[Federal Register Volume 86, Number 161 (Tuesday, August 24, 2021)]
[Notices]
[Pages 47346-47350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-18123]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92702; File No. SR-CBOE-2021-045]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Order Granting Accelerated Approval of a Proposed Rule 
Change To Amend Rule 13.15, Which Governs the Exchange's Minor Rule 
Violation Plan

August 18, 2021.
    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 August 3, 2021, Cboe Exchange, Inc. filed with the Securities 
and Exchange Commission (the ``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 and 
approving the proposal on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend Rule 13.15, which governs the Exchange's Minor Rule Violation 
Plan (``MRVP''), in connection with certain minor rule violations, 
applicable fines, as well as other clarifying, nonsubstantive changes. 
The text of the proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (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 III 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 MRVP in Rule 13.15 in connection 
with certain minor rule violations, applicable fines, as well as other 
clarifying, nonsubstantive changes. Rule 13.15 provides for disposition 
of specific violations through assessment of fines in lieu of 
conducting a formal disciplinary proceeding. Rule 13.15(g) sets forth 
the list of specific Exchange Rules under which a Trading Permit Holder 
(``TPH'') or person associated with or employed by a TPH may be subject 
to a fine for violations of such Rules and the applicable fines that 
may be imposed by the Exchange. Specifically, the proposed rule change 
amends Rule 13.15(g) by: (1) Eliminating certain rule violations that 
the Exchange no longer believes to be minor in nature; (2) updating the 
fine schedule applicable to minor rule violations related to a Market-
Maker's failure to meet Exchange quoting obligations; and (3) making 
other nonsubstantive changes.
    First, the proposed rule change removes the following rule 
violations and applicable fines from Rule 13.15(g): \3\
---------------------------------------------------------------------------

    \3\ As a result of the proposed elimination of certain rule 
violations listed under Rule 13.15(g), the proposed rule change 
subsequently renumbers current Rules 13.15(g)(6), (8), (9), (11), 
(13), (14), (15), (16), (17), (18), (19) and (20), to Rules 
13.15(g)(4), (5), (6), (7), (8), (9), (10), (11), (12), (13), (14) 
and (15), respectively.
---------------------------------------------------------------------------

    <bullet> Rule 13.15(g)(4), which currently imposes certain fines 
for failure to submit trade information on time and failure to submit 
trade information to the Price Reporter pursuant to Rule 6.1 (Report 
Transactions to the Exchange); \4\
---------------------------------------------------------------------------

    \4\ See Rule 6.1(a), which provides that a participant in each 
transaction to be designated by the Exchange must report or ensure 
the transaction is reported to the Exchange within 90 seconds of the 
execution in a form and manner prescribed by the Exchange so that 
the trade information may be reported to time and sales reports; and 
Rule 6.1(c), which provides the Exchange-established procedure for 
reporting transactions pursuant to Rule 6.1(a).
---------------------------------------------------------------------------

    <bullet> Rule 13.15(g)(5), which currently imposes certain fines 
for failure to honor the firm quote requirements of Rules 5.52 (Market-
Maker Quotes) \5\ and 5.59 (Firm Disseminated Market Quotes), to honor 
the priority of marketable priority customer orders pursuant to Rules 
5.32 and 5.85 (which among other things, govern customer priority on 
the Exchange's trading floor),\6\, and to use due diligence in the 
execution of orders for which the floor Trading Permit Holder maintains 
an agency obligation pursuant to Rule 5.91 (Floor Broker 
Responsibilities); \7\
---------------------------------------------------------------------------

