Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices 67785 

32 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 83594 

(July 5, 2018), 83 FR 32158. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 83919, 

83 FR 44083 (August 29, 2018). 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 84378, 

83 FR 51745 (October 12, 2018). 

8See letter from Kyle Murray, Assistant General 

Counsel, Cboe Global Markets, Inc. to Brent J. 

Fields, Secretary, Commission, dated November 16, 

2018. 

9 15 U.S.C. 78s(b)(2). 

10 Id. 

11 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.32

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28378 Filed 12–28–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84948; File No. SRCboeBZX–2018–044] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of 

Designation of a Longer Period for 

Commission Action on Proceedings To 

Determine Whether To Approve or 

Disapprove a Proposed Rule Change, 

as Modified by Amendment No. 1, To 

Amend BZX Rule 14.11(c) (Index Fund 

Shares) 

December 21, 2018. 

On June 21, 2018, Cboe BZX 

Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to amend BZX Rule 14.11(c) to 

permit either the portfolio holdings of a 

series of Index Fund Shares or the index 

underlying a series of Index Fund 

Shares to satisfy the listing standards 

under BZX Rules 14.11(c)(3), (4), and 

(5). The proposed rule change was 

published for comment in the Federal 

Register on July 11, 2018.3 On August 

23, 2018, pursuant to Section 19(b)(2) of 

the Act,4 the Commission designated a 

longer period within which to approve 

the proposed rule change, disapprove 

the proposed rule change, or institute 

proceedings to determine whether to 

approve or disapprove the proposed 

rule change.5 On September 28, 2018, 

the Exchange filed Amendment No. 1 to 

the proposed rule change, which 

amended and replaced the proposed 

rule change as originally filed. On 

October 5, 2018, the Commission 

published notice of Amendment No. 1 

and instituted proceedings pursuant to 

Section 19(b)(2)(B) of the Act 6 to 

determine whether to approve or 

disapprove the proposed rule change, as 

modified by Amendment No. 1.7 The 

Commission has received one comment 

letter on the proposed rule change.8

Section 19(b)(2) of the Act 9 provides 

that, after initiating disapproval 

proceedings, the Commission shall issue 

an order approving or disapproving the 

proposed rule change not later than 180 

days after the date of publication of 

notice of filing of the proposed rule 

change. The Commission may extend 

the period for issuing an order 

approving or disapproving the proposed 

rule change, however, by not more than 

60 days if the Commission determines 

that a longer period is appropriate and 

publishes the reasons for such 

determination. The proposed rule 

change was published for notice and 

comment in the Federal Register on July 

11, 2018. January 7, 2019 is 180 days 

from that date, and March 8, 2019 is 240 

days from that date. 

The Commission finds it appropriate 

to designate a longer period within 

which to issue an order approving or 

disapproving the proposed rule change 

so that it has sufficient time to consider 

the proposed rule change, as modified 

by Amendment No. 1. Accordingly, the 

Commission, pursuant to Section 

19(b)(2) of the Act,10 designates March 

8, 2019 as the date by which the 

Commission shall either approve or 

disapprove the proposed rule change, as 

modified by Amendment No. 1 (File No. 

SR–CboeBZX–2018–044). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28379 Filed 12–28–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84929; File No. SR– 

CboeEDGX–2018–060] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change Relating To 

Discontinue Bulk Order Functionality 

and Implement Bulk Message 

Functionality, and Make Other 

Nonsubstantive Changes 

December 21, 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 December 

13, 2018, Cboe EDGX Exchange, Inc. 

(the ‘‘Exchange’’ or ‘‘EDGX’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. 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 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://www.cboe.com/ 

AboutCBOE/CBOELegalRegulatory

Home.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. 

(‘‘Cboe Global’’), which is the parent 


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3See Cboe Options Rule 1.1(ppp). 

4See Cboe Options Rule 6.14B (which describes 

how the Exchange routes orders (specifically 

intermarket sweep orders) but not quotes routed to 

other exchanges); see also Nyse Arca, LLC (‘‘Arca’’) 

Rule 6.37–O(a)(3)(D) (which states quotes do not 

route). 

5The Exchange understands this is common 

practice by Market-Makers throughout the industry, 

and is consistent with Cboe Options functionality, 

which cancels all unexecuted resting Market-Maker 

quotes at the close of each trading day. 

Additionally, it is consistent with Market-Makers’ 

obligation to update market quotations in response 

to changed market conditions. See Rule 22.5(a)(5); 

see also Cboe Options Rule 8.7(b)(iii). 

6See Securities Exchange Act Release No. 82741 

(February 20, 2018), 83 FR 8306 (February 26, 2018) 

(SR–CboeEDGX–2018–005). 

7See Rule 21.1(d)(8) for the definition of ‘‘Post 

Only Orders.’’ 

8See Rule 21.1(f)(3) for the definition of the 

‘‘Day’’ Time-in-Force. 

9See Rule 21.1(f)(1) for the definition of the GTD 

Time-in-Force. 

10See current Rule 21.1(j)(3) for the current 

definition of ‘‘bulk order ports.’’ Pursuant to Rule 

21.1(j)(3)(C), Users may also submit auction 

responses through bulk order ports, and will 

continue to be able to submit auction responses 

through bulk ports. 

11See Rule 21.1(d)(8), which provides that an 

order with a Post Only instruction may not route 

away to another exchange. 

12See supra note 8. 

13See supra note 4 (the Exchange adopted bulk 

order functionality to simulate quoting 

functionality). 

14Proposed Rule 16.1(a)(4) defines a bulk 

message as a bid or offer included in a single 

electronic message a User submits to the Exchange 

in which the User may enter, modify, or cancel up 

to an Exchange-specified number of bids and offers 

(which number the Exchange will announce via 

Exchange notice or publicly available technical 

specifications). This is similar to Cboe Options Rule 

1.1(ppp), which provides that electronic quotes may 

be updated in block quantities. The limit on bids 

and offers per message is a reasonable measure for 

the Exchange to use to manage message traffic and 

activity to protect the integrity of the System. 

