Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Notices 10735 

14For purposes of waiving the 30-day operative 

delay, the Commission has considered the proposed 

rule’s impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

15 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)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5The term ‘‘Member’’ is defined as ‘‘any 

registered broker or dealer that has been admitted 

to membership in the Exchange.’’ See Exchange 

Rule 1.5(n). 

NASD Rule 3170 (Mandatory Electronic 

Filing Requirements), NASD Rule 1150 

(Executive Representative), and NASD 

Rule 1160 (Contact Information 

Requirements) into the Consolidated 

FINRA rulebook as FINRA Rule 4517 

(Member Filing and Contact Information 

Requirements) without any substantive 

changes, to update cross-references 

accordingly and reflect current 

nomenclature, and to thereby clarify 

FINRA’s rules, and because the rulebook 

consolidation process is designed to 

provide additional clarity and 

regulatory efficiency to members, the 

Commission believes that a waiver of 

the requirement is appropriate so that 

the rule change may become operative 

immediately. Therefore, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposal effective upon filing.14

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– 

FINRA–2015–004 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2015–004. 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 Web site 

(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 Web site 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 such 

filing also will be available for 

inspection and copying at the principal 

office of FINRA. All comments received 

will be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–FINRA– 

2015–004, and should be submitted on 

or before March 20, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2015–04084 Filed 2–26–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74352; File No. SR–BATS– 

2015–13] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Related to Fees for Use 

of BATS Exchange, Inc. 

February 23, 2015. 

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 February 

10, 2015, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) 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 

Exchange has designated the proposed 

rule change as one establishing or 

changing a member due, fee, or other 

charge imposed by the Exchange under 

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

Rule 19b–4(f)(2) thereunder,4 which 

renders the proposed rule change 

effective upon filing with the 

Commission. 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 the Substance 

of the Proposed Rule Change 

The Exchange filed a proposal to 

amend the fee schedule applicable to 

Members 5 and non-members of the 

Exchange pursuant to BATS Rules 

15.1(a) and (c). Changes to the fee 

schedule pursuant to this proposal are 

effective upon filing. 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at www.batstrading.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 parts 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 modify its 

fee schedule in order to: (1) remove the 

reference to ROLF from fee code BO; (2) 

make certain changes to Cross-Asset 

Step-Up Tier 3; and (3) make certain 

non-substantive clean-up changes to the 

fee schedule. 

Deleting Reference to ROLF 

The Exchange proposes to amend its 

fee schedule to remove the reference to 

mstockstill on DSK4VPTVN1PROD with NOTICES

10736 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Notices 

6 ‘‘ADAV’’ means average daily volume calculated 

as the number of shares added per day on a 

monthly basis. 

7 ‘‘TCV’’ means total consolidated volume 

calculated as the volume reported by all exchanges 

and trade reporting facilities to a consolidated 

transaction reporting plan for the month for which 

the fees apply. 

8 ‘‘Options Step-Up Add TCV’’ means ADAV as 

a percentage of TCV in January 2014 subtracted 

from current ADAV as a percentage of TCV, using 

the definitions of ADAV and TCV as provided 

under the Exchange’s fee schedule for BATS 

Options. 

9 15 U.S.C. 78f. 

10 15 U.S.C. 78f(b)(4) and (5). 

ROLF from fee code BO. Fee code BO 

currently provides that the Exchange 

will charge $0.0030 per share for any 

order routed using ROLF or Destination 

Specific routing strategy unless 

otherwise specified. Under the ROLF 

routing strategy, an order will check the 

Exchange for available shares and then 

will be sent to LavaFlow ECN 

(‘‘LavaFlow’’). This change is being 

proposed in response to LavaFlow’s 

announcement that it will cease market 

operations and its last day of trading 

will be Friday, January 30, 2015. As 

such, beginning on February 2, 2015, 

the Exchange will no longer route orders 

to LavaFlow. As proposed, the Exchange 

would continue to charge $0.0030 per 

share for orders routed using a 

Destination Specific routing strategy. 

Step-Up Add TCV Definition 

The Exchange is also proposing to 

make a non-substantive change to the 

definition of ‘‘Step-Up Add TCV’’ in its 

fee schedule. Currently, Step-Up Add 

TCV means ADAV 6 as a percentage of 

TCV 7 in January 2014 subtracted from 

current ADAV as a percentage of TCV. 

