Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices 19715 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). 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. 

12 15 U.S.C. 78s(b)(2)(B). 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Specifically, the Exchange notes that 

while CBOE would cease to administer 

an arbitration program, TPHs, associated 

persons, and their customers would still 

have an effective forum in which to 

arbitrate their disputes, claims, or 

controversies (i.e., TPHs, associated 

persons, and their customers would still 

have the availability of an arbitration 

program; it would just be FINRA’s 

program in lieu of CBOE’s). The 

Exchange believes that FINRA 

maintains a robust dispute resolution 

system that provides a clear framework 

to handle arbitrations in a manner that 

is designed to prevent fraudulent and 

manipulative acts and practices and 

promotes the protection of investors and 

the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE does not believe that the 

proposed rule change would impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. CBOE 

believes that the proposed rule change 

is not designed to address any 

competitive issues. Rather, CBOE 

believes that the proposed rule change 

is designed to facilitate the transition of 

the Exchange’s arbitration forum to 

FINRA’s pursuant to the RSA and 

streamline the arbitration process and 

provide for a unified and efficient 

arbitration forum with one set of 

arbitration rules and administrative 

procedures for all cases filed after the 

Effective Date. Additionally, CBOE 

believes that the proposed rule change 

would provide greater harmonization 

between the Exchange Rules and FINRA 

Rules of similar purpose, resulting in 

less burdensome and more efficient 

regulatory compliance for Dual 

Members. 

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 proposed rule change 

does not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 10 and Rule 19b– 

4(f)(6) 11 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 

under Section 19(b)(2)(B) of the Act 12 to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml ); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

CBOE–2015–037 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–2015–037. 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 at 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 20549–1090 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; 

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– 

2015–037 and should be submitted on 

or before May 4, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–08336 Filed 4–10–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74664; File No. SR–EDGX– 

2015–15] 

Self-Regulatory Organizations; EDGX 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Rules 11.8, 

11.9, 11.10, 11.11, and 11.16 Regarding 

the Limit Up-Limit Down Plan 

April 7, 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 26, 

2015, 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 the Substance 

of the Proposed Rule Change 

The Exchange filed a proposal to 

amend Rules 11.8, 11.9, 11.10, 11.11, 

and 11.16, in order to conform Exchange 

Rules to the rules of BATS Exchange, 

Inc. (‘‘BZX’’) and BATS Y-Exchange, 

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19716 Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices 

3See BZX and BYX Rules 11.18(e). See Securities 

Exchange Act Release Nos. 69084 (March 8, 2013), 

77 FR 16334 (March 14, 2013) (SR–BATS–2015– 

015) [sic]; and 69088 (March 8, 2013), 77 FR 16308 

(March 14, 2013) (SR–BYX–2013–010). See also 

Securities Exchange Act Release No. 67091 (May 

31, 2012), 77 FR 33498 (June 6, 2012) (the ‘‘Limit 

Up-Limit Down Release’’). 

4See Securities Exchange Act Release No. 71449 

(January 30, 2014), 79 FR 6961 (February 5, 2014) 

(SR–EDGX–2013–043; SR–EDGA–2013–034). 

5See Securities Exchange Act Release Nos. 69002 

(February 27, 2013), 78 FR 14394 (March 5, 2013) 

(SR–EDGA–2013–08); and 69003 (February 27, 

2013), 78 FR 14380 (March 5, 2013) (SR–EDGX– 

2013–08). 

6See BZX and BYX Rules 11.18(e). The Exchange 

notes that EDGA intends to file a proposal very 

similar to this proposal that will align the rules 

related to the Plan across each of the BGM 

Affiliated Exchanges. 

7Unless otherwise specified, capitalized terms 

used in this rule filing are based on the defined 

terms of the Plan. 

8The Exchange is a Participant in the Plan. 

9See Section (V)(A) of the Plan. 

10See Section VI(A) of the Plan. 

11See Section VI(A)(3) of the Plan. 

12See Section VI(B)(1) of the Plan. 

13The primary listing market would declare a 

trading pause in an NMS Stock; upon notification 

by the primary listing market, the Processor would 

disseminate this information to the public. No 

trades in that NMS Stock could occur during the 

trading pause, but all bids and offers may be 

displayed. See Section VII(A) of the Plan. 

Inc. (‘‘BYX’’) as they relate to the Plan 

to Address Extraordinary Market 

Volatility Pursuant to Rule 608 of 

Regulation NMS under the Act (the 

‘‘Limit Up-Limit Down Plan’’ or 

‘‘Plan’’).3

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 restructure 

and amend various Exchange Rules 

related to the applicability of the Plan 

in order to make the Exchange’s Rules 

identical to the corresponding rules on 

BZX and BYX, as further described 

below. In early 2014, the Exchange and 

its affiliate, EDGA Exchange, Inc. 

