[Federal Register Volume 87, Number 108 (Monday, June 6, 2022)]
[Notices]
[Pages 34334-34339]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-12012]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95006; File No. SR-CBOE-2022-024]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Rules Regarding Complex Orders

May 31, 2022.
    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 May 23, 2022, 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 and II 
below, which Items have been prepared by the Exchange. The Exchange 
filed the 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.
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    \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).
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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 its Rules regarding complex orders. 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 IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

[[Page 34335]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Rules regarding complex orders. 
Specifically, the Exchange proposes to clarify certain provisions, 
codify certain functionality, and correct certain language, as well as 
to retain class-by-class flexibility to keep complex order electronic 
eligibility for complex orders with ratios less than one-to-three and 
greater than three-to-one in classes determined by the Exchange (i.e., 
the same as it currently is with respect to those classes).
    In February of 2022, the Commission approved the Exchange's 
proposal to permit complex orders with ratios less than one-to-three 
and greater than three-to-one to trade in penny increments and be 
eligible for electronic processing.\5\ Prior to that, complex orders 
with these ratios were only able to trade on the Exchange's trading 
floor in open outcry (and in the standard increments for the applicable 
class).
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    \5\ See Securities Exchange Act Release No. 94204 (February 9, 
2022), 87 FR 8625 (February 15, 2022) (SR-CBOE-2021-046). The 
Exchange has not yet implemented this change and intends to after 
this proposed rule change becomes operative.
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    The proposed rule change makes three changes to the definition of 
complex order in Rule 1.1: (1) It deletes the sentence that narrows the 
definition of complex orders for purposes of electronic processing to 
those with ratios greater than or equal to one-to-three and less than 
or equal to three-to-one; (2) it clarifies that the term complex order 
includes Index Combo orders unless the context otherwise requires; and 
(3) it provides the Exchange with flexibility to determine on a class 
basis whether to permit complex orders with ratios less than one-to-
three and greater than three-to-one to be eligible for electronic 
processing. First, currently, the definition of complex order indicates 
that for purposes of Rules 5.33 (which relates to electronic trading of 
complex orders) and 5.85(b)(1) (which relates to open outcry trading of 
complex orders), the term ``complex order'' means a complex order with 
any ratio equal to or greater than one-to-three (.333) and less than or 
equal to three-to-one (3.00), an Index Combo order, a stock-option 
order, or a security future-option order. Pursuant to this provision, 
only complex orders with a ratio equal to or greater than one-to-three 
(.333) and less than or equal to three-to-one (3.00) (in addition to 
Index Combo Orders, stock-option orders, and security future-option 
orders) may trade electronically.\6\ The Exchange proposes to delete 
this sentence because, in accordance with a rule filing previously 
approved by the Commission,\7\ the Exchange intends to modify its 
System to permit complex orders of any ratio to trade electronically 
(except in classes determined by the Exchange, as further discussed 
below), so the term complex order generally will have the same meaning 
with respect to both open outcry and electronic trading, which 
eliminates the need to have a separate definition for electronic 
trading.\8\ Therefore, the Exchange proposes to delete the provision 
that indicates complex order means complex orders with that ratio 
restriction for purposes of Rule 5.33.\9\
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    \6\ For the purpose of applying these ratios to complex orders 
comprised of legs for both mini-options and standard options, ten 
mini-option contracts represent one standard option contract. For 
the purpose of applying these ratios to complex orders comprised of 
legs for both micro-options and standard options, 100 micro-option 
contracts represent one standard option contract.
    \7\ See Securities Exchange Act Release No. 94204 (February 9, 