Proposed Rule 16.1(a)(4) also states that a User may 

submit a bulk message through a bulk port as set 

forth in proposed Rule 21.1(j)(3), and that the 

System handles a bulk messages in the same 

manner as it handles an order or quote, unless the 

Rules specify otherwise. In other words, a bulk 

message will be treated as an order (or quote if 

submitted by a Market-Maker) pursuant to the 

Rules, including with respect to priority and 

allocation. The proposed rule change identifies the 

rule provisions pursuant to which bulk messages 

will be handled in a different manner. The 

proposed rule change also amends the paragraph 

numbering in Rule 16.1(a) to account for the 

addition of bulk messages in subparagraph (a)(4). 

15 In other words, a Market-Maker cannot 

designate one bulk message bid within a single 

message as Post Only and designate another bulk 

message bid within the same message as Book Only. 

16The proposed rule change also specifies that, 

subject to the restrictions in the proposed rule, 

Users may submit single orders through bulk ports 

in the same manner as they may submit single 

orders through any other type port, which is 

consistent with how Users may submit single orders 

to the Exchange through bulk order ports today. 

17See proposed Rule 21.1(j)(3)(C). The proposed 

rule change has no impact on the ability of Users 

to submit auction responses through bulk ports, and 

clarifies that Users may submit auction responses 

through bulk ports in the same manner as they may 

submit auction responses through any other type of 

port. 

company of Cboe Exchange, Inc. (‘‘Cboe 

Options’’) and Cboe C2 Exchange, Inc. 

(‘‘C2’’), acquired the Exchange, Cboe 

EDGA Exchange, Inc. (‘‘EDGA’’), Cboe 

BZX Exchange, Inc. (‘‘BZX or BZX 

Options’’), and Cboe BYX Exchange, 

Inc. (‘‘BYX’’ and, together with C2, Cboe 

Options, the Exchange, EDGA, and BZX, 

the ‘‘Cboe Affiliated Exchanges’’). The 

Cboe Affiliated 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 

technology to the same trading platform 

used by the Exchange, C2, and BZX 

Options in the fourth quarter of 2019. 

The proposal set forth below is intended 

to add certain functionality to the 

Exchange’s System that is more similar 

to functionality offered by Cboe Options 

in order to ultimately provide a 

consistent technology offering for 

market participants who interact with 

the Cboe Affiliated Exchanges. Although 

the Exchange intentionally offers certain 

features that differ from those offered by 

its affiliates and will continue to do so, 

the Exchange believes that offering 

similar functionality to the extent 

practicable will reduce potential 

confusion for Users. 

Cboe Options currently offers quoting 

functionality to Market-Makers, which 

permits Market-Makers to update their 

electronic quotes in block quantities.3

Quotes on Cboe Options do not route to 

other exchanges,4 and Market-Makers 

generally enter new quotes at the 

beginning of the trading day based onthen current market conditions.5 The 

Exchange currently offers bulk order 

functionality, which is intended to 

provide Users, and Market-Makers in 

particular, with a way to submit orders 

that simulate quoting functionality.6

However, while bulk order functionality 

simulates quoting functionality, bulk 

order functionality provides Users with 

a less efficient way to update multiple 

bids and offers. To update multiple bids 

and offers, a User must submit multiple 

messages at the same time, compared to 

quoting functionality, which generally 

permits a market participant to update 

multiple bids and offers in a single 

quote message. Specifically, a bulk 

order port is a dedicated logical port 

that provides Users with the ability to 

submit single and bulk order messages 

to enter, modify, or cancel orders 

designated as Post Only Orders 7 with a 

Time-in-Force of Day 8 or Good-til-Date 

(‘‘GTD’’) 9 with an expiration time on 

that trading day.10 Like quotes, bulk 

order messages do not route to other 

exchanges because they include a Post 

Only instruction.11 Use of the Day or 

GTD Time-in-Force is consistent with 

Market-Maker’s entry of new quotes at 

the beginning of each trading day.12

Unlike current Cboe Options quoting 

functionality, bulk order ports on the 

Exchange are available to all Users, not 

just Market-Makers. The Exchange 

makes bulk order ports available to all 

Users to encourage them to provide 

liquidity to the Exchange’s market. 

The Exchange proposes to replace 

bulk order functionality with bulk 

message functionality substantially 

similar to the quoting functionality 

available on Cboe Options. The 

proposed bulk message functionality is 

similar to but more efficient than 

currently available bulk order 

functionality.13 A ‘‘bulk port’’ is a 

dedicated logical port that, as proposed, 

would provide Users with the ability to 

submit: 

(1) Bulk messages,14 subject to the 

following: 

(a) A bulk message has a Time-inForce of Day; 

(b) a Market-Maker with an 

appointment in a series may designate 

a bulk message for that series as Post 

Only or Book Only (which Post Only or 

Book Only designation, as applicable, 

applies to all bulk message bids and 

offers within a single message),15 and 

other Users must designate a bulk 

message for that series as Post Only; and 

(c) a User may establish a default 

Match Trade Prevention (‘‘MTP’’) 

Modifier of MTP Cancel Newest 

(‘‘MCN’’), MTP Cancel Oldest (‘‘MCO’’), 

or MTP Cancel Both (‘‘MCB’’), and a 

default value of Attributable or NonAttributable, for a bulk port, each of 

which applies to all bulk messages 

submitted to the Exchange through that 

bulk port; 

(2) single orders in the same manner 

as Users may submit orders to the 

Exchange through any type of port,16

including designated with any Order 

Type and any Time-in-Force in Rule 

21.1(d) and (f), respectively, except a 

Market-Maker with an appointment in a 

series may designate an order for that 

series submitted through a bulk port 

only as Post Only or Book Only, and 

other Users must designate an order for 

that series submitted through a bulk 

port as Post Only; and 

(3) auction responses.17

Proposed Rule 21.1(j)(3)(A)(i) states 

that bulk messages have a Time-in-Force 

of Day. As discussed above, this is 

consistent with current Cboe Options 

quoting functionality, which cancels all 

resting quotes at the close of the trading 


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18See Rule 22.5(a)(5). 

