17528 Federal Register / Vol. 80, No. 62 / Wednesday, April 1, 2015 / Notices 

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

2 17 CFR 240.19b–4. 

information technology. Consideration 

will be given to comments and 

suggestions submitted in writing within 

60 days of this publication. 

Please direct your written comments 

to Pamela Dyson, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington, 

DC 20549; or send an email to: PRA_

Mailbox@sec.gov. 

Dated: March 27, 2015. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–07462 Filed 3–31–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Submission for OMB Review; 

Comment Request 

Upon Written Request Copies Available 

From: U.S. Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE., Washington, DC 

20549–2736. 

New Information Collection: 

Supplier Diversity Business Management 

System; SEC File No. 270–663, OMB 

Control No. 3235–XXXX. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission 

(‘‘Commission’’) has submitted to the 

Office of Management and Budget a 

request to approve the collection of 

information discussed below. 

The Commission is required under 

Section 342 of the Dodd Frank Wall 

Street and Reform Act to develop 

standards and procedures for ensuring 

the fair inclusion of minority-owned 

and women-owned businesses in all of 

the Commission’s business activities. 

The Commission is also required to 

develop standards for coordinating 

technical assistance minority-owned 

and women-owned businesses. As part 

of its implementation of Section 342 of 

the Dodd-Frank Act, the Commission is 

developing a new electronic Supplier 

Diversity Business Management System 

(the System) to collect up-to-date 

business information and capabilities 

statements from diverse suppliers 

interested in doing business with the 

Commission. The information collected 

in the System will allow the 

Commission to update and more 

effectively manage its current internal 

repository of diverse suppliers. Further, 

the information in the System will also 

allow the Commission to measure the 

effectiveness of its technical assistance 

and outreach efforts, and target areas 

where additional program efforts are 

necessary. 

Information will be collected in the 

System via web-based, e-filed, dynamic 

form-based technology. The company 

point of contact will complete a profile 

consisting of basic contact data and 

information on the capabilities of the 

business. The profile will include a 

series of questions, some of which are 

based on the data that the individual 

enters. Drop-down lists will be included 

where appropriate to increase ease of 

use. 

The information collection is 

voluntary. The System is scheduled to 

be released in May 2015. There are no 

costs associated with this collection. 

The public interface to the System will 

be available via a web-link provided by 

the agency. 

Estimated number of annual 

responses = 500 

Estimated annual reporting burden = 

250 hours (30 minutes per submission) 

On January 27, 2015, the Commission 

published a 60-day notice in the Federal 

Register (80 FR 4320) requesting public 

comment on the proposed collection of 

information. The Commission received 

no comments. 

Written comments continue to be 

invited on: (a) Whether this collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

(b) the accuracy of the agency’s estimate 

of the burden imposed by the collection 

of information; (c) ways to enhance the 

quality, utility, and clarity of the 

information collected; and (d) ways to 

minimize the burden of the collection of 

information on respondents, including 

through the use of automated collection 

techniques or other forms of information 

technology. 

Background documentation for this 

information collection may be viewed at 

the following Web site, 

www.reginfo.gov. Please direct general 

comments to the following persons: (i) 

Desk Officer for the Securities and 

Exchange Commission, Office of 

Management and Budget, Room 10102, 

New Executive Office Building, 

Washington, DC 20503 or send an email 

to Shagufta Ahmed at Shagufta_

Ahmed@omb.eop.gov; and (ii) Pamela 

Dyson, Chief Information Officer, 

Securities and Exchange Commission, c/ 

o Remi Pavlik-Simon, 100 F Street NE., 

Washington, DC 20549 or send an email 

to: PRA_Mailbox@sec.gov. Comments 

must be submitted within 30 days of 

this notice. 