(‘‘EDGA’’), received approval to effect a 

merger (the ‘‘Merger’’) of the Exchange’s 

parent company, Direct Edge Holdings 

LLC, with BATS Global Markets, Inc., 

the parent of BZX and BYX (together 

with BZX, EDGA, and EDGX, the ‘‘BGM 

Affiliated Exchanges’’).4 In the context 

of the Merger, the BGM Affiliated 

Exchanges are working to align certain 

system and regulatory functionality, 

retaining only intended differences 

between the BGM Affiliated Exchanges. 

Thus, the proposal set forth below is 

intended to amend Rules 11.8, 11.9, 

11.10, 11.11, and 11.16 to make such 

Rules identical to corresponding rules 

on BZX and BYX related to the Plan. 

The Exchange does not propose to alter 

its current system functionality with 

regard to compliance with the Plan set 

forth under current Exchange Rules.5

Rather, the proposed rule change is 

designed to provide a consistent rule set 

across each of the BGM Affiliated 

Exchanges.6

Background 

The Plan is designed to prevent trades 

in individual NMS Stocks from 

occurring outside of specified Price 

Bands.7 As described more fully below, 

the requirements of the Plan are coupled 

with Trading Pauses to accommodate 

more fundamental price moves (as 

opposed to erroneous trades or 

momentary gaps in liquidity). All 

trading centers in NMS Stocks, 

including both those operated by 

Participants and those operated by 

members of Participants, are required to 

establish, maintain, and enforce written 

policies and procedures that are 

reasonably designed to comply with the 

requirements specified in the Plan.8 As 

set forth in more detail in the Plan, Price 

Bands consisting of a Lower Price Band 

and an Upper Price Band for each NMS 

Stock are calculated by the Processors.9

When the National Best Bid (Offer) is 

below (above) the Lower (Upper) Price 

Band, the Processors shall disseminate 

such National Best Bid (Offer) with an 

appropriate flag identifying it as nonexecutable. When the National Best Bid 

(Offer) is equal to the Upper (Lower) 

Price Band, the Processors shall 

distribute such National Best Bid (Offer) 

with an appropriate flag identifying it as 

a Limit State Quotation.10 All trading 

centers in NMS Stocks must maintain 

written policies and procedures that are 

reasonably designed to prevent the 

display of offers below the Lower Price 

Band and bids above the Upper Price 

Band for NMS Stocks. Notwithstanding 

this requirement, the Processor shall 

display an offer below the Lower Price 

Band or a bid above the Upper Price 

Band, but with a flag that it is nonexecutable. Such bids or offers shall not 

be included in the National Best Bid 

(‘‘NBB’’) or National Best Offer (‘‘NBO’’) 

calculations.11

Trading in an NMS Stock 

immediately enters a Limit State if the 

National Best Offer (Bid) equals but 

does not cross the Lower (Upper) Price 

Band.12 Trading for an NMS stock exits 

a Limit State if, within 15 seconds of 

entering the Limit State, all Limit State 

Quotations were executed or canceled 

in their entirety. If the market does not 

exit a Limit State within 15 seconds, 

then the Primary Listing Exchange 

would declare a five-minute Trading 

Pause pursuant to Section VII of the 

Limit Up-Limit Down Plan, which 

would be applicable to all markets 

trading the security.13 In addition, the 

Plan defines a Straddle State as when 

the National Best Bid (Offer) is below 

(above) the Lower (Upper) Price Band 

and the NMS Stock is not in a Limit 

State. For example, assume the Lower 

Price Band for an NMS Stock is $9.50 

and the Upper Price Band is $10.50, 

such NMS stock would be in a Straddle 

State if the National Best Bid were 

below $9.50, and therefore nonexecutable, and the National Best Offer 

were above $9.50 (including a National 

Best Offer that could be above $10.50). 

If an NMS Stock is in a Straddle State 

and trading in that stock deviates from 

normal trading characteristics, the 

Primary Listing Exchange may declare a 

Trading Pause for that NMS Stock. 

Proposed Amendment to Rule 11.9 

Currently, Rule 11.9(a)(8) describes 

the priority of orders that are re-priced 

and displayed in accordance with the 

Plan. The Exchange is proposing to 

delete this clause and to include this 

information in Rule 11.16(e)(5) in order 

to adopt a consistent rule set as between 

the Exchange and the other BGM 

Affiliated Exchanges. The proposed rule 

text for Exchange Rule 11.16(e)(5) is 

directly based on BZX and BYX Rule 

11.18(e)(5), and is described in greater 

detail below. The Exchange is not 

proposing to alter the priority handling 

of orders that are re-priced and 

displayed in accordance with the Plan, 

but rather, is proposing to adopt rule 

text that is identical to that of its 

affiliated exchanges to reduce potential 

confusion. 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices 19717 

14A ‘‘Short Sale’’ instruction is defined as ‘‘[a]n 

instruction on an order which shall have the same 

meaning as defined in Rule 200(a) of Regulation 

SHO.’’ See Exchange Rule 11.6(o). 15See supra note 7 [sic]. 

16See Section II(B) of the Plan. 