19See supra notes 8 and 15. 

20 Incoming market-maker quotes on some 

options exchanges may execute against interest 

resting in the book (see, e.g., Arca Rule 6.37A– 

O(a)(3)), while on other options exchanges they may 

not (see, e.g., Box Options Exchange, LLC (‘‘BOX’’) 

Rule 8050, IM–8050–3). 

21See also Cboe Options Rule 6.14B; and Arca 

Rule 6.37A–O(a)(3)(D). 

22See Cboe Options Rule 6.53(v). 

23The ABBO means the best bid (offer) 

disseminated by other exchanges. 

24See Rule 21.1(i). Pursuant to the Price Adjust 

process, the System ranks and displays a buy (sell) 

order that, at the time of entry, would lock a 

Protected Quotation of the Exchange or another 

Exchange at one minimum price increment below 

(above) the current NBO (NBB). The System 

executes a Book Only order against orders and 

quotes and cancels any unexecuted portion if 

displaying the order on the Book would create a 

violation of Rule 27.3, and the System rejects a Post 

Only order that locks or crosses the opposite side 

Exchange best bid or offer (‘‘BBO’’) or if displaying 

the order on the Book would create a violation of 

Rule 27.3). Bulk messages will not be eligible for 

the Price Adjust process, and thus will be handled 

similar to an order not subject to the Price Adjust 

process. See proposed Rule 21.1(i) (which clarifies 

that the Price Adjust Process will not apply to bulk 

messages). 

25See Chapter XXVII of the Rules; see also 

Options Order Protection and Locked/Crossed 

Market Plan (the ‘‘Linkage Plan’’). 

26See id. 

day. This is also consistent with a 

Market-Maker’s obligation to update its 

quotations in response to changed 

market conditions in its appointed 

classes.18 Unlike current bulk orders, 

the GTD Time-in-Force with an 

expiration time on that trading day will 

not be available for bulk messages. 

Users will continue to have the ability 

to manually cancel bulk messages at any 

time during the trading day, they will 

just not be able to have bulk messages 

automatically cancel at a specific time 

on that trading day. Additionally, Users 

may apply the GTD Order Type to 

orders submitted through a bulk port (as 

further discussed below) or other type of 

port. 

Unlike Cboe Options quoting 

functionality, which is only available to 

Cboe Options market-makers, the 

proposed bulk messages will be 

available to all Users (as bulk orders are 

today). While all Users will be able to 

use bulk messages (and may currently 

use bulk orders), the primary purpose of 

bulk orders and the proposed bulk 

messages has always been to encourage 

market-maker quoting on exchanges.19

The proposed rule change provides that 

a Market-Maker with an appointment in 

a series may designate a bulk message 

for that series as ‘‘Post Only’’ or ‘‘Book 

Only.’’ This will provide Exchange 

Market-Makers with functionality 

substantially similar to Cboe Options 

quoting functionality currently available 

to Cboe Options market-makers, which 

permits Market-Makers’ incoming 

quotes to execute against resting orders 

and quotes, except against the resting 

quote of another Market-Maker (see 

discussion below).20 The Exchange 

believes permitting Market-Makers to 

use bulk messages to remove liquidity 

from the Book (if they so elect) will put 

Exchange Market-Makers on an even 

playing field as market-makers on other 

exchanges that offer quoting 

functionality. Additionally, MarketMakers are subject to various 

obligations, including obligations to 

provide two-sided quotes, to provide 

continuous quotes, and to trade at least 

75% of its contracts each quarter in 

appointed classes. The Exchange 

believes providing Market-Makers with 

flexibility to use the Post Only or Book 

Only instruction with respect to bulk 

messages will provide Market-Makers 

with additional tools to meet their 

obligations in a manner they deem 

appropriate. The Exchange further 

believes this may encourage liquidity 

providers to register as Market-Makers. 

The proposed rule change provides 

that other Users (i.e., non-MarketMakers or Market-Makers without an 

appointment in a series) must designate 

a bulk message for that series as ‘‘Post 

Only.’’ This is consistent with current 

bulk orders available to these Users, and 

will continue to provide Users with 

flexibility to avoid incurring a take fee 

if their intent is to add liquidity to the 

Book. The Exchange notes these Users 

may apply the Book Only instruction to 

orders submitted to the Exchange 

through other ports. The proposed rule 

change also amends Rule 21.9 to make 

clear that bulk messages (like current 

bulk orders) are not eligible for routing 

(which is consistent with the Order 

Types of Post Only and Book Only, 

which do not route to other options 

markets).21

The proposed rule change also 

permits Users to establish a default MTP 

Modifier of MCN, MCO, or MCB that 

would apply to all bulk messages 

submitted through a bulk port. Cboe 

Options currently offers a Market-Maker 

Trade Prevention Order, which would 

be cancelled if it would trade against a 

resting quote or order for the same 

Market-Maker, and also cancel the 

resting order or quote.22 This is 

equivalent to the MCB Modifier (except 

the MCB Modifier may be used by all 

Users rather than just Market-Makers). 

The proposed rule change provides 

Users with the ability to apply same 

trade prevention designation that is 

available for quotes on Cboe Options to 

bulk messages (MCB), as well as two 

additional MTP options (MCN and 

MCO) (the Exchange notes there is 

currently no trade prevention 

functionality equivalent to MCN or 

MCO available on Cboe Options for 

quotes). Allowing three MTP 

designations for bulk messages will 

provide Users with additional control 

over the circumstances in which their 

bulk messages (and resting orders 

(including bulk messages)) will interact 

with each other. The Exchange does not 

believe there is demand by Users for the 

MDC and MCS modifies (which are 

available on the Exchange for orders) for 

bulk messages (the Exchange notes there 

is currently no trade prevention 

functionality equivalent to MDC or MCS 

available on Cboe Options for quotes). 

The Exchange notes all Users may 

continue to apply all MTP Modifiers to 

orders submitted through a bulk port (as 

further discussed below) or any other 

type of port. 

