1050 Federal Register / Vol. 83, No. 6 / Tuesday, January 9, 2018 / Notices 

39 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6)(iii). 

5See Securities Exchange Act Release No. 79585 

(December 16, 2016), 81 FR 93988 (December 22, 

2016) (SR–BatsBZX–2016–68; SR–BatsBYX–2016– 

29; SR–BatsEDGA–2016–24; SR–BatsEDGX–2016– 

60). The Exchange notes that BYX and EDGA are 

also affiliated exchanges but do not operate options 

platforms and thus the integration described in this 

proposal is inapplicable to such exchanges. 

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 self- regulatory organization 

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. 

The proposal shall not take effect 

until all regulatory actions required 

with respect to the proposal are 

completed. 

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– 

DTC–2017–024 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–DTC–2017–024. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of DTC and on DTCC’s website 

(http://dtcc.com/legal/sec-rulefilings.aspx). All comments received 

will be posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–DTC– 

2017–024 and should be submitted on 

or before January 30, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.39

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–00159 Filed 1–8–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82436; File No. SR– 

CboeBZX–2017–022] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Adopt Risk 

Controls and Modify Rules 21.1, 21.10, 

and 21.17 in Connection With 

Technology Migration of Cboe 

Exchanges 

January 3, 2018. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

21, 2017, Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’) 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 Exchange has 

designated this proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6)(iii) 

thereunder,4 which renders it effective 

upon filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange filed a proposal to 

update Rule 21.1, Rule 21.10, and Rule 

21.17 to make modifications to the 

Exchange’s rules and functionality 

applicable to the Exchange’s options 

platform (‘‘BZX Options’’) in 

preparation for the technology migration 

of the Exchange’s affiliated options 

exchanges onto the same technology as 

the Exchange. 

The text of the proposed rule change 

is available at the Exchange’s website at 

www.markets.cboe.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 

In 2016, the Exchange and its 

affiliates Cboe BYX Exchange, Inc. 

(‘‘BYX’’), Cboe EDGA Exchange, Inc. 

(‘‘EDGA’’), and Cboe EDGX Exchange, 

Inc. (‘‘EDGX’’) received approval to 

affect a merger (the ‘‘Merger’’) of the 

Exchange’s then-current indirect parent 

company, Bats Global Markets, Inc., 

with Cboe Global Markets f/k/a CBOE 

Holdings, Inc. (‘‘Cboe’’), the direct 

parent of Cboe Exchange, Inc. (‘‘Cboe 

Options’’) and Cboe C2 Exchange, Inc. 

(‘‘C2 Options’’, and together with the 

Exchange, EDGX, and Cboe Options the 

‘‘Cboe Affiliated Exchanges’’).5 The 

Cboe Affiliated Exchanges are working 

to align certain system functionality, 

retaining only intended differences 

between the Cboe Affiliated Exchanges, 


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Federal Register / Vol. 83, No. 6 / Tuesday, January 9, 2018 / Notices 1051 

6The ‘‘System’’ is the automated trading system 

used by BZX Options for the trading of options 

contracts. See Rule 16.1(a)(59). 

7The term ‘‘User’’ means any Options Member or 

Sponsored Participant who is authorized to obtain 

access to the Exchange’s System (as defined below) 

pursuant to Rule 11.3. See Rule 16.1(a)(63). 

8See Rule 11.13, Interpretation and Policy .01; 

see also Securities Exchange Act Release Nos. 

60236 (July 2, 2009), 74 FR 34068 (July 14, 2009) 

(SR–BATS–2009–019) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

to Establish a Sponsored Access Risk Management 

Tool); 68330 (November 30, 2012), 77 FR 72894 

(December 6, 2012) (SR–BATS–2012–045) (Notice 

of Filing and Immediate Effectiveness of Proposed 

Rule Change to Expand the Availability of Risk 

Management Tools). 

9See id. 