    \5\ See Rule 5.52(a), which provides, in relevant part, that 
Market-Maker bids and offers are firm for all orders under this Rule 
and Rule 602 of Regulation NMS under the Exchange Act (``Rule 602'') 
for the number of contracts specified in the bid or offer, except 
if: (1) A system malfunction or other circumstance impairs the 
Exchange's ability to disseminate or update market bids and offers 
in a timely and accurate manner; (2) the level of trading activities 
or the existence of unusual market conditions is such that the 
Exchange is incapable of collecting, processing, and making 
available to quotation vendors the data for the option in a manner 
that accurately reflects the current state of the market on the 
Exchange; (3) prior to the conclusion of the Opening Auction 
Process; or (4) any of the circumstances provided in Rule 602(c)(4) 
exist.
    \6\ Rule 5.85(a)(2)(A), which provides that Priority Customer 
orders in the Book have first priority. If there are two or more 
Priority Customer orders in the Book at the same price, the System 
prioritizes them in the order in which the System received them 
(i.e., in time priority). The Exchange notes that customer priority 
for electronic executions is systematically enforced. See Rule 
5.32(a)(2)(A).
    \7\ See Rule 5.91(a), which provides that a Floor Broker 
handling an order must use due diligence to execute the order at the 
best price or prices available to him or, in accordance with the 
Rules. Use of due diligence in handling and executing an order 
includes: (1) Announcing to the trading crowd a request for quotes; 
(2) taking the necessary measures to ensure the proper execution of 
an order in accordance with firm quote obligations in Rule 5.52, 
including the executable quantity of a quote from the trading crowd; 
(3) the immediate and continuous representation at the trading 
station where the applicable class trades of the following types of 
orders: (A) Market orders; (B) limit orders to sell where the 
specified price is at or below the current offer or; and (C) limit 
orders to buy where the specified price is at or above the current 
bid; (4) subject to the requirement to systematize orders prior to 
representation pursuant to Rule 5.7(f), electronically recording the 
time via a PAR workstation at which the Floor Broker initially 
represents the order to the trading crowd; and (5) prioritizing the 
Floor Broker's agency business over the Floor Broker's liquidation 
orders (which liquidation orders are described in Rule 5.91(d)).
---------------------------------------------------------------------------

    <bullet> Rule 13.15(g)(7), which currently imposes certain fines 
for any individual Trading Permit Holder who fails for more than 5% of 
the Trading Permit Holder's transactions in any month to submit on the 
date that a transaction is

[[Page 47347]]

executed the trade information required by Rule 6.1; \8\
---------------------------------------------------------------------------

    \8\ See Rule 6.1(b), which requires parties to a trade to 
immediately record on a card or ticket, or enter in an electronic 
data storage medium acceptable to the Exchange, (1) the assigned 
broker initial code and clearing firm (if a Market-Maker); (2) the 
symbol of the underlying security or index; (3) the type, expiration 
month, and exercise price of the option contract; (4) the 
transaction price; (5) the number of contract units comprising the 
transaction; (6) the time of the transaction obtained from a source 
designated by the Exchange; (7) the name of the contra Clearing 
Trading Permit Holder; and (8) the assigned broker initial code of 
the contra Trading Permit Holder.
---------------------------------------------------------------------------

    <bullet> Rule 13.15(g)(10), which currently imposes certain fines 
for violations of Rule 8.14 (Communications to the Exchange or the 
Clearing Corporation); \9\ and
---------------------------------------------------------------------------

    \9\ See Rule 8.14, which provides that no Trading Permit Holder, 
person associated with a Trading Permit Holder or applicant to be a 
Trading Permit Holder shall make any misrepresentation or omission 
in any application, report or other communication to the Exchange, 
or to the Clearing Corporation with respect to the reporting or 
clearance of any Exchange transaction, or adjust any position at the 
Clearing Corporation in any class of options traded on the Exchange 
except for the purpose of correcting a bona fide error in recording 
or of transferring the position to another account.
---------------------------------------------------------------------------

    <bullet> Rule 13.15(g)(12), which currently imposes certain fines 
for trade-through violations pursuant to Rule 5.66 (Order 
Protection).\10\
---------------------------------------------------------------------------

    \10\ See Rule 5.66(a), which provides that, except as provided 
in paragraph (b), Trading Permit Holders shall not effect Trade-
Throughs. The Exchange notes that trade-through compliance for 
electronic executions are systematically enforced.
---------------------------------------------------------------------------