Dated: March 27, 2015. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–07464 Filed 3–31–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74590; File No. SR–CBOE– 

2015–029] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing of a 

Proposed Rule Change Relating to 

Stock-Option Order Handling 

March 26, 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 March 16, 

2014, 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 

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 amend its 

rules regarding the handling and 

processing of stock-option orders on the 

Exchange. 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. 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 80, No. 62 / Wednesday, April 1, 2015 / Notices 17529 

3The PAR workstation (‘‘PAR’’) is an Exchangeprovided order management tool for use on the 

Exchange’s trading floor by TPHs and PAR 

Officials. See Rule 6.12A; see also Rule 7.12 for a 

description of the responsibilities and obligations of 

PAR Officials. The Exchange’s order handling 

system allows for orders to be routed to and from 

PAR in accordance with TPH and Exchange order 

routing parameters and the Rules of the Exchange. 

See Rule 6.12A. 

4A PAR Official is an Exchange employee or 

independent contractor whom the Exchange may 

designate as being responsible for (i) operating the 

PAR workstation in a DPM trading crowd with 

respect to the classes of options assigned to him/ 

her; (ii) when applicable, maintaining the book with 

respect to the classes of options assigned to him/ 

her; and (iii) effecting proper executions of orders 

placed with him/her. See Rule 7.12. 

5To enter transactions on the Exchange, a TPH 

must either be a CTPH or must have a CTPH agree 

to accept financial responsibility for all of its 

transactions. See Rule 6.21. Every CTPH will be 

responsible for the clearance of Exchange 

transactions of a TPH that ‘‘gives up’’ the CTPH 

pursuant to a Letter of Authorization, Letter of 

Guarantee, or other authorization given by the 

CTPH to the executing TPH. See id. 

6Rule 1.1(ii); accord Rule 6.53C(a)(2). 

7Eligible stock-option orders must comply with 

the Qualified Contingent Trade Exemption under 

Rule 611(a) of Regulation NMS. See infra at pages 

8–9. TPHs submitting such orders represent that the 

orders comply with the QCT Exemption. See 

Interpretation and Policy .06 to Rule 6.53C. Certain 

other eligibility requirements may also apply to 

stock-option orders, which may be determined by 

Exchange routing parameters or in accordance with 

the order’s terms. For example, stock-option orders 

must couple the stated number of units of an 

underlying stock or a security convertible into the 

underlying stock (‘‘convertible security’’) with the 

purchase or sale of options contract(s) on the 

opposite side of the market representing either (i) 

the same number of units of the underlying stock 

or convertible security, or (ii) the number of units 

of the underlying stock necessary to create a delta 

neutral position, but in no case in a ratio greater 

than eight-to-one (8.00), where the ratio represents 

the total number of units of the underlying stock 

or convertible security in the option leg to the total 

number of units of the underlying stock or 

convertible security in the stock leg (or such lower 

ratio as may be determined by the Exchange on a 

class-by-class basis). Only those stock-option orders 

with no more than the applicable number of legs, 

as determined by the Exchange on a class-by-class 

basis, are eligible for processing. See Rule 

6.53C(a)(2). For electronic orders, the representing 

TPH must include a tied to stock indicator on each 

stock-option order upon systemization. See Rule 

6.53(y); see also Regulatory Circular RG12–088 

(Automation of Stock-Option Strategy Orders). 

8The ‘‘Hybrid Trading System’’ refers to (i) the 

Exchange’s trading platform that allows MarketMakers to submit electronic quotes in their 

appointed classes and (ii) any connectivity to the 

foregoing trading platform that is administered by 

or on behalf of the Exchange, such as a 

communications hub. References to ‘‘Hybrid,’’ 

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

the Exchange’s Rules include all platforms unless 

otherwise provided by rule. 

9TPHs are required to comply with the Qualified 

Contingent Trade (‘‘QCT’’) Exemption of Rule 

611(a) of Regulation NMS with respect to the 

execution of stock-option orders. See Interpretation 

and Policy .06 to Rule 6.53C. 