17The ‘‘System’’ is defined in Exchange Rule 

1.5(cc) as ‘‘the electronic communications and 

trading facility designated by the Board through 

which securities orders of Users are consolidated 

for ranking, execution and, when applicable, 

routing away.’’ 

18See Section VI(A)(1) of the Plan. 

Proposed Amendment to Rule 11.10 

In sum, Rule 11.10(a)(3) sets forth the 

general rule that no executions shall 

occur outside the Price Bands during 

Regular Trading Hours. The Exchange 

proposes to amend Rule 11.10(a)(3) to 

further state that the Exchange’s 

procedures for handling executing, repricing and displaying orders in 

connection with the Plan are further 

described in proposed Rule 11.16(e), 

which is discussed below. 

Current Rule 11.10(a)(3)(A) discusses 

how an order priced within the Price 

Bands may be executed or posted to the 

EDGX Book. Current Rule 11.10(a)(3)(B) 

explains how the Exchange will re-price 

an order that is priced outside of the 

Price Bands. The Exchange proposes to 

delete Rules 11.10(a)(3)(A) and (B) and 

replace them with Rule 11.16(e)(5). The 

proposed rule text for Exchange Rule 

11.16(e)(5) is directly based on BZX and 

BYX Rule 11.18(e)(5) and is described 

more fully below. The Exchange is not 

proposing to alter the handling and repricing of orders that [sic] under the 

Plan, but rather, is proposing to adopt 

rule text that is identical to that of its 

affiliated exchanges to reduce potential 

confusion. 

The Exchange also proposes to delete 

Rule 11.10(a)(3)(C) and does not 

propose to include it as part of the 

amended rule set. Rule 11.10(a)(3)(C) 

states that a description of the behavior 

of routable market and Limit Orders in 

response to the Plan is found in Rule 

11.11(b)(1). The Exchange believes this 

provision is no longer necessary as the 

Exchange’s procedures for handling, 

executing, re-pricing, and displaying 

orders in connection with the Plan are 

proposed to be described in a single 

rule, Rule 11.16(e), rather than multiple 

rules as is currently the case. 

The Exchange proposes to delete Rule 

11.10(a)(3)(D), which discusses the 

handling of orders with a Short Sale 

instruction 14 under the Plan, and 

replace it with Rule 11.16(e)(5)(E). The 

proposed rule text for Exchange Rule 

11.16(e)(5)(E) is directly based on BZX 

and BYX Rule 11.18(e)(5)(E) and is 

described more fully below. The 

Exchange is not proposing to alter the 

handling of orders with a Short Sale 

instruction under the Plan, but rather, is 

proposing to relocate the text, with 

modifications, to Rule 11.16(e)(5)(E) as 

discussed below. 

The Exchange proposes to delete Rule 

11.10(a)(3)(E) and replace it with Rule 

11.16(e)(2) thru (4). Current Rule 

11.10(a)(3)(E) states that pursuant to 

Section IV of the Plan all Trading 

Centers in NMS Stocks, including those 

operated by Members of the Exchange, 

shall establish, maintain, and enforce 

written policies and procedures that are 

reasonably designed to comply with the 

requirements specified in Section VI of 

the Plan, and to comply with the 

Trading Pauses specified in Section VII 

of the Plan. The proposed rule text for 

Exchange Rule 11.16(e)(2) thru (4) 

expands upon this provision and is 

directly based on BZX and BYX Rule 

11.18(e)(2) thru (4) described more fully 

below. 

Proposed Amendment to Rule 11.11 

Rule 11.11 discusses the handling of 

orders that are to be routed to away 

trading centers. Paragraphs (b) thru (d) 

of Rule 11.11 discuss the routing of 

orders under the Plan. The Exchange 

proposes to delete Rules 11.11(b) thru 

(d) and replace them with Rule 

11.16(e)(5)(D). The Exchange proposes 

to delete in its entirety Rule 11.11(b)(1) 

as this provision is no longer necessary 

as it is covered succinctly in new Rule 

11.16(e)(5)(D). Rule 11.11(c), which 

discusses re-routing of orders under the 

Plan, will be moved to Rule 

11.16(e)(5)(D)(i) with slight 

modifications. Rule 11.11(d), which 

discusses the operation of certain 

routing strategies under the Plan, will be 

moved to Rule 11.16(e)(5)(D)(ii) without 

change. Each of these changes are 

discussed in more detail below. 

Proposed Amendment to Rule 11.16 

The Exchange is required by the Plan 

to establish, maintain, and enforce 

written policies and procedures that are 

reasonably designed to comply with the 

limit up-limit down and trading pause 

requirements specified in the Plan. In 

February 2013, the Exchange amended 

its Rules in connection with the 

implementation of the Plan.15 The 

Exchange now proposes to incorporate 

the provisions discussed above into 

Rule 11.16(e) in order to make the 

Exchange’s Rules identical to the 

corresponding rules on BZX and BYX. 