10See, e.g., Interpretation and Policies .04(c)(1), 

.04(e), .04(f) and .06 to EDGX Rule 21.20, which 

refer to various risk control values offered by EDGX 

Options with respect to complex orders that are 

communicated to members of EDGX via 

specifications and/or Regulatory Circular. 

11See Rule 21.1(d)(5). 

12As defined in Rule 16.1(a)(29), the term ‘‘NBB’’ 

means the national best bid, the term ‘‘NBO’’ means 

the national best offer, and the term ‘‘NBBO’’ means 

the national best bid or offer as calculated by BZX 

Options based on market information received by 

BZX Options from OPRA. 

13The Exchange notes that identical or similar 

rules regarding risk controls offered by C2 Options 

are also provided in the rules of Cboe Options and 

on other options exchanges. However, the Exchange 

has focused on the Rules of C2 Options as well as 

EDGX Options for purposes of this proposal. 

14See NOM Chapter VI, Section 6(c), which 

describes the NOM Market Order Spread Protection 

and states that ‘‘System Orders that are Market 

Orders will be rejected if the best of the NBBO and 

the internal market BBO (the ‘‘Reference BBO’’) is 

wider than a preset threshold at the time the order 

is received by the System.’’ 

in the context of a technology migration. 

Thus, the proposals set forth below are 

intended to add certain functionality to 

the Exchange’s System 6 that is more 

similar to functionality offered by Cboe 

Options and C2 Options in order to 

ultimately provide a consistent 

technology offering for market 

participants who interact with the Cboe 

Affiliated Exchanges. Although the 

Exchange intentionally offers certain 

features that differ from those offered by 

its affiliates and will continue to do so, 

the Exchange believes that offering 

similar functionality to the extent 

practicable will reduce potential 

confusion for Users. 

The Exchange is proposing to adopt 

periodic but relatively minor changes to 

functionality in order to reduce risk in 

connection with the technology 

migration described above; this proposal 

is related to two such proposed changes. 

First, the Exchange proposes to adopt 

certain risk functionality in Rule 21.17, 

which is based on functionality on Cboe 

Options, C2 Options and/or the options 

trading platform operated by EDGX 

(‘‘EDGX Options’’). The Exchange notes 

that it also proposes to make a related 

change to Rule 21.1 to eliminate 

functionality that overlaps with the 

proposed risk functionality. Second, the 

Exchange proposes to modify Rule 21.10 

to allow it to provide additional 

information on transaction reports. 

Risk Controls 

The Exchange currently provides 

certain controls to Users 7 of BZX 

Options pursuant to Rule 21.16, which 

describes the Exchange’s ‘‘Risk Monitor 

Mechanism.’’ In addition, the Exchange 

provides a variety of optional risk 

controls to all Exchange Users pursuant 

to Interpretation and Policy .01 to Rule 

11.13, including various controls related 

to the price of an order.8 The Exchange 

proposes to adopt various risk controls 

currently offered by Cboe Options, C2 

Options, and/or EDGX Options and to 

codify such risk controls in Rule 21.17. 

Rule 21.17 currently permits the 

Exchange to share a User’s risk settings 

with the Clearing Member that clears 

transactions on behalf of the User, 

which is a provision that the Exchange 

does not propose to modify. Rule 21.17 

does not currently describe any 

applicable risk settings. As noted above, 

though certain risk settings offered for 

Users of BZX Options are codified in 

Rule 21.16, other optional risk settings 

offered by the Exchange are more 

generally described in Interpretation 

and Policy .01 to Rule 11.13 and have 

been described in other filings 

previously made by the Exchange.9 The 

Exchange proposes to provide more 

specificity in proposed Rule 21.17 

regarding the risk settings the Exchange 

proposes to implement for BZX Options, 

which is consistent with the approach 

taken by Cboe Options and C2 Options. 

