Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Notices 43079 

30 17 CFR 200.30–3(a)(12), (59). 

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

2 17 CFR 240.19b–4. 

3 The Exchange notes it used to permit a TPH 

organization to determine whether to have MarketMaker continuous quoting obligations apply on an 

individual or collective basis. See Securities 

Exchange Act Release No. 82974 (March 30, 2018), 

83 FR 14685 (April 5, 2018) (SR–CBOE–2018–021). 

The Exchange eliminated this flexibility and began 

applying the current interpretation as of October 

2019. See Securities Exchange Act Release No. 

87024 (September 19, 2019), 84 FR 50545 

(September 25, 2019) (SR–CBOE–2019–059). 

However, the language permitting this flexibility 

inadvertently remained in Rules 5.54(a)(1)(C), 

5.55(a)(1)(B), and 5.56(a)(2) with respect to the 

continuous quoting obligations of Designated 

Primary Market-Makers (‘‘DPMs’’), Lead MarketMakers (‘‘LMMs’’), and Preferred Market-Makers 

(‘‘PMMs’’), respectively. The proposed rule change 

deletes these outdated provisions and re-numbers 

or re-letters, as applicable, the subparagraphs as 

applicable. While the proposed rule change will 

permit a TPH organization to have continuous 

quoting obligations apply below the firm level, it 

will not permit application of continuous quoting 

obligations at the individual level, as was the case 

pursuant to the prior rule. Instead, the proposed 

rule change will permit a TPH organization to have 

continuous quoting obligations apply at the firm 

level or business unit level (if sufficient information 

barriers are in place). 

4 Cboe Options Rules currently contemplate that 

TPHs may have separate Market-Maker aggregation 

units. See, e.g., Rule 5.89(b)(1). Various other rules 

(for example contemplate TPH organizations having 

separate business units and require information 

barriers in the form of appropriate policies and 

procedures that reflect the TPH’s business to 

establish those separate business units. See, e.g., 

Rules 5.89 (risk-weighted assets transactions); 8.10 

(prevention of the misuse of material, nonpublic 

information); and 8.30, Interpretations and Policies 

.03 (position limits). 

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– 

NYSEAMER–2022–27 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–NYSEAMER–2022–27. 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–NYSEAMER–2022–27 and 

should be submitted on or before 

August 9, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–15303 Filed 7–18–22; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95271; File No. SR–CBOE– 

2022–037] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Certain of Its 

Rules Related to Market-Makers 

July 13, 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 July 5, 

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 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

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

or the ‘‘Exchange’’) is filing with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) a proposed rule 

change to amend certain of its Rules 

related to Market-Makers. 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. 

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 

certain of its Rules related to MarketMakers. Specifically, the Exchange 

proposes to amend its Rules to permit 

a Trading Permit Holder (‘‘TPH’’) 

organization to register separate marketmaker aggregation units as separate 

Market-Makers, each of which would be 

subject to Market-Maker obligations on 

an individual basis. Currently, Cboe 

interprets the term ‘‘Market-Maker’’ to 

apply at a firm level, including with 

respect to obligations.3 However, the 

Exchange understands TPH 

organizations have Market-Maker units 

that are completely separate from each 

other for operational and profit/loss 

purposes, with appropriate information 

barriers between units.4 Because of this 

operational separation, such 

organizations may prefer to have those 

units be treated as individual MarketMakers under the Exchange’s Rules 

consistent with those organizations’ 

internal operations. 

The proposed rule change amends 

certain Rules to provide TPH 

organizations with this flexibility: 


jspears on DSKJM1Z7X2PROD with NOTICES
43080 Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Notices 

5 The TPH organization will need to provide the 

Exchange with sufficient evidence of separation of 

these units. 

