

manually notifies the Trade Desk to 

reset the counting program for the EFID 

Group, unless the Member instructs the 

Exchange to permit it to reset the 

counting program by submitting an 

electronic message to the System. The 

Exchange believes each Member is in 

the best position to determine risk 

settings appropriate for its firm based on 

its trading activity and business needs 

and that it may be based on a single 

EFID or EFID Group(s). The Exchange 

notes that its affiliate Exchange, Cboe 

Exchange, Inc. (‘‘Cboe Options’’) 

similarly allows its members to set 

similar risk parameters at the acronymlevel (which is similar to an EFID) or 

firm level (similar to an EFID Group).17

New Risk Parameter 

The Exchange lastly proposes to adopt 

a new risk parameter. Specifically, 

under the proposed functionality, a 

Member may specify a maximum 

number of times that the risk parameters 

(i.e., volume, notional, count and/or 

percentage) are reached over a specified 

interval or absolute period (‘‘risk trips’’). 

When a risk trip limit has been reached, 

the Risk Monitor Mechanism will cancel 

or reject a Member’s orders or quotes 

pursuant to subparagraph (b) of Rule 

21.16. The Exchange notes that a similar 

risk parameter (i.e., a parameter based 

on the number of risk ‘‘incidents’’ that 

occur over a specified time) is available 

on its affiliate Exchange, Cboe 

Options.18 The Exchange believes the 

proposed changes to its Risk Monitor 

Mechanism rule sufficiently allows 

Members to adjust and adopt parameter 

inputs in accordance with their business 

models and risk management needs. 

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.19 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 20 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) 21 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

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.22 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 23 requirements that the rules of 

an exchange be designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 


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24 Id. 25See C2 Rule 6.8(b). The Exchange notes that 

proposed Rule 21.1(k)(2) does not include a cross 

reference to a rule regarding Designated Give Ups 

and Guarantors as BZX rules do not have a similar 

corresponding rule as C2 Rule 6.30. 

26See Cboe Options Rule 8.18. 

27See Cboe Options Rule 8.18. 

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) 24 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

First, the Exchange believes its 

proposal to harmonize Rule 21.16 to C2 

Rule 6.14 provides uniformity across 

affiliated exchange rules that govern the 

same functionality and makes the rule 

easier to read, which reduces potential 

confusion. The Exchange also proposes 

to mirror C2 Rule 6.14 because it 

believes consistent rules will increase 

the understanding of the Exchange’s 

operations for Members that are also 

participants on C2. As discussed above, 

notwithstanding the proposal to adopt 

new terminology and/or the absence of 

certain references, the Exchange intends 

no substantive changes to the meaning 

or application of Rule 21.16 other than 

what is described above with respect to 

EFID Groups and the new risk trips 

parameter. Particularly, the Exchange 

believes the adoption of the definition 

of ‘‘EFID’’ provides transparency in the 

rules and alleviates confusion, as the 

Exchange references EFIDs multiple 

times throughout proposed Rule 21.16 

and utilizes EFIDs generally on the 

Exchange with respect to its options 

platform. The Exchange notes the 

proposed definition is substantively the 

same as the definition of EFIDs under 

C2’s rules.25 The Exchange believes the 

use of ‘‘quote’’ and ‘‘quotes’’ also 

alleviates confusion as the current Risk 

Monitor Mechanism in fact affects both 

orders and quotes, as defined, and was 

intended to cover both a Member’s 

orders and Market Maker quotes. 

Similarly, the Exchange believes using 

the term ‘‘underlying’’ instead of ‘‘class’’ 

and ‘‘Member’’ instead of ‘‘user’’ 

alleviates potential confusion as the 

proposed terms more accurately reflect 

how the Risk Monitor Mechanism 

operates. 

The Exchange believes the rule 

changes to codify current practice 

alleviates potential confusion, provides 

transparency in the rules and makes the 

rules easier to read. For example, 

providing language regarding (i) a 

Member’s failure to reset or initiate a 

reset of the counting program and (ii) 

the Exchange’s ability to restrict resets, 

provides transparency in the rules as to 

what occurs in those situations, 

harmonizes rule language with that of 

the Exchange’s affiliated Exchanges, and 

reduces potential confusion. The 

alleviation of confusion removes 

impediments to, and perfects the 

mechanism of, a free and open market 

and a national market system, and, in 

general, protects investors and the 

public interest. 