2022), 87 FR 8625 (February 15, 2022) (SR-CBOE-2021-046).
    \8\ See Securities Exchange Act Release No. 94204 (February 9, 
2022), 87 FR 8625 (February 15, 2022) (SR-CBOE-2021-046).
    \9\ Similarly, the Exchange proposes to delete the reference to 
Rule 5.85(b)(1), as the ratios relevant for purposes of open outcry 
priority as described in Rule 5.85(b)(1) are already set forth in 
that provision, making this reference redundant and thus 
unnecessary.
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    Second, the complex order definition currently states that unless 
the context otherwise requires, the term complex order includes stock-
option orders and security future-option orders. Specifically, the 
proposed rule change provides that ``[u]nless the context otherwise 
requires, the term complex order includes Index Combo orders,\10\ 
stock-option orders and security future-option orders.'' The proposed 
rule change adds ``Index Combo orders'' to that sentence, because as 
discussed above the proposed rule change is deleting the immediately 
following sentence. That sentence includes the term ``Index Combo'' as 
a type of complex order for purposes of electronic and open outcry 
processing. Despite deletion of that sentence, an Index Combo is still 
a type of complex order (as set forth in Rule 5.33) and thus this 
proposed change retains that concept in the complex order definition. 
This change merely clarifies in the definition of complex order that an 
Index Combo order will generally be considered a ``complex order'' for 
purposes of the Rules.
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    \10\ An ``Index Combination'' is a purchase (sale) of an index 
option call and sale (purchase) of an index option put with the same 
underlying index, expiration date, and strike price, and a ``delta'' 
is the positive (negative) number of Index Combinations that must be 
sold (purchased) to establish a market neutral hedge with one or 
more series of the same index option. An Index Combo order may not 
have a ratio greater than eight options to one Index Combination 
(8.00) and will be subject to all provisions applicable to complex 
orders (excluding the one-to-three/three-to-one ratio) in the Rules. 
Rule 5.33(b)(3).
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    Third, as noted above, the Commission previously approved a 
proposed rule change that would permit complex orders with all ratios 
to be eligible for electronic processing, as opposed to just complex 
orders with ratios greater than or equal to one-to-three (.333) or less 
than or equal to three-to-one (3.00).\11\ Prior to implementing that 
change, the Exchange believes it is appropriate to retain flexibility 
to determine on a class-by-class basis whether to maintain the status 
quo--specifically whether to permit complex orders with ratios less 
than one-to-three (.333) or greater than three-to-one (3.00) to be 
eligible for electronic processing. Certain classes have significant 
volume executed in open outcry trading on the Exchange's trading floor. 
The Exchange and its customers continue to believe the trading floor is 
an important source of liquidity, which is provided efficiently by a 
large pool of accessible Market-Makers and floor brokers. However, 
Market-Makers and floor brokers expend resources to have a presence on 
the trading floor, which they do because a certain level of order flow 
routes to the floor. The Exchange believes it is beneficial to provide 
investors with flexibility to have their complex order interest execute 
either electronically or in open outcry. However, the Exchange also 
believes it is important to balance that flexibility with the need to 
ensure significant order flow continues to route to the trading floor, 
providing an ongoing incentive for liquidity providers to populate the 
floor. This is particularly important in classes with high open outcry 
volume. Therefore, the proposed rule change adds to the definition of 
complex order in Rule 1.1 that the Exchange determines on a class-by-
class basis whether complex orders with ratios less than one-to-three 
(.333) or greater than three-to-one (3.00) are eligible for electronic 
processing.\12\
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    \11\ See Securities Exchange Act Release No. 94204 (February 9, 
2022), 87 FR 8625 (February 15, 2022) (SR-CBOE-2021-046). The 
Exchange has yet to implement this change and plans to do so after 
this proposed rule change is operative.
    \12\ The proposed rule change also makes conforming changes to 
Rules 5.6 (definition of complex order), 5.30(a)-(c), 5.33, and 
5.83(b).
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    The proposed rule change next corrects an error in the definition 
of