As a general matter, the Exchange 

proposes to adopt various numeric 

values that would apply to the risk 

settings offered by the Exchange. 

Consistent with the rules of EDGX 

Options,10 the Exchange proposes to 

maintain all numeric values established 

by the Exchange pursuant to Rule 21.17 

in publicly available specifications and/ 

or published in a Regulatory Circular. 

Further, as a general matter, the 

proposed risk settings would be applied 

to all orders and quotes received by BZX 

Options rather than optionally 

configured and enabled by Users. Thus, 

proposed Rule 21.17 would explicitly 

state that unless otherwise specified, the 

price protections in the Rule, including 

the numeric values established by the 

Exchange, may not be disabled or 

adjusted. Below are descriptions of the 

specific risk settings proposed by the 

Exchange. 

The first risk control the Exchange 

proposes to adopt is the Market Order 

NBBO Width Protection. As proposed, if 

a User submits a Market Order 11 to the 

System when the NBBO 12 width is 

greater than x% of the midpoint of the 

NBBO, subject to minimum and 

maximum dollar values established by 

the Exchange, the System will reject or 

cancel back to the User the Market 

Order. The Exchange proposes to 

establish ‘‘x’’ and the minimum and 

maximum values on a class-by-class 

basis. The proposed Market Order 

NBBO Width Protection is based on and 

similar to the Market-Width Parameter 

set forth in C2 Options Rule 6.17(a)(1).13

In particular, similar to C2 Options Rule 

6.17(a)(1), the Exchange would reject or 

cancel Market Orders when the width of 

the NBBO is greater than an acceptable 

range and would establish the numeric 

values that would ultimately determine 

acceptable quote widths on a class-byclass basis. However, in contrast to C2 

Options Rule 6.17(a)(1), the Exchange 

does not propose to set forth specific 

boundaries for quote widths within the 

proposed rule. The Exchange believes 

that it needs flexibility to modify 

acceptable quote widths based on 

experience with the risk control and 

Users would always have access to the 

applicable settings in the Exchange’s 

publicly available specifications and/or 

as published in a Regulatory Circular. 

The Exchange notes that the Nasdaq 

Options Market (‘‘NOM’’) has a similar 

quote width protection in place for 

market orders that does not specify the 

applicable limits within the rule.14 The 

Exchange notes that it does not 

currently have an NBBO width 

protection in place for Market Orders, 

and thus this protection is an additive 

control to protect against erroneous 

executions. 

The second risk control the Exchange 

proposes to adopt is the Limit Order Fat 

Finger Check. As proposed, if a User 

submits a buy (sell) limit order to the 

System with a price that is more than a 

buffer amount established by the 

Exchange above (below) the NBO (NBB), 

or, in the case of an order received prior 

to 9:30 a.m., above (below) the midpoint 

of the NBBO at the close of the market 

on the previous trading day, the System 

will reject or cancel back to the User the 

limit order. The proposed Limit Order 

Fat Finger Check is based on and similar 

to certain Limit Order Price Parameters 

set forth in C2 Options Rule 6.17(b). In 

particular, similar to C2 Options Rule 

6.17(b)(1) and (b)(2), the Exchange 

would reject or cancel limit orders that 

are more than an acceptable difference 

from the applicable reference price and 


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15See BOX Rule 7290, which describes the Price 

Protection for Limit Orders and Quotes and states 

that ‘‘[t]he price parameter is set by either the 

Exchange or the Participant on an underlying 

security basis and is a percentage of the NBBO on 

the opposite side of the incoming order or quote. 

Unless determined otherwise by the Exchange and 

announced to Participants via Informational 

Circular, the specified percentage shall be: 100% for 

the contra-side NBB or NBO priced at or below 

$0.25; and 50% for the contraside NBB or NBO 

priced above $0.25.’’ 

would distinguish the applicable 

reference price depending on whether 

an order was received prior to market 

open or during the trading day. 