10See Securities and Exchange Release No. 34– 

66394 (February 14, 2012), 77 FR 10026 (February 

21, 2012) (Notice of Filing of a Proposed Rule 

Change Related to Stock-Option Processing) (SR– 

CBOE–2012–005); see also Rules 6.45A(b) and 

6.45B(b). 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

rules regarding the handling and 

processing of stock-option orders 

represented in open outcry on the floor 

of the Exchange. Specifically, the 

Exchange proposes to adopt 

subparagraph (d) to Rule 6.48 (Contract 

Made on Acceptance of Bid or Offer) to 

extend electronic stock component 

routing functionality currently only 

available in the electronic trading 

environment to Public Automated 

Routing (‘‘PAR’’) workstation 3 users 

and thus, allow Trading Permit Holders 

(‘‘TPHs’’) or PAR Officials 4 to 

electronically route the stock 

component of a stock-option order 

represented in open outcry on the floor 

of the Exchange to an Exchangedesignated broker-dealer not affiliated 

with the Exchange for electronic 

execution at a stock trading venue 

directly from PAR. In addition, the 

Exchange proposes to amend 

Interpretation and Policy .06 to Rule 

6.53C to require that the Clearing 

Trading Permit Holder (‘‘CTPHs’’) 

(instead of the executing TPH), on a 

stock-option order, enter into a 

brokerage agreement with one or more 

non-affiliated Exchange-designated 

broker-dealers before electronically 

routing the stock component a of stockoption order to an Exchange-designated 

broker-dealer for execution at a stocktrading venue.5 The Exchange also 

proposes to add cross-references to the 

proposed amended stock-option order 

handling and processing rules in the 

Interpretations and Policies to Rules 

6.45A (Priority and Allocation of Equity 

Option Trades on the CBOE Hybrid 

System) and 6.45B (Priority and 

Allocation of Trades in Index Options 

and Options on ETFs on the CBOE 

Hybrid System). The Exchange believes 

that the proposed enhanced 

functionalities with respect to the 

handling and processing of stock-option 

orders on PAR will promote more 

efficient trading and benefit market 

participants by eliminating intermediary 

manual steps currently required for 

open outcry stock-option order 

execution. 

Current Procedures 

Under Rule 1.1, a stock-option order 

is defined as ‘‘an order to buy or sell a 

stated number of units of an underlying 

or a related security coupled with either 

(a) the purchase or sale of option 

contract(s) on the opposite side of the 

market representing either the same 

number of units of the underlying or 

related security or the number of units 

of the underlying security necessary to 

create a delta neutral position or (b) the 

purchase or sale of an equal number of 

put and call option contracts, each 

having the same exercise price, 

expiration date and each representing 

the same number of units of stock as, 

and on the opposite side of the market 

from, the underlying or related security 

portion of the order.’’ 6 Stock-option 

orders are a popular with investors (e.g., 

buy-writes) and are frequently handled 

and processed on the Exchange. 

Currently, eligible stock-option orders 7

may be handled and processed on the 

Exchange either manually in open 

outcry or electronically through the 

Hybrid Trading System.8 This proposal 

seeks to enhance PAR functionality to 

allow a third option for handling and 

processing of a stock-option order on 

the Exchange by allowing the stock 

component of a stock-option order 

executed in open outcry to be handled 

electronically directly from PAR by a 

PAR user (i.e. a floor broker or PAR 

Official) on the floor of the Exchange. 