[[Page 34336]]

COA-eligible and Do-Not-COA orders in rule 5.33(c)(5). The Exchange's 
System currently determines whether an order is ``COA-eligible'' by 
comparing the price of an order to resting interest on the same side as 
the order in the Simple Book and in the Complex Order Book (``COB''). 
However, the current definition inadvertently inversed the relevant 
terms and compares the price of a buy complex order to the synthetic 
best offer (``SBO'') and sell complex orders and compares the price of 
a sell complex order to the synthetic best bid (``SBB'') and buy 
complex orders, which would be opposite-side interest. The proposed 
rule change corrects this error and revises the definition to provide 
that whether a complex order is COA-eligible will be determined by 
comparing the order's price to same-side interest, which is consistent 
with current System functionality. Specifically, a ``COA-eligible'' 
complex order is a buy (sell) complex order with User instructions to 
(or which default to) initiate a COA that is priced (i) equal to or 
higher (lower) than the SBB (SBO) (provided that if any of the bids or 
offers on the Simple Book that comprise the SBB (SBO) is represented by 
a Priority Customer order, the complex order must be priced at least 
one minimum increment higher (lower) than the SBB (SBO) and (ii) higher 
(lower) than the price of buy (sell) complex orders resting at the top 
of the COB. This is consistent with the provisions that will cause a 
COA to terminate early, pursuant to which a COA will end early because 
of incoming same-side interest.\13\ Additionally, the proposed rule 
change is consistent with another exchange's definition of ``COA-
eligible'' order.\14\
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    \13\ Specifically, Rule 5.33(d)(3) provides that the COA 
response time interval terminates early (a) when the System receives 
a non-COA-eligible order on the same side as the COA-eligible order 
that initiated the COA but with a price better than the COA price, 
in which case the System terminates the COA and processes the COA-
eligible order pursuant to Rule 5.33(d)(5) and enters the new order 
in the COB; (b) when the System receives a non-Priority Customer 
Order in a leg of the complex order that would improve the SBBO on 
the same side as the COA-eligible order that initiated the COA to a 
price better than the COA price, in which case the System terminates 
the COA and processes the COA-eligible order pursuant to Rule 
5.33(d)(5), enters the new order in the Simple Book, and updates the 
SBBO; or (c) if the System receives a Priority Customer Order in a 
leg of the complex order that would join or improve the SBBO on the 
same side as the COA-eligible order that initiated the COA to a 
price equal to or better than the COA price, in which case the 
System terminates the COA and processes the COA-eligible order 
pursuant to Rule 5.33(d)(5), enters the new order in the Simple 
Book, and updates the SBBO.
    \14\ See Cboe C2 Exchange, Inc. Rule 5.33(b)(2).
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    The proposed rule change also makes non-substantive changes to Rule 
5.33(f)(2)(A). Specifically, the proposed rule change combines 
subparagraph (ii) with (v) (and renumbers the subparagraphs), as the 
provisions ultimately mean the same thing. Specifically, Rule 
5.33(f)(2)(A)(i) provides that the System does not execute a complex 
order pursuant to Rule 5.33 at a net price worse than the SBBO or equal 
to the SBBO when there is a Priority Customer order at the SBBO, except 
all-or-none (``AON'') complex orders may only execute at prices better 
than the SBBO. Therefore, if there is a Priority Customer Order 
comprising part of the SBBO, a complex order could only execute by 
improving the SBBO, which would require improvement of component 
prices. This is what current Rule 5.33(f)(2)(A)(v) requires. 
Specifically, that provision states that the System does not execute a 
complex order pursuant to Rule 5.33 at a net price that would cause any 
component of the complex strategy to be executed at a price ahead of a 
Priority Customer Order on the Simple Book without improving the BBO of 
(a) at least one component of the complex strategy, if the complex 
order has a ratio equal to or greater than one-to-three (.333) and less 
than or equal to three-to-one (3.00), or is an Index Combo order; or 