The proposed amendments to Rule 

11.16(e) are based on BZX and BYX 

Rules 11.18(e). The Exchange believes 

that the provisions proposed below are 

reasonably designed to prevent 

executions outside the Price Bands as 

required by the limit up-limit down and 

trading pause requirements specified in 

the Plan. 

First, the Exchange proposes to add 

Rule 11.16(e)(1) to provide that all 

capitalized terms not otherwise defined 

in paragraph (e) of the Rule shall have 

the meanings set forth in the Plan or 

Exchange Rules, as applicable. The 

Exchange also proposes to add Rules 

11.16(e)(2) thru (4) described below. 

These provisions are based on BXZ and 

BYX Rules 11.18(e)(2) thru (4) and 

designed to replace deleted Rule 

11.10(a)(3)(E), which states that the 

Exchange and its Members must 

establish policies and procedures that 

are reasonably designed to comply with 

the Plan. Specifically, the Exchange 

proposes to add Rule 11.16(e)(2) to 

provide that the Exchange is a 

Participant in, and subject to the 

applicable requirements of, the Plan, 

which establishes procedures to address 

extraordinary volatility in NMS Stocks. 

Further, the Exchange proposes to add 

Rule 11.16(e)(3) to provide that 

Exchange Members shall comply with 

the applicable provisions of the Plan. 

The Exchange believes the requirements 

of current Rule 11.10(a)(3)(E) would be 

sufficiently covered in proposed Rules 

11.16(e)(2) and (3), which will help 

ensure the compliance by its Members 

with the provisions of the Plan as 

required pursuant to Section II(B) of the 

Plan.16

The Exchange also proposes to add 

Rule 11.16(e)(4) to replace deleted Rule 

11.10(a)(3)(E). Rule 11.16(e)(4) would 

provide that the Exchange’s System 17

shall not display or execute buy (sell) 

interest above (below) the Upper 

(Lower) Price Bands, unless such 

interest is specifically exempted under 

the Plan. The Exchange believes that 

this requirement is reasonably designed 

to help ensure the compliance with the 

limit up-limit down and trading pause 

requirements specified in the Plan by 

preventing executions outside the Price 

Bands as required pursuant to Section 

VI(A)(1) of the Plan.18

As mentioned above, the Exchange 

proposes to incorporate the provisions 

of current Rules 11.9(a)(8) and 

11.10(a)(3)(A) and (B) within Rule 

11.16(e)(5) regarding the treatment of 

certain trading interest on the Exchange 

in order to prevent executions outside 

the Price Bands and to comply with the 

Plan. The Exchange is proposing to 

delete Rules 11.9(a)(8) and 

11.10(a)(3)(A) and (B) to include this 

information in Rule 11.16(e)(5) in order 

to adopt a consistent rule set as between 

the Exchange and the other BGM 

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19718 Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices 

19Under the Cancel Back instruction, a User may 

instruct the System to immediately cancel the order 

when, if displayed by the System on the EDGX 

Book at the time of entry, or upon return to the 

System after being routed away, would create a 

violation of Rule 610(d) of Regulation NMS or Rule 

201 of Regulation SHO, or the order cannot 

otherwise be executed or posted by the System to 

the EDGX Book at its limit price. See Exchange Rule 

11.6(b). 

20The Exchange notes that this includes any 

interest that is displayed and/or resting at a less 

aggressive price but executable at a more aggressive 

price, such as orders subject to price sliding and 

discretionary order types. 

21The ‘‘Pegged’’ instruction is described under 

Rule 11.6(j). 

Affiliated Exchanges. Proposed Rule 

11.16(e)(5) is based on BZX and BYX 

Rules 11.18(e)(5). 

Current Rule 11.9(a)(8) describes the 

priority of orders that are re-priced and 

displayed in accordance with the Plan. 

Specifically, Rule 11.9(a)(8) states that if 

the Upper (Lower) Price Band moves so 

that the price of a buy (sell) order 

resting on the EDGX Book would 

consequently be above (below) the 

Upper (Lower) Price Band, such order 

will be re-priced and displayed at a 

price equal to the Upper (Lower) Price 

Band, provided a new timestamp, and 

prioritized based on its existing 

timestamp at the time the new Price 

Bands are established. If an order is 

resting on the EDGX Book at a price 

equal to the Upper (Lower) Price Band, 

such order will not be re-priced but will 

be provided a new timestamp and 

prioritized based on its existing 

timestamp at the time the new Price 

Bands are established. 

Likewise, under proposed Rule 

11.16(e)(5), when re-pricing resting 

orders because such orders are above 

(below) the Upper (Lower) Price Band, 

the Exchange will provide new 

timestamps to such orders. The 

Exchange will also provide new 

timestamps to resting orders at the less 

aggressive price to which such orders 

are re-priced. Any resting interest that is 

re-priced pursuant to Rule 11.16(e)(5) 

shall maintain priority ahead of interest 

that was originally less aggressively 

priced, regardless of the original 

timestamps for such orders. The 

Exchange is not proposing to alter the 

priority handling of orders that are repriced and displayed in accordance 

with the Plan, but rather, is proposing 

to adopt rule text that is identical to that 

of its affiliated exchanges to reduce 

potential confusion. While the text of 

current Rule 11.9(a)(8) is not identical to 

proposed Rule 11.16(e)(5), the Exchange 

proposes to adopt language identical to 

BZX and BYX Rules 11.18(e)(5), which 

it believes more clearly describes system 

functionality. 