However, in contrast to C2 Options Rule 

6.17(b), which states that the acceptable 

tick distance shall be no less than two 

minimum increment ticks for simple 

orders, the Exchange does not propose 

to set forth specific boundaries for the 

acceptable difference within the 

proposed rule. As is true for the Market 

Order NBBO Width Protection 

described above, the Exchange believes 

that it needs flexibility to modify the 

acceptable price range based on 

experience with the risk control and 

Users would always have access to the 

applicable settings in the Exchange’s 

publicly available specifications and/or 

as published in a Regulatory Circular. 

The Exchange notes that the BOX 

Options Exchange (‘‘BOX’’) has a similar 

price protection in place for limit orders 

that does specify potential percentages 

in the Rule but also permits BOX to 

modify such percentages via 

Information Circular without 

establishing outer boundaries.15 The 

Exchange notes that EDGX Options also 

currently applies mandatory fat finger 

protection to complex orders received 

by EDGX Options pursuant to 

Interpretation and Policy .06 to EDGX 

Rule 21.20. The Exchange also notes 

that it currently offers price protections 

analogous to the proposed Limit Order 

Fat Finger Check for orders other than 

complex orders (i.e., ‘‘simple orders’’), 

however, as noted above such price 

protections are optional. 

The third risk control the Exchange 

proposes to adopt is the Buy Order Put 

Check. As proposed, if a User enters a 

buy limit order for a put with a price 

that is higher than or equal to the strike 

price of the option, the System will 

reject or cancel back to the User the 

limit order. Similarly, if a User enters a 

buy Market Order for a put that would 

execute at (or the remaining portion 

would execute at) a price higher than or 

equal to the strike price of the option, 

the System will reject or cancel back to 

the User the Market Order (or remaining 

portion). The Exchange does not 

propose to apply this check to adjusted 

options. The proposed Buy Order Put 

Check is based on and substantively 

identical to the Put Strike Price Value 

Check set forth in C2 Options Rule 

6.17(d)(1)(A). The Exchange notes that it 

does not currently have an analogous 

risk control in place, and thus, this 

protection is an additive control to 

protect against erroneous executions. 

The fourth and final risk control the 

Exchange proposes to adopt is the DrillThrough Price Protection. As proposed, 

the Drill-Through Price Protection 

feature is a price protection mechanism 

applicable to all orders under which a 

buy (sell) order will not be executed at 

a price that is higher (lower) than the 

NBO (NBB) at the time of order entry 

plus (minus) a buffer amount 

established by the Exchange (the ‘‘DrillThrough Price’’). If a buy (sell) order 

would execute or post to the BZX 

Options Book at a price higher (lower) 

than the Drill-Through Price, the System 

will instead post the order to the BZX 

Options Book at the Drill-Through Price, 

unless the terms of the order instruct 

otherwise. Any order (or unexecuted 

portion thereof) will rest in the BZX 

Options Book (based on the time at 

which it enters the book for priority 

purposes) for a time period in 

milliseconds that may not exceed three 

seconds with a price equal to the DrillThrough Price. If the order (or 

unexecuted portion thereof) does not 

execute during that time period, the 

System will cancel it. While similar to 

and based on C2 Options Rule 

6.17(a)(2), the proposed Rule is more 

directly based on Interpretation and 

Policy .04, to EDGX Options Rule 21.20, 

which describes Drill-Through Price 

Protection applicable to complex orders 

on EDGX Options. The proposed DrillThrough Price Protection is identical to 

Interpretation and Policy .04 to EDGX 

Options Rule 21.20 with the exceptions 

of necessary differences between 

language related to simple orders and 

complex orders and that in contrast to 

a User being able to modify the 

protection to a more or less restrictive 

control, which is available for the 

control on EDGX Options for complex 

orders, the Exchange proposes to apply 

standard Drill-Through Price Protection 

to all orders and such protection cannot 

be modified. 