(b) each component of the complex strategy with a Priority Customer 
Order at the BBO, if the complex order has a ratio less than one-to-
three (.333) or greater than three-to-one (3.00). Because these two 
provisions are interrelated, the Exchange believes it is appropriate to 
combine them into proposed Rule 5.33(f)(2)(A)(iv).\15\ The proposed 
rule change has no impact on complex order priority.
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    \15\ The proposed rule change makes other nonsubstantive changes 
to the sentence structure as a result of the combination of 
provisions.
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    The proposed rule change also clarifies that for complex order 
priority for complex orders with ratios equal to or greater than one-
to-three and less than or equal to three-to-one, complex order priority 
in open outcry is slightly different than complex order priority for 
these complex orders in electronic trading. Specifically, in electronic 
trading, these complex orders may not execute when there is a Priority 
Customer order on any leg on the SBBO while in open outcry trading, 
these orders can trade at the SBBO unless there is a Priority Customer 
order on every leg comprising the SBBO. Current Rule 5.85(b)(1) states 
that a complex order with any ratio equal to or greater than one-to-
three (.333) and less than or equal to three-to-one (3.00) or that is 
an Index Combo order may be executed at a net debit or credit price 
without giving priority to equivalent bids (offers) in the individual 
series legs that are represented in the trading crowd or in the Book if 
the price of at least one leg of the order improves the corresponding 
bid (offer) of a Priority Customer order(s) in the Book by at least one 
minimum trading increment as set forth in Rule 5.4(b). The proposed 
rule change clarifies that this provision means that one component of 
the complex order must improve the price of one component leg in the 
Book if there is a Priority Customer order at the top of the Book for 
each leg of the Priority Customer order (rather than just at least one 
leg, which is the case for electronic trading complex order priority, 
as discussed above). Because open outcry and electronic complex order 
priority differ with respect to complex orders with any ratio equal to 
or greater than one-to-three (.333) and less than or equal to three-to-
one (3.00) and Index Combo orders, the Exchange believes it is 
appropriate to clarify that in the Rules. Therefore, the proposed rule 
change adds to Rule 5.85(b)(1) a sentence stating that, in other words, 
if there is a Priority Customer order at the top of the Simple Book on 
each leg comprising the SBBO for the complex strategy, at least one 
component of the complex order must execute at a price that improves 
the price of the Priority Customer order on the Simple Book for that 
component.\16\ The proposed rule change has no impact on open outcry 
complex order priority.
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    \16\ Complex order priority with respect to complex orders with 
ratios less than one-to-three (.333) and greater than three-to-one 
(3.00) (except for Index Combo orders) is the same in both 
electronic and open outcry trading. Therefore, the proposed rule 
change adds to Rule 5.85(b)(2) the same language from proposed Rule 
5.33(f)(2)(iv)(b), which states that for complex order with those 
ratios, if there is a Priority Customer order on any leg(s) 
comprising the SBBO, the component(s) of the complex order for the 
leg(s) with a Priority Customer order at the BBO must execute at a 
price that improves the price of that Priority Customer order(s) on 
the Simple Book by at least one minimum increment.
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    Finally, the proposed rule change updates Rule 5.33(g) to reflect 
that the System accepts for electronic processing complex orders with 
more than four legs. Current Rule 5.33(g) states that a complex order 
may execute against orders and quotes resting in the Simple Book 
pursuant to Rule 5.33(d)(5)(A) and (e) if it can execute in full or in 
a permissible ratio and if it has no more than a maximum number of 
legs, which the Exchange determines on a class-by-class basis and may 
be two, three or four, subject to certain restrictions, including that 
non-Customer complex orders with two option legs that are both