    Additionally, as a result of the proposed deletion of Rule 
13.15(g)(4) and (g)(5), the proposed rule change also deletes 
Interpretations and Policies .01 and .02 to Rule 13.15, as 
Interpretation and Policy .01 exclusively relates to Rule 13.15(g)(5), 
and Interpretation and Policy .02 exclusively relates to Rule 
13.15(g)(4). The proposed rule change also moves the entirety of the 
rule text in Interpretation and Policy .03, which exclusively 
corresponds to current Rule 13.15(g)(6), into Rule 13.15(g)(6) itself. 
Additionally, the proposed rule change moves the language currently in 
footnote 1 into current Rule 13.15(g)(6). Footnote 1 provides that 
Minor Rule Violation Fines imposed under this provision may be issued 
by Exchange Floor Officials. The Exchange notes that, while footnote 1 
is currently appended to Rule 13.15(g)(5), which is being deleted as 
proposed herein, it more appropriately applies to current Rule 
13.15(g)(6) (Violations of Trading Conduct and Decorum Policies), as 
fines for violations of which are currently issued by Exchange Floor 
Officials pursuant to Rule 5.80(c). Rule 5.80(c)(1)(A) specifically 
provides that Exchange Floor Officials may fine TPHs and persons 
employed by or associated with TPHs pursuant to Rule 13.15 for trading 
conduct and decorum violations which are subject to fine under such 
fine schedules. As such, the proposed relocation of the language in 
footnote 1 merely provides additional clarity in the MRVP fine schedule 
regarding the issuance of Minor Rule Violation fines for trading 
conduct and decorum violations.
    The Exchange no longer believes violations of the above-listed 
rules to be minor in nature and therefore proposes to remove them from 
the list of rules in Rule 13.15(g) eligible for a minor rule fine 
disposition. Particularly, the Exchange believes that violations of 
each of the rules listed above may directly impact trading on the 
Exchange, maintenance of a fair and orderly market, and/or customer 
protections. For example, the Exchange believes that the requirement to 
submit trade information on time, to the Price Reporter and 
consistently on an order's transaction date, as well as the requirement 
to truthfully and accurately represent information in communications to 
the Exchange and the Clearing Corporation allows the Exchange (and the 
Clearing Corporation) to maintain an accurate audit trail and trade 
information. Likewise, honoring firm quotations is vital in promoting 
efficient functioning of intermarket price priority and trading in 
general. Timely and accurate representation of both trade information 
and quotations protects investors by providing them with accurate 
information essential to their trading activities and participation in 
the markets. Upholding due diligence to honor the priority of customer 
orders and obligations as a principal, as well as the prohibition 
against the execution of trades at prices inferior to protected 
quotations (trade-throughs), all provide important customer 
protections. Pursuant to Rule 13.15(f), the Exchange is not required to 
impose a fine pursuant to its MRVP with respect to the violation of any 
rule listed under Rule 13.15. If the Exchange determines that any 
violation is intentional, egregious, or otherwise not minor in nature, 
it may proceed under its formal disciplinary rules. As such, the 
Exchange has increasingly chosen to handle such violations in recent 
years under the Exchange's formal disciplinary rules, rather than 
imposing a fine pursuant to its MRVP.
    The proposed rule change next amends the fine schedule applicable 
to Maker-Makers for failure to meet Exchange quoting obligations. 
Specifically, Rule 13.15(g)(14) ((g)(9), as amended) \11\ provides that 
a fine shall be imposed upon a Market-Maker, Designated Primary Market-
Maker or Lead Market Maker (as applicable) in accordance with the fine 
schedule set forth below for the following conduct: \12\
---------------------------------------------------------------------------

    \11\ See supra note 3.
    \12\ The proposed rule change also makes nonsubstantive 
clarifying updates to Rule 13.15(g)(14), by removing the conduct 
listed in subparagraph (g)(14)(B) and updating the format in which 
time is reflected. These nonsubstantive amendments are described in 
further detail herein this proposal below.
---------------------------------------------------------------------------

