Federal Register / Vol. 86, No. 180 / Tuesday, September 21, 2021 / Notices 52521 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5See Rule 5.51(a)(1). 

6See Rule 5.51(a)(3)–(5). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92988; File No. SR–CBOE– 

2021–053] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Rule 5.5(c) and 

Rule 5.6(d) in Connection With Time-InForce Instructions Available for Bulk 

Messages for the Account of a Market 

Maker 

September 15, 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 

September 9, 2021, Cboe Exchange, Inc. 

(the ‘‘Exchange’’ or ‘‘Cboe Options’’) 

filed with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Exchange filed the proposal as a 

‘‘non-controversial’’ proposed rule 

change pursuant to Section 

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

19b–4(f)(6) thereunder.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

Cboe Exchange, Inc. (the ‘‘Exchange’’ 

or ‘‘Cboe Options’’) proposes to amend 

Rule 5.5(c) and Rule 5.6(d) in 

connection with Time-in-Force 

instructions available for bulk messages. 

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/CBOELegal

RegulatoryHome.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 

Rule 5.5(c) and Rule 5.6(d) to allow 

Users to instruct bulk messages with a 

Time-in-Force of Immediate-or-Cancel 

(‘‘IOC’’). Currently, Users may not 

designate bulk messages as IOC, which, 

pursuant to Rule 5.6(d), instructs a limit 

order to execute in whole or in part as 

soon as the System receives it. The 

System cancels and does not post to the 

Book an IOC order (or unexecuted 

portion) not executed immediately on 

the Exchange or another options 

exchange. A bulk message is a single 

electronic message a User submits with 

an M Capacity (i.e., for the account of 

a Market-Maker) to the Exchange in 

which the User may enter, modify, or 

cancel up to an Exchange-specified 

number of bids and offers. More, 

specifically, bulk message functionality 

is available to Market-Makers and 

permits them to update their electronic 

quotes in block quantities across series 

in a class. Rule 5.5(c)(3)(A)(i) currently 

provides that a bulk message submitted 

through a dedicated logical port (i.e., a 

‘‘bulk port’’) has a Time-in-Force of Day. 

Pursuant to Rule 5.6(d), the term ‘‘Day’’ 

means, for an order so designated, an 

order or quote that, if not executed, 

expires at the RTH market close. All 

bulk messages have a Time in Force of 

Day, as set forth in Rule 5.5(c). The 

Exchange notes that, pursuant to Rule 

5.6(a), a Time-in-Force applied to a bulk 

message applies to each bid and offer 

within that bulk message. 

The Exchange proposes to allow 

Market-Makers to designate bulk 

messages as IOC by amending the 

following: Rule 5.3(c)(3)(A)(i) to provide 

that a bulk message submitted through 

a bulk port has a Time-in-Force of Day 

or IOC; the definition of IOC in Rule 

5.6(d) to provide that Users may 

designate bulk messages as IOC; and the 

definition of ‘‘Day’’ in Rule 5.6(d) to 

remove the language that all bulk 

messages have a Time-in-Force of Day, 

as set forth in Rule 5.5(c), and instead 

provide that Users may designate bulk 

messages as Day. 

A Market-Maker’s primary purpose is 

to provide liquidity to the market, 

which it may do in various ways, 

including resting quotes on the Book as 

well as submitting quotes to trade 

against other resting interest on the 

Book. In addition to providing liquidity 

via continuous quotes in a MarketMaker’s appointed classes,5 as part of its 

quoting obligations, a Market-Maker is 

also required to maintain active markets 

in its appointed classes, update 

quotations in response to changed 

market conditions in its appointed 

classes and compete with other MarketMakers in its appointed classes.6 As part 

of a Market-Maker’s efforts to satisfy 

these obligations, a Market-Maker may 

update quotes with the specific purpose 

of removing interest resting in the Book. 

This may provide additional execution 

opportunities for customers, thereby 

encouraging an increase in overall 

participation in an appointed class. 

Currently, if a Market-Maker wishes 

to execute against interest in the Book, 

a Market-Maker will enter a Book Only 

bulk message or modify an existing bulk 

message to attempt to execute against 

such interest, followed immediately by 

a bulk message to cancel the preceding 

bulk message (or unexecuted portion) so 

that no portion of that bulk message will 

remain displayed on the Book. 

Essentially, in order to execute against 

interest on the Book, Market-Makers 

may currently send a sequence of bulk 

messages that mimic the result of an 

IOC instruction—ultimately the bulk 

message is cancelled and does not post 

to the Book if it is not executed 

immediately against resting interest. 

Sending a bulk message to cancel 

immediately following the submission 

of a bulk message or a bulk message 

modification to execute against resting 

interest creates an extra step for MarketMakers (compared to Trading Permit 

Holders (‘‘TPHs’’) that may use IOC 

orders to accomplish this) using bulk 

message functionality and requires the 

System to process additional messages. 