Generally, the System will handle 

bulk messages in the same manner as it 

handles orders with the same Order 

Types and Times-in-Force that will be 

available for bulk messages, including 

prioritizing, displaying, and executing 

them pursuant to Rule 21.8. Proposed 

Rule 21.1(j)(3)(A)(iv) through (vi) adds 

detail regarding how the System will 

handle bulk messages and orders 

submitted through bulk ports. 

Specifically, proposed subparagraph 

(A)(iv) states the System will cancel or 

reject a Post Only bulk message bid 

(offer) with a price that locks or crosses 

the Exchange best offer (bid) or the ABO 

(ABB).23 This is consistent with how the 

System would handle a Post Only order 

not subject to the Price Adjust process.24

Pursuant to the Post Only instruction, 

an order (or bulk message as proposed) 

may not remove liquidity from the Book 

or route away to another Exchange. If a 

Post Only bulk message locked or 

crossed the best contra-side interest on 

the Exchange, the System would cancel 

it to prevent execution of the bulk 

message against the interest on the 

Exchange in accordance with the User’s 

instructions and to prevent the 

Exchange from displaying a locked or 

crossed market.25 Similarly, if a Post 

Only bulk message locked or crossed an 

away market, the System would cancel 

it since it cannot route in accordance 

with the User’s instructions and to 

prevent the Exchange’s dissemination of 

a locked or crossed market.26

Similarly, proposed subparagraph 

(A)(v) states the System will execute a 

Book Only bulk message bid (offer) that 

locks or crosses the ABO (ABB) against 

offers (bids) resting in the Book at prices 

the same as or better than the ABO 


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27See id. 

28See Cboe Options Rule 6.14(b) (if Cboe Options 

is not at the NBBO, the System rejects a quote back 

to a Market-Maker if the quote locks or crosses the 

NBBO, which is the ABBO) and (c) (if the Cboe 

Options System accepts a quote that locks or 

crosses the NBBO, it executes the quote against 

quotes and orders in the Cboe Options Book at the 

price(s) that is the same or better than the best price 

disseminated by an away exchange(s) up to the size 

available on the Exchange and cancels the 

remaining size if the quote’s price locks or crosses 

the ABBO or books any remaining size); see also 

Rule 6.37A–O(a)(3). 29See Cboe Options Rule 6.45(c). 

30See Cboe Options Regulatory Circular RG18– 

008 (March 6, 2018), which provides that each 

market-maker acronym may only have one quote 

(which is considered to be a two-sided quote) in 

each series at a time. An EFID is comparable to an 

acronym. Under Cboe Options rules, the term 

Market-Maker generally refers to an individual (and 

thus a person with a specific acronym), except as 

otherwise provided in the Rules. See, e.g., Cboe 

Options Rule 8.7(d)(ii)(B) (which provides that 

market-maker continuous electronic quoting 

obligations may be satisfied by market-makers 

either individually or collectively with marketmakers of the same TPH organization). The 

interpretation in the circular referenced above is 

consistent with this term and a Market-Maker’s 

obligations set forth in Rule 8.7 (e.g., market-Makers 

must contribute to the maintenance of a fair and 

orderly market, including by competing to improve 

markets, update quotes in response to changed 

market conditions, and price options contracts 

fairly). 

(ABB) and then cancels the unexecuted 

portion. This is consistent with how the 

System would handle a Book Only order 

not subject to the Price Adjust process. 

Pursuant to the Book Only instruction, 

an order (or bulk message as proposed) 

may not route away to another 

Exchange. If a Book Only bulk message 

locked or crossed an away market, the 

System would execute it to the extent it 

could against contra-side interest on the 

Exchange and then cancel it since it 

cannot route in accordance with the 

User’s instructions and to prevent the 

Exchange’s dissemination of a locked or 

crossed market.27 In addition to being 

similar to current Exchange Rules 

regarding the handling of Post Only and 

Book Only Orders not subject to the 

Price Adjust process, the Exchange 

notes that proposed subparagraphs 

(A)(iv) and (v) are substantially the same 

as another exchange’s handling rules 

applicable to quotes.28

Proposed subparagraph (A)(vi) states 

the System will cancel or reject a Book 

Only bulk message bid (offer) (or 

unexecuted portion) submitted by a 

Market-Maker with an appointment in 

the series through a bulk port if it would 

execute against a resting offer (bid) with 

a Capacity of M (Market-Maker). The 

options market is driven by MarketMaker quotes, and thus Market-Maker 

quotes are critical to provide liquidity to 

the market and contribute to price 

discovery for investors. The Exchange 

expects Market-Makers regularly to use 

bulk messages to input and update 

prices on multiple series of options at 

the same time. Market-Maker quotes are 

generally based on pricing models that 

rely on various factors, including the 

price of the underlying security and that 

security’s volatility. As these variables 

change, a Market-Maker’s pricing model 

automatically will enter updates to its 

bids and offers with bulk messages for 

some or all of an option’s series. 

Because Market-Makers may update 

bids and offers using bulk messages in 

multiple series at the same time, there 

can be a multitude of instances in which 

their bids and offers inadvertently 

interact with each other, which can lead 

to significant risk and exposure. This 

may occur, for example, when one 

Market-Maker’s price update system is 

faster than systems used by other 

Market-Makers. In this respect, a 

Market-Maker’s system that updates 

options prices microseconds faster than 

another Market-Maker’s system may 

lock or cross its bids (offers) against the 

other Market-Maker’s offers (bids) every 

time its bid (offer) adjusts to the offer 

(bid) of the second Market-Maker even 

if the second Market-Maker’s system 

was also in the process of updating that 

offer (bid). For example, assume MarketMakers A and B are both quoting $1.10– 

1.20 when the underlying moves, 

causing both each Market-Maker’s 

system to update its quotes to $1.20– 

1.30. By being microseconds faster, 

Market-Maker A’s system will send a 

bid of $1.20, which locks Market-Maker 

B’s offer prior to Market-Maker B’s offer 

updating, even though its system was 

also in the process of updating its offer. 