Manual Processing 

Stock-option orders may be handled 

and processed on the Exchange in open 

outcry, with the stock portion of the 

order manually transmitted (e.g., via 

telephone) by the PAR user (i.e. a floor 

broker or PAR Official) on the floor to 

a broker on a stock trading venue for 

execution.9 Trading of a stock-option 

order in open outcry involves the stockoption order being represented in open 

outcry as a strategy order at a single net 

price with the option component being 

traded by a broker or PAR Official on 

the floor of the Exchange and the stock 

portion being manually transmitted to a 

broker at a stock trading venue for 

execution.10 Manual transmission of the 

stock component of a stock-option order 

is accomplished by placing a stock order 

with a broker as two paired orders with 

a designated limit price to be matched 

by the broker either on a lit stock 

exchange, Alternative Trading System 

(‘‘ATS’’), or over-the-counter. As agent, 

the broker is responsible for 

determining whether the order may be 

executed in accordance with all of the 

rules applicable to the execution of 

equity orders, including compliance 

with the applicable short sale, tradethrough, and reporting rules. In the 

event that the stock leg of a stock-option 

order cannot be executed by the broker, 

the stock-option order will remain on 

mstockstill on DSK4VPTVN1PROD with NOTICES

17530 Federal Register / Vol. 80, No. 62 / Wednesday, April 1, 2015 / Notices 

11See Interpretation and Policy .06 to Rule 

6.53C(b)(1). 

12See Interpretation and Policy .06 to Rule 6.53C. 

13See Interpretation and Policy .06 to Rule 6.53C 

(Complex Orders on the Hybrid System); see also 

Securities and Exchange Release No. 34–66759 

(April 6, 2012), 77 FR 22027 (April 12, 2012) (Order 

Approving a Proposed Rule Change Relating to 

Stock-Option Orders) (SR–CBOE–2012–005); 

Securities and Exchange Release No. 34–66394 

(February 14, 2012), 77 FR 10026 (February 21, 

2012) (Notice of Filing of a Proposed Rule Change 

Related to Stock-Option Processing) (SR–CBOE– 

2012–005); Securities and Exchange Release No. 

34–56903 (December 5, 2007), 72 FR 70356 

(December 11, 2007) (Order Approving Proposed 

Rule Change, as Modified by Amendment No. 1, 

Relating to Stock-Option Orders) (SR–CBOE–2007– 

068). 

14Currently, ConvergEx Execution Services, LLC 

(‘‘ConvergEx’’) is the only Exchange-designated 

broker-dealer that the Exchange uses for executions 

of stock components of stock-option orders on away 

stock trading venues. The Exchange, however, may 

require TPHs to enter into a brokerage agreement 

with one or more Exchange-designated brokerdealers that are not affiliated with the Exchange to 

electronically execute the stock component of the 

stock-option order at a stock trading venue. See 

Interpretation and Policy .06 to Rule 6.53C. 

15See generally id. [sic]; see also Rule 6.25(a)(3). 

16See Interpretation and Policy .06 to Rule 6.53C; 

see also Regulatory Circular RG12–088 (Automation 

of Stock-Option Strategy Orders). 

17FBW is a system for electronically entering and 

electronically managing orders on the floor of the 

Exchange. FBW is a third-party facility of the 

Exchange supplied and managed by LiquidPoint, 

LLC. 

18See 17 CFR 242.611(a); Rule 6.53C.06(a); see 

also Securities and Exchange Release No. 34–57620 

(April 4, 2008), 73 FR 19271 (April 9, 2008) (Order 

Modifying the Exemption for Qualified Contingent 

Trades from Rule 611(a) of Regulation NMS under 

the Securities Exchange Act of 1934); Securities 

Exchange Act Release No. 34–54389 (August 31, 

2006), 71 FR 52829 (September 7, 2006) (Order 

Granting an Exemption for Qualified Contingent 

Trades from Rule 611(a) of Regulation NMS under 

the Securities Exchange Act of 1934). 

19See Interpretation and Policy .06(a) to Rule 

6.53C. In addition, the Exchange has built certain 

checks into the Hybrid Trading System to validate 

certain aspects of compliance with the QCT 

Exemption of Rule 611(a) of Regulation NMS for 

stock-option orders. Those QCT validating checks 

are described in SR–CBOE–2012–005. See 

Securities and Exchange Release No. 34–66394 

(February 14, 2012), 77 FR 10026 (February 21, 

2012) (Notice of Filing of a Proposed Rule Change 

Related to Stock-Option Processing) (SR–CBOE– 

2012–005). 20See Rule 6.25(a)(3). 