In connection with the changes 

described above, the Exchange proposes 

to remove a portion of the definition of 

a [sic] Market Orders to remove a risk 

protection currently in place that 

overlaps with various risk controls 

described above. Market Orders are 

currently defined in in Rule 21.1(d)(5) 

as ‘‘orders to buy or sell at the best price 

available at the time of execution.’’ Rule 

21.1(d)(5) further states that ‘‘[a]ny 

portion of a Market Order that would 

execute at a price more than $0.50 or 5 

percent worse than the NBBO at the 

time the order initially reaches BZX 

Options, whichever is greater, will be 

cancelled.’’ The Exchange proposes to 

remove this price protection for Market 

Orders because it is no longer necessary 

in light of the proposed risk controls 

described above (other than the Limit 

Order Fat Finger Check, which is 

inapplicable to Market Orders). In 

particular, the Drill-Through Price 

Protection provides a control with 

respect to the execution prices of Market 

Orders and would be duplicative of the 

existing control. 

Details in Transaction Reports 

The Exchange also proposes to modify 

Rule 21.10, Anonymity, to allow it to 

provide additional information on 

transaction reports. Current Rule 

21.10(a) states that ‘‘[t]he intra-day 

transaction reports produced by the 

System will indicate the details of the 

transactions, and shall not reveal contra 

party identities.’’ The Exchange notes 

that this provision is consistent with 

Rule 11.15(d) of its cash equities trading 

platform (‘‘BZX Equities’’) but is not a 

common provision in the rules of other 

options exchanges, including Cboe 

Options or C2 Options, which do not 

have such a provision. The Exchange 

currently provides details regarding 

contra-parties on various end of day and 

end of month reports for clearing 

purposes, and this information is 

similarly readily available through the 

Options Clearing Corporation (‘‘OCC’’) 

for clearing purposes. 

The Exchange proposes to remove the 

restriction on providing contra party 

identities and to specifically state that 

aggregated and individual transaction 

reports produced by the System will 

indicate the details of a User’s 

transactions, including the contra 

party’s MPID, capacity, and clearing 

firm account number. 

Current paragraph (c) of Rule 21.10 

contains three exceptions to the general 

rule of anonymity, providing that the 

‘‘Exchange shall reveal a User’s identity 

in the following circumstances: (1) For 

regulatory purposes or to comply with 

an order of an arbitrator or court; (2) if 

both Users to the transaction consent; 

(3) Unless otherwise instructed by a 

User, the Exchange will reveal to a User, 

no later than the end of the day on the 

date an anonymous trade was executed, 

when the User’s Order has been 

decremented by another Order 

submitted by that same User.’’ The 

Exchange proposes to retain only the 

first exception, regarding regulatory 

purposes or to comply with an order of 


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16 15 U.S.C. 78f(b). 

17 15 U.S.C. 78f(b)(5). 

18The Exchange notes that its affiliate, EDGX, 

also intends to adopt changes that are substantively 

identical to the changes set forth in this proposal. 

In addition, as Cboe Options and C2 Options 

migrate to the same technology platform as the 

Exchange, Cboe Options and C2 Options intend to 

modify rules and functionality to be consistent with 

the Exchange and EDGX, unless the retention of 

differences is intended. 

19See supra, note 8. 

20See supra, notes 14 and 15. 

21See, e.g., Rule 21.1(c)(1), defining ‘‘Attributable 

Orders’’ as orders that are designated for display 

(price and size) including the User’s market 

participant identifier (‘‘MPID’’). 

22 15 U.S.C. 78f(b)(5). 

23 15 U.S.C. 78s(b)(3)(A). 

24 17 CFR 240.19b–4. 