The Exchange believes providing 

Members the ability to configure certain 

risk parameters across underlyings for 

an EFID Group is also appropriate 

because it permits a Member to protect 

itself from inadvertent exposure to 

excessive risk on an additional level 

(i.e., on an EFID group-level, not just 

underlying- or EFID-level). Reducing 

such risk will enable Members to enter 

quotes and orders with protection 

against inadvertent exposure to 

excessive risk, which in turn will 

benefit investors through increased 

liquidity for the execution of their 

orders. Such increased liquidity benefits 

investors because they may receive 

better prices and because it may lower 

volatility in the options market. The 

Exchange also believes each Member is 

in the best position to determine risk 

settings appropriate for its firm based on 

its trading activity and business needs 

and that that may be based on an EFID 

Group(s). Additionally, as discussed 

above, Cboe Options similarly allows its 

members to set risk parameters at the 

acronym-level (which is similar to an 

EFID) or firm-level (similar to an EFID 

Group).26

Lastly, the Exchange believes the 

proposal to adopt the new risk 

parameter based on number of times a 

risk parameter or group of risk 

parameters are reached will provide 

Members with an additional tool for 

managing risks. Furthermore, as noted 

above, the Exchange’s affiliated 

exchange offers similar functionality.27

Overall, the proposed rule change 

provides Members more protections that 

reduce the risks from potential system 

errors and market events. As a result, 

the proposed changes, including the 

new risk parameter for the Risk Monitor 

Mechanism, have the potential to 

promote just and equitable principles of 

trade. Additionally, the proposed 

changes apply to all Members. 

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. Rather, the 

Exchange believes that the proposed 

changes with respect to its Risk Monitor 

Mechanism help promote fair and 

orderly markets and provide clarity and 

transparency the Rule. For example, the 

proposed rule change adds an 

additional risk control parameter and 

flexibility to help further prevent 

potentially erroneous executions, which 

benefits all market participants. The 

proposed changes apply uniformly to all 

Members and the Exchange notes that 

the proposed changes apply to all 

quotes and orders in the same manner. 

Additionally, the Exchange does not 

believe that the proposed rule change 

will impose any burden on intermarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act because the 

proposed enhancements apply only to 

trading on the Exchange. Additionally, 

the Exchange notes that it is voluntary 

for the Members to determine whether 

to make use of the new enhancements 

of the Risk Monitor Mechanism. To the 

extent that the proposed changes may 

make the Exchange a more attractive 

trading venue for market participants on 

other exchanges, such market 

participants may elect to become 

Exchange market participants. 

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 


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Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices 64401 

28 15 U.S.C. 78s(b)(3)(A). 

29 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. 

30 17 CFR 240.19b–4(f)(6). 

31 17 CFR 240.19b–4(f)(6)(iii). 

32For 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). 33 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(2) and (f)(4). 

5Each capitalized term not otherwise defined 

herein has its respective meaning as set forth in the 

Fee Guide and the Rules, By-Laws and Organization 

Certificate of DTC (the ‘‘Rules’’), available at http:// 

www.dtcc.com/legal/rules-and-procedures.aspx. 

Act 28 and Rule 19b–4(f)(6) 

thereunder.29

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 30 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 31

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 to provide Members 

with additional tools and greater 

flexibility for managing their potential 

risk as soon as possible. Accordingly, 

the Commission believes that waiver of 

the 30-day operative delay is consistent 

with the protection of investors and the 

public interest. Therefore, the 

Commission hereby waives the 

operative delay and designates the 

proposal as operative upon filing.32

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 rule-comments@

sec.gov. Please include File Number SR– 

CboeBZX–2018–086 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–2018–086. 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–2018–086 and 

should be submitted on or before 

January 4, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27085 Filed 12–13–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84768; File No. SR–DTC– 

2018–011] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Amend 

the Guide to the DTC Fee Schedule 

December 10, 2018. 

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 November 

26, 2018, The Depository Trust 

Company (‘‘DTC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the clearing agency. DTC filed the 

proposed rule change pursuant to 

Section 19(b)(3)(A) of the Act 3 and 

Rules 19b–4(f)(2) and (f)(4) thereunder.4

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change consists of 

amendments to the Guide to the DTC 

Fee Schedule (‘‘Fee Guide’’) 5 in order to 

(i) simplify the pricing structure, (ii) 

align fees with the costs of services 

provided by DTC, and (iii) encourage 

Participant practices that promote 

efficient market behavior. The proposed 

changes would include: (A) Grouping 

certain fee line items for related or 

similar services under one fee line item, 

(B) deleting fees with little or no 

activity, (C) updating certain fees to 

reflect DTC’s costs in relation to the 

service, (D) decreasing certain fees in 

order to incentivize Participants to 

utilize certain DTC services that 

promote efficiency, both in the servicing 

of physical securities in the Custody 

Service and for the settlement of 

securities transactions at DTC, and (E) 

increasing a surcharge to discourage the 

late submission of certain underwriting 

documentation. In addition, the 

proposed rule change would also make 


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