Federal Register / Vol. 81, No. 27 / Wednesday, February 10, 2016 / Notices 7173 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–77049; File No. SR–CBOE– 

2016–005] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing of a 

Proposed Rule Change Relating to 

Professionals 

February 4, 2016. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’), and Rule 19b-4 thereunder, 

notice is hereby given that on January 

27, 2016, Chicago Board Options 

Exchange, Incorporated (the ‘‘Exchange’’ 

or ‘‘CBOE’’) 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 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Interpretation and Policy .01 to Rule 

1.1(ggg) relating to Professionals. The 

text of the proposed rule change is 

provided below. 

(Additions are italicized; deletions are 

[bracketed]) 

* * * * * 

Chicago Board Options Exchange, 

Incorporated Rules 

* * * * * 

CHAPTER I Definitions 

Rule 1.1. Definitions 

When used in these Rules, unless the 

context otherwise requires: 

(a) Any term defined in the Bylaws 

and not otherwise defined in this 

Chapter shall have the meaning 

assigned to such term in the Bylaws. 

(b)—(fff) No change. 

Professional 

(ggg) The term ‘‘Professional’’ means 

any person or entity that (i) is not a 

broker or dealer in securities, and (ii) 

places more than 390 orders in listed 

options per day on average during a 

calendar month for its own beneficial 

account(s). A Professional will be 

treated in the same manner as a broker 

or dealer in securities for purposes of 

Rules 6.2A, 6.2B, 6.8C, 6.9, 6.13A, 

6.13B, 6.25, 6.45, 6.45A (except for 

Interpretation and Policy .02), 6.45B 

(except for Interpretation and Policy 

.02), 6.53C(c)(ii), 6.53C(d)(v), 

subparagraphs (b) and (c) under 

Interpretation and Policy .06 to Rule 

6.53C, 6.74 (except Professional orders 

may be considered public customer 

orders subject to facilitation under 

paragraphs (b) and (d)), 6.74A, 6.74B, 

8.13, 8.15B, 8.87, 24.19, 43.1, 44.4, 

44.14. The Professional designation is 

not available in Hybrid 3.0 classes. All 

Professional orders shall be marked 

with the appropriate origin code as 

determined by the Exchange. 

. . . Interpretations and Policies: 

.01 [For purposes of this Rule 1.1(ggg), 

an order which is placed for the 

beneficial account(s) of a person or 

entity that is not a broker or dealer in 

securities that is broken into multiple 

parts by a broker or dealer or by an 

algorithm housed at a broker or dealer 

or by an algorithm licensed from a 

broker or dealer, but which is housed 

with the customer in order to achieve a 

specific execution strategy including, 

for example, a basket trade, program 

trade, portfolio trade, basis trade, or 

benchmark hedge, constitutes a single 

order and shall be counted as one 

order.] Except as noted below, each 

order of any order type counts as one 

order for Professional order counting 

purposes. 

(a) Complex Orders: 

(1) A complex order comprised of four 

(4) legs or fewer counts as a single order; 

(2) A complex order comprised of five 

(5) legs or more counts as multiple 

orders with each option leg counting as 

its own separate order; 

(b) ‘‘Parent’’/‘‘Child’’ Orders: 

(1) Same Side and Same Series: A 

‘‘parent’’ order that is placed for the 

beneficial account(s) of a person or 

entity that is not a broker or dealer in 

securities that is broken into multiple 

‘‘child’’ orders on the same side (buy/

sell) and series as the ‘‘parent’’ order by 

a broker or dealer, or by an algorithm 

housed at a broker or dealer or by an 

algorithm licensed from a broker or 

dealer, but which is housed with the 

customer, counts as one order even if 

the ‘‘child’’ orders are routed across 

multiple exchanges. 

(2) Both Sides and/or Multiple Series: 

A ‘‘parent’’ order (including a strategy 

order) that is broken into multiple 

‘‘child’’ orders on both sides (buy/sell) 

of a series and/or multiple series counts 

as multiple orders, with each ‘‘child’’ 

order counting as a new and separate 

order. 

(c) Cancel/Replace: 

(1) Except as provided in paragraph 

(c)(2) below, any order that cancels and 

replaces an existing order counts as a 

separate order (or multiple new orders 

in the case of a complex order 

comprised of five (5) legs or more). 