    <bullet> Failure to meet the continuous quoting obligation (Rule 
5.52, 5.55, and 5.54);
    <bullet> Failure to meet the initial quote volume requirements 
(Rule 5.52); and
    <bullet> Failure of a Lead Market-Maker or Designated Primary 
Market-Maker to enter opening quotes within one minute following the 
initiation of an opening rotation (e.g., 9:31 a.m.) in a series in its 
appointed or allocated class, respectively, that is not open due to the 
lack of a quote (see Rule 5.31(e)(2) or (j)(5)(B), as applicable) 
(Rules 5.55 and 5.54), respectively.
    For the first offense during any rolling 24-month period, the fine 
schedule imposed by Rule 13.15(g)(14) currently permits the Exchange to 
apply a fine ranging between $2,000 and $4,000. For subsequent offenses 
during the same period, the fine schedule currently permits the 
Exchange to apply a fine ranging between $4,000 and $5,000. The 
proposed rule change updates the fine schedule to provide that, during 
any rolling 24-month period, the Exchange may give a Letter of Caution 
for a first offense, may apply a fine of $1,500 for a second offense, 
may apply a fine of $3,000 for a third offense,\13\ and may proceed 
with formal disciplinary action for subsequent offenses. As described 
above, and as is the case for all rule violations covered under Rule 
13.15(g), the Exchange may determine that a violation of Market-Maker 
quoting obligations is intentional, egregious, or otherwise not minor 
in nature and choose to proceed under the Exchange's formal 
disciplinary rules rather than its MRVP.\14\ The Exchange may continue 
to aggregate individual violations of

[[Page 47348]]

particular rules and treat such violations as a single offense.\15\
---------------------------------------------------------------------------

    \13\ The Exchange notes that Rule 13.15(a) authorizes the 
Exchange to impose a fine, not to exceed $5,000, for minor rule 
violations in lieu of commencing a disciplinary proceeding. 
Additionally, any fine imposed pursuant to Rule 13.15 that (1) does 
not exceed $2,500 and (2) is not contested, shall be reported by the 
Exchange to the Commission on a periodic, rather than a current, 
basis, except as may otherwise be required by Exchange Act Rule 19d-
1 and by any other regulatory authority.
    \14\ See Rule 13.15(f).
    \15\ See Rule 13.15(a).
---------------------------------------------------------------------------

    The Exchange believes it is appropriate to remove the range of 
fines imposed for first and subsequent offenses and, instead, apply a 
letter of caution for a first offense, a specified fine amount for a 
second and a third offense, and formal disciplinary proceedings for 
subsequent offenses. Particularly, the Exchange believes that applying 
a lesser penalty (Letter of Caution) for a first offense and then 
providing a higher, itemized fine per second and third offenses and, 
ultimately, formal disciplinary proceedings for any subsequent offenses 
during a rolling 24-month period, will allow the Exchange to levy 
progressively larger fines and greater penalties against repeat-
offenders (as opposed to a fine range for any offenses that may come 
after a first offense). The Exchange believes this fine structure may 
serve to more effectively deter repeat-offenders while providing 
reasonable warning for a first offense during a rolling 24-month 
period. The Exchange notes that a lesser penalty in the form of a 
warning letter for a first offense paired with a greater penalty in the 
form of formal disciplinary proceedings after a finite number of 
following offenses is consistent with the minor rule violation fine 
schedules applicable to minor rule violations of substantially the same 
market maker quoting obligations on the Exchange's affiliated options 
exchanges, EDGX and BZX,\16\ as well as substantially similar market 
maker quoting obligations on another options exchange.\17\ The Exchange 
notes that the proposed change is intended to provide for consistency 
across the Exchange's MRVP and the MRVPs of its affiliated options 
exchanges. Additionally, EDGX and BZX also intend to file proposals to 
update their minor rule violation fines so that second, third, and 
subsequent offenses for violating market maker quoting obligations will 
receive the same sanctions,\18\ as proposed herein.
---------------------------------------------------------------------------