This could happen contemporaneously 

in a large number of series within the 

class, such that instead of locking one 

quote, Market-Maker A may lock 20 of 

Market-Maker B’s quotes. This may 

expose each Market-Maker to significant 

risk due to these unintended executions. 

The proposed rule change will protect 

Market-Makers from executions that 

occur due to technology disparities 

rather than the intention of MarketMakers to trade with one another at a 

particular price. As a result, MarketMaker quotes will continue to provide 

liquidity on the Book. This proposed 

functionality is similar to the quote-lock 

functionality available on Cboe 

Options.29 While that functionality 

permits locked quotes to execute against 

each other after a specified amount of 

time, it also provides market-makers 

with an opportunity to update their 

resting quotes, which would prevent 

execution of an incoming market-maker 

quote against a resting market-maker 

quote. As proposed, a Market-Maker 

bulk message (or order) will be rejected 

if it would execute against resting 

Market-Maker interest. The MarketMaker may resubmit its bulk message 

(or order) after being rejected, which 

would be able to rest in the Book if the 

Market-Maker repriced its resting bid or 

offer in the interim. Additionally, a 

Market-Maker may interact with resting 

Market-Maker interest by submitting an 

order to the Exchange through a 

different type of port. 

Proposed Rule 21.6(a) provides that a 

User may only enter one bid and one 

offer for a series per Executing Firm ID 

(‘‘EFID’’) per bulk port. The Exchange 

believes this will encourage Users to 

submit their best bids and offers in 

series, and thus provide displayed 

liquidity to the market and contribute to 

public price discovery. Note firms may 

have multiple EFIDs and multiple bulk 

ports, and thus will have the ability 

through separate ports or EFIDs to 

submit additional bids and offers using 

bulk messages in the same series if they 

choose. This provision is consistent 

with the rule interpretation of another 

exchange.30

In addition to permitting Users to 

submit bulk orders (which functionality 

the Exchange will discontinue and 

replace with bulk message 

functionality), current bulk order ports 

permit Users to submit single orders to 

the Exchange. To encourage Users that 

may not have quoting systems to 

provide liquidity to the Exchange, the 

proposed rule change will permit Users 

to continue to submit single orders to 

the Exchange through these ports, 

which are proposed to be renamed as 

bulk ports. Proposed Rule 21.1(j)(3)(B)(i) 

will permit Users to designate these 

orders with any Order Type and any 

Time-in-Force in Rule 21.1(d) and (f), 

respectively, subject to the Book Only 

and Post Only restrictions described 

below. This will provide Users with 

additional functionality that is available 

for single orders submitted through bulk 

ports today, and allow their liquidity to 

rest on the Exchange for multiple 

trading days, if Users so choose. This 

will also provide Users with additional 

control over the orders they use to 

provide liquidity to the Exchange 

through bulk ports. Proposed 

subparagraph (B)(i) imposes the same 

restrictions on the use of Book Only and 

Post Only for orders submitted through 

a bulk port that apply to bulk messages, 

as described above. Additionally, 

proposed subparagraph (B)(ii) imposes 

the same prohibition on Market-Maker 

orders submitted through bulk ports 

from removing resting Market-Maker 


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31See Rule 21.17(b). Orders submitted through 

bulk ports will be subject to the current order price 

protection mechanisms, such as limit fat finger 

check in Rule 21.17. The proposed rule change 

amends Rule 21.17(a) through (e) (and the 

introductory language to that rule) to make clear 

that the price protections and risk controls in those 

paragraphs will not be applicable to bulk messages. 

32See, e.g., Cboe Options Rule 6.14(a) and (b); 

Arca Rule 6.37A–O(a)(3). 

33See ‘‘cancel on reject’’ functionality in 

technical specifications available at http://

markets.cboe.com/us/options/support/technical/. 

34See, e.g., Cboe Options Rule 6.14(b); Arca Rule 

6.37A–O(a)(3)(C). 

35The Exchange notes that Market-Makers are not 

required to quote on the COB, and that complex 

quoting functionality is not currently available on 

Cboe Options. 

36See Cboe Options Rules 6.14A (describing the 

Hybrid Agency Liaison, which is similar to the Step 

Up Mechanism) and 6.74A (describing the 

Automated Improvement Mechanism, which is 

similar to the Bats Auction Mechanism). 37 15 U.S.C. 78f(b). 38 15 U.S.C. 78f(b)(5). 39 Id. 40See Cboe Options Rule 1.1(ppp), which 

provides that electronic quotes may be updated in 

block quantities. 

interest that applies to bulk messages, as 

described above. The Exchange believes 

it is appropriate for orders submitted 

through bulk ports be subject to the 

same restrictions on adding and 

removing liquidity as bulk messages 

submitted through bulk ports, so that 

orders submitted through bulk ports do 

not have an advantage over bulk 

messages, and vice versa. 

While liquidity providers are most 

commonly registered market-makers, 

other professional traders also provide 

liquidity to the options market, which 

contributes to price discovery. As a 

result, unlike other exchanges that 

restrict quoting functionality to marketmakers, the Exchange believes it is 

appropriate to make bulk messages 

available to all Users to encourage them 

to provide liquidity, which is critical to 

the Exchange’s market. Additionally, 

permitting orders to be submitted 

through bulk ports will continue to 

provide all liquidity providers with this 

functionality that is available today, as 

well as additional flexibility with 

respect to this functionality they may 

use to provide liquidity to the Exchange. 

The proposed rule change adds a 

price protection mechanism for bulk 

messages similar to the fat finger check 

the Exchange currently provides for 

orders. Proposed Rule 21.17(f) states the 

System cancels or rejects any bulk 

message bid (offer) above (below) the 

NBO (NBB) by more than a specified 

amount determined by the Exchange. 

This is similar to the fat finger check 

currently applicable to limit orders.31

Bulk messages that cross the NBBO by 

more than a specified amount are 

rejected as presumptively erroneous. 