As such, the proposed rule change to 

permit Market-Makers to designate their 

bulk messages as IOC would allow them 

to attempt more effectively and 

efficiently to execute against interest in 

the Book and would reduce message 

traffic by eliminating the need for 

Market-Makers to send multiple 

messages to attempt this. The Exchange 

notes that Market-Makers may already 

use bulk messages to remove liquidity 

from the Book (if they so elect) using the 

‘‘Book Only’’ instruction and, as 

described above, Market-Makers may 

already use bulk messages to remove 

liquidity without letting nonexecuted 

size rest on the Book. The proposed rule 


lotter on DSK11XQN23PROD with NOTICES1
52522 Federal Register / Vol. 86, No. 180 / Tuesday, September 21, 2021 / Notices 

7A ‘‘quote’’ or ‘‘quotation’’ is a firm bid or offer 

a Market-Maker may submit electronically in an 

order or bulk message. See Rule 1.1. The Exchange 

also notes that, while Market-Makers may currently 

instruct their orders, including quotes submitted as 

orders, as IOC, the Exchange understands that 

Market-Makers predominantly conduct their trading 

activity through and design their business models 

around the use [sic] bulk messages. 

8See Securities Exchange Release Nos. 86374 

(July 15, 2019), 84 FR 34963 (July 19, 2019) (SR– 

CBOE–2019–033); and 88816 (May 6, 2020), 85 FR 

28131 (May 12, 2020) (SR–CBOE–2020–041). The 

Exchange notes that SR–CBOE–2019–033 

implemented bulk message functionality to replace 

the Exchange’s prior block quoting functionality, 

which likewise allowed a Market-Maker to submit 

a single message containing bids and offers in 

multiple series; however, the Exchange Rules did 

not prohibit an IOC designation for quotes 

submitted in block quantities. 

9 15 U.S.C. 78f(b). 

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

11 Id. 

change merely streamlines the manner 

in which Market-Makers may already 

utilize bulk messages to execute against 

interest on the Book without sending an 

unexecuted bulk message (or 

unexecuted portion) to the Book 

thereafter. Also, Market-Makers may 

already designate their quotes submitted 

in an order as IOC.7

The Exchange notes that bulk message 

functionality is designed to facilitate 

Market-Makers quoting on the Exchange 

in connection with their responsibility 

as liquidity providers. For example, the 

current requirement that bulk messages 

have a Time-in-Force of Day is 

consistent with general practice of 

Market-Makers to enter new quotes at 

the beginning of each trading day, as 

well as a Market-Maker’s obligation to 

update its quotes in response to changed 

market conditions in its appointed 

classes. The provision that allows 

Market-Makers to designate their bulk 

messages as Post Only or Book Only is 

intended to provide Market-Makers with 

flexibility to use these instructions to 

permit them to execute against resting 

interest upon entry or add liquidity to 

the Book in connection with their 

various obligations in a manner they 

deem appropriate.8 The Exchange 

believes that the proposed rule change 

likewise permits Market-Makers to use 

an instruction with respect to their bulk 

messages as an additional tool to 

provide liquidity to the market and meet 

their various obligations (such as 

maintaining active markets in an 

appointed class, updating quotations in 

response to changed market conditions 

in an appointed class and competing 

with other Market-Makers in an 

appointed class) in a manner they deem 

appropriate, which may include 

removing interest in the Book to 

subsequently post updated quotes at 

potentially tighter spreads and to 

provide additional execution 

opportunities at potentially improved 

prices. The Exchange also believes that 

the proposed rule change enhances a 

current means by which Market-Makers 

use bulk messages to facilitate the 

provision of liquidity on the Exchange. 

That is, Market-Makers using bulk 

messages with an IOC instruction, as 

proposed, may more efficiently execute 

against resting interest, thereby 

increasing execution opportunities for 

orders resting on the Book. An increase 

in transactions on the Exchange may 

facilitate tighter spreads and price 

discovery, and, as a result, encourage 

increased participation and additional 

order flow from other market 

participants. The Exchange notes that 

the submission of bulk messages to the 

Exchange is voluntary and that MarketMakers may continue to elect to use 

bulk messages designated as Day in the 

same manner as they do today, 

including sending a bulk message 

immediately followed by a cancel to 

attempt to execute against resting 

interest. 