In order to add an additional month to 

use as a baseline for calculating Step-Up 

Add TCV, as further described below, 

the Exchange is proposing to amend the 

fee schedule such that Step-Up Add 

TCV means ADAV as a percentage of 

TCV in the relevant baseline month 

subtracted from current ADAV as a 

percentage of TCV. The Exchange is also 

proposing to make a corresponding nonsubstantive change to footnote 2, titled 

‘‘Step-Up Tiers,’’ such that the criteria 

to qualify for the tiers is described as the 

‘‘Member’s Step-Up TCV from January 

2014 is equal to or greater than’’ instead 

of ‘‘Member’s Step-Up TCV is equal to 

or greater than.’’ This change is nonsubstantive because the Exchange is not 

proposing to amend any fees, rebates, or 

the calculation thereof, but rather 

making the requisite change in order for 

the rebate and the criteria associated 

with meeting the tiers to remain the 

same in conjunction with the proposed 

changes to the definition of Step-Up 

Add TCV outlined above. 

Cross-Asset Step-Up Tiers 

The Exchange is also proposing to 

amend the criteria for meeting Tier 3 in 

the Cross-Asset Step-Up Tiers. 

Specifically, the Exchange is proposing 

to make two changes: to base the tier 

calculation on a Member’s Step-Up Add 

TCV from December 2014; and to lower 

the threshold required to meet Tier 3 

from 0.20% to 0.15%. Currently, in 

order to meet Tier 3 of the Cross-Asset 

Step-Up Tier and receive a $0.0032 

rebate per share that adds liquidity: (i) 

a Member’s ADAV as a percentage of 

TCV must be equal to or greater than 

0.20%; and (ii) the Member’s Options 

Step-Up Add TCV 8 must be equal to or 

greater than 0.60%. The Exchange is not 

proposing to amend requirement (ii). 

The Exchange is proposing to amend 

requirement (i) such that a Member 

must have a Step-Up Add TCV from 

December 2014 of at least 0.15% instead 

of an ADAV as a percentage of TCV of 

at least 0.20%, which will encourage 

increased participation on the Exchange 

by requiring that a Member increases its 

participation on the Exchange as 

compared to December 2014, rather than 

maintaining a static ADAV as a 

percentage of TCV. 

The Exchange proposes to implement 

the amendments to its fee schedule 

effective February 10, 2015. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder that 

are applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6 of the Act.9

Specifically, the Exchange believes that 

the proposed rule change is consistent 

with Sections 6(b)(4) of the Act and 

6(b)(5) of the Act,10 in that it provides 

for the equitable allocation of reasonable 

dues, fees and other charges among 

members and other persons using any 

facility or system which the Exchange 

operates or controls. The Exchange 

notes that it operates in a highly 

competitive market in which market 

participants can readily direct order 

flow to competing venues if they deem 

fee levels at a particular venue to be 

excessive. 

The Exchange believes that its 

proposal to eliminate ROLF from fee 

code BO represents an equitable 

allocation of reasonable dues, fees, and 

other charges among Members and other 

persons using its facilities. The 

proposed change is in response to 

LavaFlow’s announcement that it will 

cease market operations and its last day 

of trading will be Friday, January 30, 

2015. The Exchange notes that the 

proposed change is not designed to 

amend any fee or rebate, nor alter the 

manner in which the Exchange assesses 

fees and rebates. As of February 2, 2015, 

the Exchange will no longer route orders 

to LavaFlow and, therefore, proposes to 

remove ROLF from the fee schedule, 

which will make the fee schedule 

clearer and less confusing for investors 

as well as help to eliminate potential 

investor confusion, thereby removing 

impediments to and perfecting the 

mechanism of a free and open market 

and a national market system, and, in 

general, protecting investors and the 

public interest. 

The Exchange also believes that the 

proposed non-substantive change to the 

definition of Step-Up Add TCV and the 

corresponding non-substantive change 

to the Step-Up Tiers are reasonable, fair, 

and equitable because they are designed 

to make the fee schedule easier to 

comprehend in light of the decision to 

add an additional baseline month, as 

described above. The Exchange notes 

that neither of the proposed changes are 

designed to amend any fee or rebate, nor 

alter the manner in which the Exchange 

assesses fees and rebates. These nonsubstantive changes to the fee schedule 

are intended to make the fee schedule 

clearer and less confusing for investors 

and eliminate potential investor 

confusion, thereby removing 

impediments to and perfecting the 

mechanism of a free and open market 

and a national market system, and, in 

general, protecting investors and the 

public interest. 

The Exchange also believes that the 

proposed change to measure the 

Member’s Step-Up Add TCV from 

December 2014 instead of ADAV as a 

percentage of TCV is reasonable, fair, 

and equitable because it will incentive 

Members to increase their participation 

on the Exchange as compared to 

December 2014, rather than maintaining 

a static ADAV as a percentage of TCV. 