This proposed check will not apply to 

bulk messages submitted prior to the 

conclusion of the Opening Process or 

when no NBBO is available. The 

Exchange believes it is appropriate to 

have the ability to not apply this check 

during the pre-open or opening rotation 

so that the check does not impact the 

determination of the opening price. The 

Exchange also believes it is appropriate 

to not apply this check when there is no 

NBBO, as the Exchange believes that is 

the most reliable measure against which 

to compare the price of the bulk 

message to determine its reasonability. 

The proposed change is similar to a 

quote price protection mechanism 

available at other options exchanges.32

Proposed Rule 21.17(g) states if, 

pursuant to the Rules, the System 

cancels or rejects a bulk message bid 

(offer) to update a resting bulk message 

bid (offer) submitted for the same EFID 

and bulk port, the System also cancels 

the resting bulk message bid (offer). The 

Exchange currently offers Users similar 

functionality for orders, which is 

optional.33 Pursuant to the proposed 

rule change, the System will always 

apply this protection to bulk messages. 

The Exchange believes this will operate 

as an additional safeguard that causes 

liquidity providers to re-evaluate their 

bids and offers in a series before 

attempting to update them again. 

Additionally, when a User submits a 

new bulk message, it is implicitly 

instructing the Exchange to cancel any 

resting bulk message in the same series. 

Thus, even if the new bulk message is 

rejected as a result of this proposed 

check, the implicit instruction to cancel 

the resting bulk message remains valid 

nonetheless. The proposed rule change 

is substantially similar to a risk control 

applicable to quotes available at another 

options exchange.34

The proposed rule change amends 

Rule 21.1(d), (f), and (g) to provide that 

eligible Order Types, Times in Force, 

and MTP Modifiers, respectively, are 

subject to the proposed restrictions in 

Rule 21.1(j) with respect to orders and 

bulk messages submitted through bulk 

ports, and clarify which Order Types, 

Times in Force, and MTP Modifiers are 

available and not available for bulk 

messages, as described above. The 

proposed rule change also amends the 

definitions of Orders, Order Types, 

Time in Force, and MTP Modifiers in 

Rule 21.1(c), (d), (f), and (g), 

respectively, in accordance with 

proposed Rule 21.1(j)(3)(A). 

Additionally, the proposed rule 

change amends Rule 21.20 to make clear 

that Users may not submit complex 

orders through bulk ports.35 The 

proposed rule change also amends Rules 

21.18 and 21.19 to clarify that bulk 

messages are not eligible for the Step Up 

Mechanism for Bats Auction 

Mechanism, respectively. Quotes are not 

eligible for submission in corresponding 

auction mechanisms on Cboe Options.36

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.37 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 38 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) 39 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 remove impediments to and 

perfect the mechanism of a free and 

open market because it provides Users, 

including Market-Makers and other 

liquidity providers, with enhanced 

functionality to allow them to provide 

liquidity to the market and update bids 

and offers in response to changed 

market conditions. While current bulk 

orders simulate quotes, Users must 

submit multiple messages in bulk to 

update bids and offers in multiple 

series. The proposed bulk messages will 

permit Users to update multiple bids 

and offers in block quantities in a single 

message, which will permit them to 

update bids and offers (for example, in 

response to changing market conditions) 

in a more efficient manner. The 

proposed ability to update bids and 

offers in block quantities is similar to 

that available on another options 

exchange.40

With respect to all Users, the 

proposed bulk messages are 


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41Other options exchanges only permit marketmakers to submit quotes. See, e.g., Cboe Options 

Rules 1.1(ppp) and 8.3(c); Arca Rule 6.37A–O(a)(1). 

42See id. and Box Options Exchange, LLC 

(‘‘BOX’’) Rule 8050, IM–8050–3. 

43See Cboe Options Rule 6.45(c). 

44See Cboe Options Rule 6.14(b) and (c); see also 

Rule 6.37A–O(a)(3). 

substantially similar to the current bulk 

orders available through bulk order 

ports—Users will be able to submit bulk 

messages that are Day and Post Only. 

However, the proposed rule change will 

permit them to do so in a single bulk 

message rather than in multiple 

messages. While the use of the GTD 

Time-in-Force will not be permitted for 

bulk messages as it currently is for bulk 

orders, Users may achieve the same 

result as GTD for their bulk messages by 

manually cancelling a bulk message at 

a specified time during the trading 

day—the proposed rule change merely 

does not provide a means for automatic 

cancellation of bulk messages at a 

specific time during the trading day. 

Additionally, Users may continue to 

apply GTD to orders submitted to the 

Exchange through bulk ports and other 

ports. 

The Exchange believes the proposed 

rule change will permit liquidity 

providers to more efficiently update 

their resting bids and offers, which may 

help them manage their risk exposure 

when, for example, updating their bids 

and offers in response to changing 

market conditions. The Exchange 

believes this will continue to encourage 

all Users to provide liquidity on the 

Exchange and avoid incurring a taker 

fee if their intent is to submit bids and 

offers to add liquidity to the Book. As 

a result, this may increase liquidity, 

resulting in more trading opportunities 

and tighter spreads, which benefits all 

investors. The Exchange notes the 

proposed rule change provides Users 

with additional flexibility by permitting 

certain MTP Modifiers to be applied to 

bulk messages to prevent their orders 

and bulk messages from trading against 

each other. The MTP Modifiers not 

available for bulk messages will 

continue to be available for Users on 

orders submitted through bulk ports and 

other ports. Unlike other options 

exchanges that limit the use of quoting 

functionality to market-makers, the 

proposed rule change will permit all 

Users to submit bulk messages. 

Additionally, the proposed rule change 

to permit Users to continue to submit 

orders (subject to restrictions on the 

Post Only and Book Only instructions, 

as discussed above) through bulk ports 

will encourage Users that may not have 

quoting systems to provide liquidity to 

the Exchange by submitting single 

orders through bulk ports. This is also 

consistent with current bulk orders, 

which permits Users to submit both 

single and bulk orders through bulk 

order ports. 