Current Rules 11.10(a)(3)(A) and (B) 

address the handling and re-pricing of 

orders under the Plan. Rule 

11.10(a)(3)(A) discusses how an order 

priced within the Price Bands may be 

executed or posted to the EDGX Book by 

stating that a non-routable buy (sell) 

order that is entered into the System at 

a price less (greater) than or equal to the 

Upper (Lower) Price Band will be 

posted to the EDGX Book or executed, 

unless: (i) the order includes a Time-inForce Instruction (‘‘TIF’’) of Immediate 

or Cancel (‘‘IOC’’) or Fill-or-Kill 

(‘‘FOK’’), in which case it will be 

cancelled if not executed; or (ii) the 

User has entered instructions to 

cancel 19 the order. Rule 11.10(a)(3)(B) 

explains how the Exchange will re-price 

an order that is priced outside of the 

Price Bands by stating that a nonroutable buy (sell) order at a price 

greater (less) than the Upper (Lower) 

Price Band will be re-priced and 

displayed at the price of the Upper 

(Lower) Price Band. If the price of the 

Upper (Lower) Price Band moves above 

(below) the non-routable buy (sell) 

order’s displayed price, the buy (sell) 

order will not be adjusted further and 

will remain posted at the original price 

at which it was posted to the EDGX 

Book. If the Upper (Lower) Price Band 

crosses a non-routable buy (sell) order 

resting on the EDGX Book, the buy (sell) 

order will be re-priced to the price of 

the Upper (Lower) Price Band. 

Likewise, proposed Rule 11.16(e)(5) 

discusses the re-pricing and 

cancellation of interest and specifically 

provides that the Exchange systems 

shall re-price and/or cancel buy (sell) 

interest that is priced or could be 

executed 20 above (below) the Upper 

(Lower) Price Band. The Exchange is not 

proposing to alter the handling or repricing of orders under the Plan, but 

rather, is proposing to adopt rule text 

that is identical to that of its affiliated 

exchanges to reduce potential 

confusion. The Exchange notes that 

while the format of current Rules 

11.10(a)(3)(A) and (B) are not identical 

to that of proposed Rule 11.16(e)(5), the 

Exchange proposes to include the 

following provisions under Rule 

11.16(e)(5) regarding the re-pricing or 

canceling of certain trading interest that 

are similar to BZX and BYX Rule 

11.18(e)(5), which if [sic] believes 

continue to accurately describe system 

functionality and provide additional 

specificity, the specifics of which are 

described under each subsection of 

proposed Rule 11.16(e)(5) set forth 

below. 

Market Orders and Orders With a TIF of 

IOC or FOK 

Proposed Rule 11.16(e)(5)(A) would 

state that the System will only execute 

Market Orders or orders with a TIF 

instruction of IOC or FOK at or within 

the Price Bands. If a Market Order or 

order with a TIF instruction of IOC or 

FOK cannot be fully executed at or 

within the Price Bands, the System shall 

cancel any unexecuted portion of the 

order without posting such order to the 

EDGX Book. This provision is similar to 

current Rule 11.10(a)(3)(A). The Rule 

would also state that the display of 

Market Orders will be handled in 

accordance with Rule 11.8(a)(4). 

Limit Orders 

The operation of Limit Orders under 

the Plan would be set forth in Rule 

11.16(e)(5)(B), which would include the 

following provisions. 

• Orders Not Subject to Re-Pricing. 

Limit Orders will be cancelled if a User 

has entered instructions not to use the 

re-pricing process set forth in Rule 

11.16(e)(5) and such interest to buy 

(sell) is priced above (below) the Upper 

(Lower) Price Band. 

• Incoming Orders. If re-pricing is 

permitted based on a User’s 

instructions, both displayable and nondisplayable incoming Limit Orders to 

buy (sell) that are priced above (below) 

the Upper (Lower) Price Band shall be 

re-priced to the Upper (Lower) Price 

Band. 

• Resting Orders. The System shall 

re-price resting Limit Orders to buy 

(sell) to the Upper (Lower) Price Band 

if Price Bands move such that the price 

of resting Limit Orders to buy (sell) 

would be above (below) the Upper 

(Lower) Price Band. If the Price Bands 

move again and the original limit price 

of a displayed and re-priced Limit Order 

is at or within the Price Bands and a 

User has opted into the Exchange’s 

optional multiple re-pricing process, as 

described in Rule 11.6(l), the System 

shall re-price such displayed limit 

interest to the most aggressive 

permissible price up to the order’s limit 

price. All other displayed and nondisplayed limit interest re-priced 

pursuant to paragraph (e) of Rule 11.16 

will remain at its new price unless the 

Price Bands move such that the price of 

resting Limit Order to buy (sell) would 

again be above (below) the Upper 

(Lower) Price Band. 