The Exchange further believes that the 

proposal is reasonable, fair, and 

equitable because the increased 

liquidity from incentivizing Members to 

increase their participation on the 

Exchange will benefit all investors by 

deepening the liquidity pool on the 

Exchange, supporting the quality of 

price discovery, promoting market 

transparency, and improving investor 

protection. The Exchange also believes 

that lowering the threshold to meet the 

requirement from 0.20% to 0.15% is 

reasonable, fair, and equitable because 

the measurement is changing from a 

measure of total added volume (ADAV 

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Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Notices 10737 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(2). 

as a percentage of TCV) into a measure 

of the increase of added volume as 

compared to December 2014 (Step-Up 

Add TCV from December 2014) and the 

reduction will make it easier for 

Members to achieve Cross-Asset StepUp Tier 3. The Exchange believes that 

step-up pricing programs such as that 

proposed herein reward a Member’s 

growth pattern and that such increased 

volume increases the potential revenue 

to the Exchange, which will allow the 

Exchange to continue to provide and 

potentially expand the incentive 

programs operated by the Exchange. 

Such pricing programs are also fair and 

equitable in that they are available to all 

Members. Further, volume-based rebates 

and fees such as the ones maintained by 

the Exchange, including those 

amendments proposed herein, have 

been widely adopted by equities and 

options exchanges and are equitable 

because they are open to all Members on 

an equal basis and provide additional 

benefits or discounts that are reasonably 

related to the value to an exchange’s 

market quality associated with higher 

levels of market activity, such as higher 

levels of liquidity provision and/or 

growth patterns, and introduction of 

higher volumes of orders into the price 

and volume discovery processes. 

Further, the Exchange believes that the 

Cross-Asset Step-Up Tiers will provide 

such enhancements in market quality on 

the Exchange by incentivizing increased 

participation by Members attempting to 

meet Tier 3. Accordingly, the Exchange 

believes that the proposed amendments 

to the Cross-Asset Step-Up Tiers and the 

incentives associated therewith are not 

unfairly discriminatory because they 

will apply uniformly to all Members 

and are consistent with the overall goals 

of enhancing market quality on the 

Exchange. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

To the contrary, the Exchange believes 

that the proposed changes to the CrossAsset Step-Up Tiers will allow the 

Exchange to compete more ably with 

other execution venues by drawing 

additional volume to the Exchange, 

thereby making it a more desirable 

destination venue for its customers. 

Further, the Exchange does not believe 

that these proposed changes represent a 

significant departure from previous 

pricing offered by the Exchange or 

pricing offered by the Exchange’s 

competitors. Additionally, Members 

may opt to disfavor the Exchange’s 

pricing if they believe that alternatives 

offer them better value. Accordingly, the 

Exchange does not believe that the 

proposed change will impair the ability 

of Members or competing venues to 

maintain their competitive standing in 

the financial markets. 

The Exchange also believes that its 

proposal to remove ROLF from fee code 

BO would not affect intermarket nor 

intramarket competition because the 

change is not designed to amend any fee 

or rebate or to alter the manner in which 

the Exchange assesses fees or calculates 

rebates. It is simply proposed in 

response to LavaFlow’s announcement 

that it will cease market operations 

following the close of business on 

Friday, January 30, 2015. 

The Exchange believes that the nonsubstantive and organizational changes 

to the fee schedule would not affect 

intermarket nor intramarket competition 

because none of the proposed changes 

are designed to amend any fee or rebate 

or to alter the manner in which the 

Exchange asses fees or rebates. The 

changes are intended to make the fee 

schedule as clear and concise as 

possible. 

As stated above, the Exchange notes 

that it operates in a highly competitive 

market in which market participants can 

readily direct order flow to competing 

venues if they deem fee structures to be 

unreasonable or excessive. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any written 

comments from members or other 

interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

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

of the Act 11 and paragraph (f)(2) of Rule 

19b–4 thereunder.12 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– 

BATS–2015–13 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–BATS–2015–13. 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 Web site (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 Web site 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 such 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–BATS– 

2015–13 and should be submitted on or 

before March 20, 2015. 

mstockstill on DSK4VPTVN1PROD with NOTICES

10738 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Notices 

13 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). 

5The CBOE ‘‘Hybrid System’’ or ‘‘Hybrid Trading 

System’’ refers to the Exchange’s trading platform 

that allows Market-Makers to submit electronic 

quotes in their appointed classes. The ‘‘Hybrid 3.0 

Platform’’ is an electronic trading platform on the 

Hybrid Trading System that allows one or more 

quoters to submit electronic quotes which represent 

the aggregate Market-Maker quoting interest in a 

series for the trading crowd. Classes authorized by 

the Exchange for trading on the Hybrid Trading 

System shall be referred to as Hybrid classes. 