The proposed rule change further 

removes impediments to and perfects 

the mechanism of a free and open 

market and a national market system by 

providing appointed Market-Makers 

with the ability to submit Book Only 

bulk messages, because it will align 

functionality available to appointed 

Market-Makers on the Exchange with 

the quoting functionality available to 

market-makers on other options 

exchanges, including Cboe Options, 

which permit quotes to both add and 

remove liquidity.41 Market-Makers are 

critical to providing liquidity and price 

discovery on the Exchange, and are 

subject to various obligations, as 

discussed above. The Exchange notes all 

other Users may continue to use the 

Book Only instruction (or other 

instructions that permit execution 

against resting orders on the Book) on 

orders submitted through other ports, as 

they may do today. The Exchange 

believes providing Market-Makers with 

flexibility to use the Post Only or Book 

Only instruction with respect to bulk 

messages will provide them with 

additional tools to meet their obligations 

in a manner they deem appropriate and 

is reasonable given the critical role 

Market-Makers plan in the options 

market. The Exchange believes this may 

also encourage liquidity providers to 

register as Market-Makers. 

The proposed rule change provides 

Market-Makers with a combination of 

functionality available to market-makers 

on other exchanges, as some exchanges 

permit market-makers to remove 

liquidity and others only permit marketmakers to post liquidity using quotes.42

As a result, the Exchange believes the 

proposed rule change will provide 

Market-Makers with greater control over 

their interactions with contra-side 

liquidity and would increase 

opportunities for such interaction. The 

Exchange believes this will provide 

Market-Makers with a greater level of 

determinism, in terms of managing their 

exposure, which may encourage them to 

be more aggressive when providing 

liquidity. The Exchange believes this 

may result in more trading 

opportunities and tighter spreads, 

which contributes to price discovery. 

Ultimately, this may improve overall 

market quality and enhance competition 

on the Exchange, which benefits all 

investors. 

Similarly, the proposed rule change to 

prevent Market-Maker bulk messages 

from removing Market-Maker orders or 

bulk messages resting on the Book 

removes impediments to and perfects 

the mechanism of a national market 

system by eliminating trades that may 

be unintended (potentially the result of 

technological disparities between 

Market-Makers) and thus not beneficial 

to customers, and that may impede 

certain liquidity providers’ ability to 

competitively price their bids and 

offers. The Exchange believes the 

proposed rule change will increase 

availability of liquidity in the market 

and will enhance competition, because 

Market-Makers will be better able to 

quote aggressively with fewer concerns 

over technological disparities in their 

quoting systems, which ultimately 

benefits all investors. The Exchange 

notes this proposed rule change is 

similar to functionality available on 

another options exchange.43

The proposed handling of bulk 

messages to prevent the display of a 

locked or crossed market will perfect 

the mechanism of a free and open 

market and national market system, as 

it is consistent with the Linkage Plan 

and the Exchange’s handling of orders 

with similar instructions. This proposed 

handling of bulk messages is also 

consistent with handling of quotes on 

other options exchanges.44 The 

proposed risk controls and price 

protection mechanisms that will apply 

to bulk messages promote just and 

equitable principles of trade and will 

protect investors by mitigating potential 

risks associated with Users submitting 

bulk messages at clearly unintended 

prices and trading at extreme and 

potentially erroneous prices. 

Additionally, the proposed rule change 

to cancel a User’s resting bulk message 

when the System rejects a bulk message 

intended to update that resting bulk 

message provides Users with an 

additional safeguard that causes Users 

to reevaluate their bids and offers in the 

series before attempting to update them 

again. Additionally, when a User 

submits a new bulk message, it is 

implicitly instructing the Exchange to 

cancel any resting bulk message. Thus, 

even if the new bulk message is rejected, 

the Market-Maker’s implicit instruction 

to cancel the resting bulk message 

remains valid nonetheless. 

The options markets are quote driven 

markets and thus dependent on 

liquidity providers, which are most 

commonly registered market-makers but 

also other professional traders, for 

liquidity and price discovery. The 

Exchange believes the proposed 

enhanced functionality, including the 

additional flexibility for Market-Makers 


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to manage their risk exposure and 

provide additional control over 

interactions with contra-side liquidity, 

for these liquidity providers to more 

efficiently enter and update bids and 

offers. This may encourage the 

provision of more aggressive liquidity, 

which may result in more trading 

opportunities and tighter spreads, 

which contributes to price discovery. 

This may improve overall market 

quality and enhance competition on the 

Exchange, which benefits all investors. 

The proposed rule change is generally 

intended to align system functionality 

currently offered by the Exchange with 

Cboe Options functionality in order to 

provide a consistent technology offering 

for the Cboe Affiliated Exchanges. A 

consistent technology offering, in turn, 

will simplify the technology 

implementation, changes, and 

maintenance by Users of the Exchange 

that are also participants on Cboe 

Affiliated Exchanges. The proposed rule 

change would also provide Users with 

access to functionality that is generally 

available on markets other than the 

Cboe Affiliated Exchanges, which may 

result in the efficient execution of 

quotes and orders and provide Users 

with additional flexibility and increased 

functionality on the Exchange’s System. 

When Cboe Options migrates to the 

same technology as that of the Exchange 

and other Cboe Affiliated Exchanges, 

Users of the Exchange and other Cboe 

Affiliated Exchanges will have access to 

similar functionality on all Cboe 

Affiliated Exchanges. As such, the 

proposed rule change would foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities and would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system. 

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 

Exchange does not believe the proposed 

rule change will impose any burden on 

intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as the 

proposed bulk messages, like the 

current bulk orders, are optional for all 

Users. While only Market-Makers may 

submit Book Only bulk messages, the 

Exchange believes this is appropriate 

given the various obligations MarketMakers must satisfy under the Rules and 

the unique and critical role MarketMakers play in the options market, as 

discussed above. The Exchange believes 

providing Market-Makers with 

flexibility to use the Post Only or Book 

Only instruction with respect to bulk 

messages will provide Market-Makers 

with additional tools to meet their 

obligations in a manner they deem 

appropriate. The Exchange believes the 

proposed functionality for MarketMakers adds value to market-making on 

the Exchange and provides them with 

greater control over how their quotes 

interact with contra-side liquidity both 

on the Exchange. The Exchange notes 

all other Users may continue to use the 

Book Only instruction on orders 

submitted to the Exchange through 

other types of ports. The Post Only 

instruction for bulk messages will be 

available to all Users, and is 

substantially similar to the bulk orders 

currently available to all Users. 