    \16\ See BZX Rule 25.3(d); and EDGX Rule 25.3(d).
    \17\ See e.g., MIAX Options Rule 1014(d)(7).
    \18\ The Exchange again notes that pursuant to the BZX and EDGX 
MRVPs, first offenses regarding market maker quoting obligations 
already receive a Letter of Caution and the highest/last range of 
offenses (currently 5 or more) are already subject to formal 
disciplinary action. See supra note 16.
---------------------------------------------------------------------------

    The proposed rule change also makes nonsubstantive clarifying 
changes to certain provisions in Rule 13.15(g). The proposed rule 
change makes a clean-up revision by removing the conduct listed in 
subparagraph (g)(14)(B), ``failure to meet the applicable quote width 
requirements (Rule 5.52),'' because, as of 2019, Market-Makers are no 
longer subject to a quote width requirement.\19\ The proposed rule 
change amends the subsequent lettering in subparagraph (g)(14) as a 
result of this revision. The proposed rule change corrects a typo in 
the fine amounts that inadvertently contain an additional digit in 
subparagraph (g)(8). The proposed rule change also updates the time 
format in the example provided in subparagraph (g)(14)(D), which is 
currently reflected in Central Time, to instead reflect Eastern Time 
without time zone indication. This proposed change is consistent with 
Rule 1.6, which states that unless otherwise specified, all times in 
the Rules are Eastern Time, and conforms the time reflected in 
(g)(14)(D) to the time format reflected throughout the Rules. The 
proposed rule change corrects the cross-reference to Rule 5.24(e) in 
Rule 13.15(g)(19) to, instead, correctly reflect Rule 5.5(d). The 
Exchange previously restructured its Rulebook in connection with a 2019 
technology migration and, prior to this restructuring, the provision in 
current Rule 13.15(g)(19) referred to what is now Rule 5.5(d) (former 
Rule 6.23A(f)),\20\ instead of what is now Rule 5.24(e) (former Rule 
6.18). Upon restructuring Chapter 13,\21\ the Exchange inadvertently 
changed the cross-reference in Rule 13.15(g)(19) to reflect the 
incorrect rule and now proposes to update this cross-reference to 
reflect the correct and originally intended cross-reference to Rule 
5.5(d). Likewise, the Exchange updates a cross-reference to prior Rule 
5.25 to current Rule 5.5 in subparagraph (g)(19).
---------------------------------------------------------------------------

    \19\ See Securities Exchange Act Release No. 87024 (September 
19, 2019), 84 FR 50545 (September 25, 2019) (SR-CBOE-2019-059).
    \20\ See Securities Exchange Act Release No. 87320 (October 16, 
2019), 84 FR 56501 (October 22, 2019) (SR-CBOE-2019-095).
    \21\ See Securities Exchange Act Release No. 87210 (October 3, 
2019), 84 FR 54190 (October 9, 2019) (SR-CBOE-2019-068).
---------------------------------------------------------------------------

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.\22\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \23\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. The Exchange 
believes the proposed rule change is consistent with the Section 
6(b)(5) \24\ requirement that the rules of an exchange not be designed 
to permit unfair discrimination between customers, issuers, brokers, or 
dealers.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78f(b).
    \23\ 15 U.S.C. 78f(b)(5).
    \24\ Id.
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change to remove 
certain rules listed as eligible for a minor rule fine disposition 
under its MRVP, which it no longer considers violations of which to be 
minor in nature, will assist the Exchange in preventing fraudulent and 
manipulative acts and practices and promoting just and equitable 
principles of trade, and will serve to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, protect investors and the public interest. 
Particularly, the Exchange believes that violations of each of the 
rules proposed to be removed from its MRVP may directly impact trading 
on the Exchange, maintenance of a fair and orderly market, and/or 
customer protection. As such, the Exchange does not believe violations 
of these rules to be minor in nature and, instead, should continue to 
be handled under its formal disciplinary rules, as the Exchange has 
chosen to handle the majority of all such violations in recent years, 
rather than imposing fines pursuant to its MRVP.
    The Exchange also believes that the proposed rule change to remove 
the range of fines imposed for first and subsequent Market-Maker 
quoting offenses and, instead, apply a letter of caution for a first 
offense, a specified fine amount for a second and a third offense, and 
formal disciplinary proceedings for subsequent offenses will assist the 
Exchange in preventing fraudulent and manipulative acts and practices 
and promoting just and equitable principles of trade, and will serve to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general, protect investors 
and the public interest. Particularly, the Exchange believes that 
applying a lesser penalty (Letter of Caution) for a first offense and 
then providing an itemized fine per second