Orders With a Pegged Instruction 21

Currently, the operation of orders 

with a Pegged instruction under the 

Plan is not specifically addressed in the 

Exchange’s Rules. Therefore, the 

Exchange proposes to adopt Rule 

11.16(e)(5)(C) which would state that 

orders with a Pegged instruction to buy 

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22This provision shall also replace current Rule 

11.10(a)(3)(C) which states that the description of 

the behavior of routable Market Orders and Limit 

Orders in response to the Plan is set forth in Rule 

11.11(b)(1). 

23The ‘‘Aggressive’’ instruction is described 

under Rule 11.6(n)(1). 

24The ‘‘Super Aggressive’’ instruction is 

described under Rule 11.6(n)(2). 

25The Exchange notes that this provision is not 

included in BZX or BYX Rule 11.18(e), but the 

Exchange believes it provides additional detail that 

was included in current Exchange Rule 11.11(c) 

that is helpful to retain in proposed Rule 

11.16(e)(5)(D)(i). 

26The Exchange notes that it proposal to include 

current Rule 11.11(d) within proposed Rule 

11.16(e)(5)(D)(ii), rather than within its Rule 

11.11(g) which describes each of its routing 

strategies, differs from the location of the same 

provision under BZX and BYX Rule 11.13(a)(3), 

which describes BZX and BYX’s routing strategies. 

27The term ‘‘Permitted Price’’ is defined in Rule 

11.6(k). 

28See Securities Exchange Act Release Nos. 

73468 (October 29, 2014), 79 FR 65450 (November 

4, 2014) (SR–EDGX–2014–18); and 73592 

(November 13, 2014), 79 FR 68937 (November 19, 

2014) (SR–EDGA–2014–20). 

(sell) shall peg to the specified pegging 

price or the Upper (Lower) Price Band, 

whichever is lower (higher). Rule 

11.16(e)(5)(c) is similar to BZX and BYX 

Rules 11.18(e)(5)(C). 

Routable Orders 

The Exchange proposes to delete 

Rules 11.11(b) thru (d), which discuss 

the routing of orders under the Plan, 

and replace them with Rule 

11.16(e)(5)(D). The Exchange is not 

proposing any changes to its routing 

functionality in connection with the 

implementation of the Plan. The 

Exchange proposes to delete in its 

entirety Rule 11.11(b)(1), which states 

when an order may be routed under the 

Plan, as these provisions are no longer 

necessary as they are covered succinctly 

in new Rule 11.16(e)(5)(D). Rule 

11.16(e)(5)(D) would state that if routing 

is permitted based on a User’s 

instructions, orders shall be routed 

away from the Exchange pursuant to 

Rule 11.11, provided that the System 

shall not route buy (sell) interest at a 

price above (below) the Upper (Lower) 

Price Band.22 Rule 11.11(c), which 

discusses re-routing of orders under the 

Plan, will be moved to Rule 

11.16(e)(5)(D)(i) with slight 

modifications. Current Rule 11.11(c) 

states that for routing strategies that 

access all Protected Quotations, when 

the Upper (Lower) Price Band adjusts 

such that the NBO (NBB) becomes 

executable, a routable buy (sell) Market 

or marketable Limit Order will be 

eligible to be re-routed by the Exchange. 

Likewise, Rule 11.16(e)(5)(D)(i) would 

state that when the Upper (Lower) Price 

Band adjusts such that the NBO (NBB) 

becomes executable, a routable buy 

(sell) Market or marketable Limit Order 

will be eligible to be re-routed by the 

Exchange if such order contains an 

Aggressive 23 or Super Aggressive 24

instruction.25 Rule 11.11(d), which 

discusses the operation of certain 

routing strategies under the Plan, will be 

moved to Rule 11.16(e)(5)(D)(ii) without 

change. Rule 11.16(e)(5)(D)(ii) would 

state that routing strategies SWPA and 

SWPB (together, ‘‘SWP’’), as described 

in Rule 11.11(g), are eligible for routing 

in accordance with the Plan as follows: 

the System will immediately cancel 

orders utilizing an SWP routing strategy 

when an order to buy utilizing an SWP 

routing strategy has a limit price that is 

greater than the Upper Price Band or if 

a sell order utilizing an SWP routing 

strategy has a limit price that is less 

than the Lower Price Band. Proposed 

Rule 11.16(e)(5)(D)(ii) is similar to BZX 

and BYX Rule 11.13(a)(3)(I).26

Orders With a Short Sale Instruction 

The Exchange proposes to replace 

current Rule 11.10(a)(3)(D), which 

discusses the handling of orders with a 

Short Sale instruction under the Plan, 

with proposed Rule 11.16(e)(5)(E). The 

proposed rule text for Exchange Rule 

11.16(e)(5)(E) is directly based on BZX 

and BYX Rule 11.18(e)(5)(E). Current 

Rule 11.10(a)(3)(D) states that where a 

short sale order is entered into the 

System with a limit price below the 

Lower Price Band and a short sale price 

test restriction under Rule 201 of 

Regulation SHO is in effect, the System 

will re-price such order to the Lower 

Price Band as long as the Lower Price 

Band is at a Permitted Price.27 When an 

order with a Short Sale instruction is 

entered into the System with a limit 

price above the Lower Price Band and 

a short sale price test restriction under 

Rule 201 of Regulation SHO is in effect, 

the System will re-price such order, if 

necessary, at a Permitted Price. 