PAR or, at the order entry firm’s 

discretion, to the order entry firm’s 

booth.11 Stock-option orders have 

historically been handled and processed 

in open outcry on the Exchange. The 

Exchange continues to allow TPHs to 

manually execute stock-option orders in 

this manner.12

Electronic Processing 

Stock-option orders may also be 

handled electronically on the Exchange, 

with the stock portion of the order being 

electronically transmitted by the 

Exchange to a non-affiliated third party 

Exchange-designated broker-dealer for 

execution at an away stock trading 

venue.13 Generally, the stock 

component of a stock-option order is 

transmitted to an Exchange-designated 

broker-dealer 14 as two paired orders 

with a designated limit price after the 

Exchange’s trading system has 

determined that a stock-option order is 

executable at the designated net price. 

Once transmitted to the Exchangedesignated broker-dealer, the Exchangedesignated broker dealer acts as agent 

for the stock leg of the stock-option 

order and is responsible for the proper 

execution, trade reporting, and 

submission to clearing of the stock 

trade. Specifically, the Exchangedesignated broker-dealer will be 

responsible for determining whether the 

orders may be executed in accordance 

with all of the rules applicable to the 

execution of equity orders, including 

compliance with the applicable short 

sale, trade-through, and reporting rules. 

In the event that the stock component of 

a stock-option order cannot be executed 

by the Exchange-designated brokerdealer, the stock-option order execution 

will be nullified and parties to the trade 

will be notified by the Exchange.15

Currently, TPHs that wish to 

participate in electronic stock-option 

order processing must enter into a 

customer agreement with one or more 

designated broker-dealer that is not 

affiliated with the Exchange.16 In 

addition, to be eligible for electronic 

processing, TPHs must validate that 

they have executed a brokerage 

agreement with an Exchange-designated 

broker-dealer in order to obtain 

activation of stock-option order entry 

functionality on the Floor Broker 

Workstation (‘‘FBW’’).17 TPHs may only 

submit complex orders with a stock 

component for electronic processing if 

such orders comply with the Qualified 

Contingent Trade (‘‘QCT’’) Exemption of 

Rule 611(a) of Regulation NMS.18 A 

QCT is a transaction consisting of two 

or more component orders, executed as 

agent or principal, that satisfies the six 

elements enumerated in the 

Commission’s Order exempting QCTs 

from the requirements of 611(a), which 

requires trading centers to establish, 

maintain, and enforce written policies 

and procedures that are reasonably 

designed to prevent trade-throughs. 

TPHs submitting stock-option orders for 

electronic processing must represent 

that the orders’ terms comply with the 

QCT Exemption of Rule 611(a) of 

Regulation NMS.19

Proposed Rule Changes 

The Exchange proposes to introduce 

enhanced PAR functionality that would 

allow TPHs and PAR Officials to route 

the stock portion of a stock-option order 

directly to an Exchange-designated 

broker-dealer for electronic execution at 

a stock trading facility. Under proposed 

Rule 6.48(d), TPHs and PAR Officials 

would be able to transmit stock portions 

of stock-option orders represented in 

open outcry directly from PAR to an 

Exchange-designated broker-dealer not 

affiliated with the Exchange for 

electronic execution at a stock trading 

venue. Thus, rather than executing stock 

orders manually via telephone, PAR 

users would be able to electronically 

send the stock portion of the stockoption order from PAR directly to an 

Exchange-designated broker-dealer for 

immediate execution at a stock trading 

venue. The Exchange notes that this 

functionality (electronic stock 

component order routing, processing, 

and handling), is already in use for 

electronic stock-option orders submitted 

into the Hybrid Trading System. The 

Exchange is merely proposing to extend 

this functionality to stock-option orders 

handled on the floor of the Exchange. 