[[Page 47349]]

and third offenses and, ultimately, formal disciplinary proceedings for 
any subsequent offenses during a rolling 24-month period, will allow 
the Exchange to levy greater penalties (i.e., formal disciplinary 
proceedings) against repeat-offenders (as opposed to a fine range for 
any offenses that may come after a first offense) which may serve to 
more effectively deter repeat-offenders while providing reasonable 
warning for a first offense during a rolling 24-month period. The 
Exchange believes that more effectively deterring repeat-offenders and 
making first instance offenders aware of their quoting obligation 
violations and the subsequent consequences for continued failure, will, 
in turn, further motivate Market-Makers to continue to uphold their 
quoting obligations, providing liquid markets to the benefit of all 
investors. The Exchange again notes that a lesser penalty in the form 
of a warning letter for a first offense paired with greater penalties 
in the form of eventual formal disciplinary proceedings following a 
finite number of offenses is consistent with the minor rule violation 
fine schedules applicable to minor rule violations of substantially the 
same market maker quoting obligations on the Exchange's affiliated 
options exchanges, EDGX and BZX.\25\ As such, the proposed rule change 
is also designed to benefit investors by providing from consistent 
penalties across the MRVPs of the Exchange and its affiliated options 
exchanges. As described above, EDGX and BZX intend to file proposals to 
update their minor rule violation fines so that second, third, and 
subsequent offenses for violating market maker quoting obligations will 
receive the same sanctions,\26\ as proposed herein.
---------------------------------------------------------------------------

    \25\ See supra note 16.
    \26\ See supra note 18.
---------------------------------------------------------------------------

    Additionally, the proposed clarifications and corrections, as 
applicable, in connection with footnote 1 of Rule 13.15, Interpretation 
and Policy .03 to Rule 13.15, and Rules 13.15(g)(8), (14) and (19) will 
benefit investors by adding clarity to the Rules.
    The Exchange further believes that the proposed rule changes to 
Rule 13.15(g) are consistent with Section 6(b)(6) of the Act,\27\ which 
provides that members and persons associated with members shall be 
appropriately disciplined for violation of the provisions of the rules 
of the exchange, by expulsion, suspension, limitation of activities, 
functions, and operations, fine, censure, being suspended or barred 
from being associated with a member, or any other fitting sanction. As 
noted, the proposed rule change removes certain Rules listed as 
eligible for a minor rule fine disposition under the Exchange's MRVP 
that the Exchange no longer believes violations of which are minor in 
nature and are more appropriately disciplined through the Exchange's 
formal disciplinary procedures, and amends the fine schedule applicable 
to Market-Maker failures to meet their quoting obligations in a manner 
that appropriately sanctions such failures.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78f(b)(6).
---------------------------------------------------------------------------

    The Exchange also believes that the proposed change is designed to 
provide a fair procedure for the disciplining of members and persons 
associated with members, consistent with Sections 6(b)(7) and 6(d) of 
the Act.\28\ Rule 13.15, currently and as amended, does not preclude a 
TPH or person associated with or employed by a TPH from contesting an 
alleged violation and receiving a hearing on the matter with the same 
procedural rights through a litigated disciplinary proceeding.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78f(b)(7) and 78f(d).
---------------------------------------------------------------------------

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 proposed rule change is 
not intended to address competitive issues but rather is concerned 
solely with amending its MRVP in connection with rules eligible for a 
minor rule fine disposition and with the fine schedule for Market-Maker 
failures to meet quoting obligations. The Exchange believes the 
proposed rule changes, overall, will strengthen the Exchange's ability 
to carry out its oversight and enforcement functions and deter 
potential violative conduct.