6 For example, if Firm ABC has aggregation units 

DEF and GHI each registered as separate MarketMakers, if Market-Maker DEF has an appointment 

in class XYZ but Market-Maker GHI does not, 

Market-Maker GHI could be solicited to be the 

contra-side order in an AIM or SAM auction in 

class XYZ, but Market-Maker DEF could not. 

7The Exchange’s Regulatory Division intends to 

announce by Regulatory Circular a method by 

which a TPH organization may seek pre-approval of 

the policies and procedures comprising the 

information barriers. 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78f(b)(5). 

10 Id. 

• Rule 3.52 currently provides that 

TPHs registered as Market-Makers have 

certain rights and bear certain 

responsibilities beyond those of other 

TPHs. The proposed rule change adds 

Interpretation and Policy .01 to provide 

that if a TPH organization is comprised 

of multiple market-making aggregation 

units and has in place appropriate 

information barriers or segregation 

requirements,5 the TPH may register 

each individual aggregation unit as a 

separate Market-Maker. The proposed 

rule change also adds a similar 

interpretation and policy to Rules 3.53, 

3.55, and 3.56 regarding DPMs, LMMs, 

and PMMs, respectively. 

• The proposed rule change adds 

Rule 5.50, Interpretation and Policy .01 

to provide that Market-Maker 

appointments would apply to each 

individual Market-Maker aggregation 

unit and adds Rule 5.53, Interpretation 

and Policy .01 to provide that each 

Market-Maker aggregation unit will be 

evaluated for good standing on an 

individual basis. 

• The proposed rule change amends 

Rules 5.33, Interpretation and Policy .02 

and adds Rule 5.51, Interpretation and 

Policy .01; Rule 5.52, Interpretation and 

Policy .01; Rule 5.54, Interpretation and 

Policy .01; Rule 5.55, Interpretation and 

Policy .01; and Rule 5.56, Interpretation 

and Policy .01 to provide that MarketMaker obligations (including those with 

respect to DPMs, LMMs, and PMMs, 

when applicable), will apply to 

individual Market-Maker aggregation 

units if a TPH organization registers 

separate aggregation units as MarketMakers. 

• The proposed rule change adds 

Rule 5.24, Interpretation and Policy .02 

to require any individual Market-Maker 

aggregation unit within a single firm to 

connect to the Exchange’s backup 

systems and participate in functional 

and performance testing announced by 

the Exchange if that unit satisfies the 

connection criteria set forth in Rule 

5.24(b). 

• The proposed rule change adds 

Rule 5.37, Interpretation and Policy .04 

(related to the Automated Improvement 

Mechanism (‘‘AIM’’)) and Rule 5.39, 

Interpretation and Policy .04 (related to 

the Solicitation Auction Mechanism 

(‘‘SAM’’)) to provide that the restriction 

in the introductory paragraph of each 

Rule that prohibits a solicited order for 

the account of any Market-Maker with 

an appointment in the applicable class 

on the Exchange in all classes except 

SPX applies to an individual MarketMaker aggregation unit if a TPH has 

multiple aggregation units registered as 

separate Market-Makers.6

These proposed changes are 

consistent with the concept of treating 

individual Market-Maker aggregation 

units within a single firm as separate 

Market-Makers. 

The proposed rule change states that 

a TPH organization may register 

separate aggregation units as individual 

Market-Makers if the organization has in 

place appropriate information barriers 

or segregation units. The proposed 

language provides TPHs with flexibility 

to adapt their policies and procedures to 

reflect their business model and 

activities, including changes thereto. 