Likewise, proposed Rule 11.16(e)(5)(E) 

would state that where a short sale price 

restriction under Rule 201 of Regulation 

SHO is in effect, orders with a Short 

Sale instruction priced below the Lower 

Price Band shall be re-priced to the 

higher of the Lower Price Band or the 

Permitted Price. The Exchange is not 

proposing to alter the handling of orders 

with a Short Sale instruction that under 

the Plan, but rather, is proposing to 

relocate the text, with modifications, to 

Rule 11.16(e)(5)(E) discussed above. 

Other Amendments to Rule 11.16 

The Exchange also proposes to 

relocate Rule 11.16(c), which discusses 

the re-opening of trading following a 

trading halt, to proposed Rule 

11.16(e)(6), with minor modifications. 

Current Rule 11.16(c) states that the reopening of trading following a trading 

halt will be conducted pursuant to 

procedures adopted by the Exchange 

and communicated by notice to its 

Members. The Exchange recently 

codified its opening process, including 

its re-opening process follow a halt, 

suspension or pause, under Rule 11.7.28

Therefore, with respect to the reopening of trading following a Trading 

Pause, the Exchange proposes to adopt 

Rule 11.16(e)(6) to provide that the 

Exchange shall re-open the security as 

set forth in Rule 11.7(e), which is the 

Exchange’s Rule describing the 

Exchange’s re-opening process 

following a trading halt, suspension or 

pause. 

The Exchange also proposes to delete 

Rule 11.16(d) which discusses when the 

Exchange may resume trading where the 

Primary Listing Market issues an 

individual stock trading pause and how 

individual stock trading pauses are to be 

handled during Phase I of the Plan. 

Interpretation and Policy .01 to Rule 

11.16 states that the provisions of 

paragraph (d) of this Rule shall be in 

effect during a pilot set to end on the 

earlier of the initial date of operations 

of the Regulation NMS Plan to Address 

Extraordinary Market Volatility or 

February 4, 2014. Phase I of the Plan has 

expired and the Exchange, therefore, 

proposes to delete Rule 11.16(d) as well 

as Interpretation and Policy .01 to Rule 

11.16 as they are no longer relevant. 

Lastly, the Exchange proposes the 

following additional amendments to 

Rule 11.16: (i) renumber paragraph (f) as 

(d); (ii) delete current Rule 11.16(e) and 

replace it with new paragraph (f) 

providing that in the event of a trading 

halt, all orders will remain on the EDGA 

[sic] Book unless cancelled by the User; 

and (iii) adopt paragraph (g), which 

would state that all times referenced in 

Rule 11.16 shall be Eastern Time. 

Ministerial Changes 

In light of the above restructuring of 

the Exchange Rules, the Exchange 

proposes the following ministerial 

changes to update cross references to 

Rules that are to be deleted or relocated 

as described above: 

• amend Rule 11.8(a)(4) regarding the 

display of Market Orders to update a 

cross-reference to current Rule 

11.10(a)(3)(A) to proposed Rule 

11.16(e)(5), 

• amend Rule 11.8(d)(7) regarding the 

operation of MidPoint Match Orders 

under the Plan to update a crossmstockstill on DSK4VPTVN1PROD with NOTICES

19720 Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices 

29 15 U.S.C. 78f(b). 

30 15 U.S.C. 78f(b)(5). 

31See supra note 8 [sic]. 32 15 U.S.C. 78k–1(a)(1). 

33 15 U.S.C. 78s(b)(3)(a)(iii). 

34 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. 

reference to current Rule 11.10(a)(3) to 

proposed Rule 11.16(e), and 

• amend Rule 11.9(a)(2)(D)(ii) 

regarding the priority of Market Orders 

displayed on the EDGX Book to delete 

a cross-reference to current Rule 

11.10(a)(3)(A). 

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(b) of the 

Act.29 Specifically, the proposed change 

is consistent with Section 6(b)(5) of the 

Act,30 because it is designed to promote 

just and equitable principles of trade, 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. The Exchange does not 

propose to alter its current system 

functionality with regard to compliance 

with the Plan set forth under current 

Exchange Rules. Rather, the proposed 

rule change is designed to provide a 

consistent rule set across each of the 

BGM Affiliated Exchanges. As 

mentioned above, the proposed rule 

changes, combined with the planned 

filing for EDGA,31 would allow the BGM 

Affiliated Exchanges to provide a 

consistent set of rules as it relates to the 

compliance with the Plan across each of 

the BGM Affiliated Exchanges. 