25 17 CFR 240.19b–4(f)(6). 

an arbitrator or court, as the second and 

third exceptions are no longer necessary 

to the extent the Exchange will provide 

information on individual and aggregate 

transaction reports produced by the 

System. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 16 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 17

in particular, in that 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. In 

particular, consistent rules and 

functionality between the Exchange and 

its affiliated exchanges will reduce 

complexity and help avoid potential 

confusion by the Users of the Exchange 

that are also participants on other Cboe 

Affiliated Exchanges.18

The Exchange believes the proposed 

amendment will reduce complexity and 

increase the understanding of the 

Exchange’s operations for all Users of 

the Exchange. In particular, by adopting 

certain mandatory risk controls, the 

Exchange’s functionality will be more 

similar to that of Cboe Options and C2 

Options. In turn, when Cboe Options 

and C2 Options are migrated to the same 

technology as that of the Exchange, 

Users of the Exchange and other Cboe 

Affiliated Exchanges will have access to 

similar functionality on all Cboe 

Affiliated Exchanges. As such, the 

proposed rule change would foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities and would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system. 

The Exchange further believes that the 

proposed price protection mechanisms 

and risk controls will protect investors 

and the public interest and maintain fair 

and orderly markets by mitigating 

potential risks associated with market 

participants entering orders and quotes 

at unintended prices, and risks 

associated with orders and quotes 

trading at prices that are extreme and 

potentially erroneous, which may likely 

have resulted from human or 

operational error. While the Exchange 

has previously offered many risk 

controls under Interpretation and Policy 

.01 to Rule 11.13 and other filings 

previously made by the Exchange,19 the 

Exchange believes that Users will 

benefit from the additional specificity 

provided under the proposed rules, 

particularly because, in contrast to 

optional risk control functionality, the 

proposed rules provide that each 

proposed risk control will be applied to 

all orders received by BZX Options. 

Although the Exchange’s proposed price 

protection mechanisms and risk 

controls are similar to and based on 

existing rules of C2 Options or the 

Exchange, the Exchange notes that it has 

not proposed to establish outer 

boundaries or limits to the levels at 

which the mechanisms can be set. The 

Exchange believes this is reasonable and 

is necessary to afford the Exchange the 

flexibility to establish and modify the 

default parameters in order to protect 

investors and the public interest and 

maintain a fair and orderly market. The 

Exchange again notes that the applicable 

specified levels will always be available 

in the Exchange’s publicly available 

specifications and/or as published in a 

Regulatory Circular. The Exchange also 

notes that this approach is consistent 

with certain rules of other options 

exchanges, which similarly offer risk 

controls that can be modified without 

regard to a rule based limitation.20

The Exchange believes the proposed 

changes to Rule 21.10 that will permit 

the Exchange to provide additional 

detail in transaction reports is 

consistent with the rules of other 

options exchanges that do not contain 

explicit restrictions on providing such 

information. The proposed changes are 

similarly consistent with a variety of 

current Exchange and options industry 

practices, including the fact that 

clearing information available through 

OCC already provides contra-party 

information, as well as the ability of a 

User on the Exchange to disclose their 

identity when quoting.21 Based on the 

foregoing, the Exchange believes the 

proposed changes to Rule 21.10 are 

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

Act 22 in particular, in that they are 

designed to foster cooperation and 

coordination with persons engaged in 

clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities. 

(B) Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange notes that the proposal will 

further promote consistency between 

the Exchange and its affiliated 

exchanges, and is part of a larger 

technology integration that will 

ultimately reduce complexity for Users 

of the Exchange that are also 

participants on other Cboe Affiliated 

Exchanges. The Exchange does not 

believe that the proposed changes will 

have any direct impact on competition. 

Thus, the Exchange does not believe 

that the proposal creates any significant 

impact on competition. 