The Exchange believes this added 

functionality will support more efficient 

stock-option order execution, streamline 

the steps required for open outcry stockoption order trading, and enhance the 

Exchange’s audit trail by creating a more 

robust record of the stock component of 

stock option order executions on the 

floor of the Exchange. 

Proposed Rule 6.48(d) would also 

provide that stock portions of stockoption orders represented in open 

outcry may be routed to a designated 

broker-dealer not affiliated with the 

Exchange for electronic execution at a 

stock trading venue as single orders or 

as paired orders (including with orders 

transmitted from separate PAR 

workstations). Consistent with current 

practices, the Exchange-designated 

broker-dealer would be responsible for 

the proper execution, trade reporting, 

and submission to clearing of the stock 

trade that is part of the stock-option 

order. Stock-option order executions for 

which the stock portion of the order 

could not be executed at the designated 

price would be nullified and the parties 

to the trade would be notified by the 

Exchange.20 In addition, consistent with 

current Interpretation and Policy .06(a) 

to Rule 6.53C, TPHs’ compliance with 

the Qualified Contingent Trade (‘‘QCT’’) 

Exemption of Rule 611(a) of Regulation 

NMS would continue to be required for 

stock-option orders where the stock 

component of the stock-option order is 

routed from PAR to an Exchangedesignated broker-dealer not affiliated 

with the Exchange for electronic 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 80, No. 62 / Wednesday, April 1, 2015 / Notices 17531 

21See Rule 6.21; see also Securities and Exchange 

Release No. 34–72668 (July 24, 2014), 79 FR 44229 

(July 30, 2014) (Order Granting Approval of a 

Proposed Rule Change Relating to the Give Up of 

a Clearing Trading Permit Holder) (SR–CBOE– 

2014–048). 

22Notably, CTPHs have indicated support this 

proposal. The Exchange believes that the proposed 

rule change will allow for more efficient handling 

and processing of stock-option orders on the 

Exchange and that adoption of the proposal would 

remove impediments to, and perfect the 

mechanisms, of a national market system across 

stock and options trading venues. 

23 Validations of the required brokerage 

agreements between CTPHs and an Exchangedesignated broker-dealer would be conducted by 

the Exchange. Access to electronic processing of 

stock option orders would be systematically limited 

to those CTPHs identified as having a brokerage 

agreement with an Exchange-designated brokerdealer in place. In addition further validation will 

be ensured through market participant identifiers 

provided by CTPHs. MPIDs are firm identifiers 

issued by the NASDAQ Market Center for electronic 

securities order processing. All electronic stock 

option order messages sent to the Exchange must 

contain an MPID. The Exchange’s designed brokerdealer would also use MPIDs to process and clear 

the stock component of electronically executed 

stock option orders. 

24 15 U.S.C. 78f(b). 

25 15 U.S.C. 78f(b)(5). 

26 Id. 

execution at a stock trading venue 

selected by the Exchange-designated 

broker-dealer. 

The Exchange also proposes to amend 

Interpretation and Policy .06(a) to Rule 

6.53C. Under current Interpretation and 

Policy .06(a) to Rule 6.53C, the stock 

portion of a stock-option order cannot 

be processed automatically unless the 

executing TPH has entered into a 

brokerage agreement with one or more 

Exchange-designated broker-dealers that 

are not affiliated with the Exchange that 

can electronically execute the equity 

order on a stock trading venue. The 

Exchange proposes to change 

Interpretation and Policy .06 to Rule 

6.53C to provide that the Trading Permit 

Holder shall give up a Clearing Trading 

Permit Holder previously identified to, 

and processed by the Exchange as a 

Designated Give Up for that Trading 

Permit Holder in accordance with Rule 

6.21 and which has entered into a 

brokerage agreement with one or more 

Exchange-designated broker-dealers that 

are not affiliated with the Exchange to 

electronically execute the stock 

component of the stock-option order at 

a stock trading venue selected by the 

Exchange-designated broker-dealer on 

behalf of the Trading Permit Holder. 