[[Page 34337]]

buy or both sell and that are both calls or both puts may not leg into 
the Simple Book and all complex orders with three or four option legs 
that are all buy or all sell may not leg into the Simple Book. The 
proposed rule change modifies the parenthetical regarding legging 
restrictions to indicate that the maximum number the Exchange may 
determine on a class-by-class basis may be up to 16, as the Exchange's 
System currently accepts complex orders with up to that many legs for 
electronic processing.\17\ The proposed rule change makes no changes to 
which or how complex orders may leg into the Simple Book but rather 
updates this provision to reflect current functionality.
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    \17\ See Cboe Notice C2021060800, Cboe Options Introduces 16-Leg 
Maximum for Non-FLEX Complex Orders (June 8, 2021), available at 
Cboe Options Introduces 16-Leg Maximum for Non-FLEX Complex Orders; 
see also Cboe US Options Complex Book Process (technical 
specifications last updated April 20, 2022), Section 2.3.2, 
available at US Options Complex Book Process.
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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.\18\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \19\ 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) \20\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(5).
    \20\ Id.
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    In particular, the proposed rule change makes no changes to how 
complex orders are processed or executed, but rather updates the Rules 
to reflect more accurately current System functionality and to make 
clarifying and simplifying changes, which the Exchange believes will 
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. As noted above, the Commission previously 
approved a proposed rule change that would permit complex orders with 
all ratios to be eligible for electronic processing, as opposed to just 
complex orders with ratios greater than or equal to one-to-three (.333) 
or less than or equal to three-to-one (3.00).\21\ The proposed rule 
change to delete the part of the complex order definition in Rule 1.1 
that restricts electronic processing to complex orders with ratios 
greater than or equal to one-to-three and less than or equal to three-
to-one is consistent with the Exchange's prior proposed rule change to 
permit complex orders of all ratios to be eligible for electronic 
processing--this language was previously inadvertently not deleted.\22\
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    \21\ See Securities Exchange Act Release No. 94204 (February 9, 
2022), 87 FR 8625 (February 15, 2022) (SR-CBOE-2021-046). The 
Exchange has yet to implement this change and plans to do so after 
this proposed rule change is operative.
    \22\ See Securities Exchange Act Release No. 94204 (February 9, 
2022), 87 FR 8625 (February 15, 2022) (SR-CBOE-2021-046).
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    Additionally, the proposed rule change to permit the Exchange to 
determine on a class basis whether to permit these larger/smaller ratio 
complex orders to be eligible for electronic processing \23\ will 
further remove impediments to and perfect the mechanism of a free and 
open market and a national market system by permitting the Exchange to 
balance the flexibility of permitting complex orders to trade in open 
outcry or electronically with the need to ensure that significant order 
flow continues to route to the trading floor, providing an ongoing 
incentive for liquidity providers to populate the floor. The Exchange 
believes this will further protect investors who rely on liquidity on 
the trading floor, particularly for complex orders. While the Exchange 
generally believes any increase in electronic order flow will not be 
significant enough to impact liquidity available on the trading floor, 
the Exchange believes it is still appropriate to retain this 
flexibility in the Rules to provide it with authority to act swiftly if 
it appears floor liquidity has been or may be impacted.\24\ With 
respect to any class for which the Exchange does not permit larger/
smaller ratio complex orders to be eligible for electronic processing, 
that results in no change for these orders, as these orders currently 
can only trade in open outcry.
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    \23\ See proposed Rule 1.1 (definition of complex order) and 
corresponding changes in Rules 5.6(c) (definition of complex order), 
5.30(a)(4), (b)(4), and (c)(4), 5.33(a) (definition of complex 
order), and 5.83(b).
    \24\ The Exchange would announce any changes to classes in which 
complex orders with ratios less than one-to-three or greater than 
three-to-one were eligible or no longer eligible for electronic 
processing in accordance with Rule 1.5, providing Trading Permit 
Holders with sufficient advanced notice of any such change.
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    The proposed change to the definition of COA-eligible order in Rule 
5.33(b)(5)(A) merely conforms the provision to the System, which 
compares the price of the order to same-side interest rather than 
opposite-side interest. The current language inadvertently inverted the 
terms; the proposed rule change corrects this, which makes the rule 
text consistent with the System and thus provides additional 
transparency, ultimately benefiting investors. This is consistent with 
the provisions that will cause a COA to terminate early, pursuant to 
which a COA will end early because of incoming same-side interest.\25\ 
Additionally, the proposed rule change is consistent with another 
exchange's definition of ``COA-eligible'' order.\26\
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    \25\ Specifically, Rule 5.33(d)(3) provides that the COA 
response time interval terminates early (a) when the System receives 
a non-COA-eligible order on the same side as the COA-eligible order 
that initiated the COA but with a price better than the COA price, 
in which case the System terminates the COA and processes the COA-
eligible order pursuant to Rule 5.33(d)(5) and enters the new order 
in the COB; (b) when the System receives a non-Priority Customer 
Order in a leg of the complex order that would improve the SBBO on 
the same side as the COA-eligible order that initiated the COA to a 
price better than the COA price, in which case the System terminates 
the COA and processes the COA-eligible order pursuant to Rule 
5.33(d)(5), enters the new order in the Simple Book, and updates the 
SBBO; or (c) if the System receives a Priority Customer Order in a 
leg of the complex order that would join or improve the SBBO on the 
same side as the COA-eligible order that initiated the COA to a 
price equal to or better than the COA price, in which case the 
System terminates the COA and processes the COA-eligible order 
pursuant to Rule 5.33(d)(5), enters the new order in the Simple 
Book, and updates the SBBO.
    \26\ See Cboe C2 Exchange, Inc. Rule 5.33(b)(2).
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    The proposed rule change to update the provisions regarding complex 
order priority in Rules 5.33(f)(2) and 5.85(b)(1) is a nonsubstantive 
change intended to simplify the rule text regarding when legs of 
complex orders must improve prices of orders on the Simple Book. 
Similarly, the proposed rule change to clarify complex order priority 
in open outcry is merely a clarification of the current priority. The 
Exchange believes this will benefit investors, particularly since it is 
different than electronic complex order priority with respect to 
complex orders with ratios greater than or equal to one-to-three (.333) 
and less than or equal to three-to-one (3.00). These proposed rule 
changes have no impact on electronic or open outcry complex order 
priority.