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.9 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 10 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. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 11 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In particular, the Exchange believes 

that the proposed rule change allowing 

Market-Makers to designate their bulk 

messages as IOC will remove 

impediments to and perfect the 

mechanism of a free and open market 

and national market system and benefit 

investors by permitting Market-Makers 

to more effectively and efficiently 

execute bulk messages against specific 

interest on the Book without posting an 

unexecuted bulk message (or 

unexecuted portion) to the Book 

thereafter. As described above, MarketMakers already submit bulk messages in 

a manner that mimics an IOC 

instruction; the proposed rule change 

merely streamlines this process for 

Market-Markets by allowing them to use 

a Time-in-Force instruction currently 

available for their orders (which may 

also contain a Market-Maker’s quotes) 

on the Exchange today. In addition to 

this, Market-Makers may already 

include Book Only instructions that 

permit their bulk messages to remove 

liquidity from the Book. The proposed 

rule change is designed to benefit 

market participants by increasing 

efficiency and reducing additional 

message traffic by eliminating the need 

for Market-Makers to send an additional 

bulk message to cancel along with their 

bulk messages in instances in which 

they wish to execute against interest 

that appears on the Book. The proposed 

rule change allows Market-Makers to 

elect to use their bulk messages as 

additional tools to meet their various 

obligations in a manner they deem 

appropriate, consistent with the purpose 

of bulk message functionality to 

facilitate Market-Makers’ provision of 

liquidity, which may include removing 

interest in the Book to subsequently 

post updated quotes at potentially 

tighter spreads and to provide 

additional execution opportunities at 

potentially improved prices. Also, the 

use of IOC bulk messages for MarketMakers may ultimately facilitate the 

provision of additional liquidity on the 

by increasing execution opportunities 

on the Exchange, as an increase in 

transactions on the Exchange may 

facilitate tighter spreads and price 

discovery, thereby encouraging 

increased participation and additional 

order flow from other market 

participants, to the benefit of all 

investors. Market-Makers may continue 

to elect to use bulk messages designated 

as Day in the same manner as they do 

today, including sending a bulk message 

immediately followed by a cancel to 

attempt to execute against resting 

interest. 

Additionally, the Exchange does not 

believe that the proposed rule change 

would permit unfair discrimination as 

bulk message functionality is 

principally designed to facilitate the 

provision of liquidity by Market-Makers 

to the Exchange and help MarketMakers’ satisfy their obligations. The 

Exchange believes that Market-Makers 

play a unique and critical role in the 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 86, No. 180 / Tuesday, September 21, 2021 / Notices 52523 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(6). 14 17 CFR 200.30–3(a)(12). 

options market by providing liquid and 

active markets and are subject to various 

quoting obligations (which other market 

participants are not), including an 

obligation to maintain active markets, to 

update quotations in response to 

changed market conditions and to 

compete with other Market-Makers in 

its appointed classes. Bulk message 

functionality, including an IOC bulk 

message, provides Market-Makers with a 

means to help them satisfy these 

obligations. As noted above, MarketMakers are already able to use Book 

Only bulk messages to execute against 

resting liquidity in multiple series 

across a class and to cancel quotes in 

multiple series across a class. The 

proposed rule change simply allows 

Market-Makers to utilize their bulk 

messages in the same manner, just with 

a single message. 

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 does not believe that the 

proposed rule change will change will 

impose any burden on intramarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act because the IOC 

instruction for bulk messages will be 

available for all Market-Makers that 

choose to submit bulk messages. Use of 

the IOC instruction for bulk messages is 

voluntary, and Market-Makers may 

choose to continue to only apply the 

Day Time-in-Force to bulk messages and 

continue to attempt to execute bulk 

messages against resting interest using 

multiple messages as they do today. The 

proposed rule change permits MarketMakers to use a Time-in-Force that is 

already available to all TPHs, including 

Market-Makers, to apply to their orders. 

While only Market-Makers may submit 

IOC bulk messages (as only MarketMakers may currently submit any bulk 

messages), the Exchange believes this is 

appropriate given the various 

obligations Market-Makers must satisfy 

under the Rules and the unique and 

critical role Market-Makers play in the 

options market by providing liquid and 

active markets. The Exchange believes 

providing Market-Makers with 

flexibility to use the IOC instruction 

with respect to bulk messages will 

provide Market-Makers with an 

enhanced tool to provide liquidity to the 

market and satisfy their obligations in a 

manner they deem appropriate, as they 

are similarly able to do today by electing 

the Book Only and Post Only 

instructions for their bulk messages. 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on intermarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act 

as it relates to quoting functionality 

available to Market-Makers on the 

Exchange. The Exchange notes that 

market participants on other exchanges 

are welcome to become Market-Makers 

on the Exchange if they determine that 

this proposed rule change has made 

participation as a Market-Maker on the 

Exchange more attractive or favorable. 

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 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. 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 12 and Rule 19b–4(f)(6) 13

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 will institute proceedings 

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–2021–053 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–2021–053. 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 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. 

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–2021–053, and 

should be submitted on or before 

October 12, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–20327 Filed 9–20–21; 8:45 am] 

BILLING CODE 8011–01–P 


lotter on DSK11XQN23PROD with NOTICES1