The Exchange believes that the 

proposed rule change would bring 

Interpretation and Policy .06(a) to Rule 

6.53C in line with the Exchange’s give 

up rules in Rule 6.21. 

All trades are finalized not when they 

are executed, but when they clear. It is 

the CTPH, not the order entry TPH that 

guarantees authorization of a trade and 

accepts financial responsibility for all 

Exchange transactions made by the 

executing TPH. Because the CTPH is the 

party guaranteeing the transaction, the 

Exchange believes that it is reasonable 

to require that the CTPH enter into a 

brokerage agreement with an Exchangedesignated broker-dealer not affiliated 

with the Exchange in order to route the 

stock portion of a stock-option order for 

electronic processing rather than 

requiring an executing TPH (that may be 

acting as agent or broker) to enter into 

such an agreement on the CTPH’s 

behalf. Consistent with Rule 6.21, the 

CTPH should be responsible for order 

handling and processing requirements 

for trades that it guarantees.21

Furthermore, under current 

Interpretation and Policy .06(a) to Rule 

6.53C, the stock portion of a stockoption order cannot be processed 

automatically unless the executing TPH 

has entered into a brokerage agreement 

with one or more Exchange-designated 

broker-dealers that are not affiliated 

with the Exchange that can 

electronically execute the equity order 

on a stock trading venue. Accordingly, 

even when acting as agent or broker, a 

TPH cannot submit the stock portion of 

a stock-option order for electronic 

processing unless the TPH has entered 

into a brokerage agreement with an 

Exchange-designated broker-dealer that 

is not affiliated with the Exchange. The 

Exchange believes that current 

Interpretation and Policy .06(a) has a 

chilling effect on market activity 

because it prohibits TPHs from entering 

orders when acting as a broker for the 

account of a CTPH or a CTPH customer 

account. Brokers that represent a stockoption order merely as an executing 

agent rather than on behalf of their own 

customers may be less willing to enter 

into a brokerage agreement with one or 

more Exchange-designated brokerdealers and accept counterparty risk for 

a one-time fee. On the other hand, a 

CTPH that submits such an order to a 

floor broker on behalf of its own 

customer and has already accepted 

counterparty risk on behalf of its 

customer as clearing agent and would 

likely enter such a brokerage agreement 

willing as it would extend counterparty 

risk current parameters.22

Accordingly, the Exchange proposes 

to amend Interpretation and Policy 

.06(a) to Rule 6.53C to provide that 

TPHs shall give up a CTPH previously 

identified to, and processed by the 

Exchange as a Designated Give Up in 

accordance with Rule 6.21 and which 

has entered into a brokerage agreement 

with one or more Exchange-designated 

broker-dealers that are not affiliated 

with the Exchange to electronically 

execute the stock portion of the stockoption order at a stock trading venue 

selected by the Exchange-designated 

broker-dealer.23

The Exchange also proposes to change 

Interpretation and Policy .06 to Rule 

6.53C to provide that stock-option 

orders may be executed against other 

electronic stock-option orders rather 

than state that such orders may be 

executed against other stock-option 

orders through the COB or COA. This 

change reflects the fact that such orders 

may be subjected to the Automated 

Improvement Mechanism (‘‘AIM’’) as 

well as executed through the COB or 

COA. Finally, the Exchange proposes 

conforming administrative changes to 

the Rules to include the language 

describing these functionality 

enhancements in Rules 6.45A and 

6.45B. The proposed administrative 

changes would provide reference to this 

new technology within the priority rules 

for stock-option orders. Thus, these 

administrative changes merely add 

clarity to the Rules regarding the 

functionality available to TPHs on PAR. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.24 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 25 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 facilitation 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) 26 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In particular, the Exchange believes 

the proposed rule change removes 

impediments to and perfects the 

mechanism of a free and open market by 

eliminating steps involved in stockoption order execution on the Exchange 

which allows for more efficient trading. 

mstockstill on DSK4VPTVN1PROD with NOTICES

17532 Federal Register / Vol. 80, No. 62 / Wednesday, April 1, 2015 / Notices 

27 17 CFR 200.30–3(a)(12). 