Classes authorized by the Exchange for trading on 

the Hybrid 3.0 Platform shall be referred to as 

Hybrid 3.0 classes. References to ‘‘Hybrid,’’ ‘‘Hybrid 

System,’’ or ‘‘Hybrid Trading System’’ in the 

Exchange’s Rules shall include all platforms unless 

otherwise provided by rule. See, e.g., Rule 1.1(aaa). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2015–04068 Filed 2–26–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74351; File No. SR–CBOE– 

2015–021] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Relating to Chicago 

Board Options Exchange, 

Incorporated’s Order Handling System 

and Order Management Terminal 

February 23, 2015. 

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 February 

19, 2015, Chicago Board Options 

Exchange, Incorporated (the ‘‘Exchange’’ 

or ‘‘CBOE’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Exchange filed the proposal as a ‘‘noncontroversial’’ 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 

The Exchange is proposing to adopt a 

rule that further describes its existing 

order handling system (also referred to 

below as ‘‘OHS’’) and order 

management terminal (also referred to 

below as ‘‘OMT’’) operations, and to 

make corresponding amendments to its 

opening, automatic execution and 

complex order processing rules. The 

text of the proposed rule change is 

available on the Exchange’s Web site 

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

CBOELegalRegulatoryHome.aspx), at 

the Exchange’s Office of the Secretary, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing to adopt 

new Rule 6.12 to further describe its 

existing OHS and OMT operations, and 

to make corresponding amendments to 

its opening, automatic execution and 

complex order processing rules (Rules 

6.2B, 6.13, and 6.53C, respectively). The 

Exchange notes that these OHS and 

OMT operations are currently in use 

and referenced in the Exchange Rules. 

The purpose of this rule change is 

simply to codify further details of the 

existing operations within the Exchange 

Rules. 

Background 

The CBOE Hybrid System 5 is a 

trading platform that allows automatic 

executions to occur electronically and 

open outcry trades to occur on the floor 

of the Exchange. To operate in this 

‘‘hybrid’’ environment, the Exchange 

has made available to Trading Permit 

Holders (‘‘TPHs’’) a dynamic order 

handling system, also referred herein as 

OHS, that has the capability to route 

orders to the Hybrid System for 

automatic execution and book entry, to 

PAR workstations located in the trading 

crowds for open outcry and other 

manual handling by TPHs and Exchange 

PAR Officials, and/or to other order 

management terminals generally located 

in booths on the trading floor for 

manual handling. Where an order is 

routed for processing by the Exchange 

order handling system depends on 

various parameters configured by the 

Exchange and the order entry firm itself. 

Thus, the OHS provides TPHs with 

some flexibility to determine how to 

process their orders in the CBOE Hybrid 

System. 

The Exchange believes these routing 

parameters assist with the maintenance 

of a fair and orderly market and help to 

mitigate potential risks associated with 

orders executing at potentially 

erroneous prices or inconsistent with a 

particular investment strategy by 

routing certain orders to a PAR 

workstation or a booth order 

management terminal for manual 

handling based on parameters 

determined by the Exchange under Rule 

6.2B, 6.13 or 6.53C, by routing certain 

orders to an order management terminal 

based on parameters prescribed by the 

Exchange, by routing certain orders to 

an order management terminal or a PAR 

workstation or for electronic process, 

based on parameters prescribed by the 

order entry firm itself, and by routing 

certain orders to an order management 

terminal in the event of certain 

Exchange system disruptions or 

malfunctions. The order handling 

system also permits orders to be routed 

from a PAR workstation to an order 

management terminal (and vice versa) 

and from a PAR workstation or an order 

management terminal to the Hybrid 

System for automatic execution or book 

entry. The Exchange also views the 

order handling system as an important 

tool to assist order entry firms in their 

ability to efficiently manage, process 

and execute orders in a ‘‘hybrid’’ trading 

environment. The Exchange believes 

this, again, promotes fair and orderly 

markets, as well as assists the Exchange 

in its ability to effectively attract order 

flow and liquidity to its market, and 

ultimately benefits all CBOE TPHs and 

all investors. 

Regarding booth routing parameters in 

particular, an order may route to an 

order management terminal generally 

located in a booth depending on various 

circumstances. One such set of 

circumstances pertains to automatic 

execution/book ‘‘kick-outs.’’ In that 

regard, the electronic processes under 

Rules 6.2B (pertaining to opening 

transactions), 6.13 (pertaining to simple 

orders) and 6.53C (pertaining to 

complex orders), provide that an order 

that is not eligible for automatic 

mstockstill on DSK4VPTVN1PROD with NOTICES