Consistent rules, in turn, will simplify 

the regulatory requirements for 

Members of the Exchange that are also 

participants on EDGA, BZX and/or BYX. 

The proposed rule change would 

provide greater harmonization between 

rules of similar purpose on the BGM 

Affiliated Exchanges, resulting in 

greater uniformity and less burdensome 

and more efficient regulatory 

compliance and understanding of 

Exchange Rules. 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. Similarly, the Exchange also 

believes that, by harmonizing the rules 

and across each BGM Affiliated 

Exchange with respect to the Plan, the 

proposal will enhance the Exchange’s 

ability to fairly and efficiently regulate 

its Members, meaning that the proposed 

rule change is equitable and will 

promote fairness in the market place. 

Finally, the proposal to remove the 

references to individual stock trading 

pauses promotes just and equitable 

principles of trade and removes 

impediments to, and perfects the 

mechanism of, a free and open market 

and a national market system. By 

eliminating the reference to trading 

pauses outside the scope of the Plan in 

its rules, the Exchange will help to 

alleviate any potential confusion with 

respect to such pauses, particularly in 

light of the implementation of the Plan. 

The proposed rule change is also 

consistent with Section 11A(a)(1) of the 

Act 32 in that it seeks to assure fair 

competition among brokers and dealers 

and exchange markets. 

Finally, the Exchange believes that 

the non-substantive, ministerial changes 

discussed above will contribute to the 

protection of investors and the public 

interest by helping to avoid confusion 

with respect to Exchange Rules. 

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 not 

necessary or appropriate in furtherance 

of the purposes of the act. To the 

contrary, allowing the Exchange to 

implement substantively identical rules 

across each of the BGM Affiliated 

Exchanges regarding the Plan does not 

present any competitive issues, but 

rather is designed to provide greater 

harmonization among Exchange, BYX, 

BZX, and EDGA rules of similar 

purpose. The proposed rule change 

should, therefore, resulting in less 

burdensome and more efficient 

regulatory compliance and 

understanding of Exchange Rules for 

common members of the BGM Affiliated 

Exchanges and an enhanced ability of 

the BGM Affiliated Exchanges to fairly 

and efficiently regulate Members, which 

will further enhance competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has 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 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 33 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.34

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: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) 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– 

EDGX–2015–15 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–EDGX–2015–15. 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 

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Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices 19721 

35 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3As of April 1, 2015, Underlying Symbol List A 

will also include the Russell 2000 Index (‘‘RUT’’). 

4 15 U.S.C. 78f(b). 

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

6 15 U.S.C. 78f(b)(4). 

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–EDGX– 

2015–15, and should be submitted on or 

before May 4, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.35

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–08335 Filed 4–10–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74669; File No. SR–CBOE– 

2015–038] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the Fees 

Schedule 

April 7, 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 April 1, 

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 

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 

Fees Schedule. 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 proposes to amend its 

Fees Schedule, effective April 1, 2015. 

Specifically, the Exchange proposes to 

amend the Complex Order Book 

(‘‘COB’’) Taker Surcharge. By way of 

background, the COB Taker Surcharge is 

a $0.05 per contract per side surcharge 

for non-customer complex order 

executions that take liquidity from the 

COB in all underlying classes except 

OEX, XEO, SPX (including SPXW), 

SPXpm, SRO, VIX, VXST, Volatility 

Indexes and binary options 

(‘‘Underlying Symbol List A 3’’) and 

mini-options. Additionally, the COB 

Taker Surcharge is not assessed on noncustomer complex order executions in 

the Complex Order Auction (‘‘COA’’), 

the Automated Aim Mechanism 

(‘‘AIM’’), orders originating from a Floor 

Broker PAR, or electronic executions 

against single leg markets. The 

Exchange proposes to exclude from the 

COB Taker Surcharge, stock-option 

order executions. Eliminating the 

surcharge for stock-option orders will 

allow Trading Permit Holders (‘‘TPHs’’) 

who engage in stock-option order 

executions the opportunity to pay lower 

fees for such transactions and provide 

greater incentives for such trading. 

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.4 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 5 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 

Section 6(b)(4) of the Act,6 which 

requires that Exchange rules provide for 

the equitable allocation of reasonable 

dues, fees, and other charges among its 

Trading Permit Holders and other 

persons using its facilities. 

The Exchange believes that the 

proposal to exclude from the COB Taker 

Surcharge stock-option orders is 

reasonable because it will allow TPHs 

who engage in stock-option order 

trading the opportunity to pay lower 

fees for such transactions. It is equitable 

and not unfairly discriminatory because 

it is applied to all TPHs equally. 

Additionally, the Exchange believes the 

proposed change is designed to attract 

greater stock-option order flow to the 

Exchange. This would bring greater 

liquidity to the market, which benefits 

all market participants. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule changes will impose 

any burden on competition that are not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange does not believe that 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 

because the proposed change applies to 

all TPHs. The Exchange does not believe 

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