Additionally, all Users may submit 

single orders with all other Times-inForce and Order Types (subject to the 

same Post Only and Book Only 

restrictions applicable to bulk messages) 

not available for bulk messages through 

bulk ports, which may encourage Users 

that may not have quoting systems to 

provide liquidity to the Exchange. 

The proposed rule change to prevent 

Market-Maker bulk message executions 

against other resting Market-Maker 

interest is intended to protect MarketMakers from executions due to 

technology disparities rather than the 

intention of Market-Makers to trade 

with one another at that price. The 

Exchange believes this functionality and 

protection for Market-Makers may 

encourage Market-Makers to quote 

tighter and deeper markets, which will 

increase liquidity and enhance 

competition. The proposed price 

protection mechanisms and risk 

controls applicable to bulk messages 

will apply in the same manner to all 

bulk messages submitted by market 

participants. The Exchange believes this 

protection for bulk messages provides 

liquidity providers with additional 

protection from anomalous or erroneous 

executions. Generally, once bulk 

messages are resting on the Book, the 

System will handle them no differently 

than resting orders—this includes how 

the System prioritizes orders and quotes 

when executing them against incoming 

orders or quotes. Bulk messages that are 

available to all Users will work in the 

same manner for all Users, and the 

additional bulk message functionality 

available to appointed Market-Makers 

will work in the same manner for all 

such Market-Makers. The Exchange 

believes it is reasonable to provide 

additional functionality to MarketMakers given their unique and critical 

role in the options market and the 

various obligations that Market-Makers 

must satisfy. 

The Exchange does not believe the 

propose rule change will impose any 

burden on intermarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act, 

because it will provide Market-Makers 

with bulk message functionality that is 

similar to that quoting available to 

market-makers on other options 

exchanges. The Exchange believes the 

proposed functionality will permit the 

Exchange to operate on an even playing 

field relative to other exchanges that 

have similar functionality. As discussed 

above, the options markets are quote 

driven markets and thus dependent on 

liquidity providers, which are most 

commonly registered market-makers but 

also other professional traders, for 

liquidity and price discovery. The 

Exchange believes the proposed 

enhanced functionality, including the 

additional flexibility for Market-Makers 

to manage their risk exposure and 

provide additional control over 

interactions with contra-side liquidity, 

for these liquidity providers to more 

efficiently enter and update bids and 

offers. This may encourage the 

provision of more aggressive liquidity, 

which may result in more trading 

opportunities and tighter spreads, 

which contributes to price discovery. 

This may improve overall market 

quality and enhance competition on the 

Exchange, which benefits all investors. 

The Exchange reiterates that the 

proposed rule change is being proposed 

in the context of the technology 

integration of the Cboe Affiliated 

Exchanges. Thus, the Exchange believes 

this proposed rule change permits fair 

competition among national securities 

exchanges. In addition, the Exchange 

believes the proposed rule change will 

benefit Exchange participants in that it 

will provide a consistent technology 

offering for Users by the Cboe Affiliated 

Exchanges. 

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 


khammond on DSK30JT082PROD with NOTICES
67792 Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices 

45 15 U.S.C. 78s(b)(3)(A). 

46 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

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. 

47 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Recently, the six exchanges affiliated with 

Nasdaq, Inc. (The Nasdaq Stock Market LLC, 

Nasdaq BX, Inc., Nasdaq PHLX LLC, Nasdaq ISE, 

LLC, Nasdaq GEMX, LLC, and Nasdaq MRX, LLC 

(collectively, the ‘‘Affiliated Exchanges’’)) added 

shell structures to their respective rulebooks with 

the purpose of improving efficiency and readability 

and to align their respective rules. 

burden on competition; and (iii) become 

operative for 30 days after the date of 

the filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to 19(b)(3)(A) 

of the Act 45 and Rule 19b–4(f)(6) 46

thereunder. 

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 

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– 

CboeEDGX–2018–060 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–2018–060. 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–2018–060 and 

should be submitted on or before 

January 22, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.47

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28395 Filed 12–28–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84934; File No. SR–GEMX– 

2018–43] 

Self-Regulatory Organizations; Nasdaq 

GEMX, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend General 8 

December 21, 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 December 

19, 2018, Nasdaq GEMX, LLC (‘‘GEMX’’ 

or ‘‘Exchange’’) 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 Exchange. 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 

The Exchange proposes to delete the 

Exchange’s existing rules on colocation, 

connectivity, and direct connectivity 

(the ‘‘Existing Connectivity Rules’’), 

under General 8, and incorporate by 

reference into General 8 The Nasdaq 

Stock Market LLC’s (‘‘Nasdaq’s’’) rules 

on colocation, connectivity, and direct 

connectivity, which are located in 

General 8 of the Nasdaq rulebook shell 

structure.3

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaqgemx.cchwallstreet.com/, 

at the principal office of the Exchange, 

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 its 

Existing Connectivity Rules, currently 

under General 8, and incorporate by 

reference the corresponding Nasdaq 

rules, at General 8 of Nasdaq’s rulebook. 

The Exchange proposes to remove the 

current rule text from General 8 and 

replace it with the following text: 

General 8 Connectivity 

The rules contained in The Nasdaq Stock 

Market LLC General 8, as such rules may be 

in effect from time to time (the ‘‘General 8 

Rules’’), are hereby incorporated by reference 

into this Nasdaq GEMX General 8, and are 

thus Nasdaq GEMX Rules and thereby 

applicable to Nasdaq GEMX Members. 

Nasdaq GEMX Members shall comply with 

the General 8 Rules as though such rules 

were fully set forth herein. All defined terms, 

including any variations thereof, contained 

in the General 8 Rules shall be read to refer 

to the Nasdaq GEMX related meaning of such 

term. Solely by way of example, and not in 

limitation or in exhaustion: the defined term 


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