This flexibility is similar to other rules 

that require information barriers, such 

as Rule 8.10, which requires every TPH 

to establish, maintain, and enforce 

written policies and procedures 

reasonably designed, taking into 

consideration the nature of the TPH’s 

business, to prevent the misuse, in 

violation of the Exchange Act and 

Exchange Rules, of material nonpublic 

information by the TPH or persons 

associated with the TPH. In accordance 

with this proposed rule change, 

pursuant to Rule 8.10, a TPH 

organization that registers separate 

business units as individual MarketMakers would be obligated to ensure 

that its policies and procedures reflect 

the current state of its business and 

continue to be reasonably designed to 

prevent the misuse of material, 

nonpublic information. Separate 

market-making units registered as 

individual Market-Makers may dictate 

that an information barrier or functional 

separation be part of the appropriate set 

of policies and procedures that would 

be reasonably designed to achieve 

compliance with the proposed rule 

change. The proposed rule change has 

no pre-approval requirement; however, 

appropriate information barriers would 

be subject to review as part of the 

process to register the separate 

aggregation units as individual MarketMakers with the Exchange.7

Additionally, these policies and 

procedures would be subject to regular 

review by the Exchange’s Regulation 

Division, such as part of the routine 

examination or testing process or as part 

of internal surveillances and 

investigations. 

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.8 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 9 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) 10 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 

the proposed rule change will promote 

just and equitable principles of trade 

and 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, because it will 

provide TPH organizations with 

flexibility to register its business units 

as Market-Makers with the Exchange, 

and have the Exchange regulate those 

Market-Maker business units, in a 

manner consistent with these 

organizations’ internal business 

operations. The Exchange believes this 

will permit these organizations to 

manage the entirety of their MarketMaker operations—including MarketMaker registrations, appointments, and 

quoting—as they deem appropriate 

based on the nature of their businesses, 

which may ultimately benefit the 

efficiency of their Market-Maker 

businesses. The Exchange does not 

propose to modify any Market-Maker 

responsibilities or obligations. The 

Exchange does not believe the proposed 

rule change will reduce liquidity, as any 

individual Market-Maker aggregation 

unit (as opposed to the TPH 


jspears on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Notices 43081 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

13 17 CFR 240.19b–4(f)(6)(iii). 

14For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

organization collectively) will need to 

satisfy all Market-Maker obligations, 

including continuous quoting 

obligations, on its own. 

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 will not impose 

any burden on intramarket competition, 

because it will apply in the same 

manner to all TPH organizations that 

register with the Exchange as MarketMakers. Whether a TPH organization 

registers separate business units as 

Market-Makers is within the sole 

discretion of that organization. With 

respect to TPH organizations that elect 

to register separate business units as 

Market-Makers, the proposed rule 

change will apply all applicable MarketMaker rules, including those regarding 

Market-Maker obligations and 

responsibilities, in the same manner to 

those units. The Exchange does not 

propose to modify any Market-Maker 

obligations or responsibilities, and thus 

does not believe the proposed rule 

change will diminish liquidity on the 

Exchange. The proposed rule change 

will not impose any burden on 

intermarket competition, because the 

proposed rule change applies only to 

how TPH organizations may register 

with the Exchange as a Market-Maker 

and how the Exchange will determine 

Market-Maker compliance with 

Exchange-imposed Market-Maker 

obligations and responsibilities. 

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: (i) significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 11 and Rule 19b– 

4(f)(6) thereunder.12

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act normally does not become operative 

for 30 days after the date of its filing. 

However, Rule 19b–4(f)(6)(iii) 13 permits 

the Commission to designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange requested that 

the Commission waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The proposal provides flexibility 

to a TPH organization to register 

separate market-maker aggregation units 

as separate Market-Makers, each of 

which would be subject to MarketMaker obligations on an individual 

basis, if appropriate information barriers 

or segregation requirements are in place. 

The Commission believes that waiver of 

the 30-day operative delay is consistent 

with the protection of investors and the 

public interest because the proposed 

rule change does not raise any new or 

novel issues. Accordingly, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposed rule change operative upon 

filing.14

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. 

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–2022–037 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CBOE–2022–037. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet 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–2022–037 and 

should be submitted on or before 

August 9, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–15306 Filed 7–18–22; 8:45 am] 

BILLING CODE 8011–01–P 


jspears on DSKJM1Z7X2PROD with NOTICES