(C) Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any written 

comments from members or other 

interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (A) Significantly affect 

the protection of investors or the public 

interest; (B) impose any significant 

burden on competition; and (C) by its 

terms, 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 23 and paragraph (f)(6) of Rule 19b– 

4 thereunder,24 the Exchange has 

designated this rule filing as noncontroversial. The Exchange has given 

the Commission written notice of its 

intent to file the proposed rule change, 

along with a brief description and text 

of the proposed rule change at least five 

business days prior to the date of filing 

of the proposed rule change, or such 

shorter time as designated by the 

Commission. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 25 normally does not 

become operative prior to 30 days after 

the date of the filing. However, Rule 


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1054 Federal Register / Vol. 83, No. 6 / Tuesday, January 9, 2018 / Notices 

26 17 CFR 240.19b–4(f)(6)(iii). 

27For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 28 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Specialist’’ applies to transactions for 

the account of a Specialist (as defined in Exchange 

Rule 1020(a)). A Specialist is an Exchange member 

who is registered as an options specialist pursuant 

to Rule 1020(a). An options Specialist includes a 

Remote Specialist which is defined as an options 

specialist in one or more classes that does not have 

a physical presence on an Exchange floor and is 

approved by the Exchange pursuant to Rule 501. 

4The term ‘‘ROT, SQT and RSQT’’ applies to 

transactions for the accounts of Registered Option 

Traders (‘‘ROTs’’), Streaming Quote Traders 

(‘‘SQTs’’), and Remote Streaming Quote Traders 

(‘‘RSQTs’’). For purposes of the Pricing Schedule, 

the term ‘‘Market Maker’’ will be utilized to 

describe fees and rebates applicable to ROTs, SQTs 

and RSQTs. RSQTs may also be referred to as 

Remote Market Markers (‘‘RMMs’’). 

5Options overlying Standard and Poor’s 

Depositary Receipts/SPDRs (‘‘SPY’’) are based on 

the SPDR exchange-traded fund (‘‘ETF’’), which is 

designed to track the performance of the S&P 500 

Index. 

6The term ‘‘Customer’’ applies to any transaction 

that is identified by a member or member 

organization for clearing in the Customer range at 

The Options Clearing Corporation (‘‘OCC’’) which 

is not for the account of a broker or dealer or for 

the account of a ‘‘Professional’’ (as that term is 

defined in Rule 1000(b)(14)). 

19b–4(f)(6)(iii) 26 permits the 

Commission to designate a shorter time 

if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange notes that the 

proposal will promote consistency 

between the Exchange and its affiliated 

exchanges, and is part of a larger 

technology integration that will 

ultimately reduce complexity for Users 

of the Exchange that are also 

participants on other Cboe Affiliated 

Exchanges. The Exchange further notes 

that allowing the Exchange to move 

forward with the proposed changes 

without an operative delay will ensure 

that the technology integration can 

continue with periodic but measured 

changes rather than implementing 

several changes at once. Furthermore, 

the Exchange states that the 

implementation of the risk controls will 

help to avoid potentially erroneous 

executions. The Commission believes 

that waiver of the 30-day operative 

delay is consistent with the protection 

of investors and the public interest. 

Accordingly, the Commission hereby 

waives the operative delay and 

designates the proposed rule change as 

operative upon filing.27

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: (1) Necessary or appropriate in 

the public interest; (2) for the protection 

of investors; or (3) 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– 

CboeBZX–2017–022 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE, Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CboeBZX–2017–022. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CboeBZX–2017–022 and 

should be submitted on or before 

January 30, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–00158 Filed 1–8–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82442; File No. SR–Phlx– 

2017–108] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the 

Exchange’s Pricing Schedule 

January 4, 2018. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

21, 2017, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Exchange’s Pricing Schedule in the 

following respects: (i) Modify the 

Simple Order rebate applicable to 

Specialists 3 and Market Makers 4 for 

adding liquidity in SPY; 5 (ii) establish 

a new $0.05 per contract surcharge for 

Customers 6 whose SPY Complex Orders 

execute against simple Market Maker or 

Specialist orders resting on the Simple 

Order Book; (iii) reduce the per contract 


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