By allowing PAR users to route the 

stock portion of a stock-option order to 

a broker at a stock trading venue 

directly from PAR, the Exchange is 

attempting to allow stock-option orders 

to be matched faster and more 

efficiently. Creating a more streamlined 

approach to the execution of stockoption orders allows for less 

complicated and, thus, less confusing 

trading on the Exchange. In addition, as 

a consequence, the proposed rule 

change will promote more liquidity on 

the national market system by allowing 

TPHs to more easily use stock-option 

orders and more quickly send stock leg 

portions of complex order to stock 

trading venues for execution. The 

Exchange also believes that the 

proposed rule would enhance the 

Exchange’s audit trail by creating a more 

robust record of the stock component of 

stock option order executions on the 

floor of the Exchange. 

The Exchange also believes that the 

proposed changes to Interpretation and 

Policy .06 to Rule 6.53C to provide that 

the Trading Permit Holder shall give up 

a Clearing Trading Permit Holder 

previously identified to, and processed 

by the Exchange as a Designated Give 

Up for that Trading Permit Holder in 

accordance with Rule 6.21 and which 

has entered into a brokerage agreement 

with one or more Exchange-designated 

broker-dealers that are not affiliated 

with the Exchange to electronically 

execute the stock component of the 

stock-option order at a stock trading 

venue selected by the Exchangedesignated broker-dealer on behalf of 

the Trading Permit Holder would help 

create a more robust market for stockoption orders and protect investors 

interests consistent with the Act. The 

Exchange believes that the proposed 

rule change would bring Interpretation 

and Policy .06(a) to Rule 6.53C in line 

with the Exchange’s give up rules in 

Rule 6.21. Consistent with Rule 6.21, 

the CTPH should be responsible for 

order handling and processing 

requirements for trades that it 

guarantees. The proposed amendments 

are reasonable and provide certainty 

that a CTPH will always be responsible 

for a trade, which protects investors and 

the public interest. 

Finally, the Exchange believes that 

the proposed change to Interpretation 

and Policy .06 to Rule 6.53C providing 

that stock-option orders may be 

executed against other electronic stockoption orders and the proposed 

amendments to Rules 6.45A and 6.45B 

would add additional clarity and 

transparency to the Rules. The Exchange 

continues to evaluate its Rules to add 

additional clarity and transparency 

whenever possible. The Exchange 

believes that its efforts to clarify the 

Rules are in the interests of market 

participants and the general public and 

that providing added transparency in 

the Rules is consistent with the Act. 

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. Specifically, 

the Exchange already offers such orders 

and is merely introducing new 

functionality to execute such orders. 

Thus, the Exchange does not believe 

that the proposed changes will pose a 

burden on intramarket competition or 

intermarket competition as these orders 

are already available on the Exchange. 

The functionality is available to all 

TPHs that choose to enter into the 

necessary agreements with the Exchange 

designated broker-dealer that is not 

affiliated with the Exchange. To the 

contrary, the Exchange believes that the 

proposed rule change will relieve any 

burden on, or otherwise promote, 

competition as it allows for market 

participants to more quickly execute 

stock-option orders via the Exchange’s 

Hybrid System. 

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 written comments on the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the Exchange consents, the Commission 

will: 

A. by order approve or disapprove 

such proposed rule change, or 

B. institute proceedings to determine 

whether the proposed rule change 

should be 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– 

CBOE–2015–029 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CBOE–2015–029. 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 

offices 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–CBOE– 

2015–029, and should be submitted on 

or before April 22, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–07364 Filed 3–31–15; 8:45 am] 

BILLING CODE 8011–01–P 

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