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. 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

    <bullet> Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#6c1e190009410f0301010902181f2c1f090f420b031a"><span class="__cf_email__" data-cfemail="7b090e171e56181416161e150f083b081e18551c140d">[email protected]</span></a>. Please include 
File Number SR-CBOE-2021-045 on the subject line.

Paper Comments

    <bullet> 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-2021-045. 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-CBOE-2021-045 and should be submitted on 
or before September 14, 2021.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\29\ In 
particular, the

[[Page 47350]]

Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\30\ which requires that the rules of an 
exchange be designed to promote just and equitable principles of trade, 
to remove impediments and to 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 Commission also believes that 
the proposal is consistent with Sections 6(b)(1) and 6(b)(6) of the Act 
\31\ which require that the rules of an exchange enforce compliance 
with, and provide appropriate discipline for, violations of Commission 
and Exchange rules. Finally, the Commission finds that the proposal is 
consistent with the public interest, the protection of investors, or 
otherwise in furtherance of the purposes of the Act, as required by 
Rule 19d-1(c)(2) under the Act,\32\ which governs minor rule violation 
plans.
---------------------------------------------------------------------------

    \29\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \30\ 15 U.S.C. 78f(b)(5).
    \31\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \32\ 17 CFR 240.19d-1(c)(2).
---------------------------------------------------------------------------

    As stated above, the Exchange proposes to amend Rule 13.15(g) by: 
(1) Eliminating certain rule violations that the Exchange no longer 
believes to be minor in nature; (2) updating the fine schedule 
applicable to minor rule violations related to a Market-Maker's failure 
to meet Exchange quoting obligations; and (3) making other non-
substantive changes.
    The Commission believes that Rule 13.15 is an effective way to 
discipline a member for a minor violation of a rule. The Commission 
finds that the Exchange's proposal to eliminate rules that the Exchange 
no longer believes to be minor in nature from the MRVP and amending the 
fee schedule related to a Market-Maker's failure to meet the Exchange's 
quoting obligations is consistent with the Act because it may help the 
Exchange's ability to better carry out its oversight and enforcement 
responsibilities. Lastly, the Commission also believes that the 
Exchange's proposal to make non-substantive changes are consistent with 
the Act because they add clarity to the Exchange's rules.
    In approving the propose rule change, the Commission in no way 
minimizes the importance of compliance with the Exchange's rules and 
all other rules subject to fines under Rule 13.15. The Commission 
believes that a violation of any self-regulatory organization's rules, 
as well as Commission rules, is a serious matter. However, Rule 13.15 
provides a reasonable means of addressing rule violations that may not 
rise to the level of requiring formal disciplinary proceedings, while 
providing greater flexibility in handling certain violations. The 
Commission expects that the Exchange will continue to conduct 
surveillance with due diligence and make a determination based on its 
findings, on a case-by-case basis, whether a fine of more or less than 
the recommended amount is appropriate for a violation under Rule 13.15 
or whether a violation requires formal disciplinary action.
    For the same reasons discussed above, the Commission finds good 
cause, pursuant to Section 19(b)(2) of the Act,\33\ for approving the 
proposed rule change prior to the thirtieth day after the date of 
publication of the notice of the filing thereof in the Federal 
Register. The proposal will assist the Exchange in preventing 
fraudulent and manipulative practices by allowing the Exchange to 
adequately enforce compliance with, and provide appropriate discipline 
for, violations of Exchange rules. Accordingly, the Commission believes 
that a full notice-and-comment period is not necessary before approving 
the proposal.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\34\ and Rule 19d-1(c)(2) thereunder,\35\ that the proposed rule change 
(SR-CBOE-2021-045) be, and hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------

    \34\ 15 U.S.C. 78s(b)(2).
    \35\ 17 CFR 240.19d-1(c)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
---------------------------------------------------------------------------

    \36\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021-18123 Filed 8-23-21; 8:45 am]
BILLING CODE 8011-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>