[[Page 34338]]

    Finally, the proposed rule change to the provision regarding 
complex order legging in Rule 5.33(g) will protect investors, as it 
merely updates the provision to reflect that the System accepts for 
electronic processing complex orders with more than four legs. The 
proposed rule change makes no changes to which or how complex orders 
may leg into the Simple Book but rather updates this provision to 
reflect current functionality.

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 for competitive purposes, but rather to clarify certain 
provisions, codify certain functionality, and correct certain language, 
as well as to retain class-by-class flexibility to keep complex order 
electronic eligibility the same as it currently.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, because all 
changes will apply in the same manner to all investors. To the extent 
the Exchange determines to not permit higher/lower ratio complex orders 
to be eligible for electronic processing in any class, that will result 
in maintaining the status quo for complex orders in that class, as the 
Exchange currently does not permit complex orders with those ratios to 
be processed electronically. Additionally, manual handling and open 
outcry processing will be available for all complex orders with such 
ratios from all investors. The other proposed rule changes have no 
impact on trading and thus will not change how any investors' complex 
orders are processed or executed on the Exchange. As noted above, the 
proposed rule change makes no changes to electronic or open outcry 
complex order priority, which orders can initiate a COA, or how complex 
orders may leg into the Simple Book.
    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, because the 
proposed rule change has no impact on how complex orders trade, as it 
makes primarily clarifying updates, corrections, and other 
nonsubstantive changes. The Exchange is unaware of any other options 
exchanges that permit complex orders with ratios less than .333 or 
greater than 3.00 to trade electronically. Therefore, to the extent the 
Exchange does not make complex orders with those ratios in a class 
eligible for electronic processing, the Exchange would be permitting 
complex orders to trade in the same manner as other options exchanges. 
Other options exchanges are welcome to modify their systems to permit 
higher/lower ratio orders to execute electronically or on their trading 
floors.

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 \27\ and Rule 19b-
4(f)(6) \28\ 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.
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    \27\ 15 U.S.C. 78s(b)(3)(A).
    \28\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \29\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\30\ the Commission 
may 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. As discussed above, 
the proposal will allow the Exchange to determine on a class-by-class 
basis whether complex orders with ratios less than one-to-three and 
greater than three-to-one will be eligible for electronic processing. 
The Exchange states that this flexibility will allow the Exchange to 
balance the benefits of permitting the electronic processing of these 
complex orders with the need to ensure that significant order flow 
continues to route to the Exchange's trading floor, thereby providing 
an ongoing incentive for liquidity providers to maintain a presence on 
the floor. The Exchange further states that waiver of the operative 
delay will benefit investors by allowing the Exchange to broaden the 
availability of electronic complex order processing in many option 
classes as soon as possible. In addition, the Exchange states that the 
proposed amendments to the complex order priority provisions in 
Exchange Rules 5.33(f)(2) and 5.85(b)(1) are non-substantive changes 
designed to simply and clarify those rules. The proposal also corrects 
errors in the definition of COA-eligible order and updates Exchange 
Rule 5.33(g) to reflect that the Exchange's System accepts for 
electronic processing complex orders with up to 16 legs. The Commission 
finds that waiving the operative delay is consistent with the 
protection of investors and the public interest because it will allow 
the Exchange to make available without delay the electronic processing 
of complex orders with ratios less than one-to-three and greater than 
three-to-one in classes determined by the Exchange. The ability to 
trade these orders electronically, as well as on the trading floor, 
will provide investors with additional flexibility in determining how 
their complex orders are executed. The proposed changes to correct, 
update, and add clarity to the Exchange's rules will benefit investors 
by helping to ensure that the Exchange's rules are clear and accurate. 
For these reasons, the Commission designates the proposal operative 
upon filing.\31\
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    \29\ 17 CFR 240.19b-4(f)(6).
    \30\ 17 CFR 240.19b-4(f)(6)(iii).
    \31\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

[[Page 34339]]

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

    <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#1062657c753d737f7d7d757e6463506375733e777f66"><span class="__cf_email__" data-cfemail="c5b7b0a9a0e8a6aaa8a8a0abb1b685b6a0a6eba2aab3">[email protected]</span></a>. Please include 
File Number SR-CBOE-2022-024.

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-2022-024. 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 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-2022-024, and should be submitted 
on or before June 27, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-12012 Filed 6-3-22; 8:45 am]
BILLING CODE 8011-01-P


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