(2) Same Side and Same Series: An 

order that cancels and replaces any 

‘‘child’’ order resulting from a ‘‘parent’’ 

order that is placed for the beneficial 

account(s) of a person or entity that is 

not a broker, or dealer in securities that 

is broken into multiple ‘‘child’’ orders 

on the same side (buy/sell) and series as 

the ‘‘parent’’ order by a broker or dealer, 

by an algorithm housed at a broker or 

dealer, or by an algorithm licensed from 

a broker or dealer, but which is housed 

with the customer, does not count as a 

new order. 

(3) Both Sides and/or Multiple Series: 

An order that cancels and replaces any 

‘‘child’’ order resulting from a ‘‘parent’’ 

order (including a strategy order) that 

generates ‘‘child’’ orders on both sides 

(buy/sell) of a series and/or in multiple 

series counts as a new order. 

(4) Pegged Orders: Notwithstanding 

the provisions of paragraph (c)(2) above, 

an order that cancels and replaces any 

‘‘child’’ order resulting from a ‘‘parent’’ 

order being ‘‘pegged’’ to the BBO or 

NBBO or that cancels and replaces any 

‘‘child’’ order pursuant to an algorithm 

that uses BBO or NBBO in the 

calculation of ‘‘child’’ orders and 

attempts to move with or follow the BBO 

or NBBO of a series counts as a new 

order each time the order cancels and 

replaces in order to attempt to move 

with or follow the BBO or NBBO. 

* * * * * 

The text of the proposed rule change 

is also available on the Exchange’s Web 

site (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 

Interpretation and Policy .01 to Rule 

1.1(ggg) (Professional) relating to 

Professionals. Specifically, the 


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7174 Federal Register / Vol. 81, No. 27 / Wednesday, February 10, 2016 / Notices 

1Some U.S. options exchanges refer to 

‘‘Professionals’’ as ‘‘Professional Customers’’ or 

non-‘‘Priority Customers.’’ Compare BATS 

Exchange, Inc. (‘‘BZX’’) Rule 16.1(a)(45) 

(Professional); BOX Options Exchange LLC (‘‘BOX’’) 

Rule 100(a)(50) (Professional); CBOE Rule 1.1(ggg) 

(Professional); C2 Rule 1.1; BX Chapter I, Sec. 1(49) 

(Professional); NASDAQ OMX PHLX LLC (‘‘PHLX’’) 

Rule 1000(b)(14) (Professional); Nasdaq Options 

Market (‘‘NOM’’) Chapter I, Sec. 1(a)(48) 

(Professional); with ISE Rule 100(a)(37A) (Priority 

Customer); Gemini Rule 100(a)(37A) (Priority 

Customer); Miami International Securities Exchange 

LLC (‘‘MIAX’’) Rule 100 (Priority Customer); NYSE 

MKT LLC (‘‘NYSE MKT’’) Rule 900.2NY(18A) 

(Professional Customer); NYSE Arca, Inc. (‘‘Arca’’) 

Rule 6.1A(4A) (Professional Customer). 

2See, e.g., BZX Rule 16.1(a)(45); BOX Rule 

100(a)(50); CBOE Rule 1.1(ggg); C2 Rule 1.1; BX 

Chapter I, Sec. 1(49); PHLX Rule 1000(b)(14); NOM 

Chapter I, Sec. 1(a)(48); see also ISE Rule 

100(a)(37A) (Priority Customer); Gemini Rule 

100(a)(37A) (Priority Customer); MIAX Rule 100 

(Priority Customer); NYSE MKT Rule 900.2NY(18A) 

(Professional Customer); Arca Rule 6.1A(4A) 

(Professional Customer). 

3See, e.g., Securities Exchange Act Release No. 

60931 (November 4, 2009), 74 FR 58355, 58356 

(November 12, 2009) (Notice of Filing of Proposed 

Rule Change, as Modified by Amendment No. 1, 

Related to Professional Orders) (SR–CBOE 2009– 

078); Securities Exchange Act Release No. 59287 

(January 23, 2009), 74 FR 5694, 5694 (January 30, 

2009) (Notice of Filing of Amendment No. 2 and 

Order Granting Accelerated Approval of the 

Proposed Rule Change, as Modified by Amendment 

Nos. 1 and 2 Thereto, Relating to Professional 

Account Holders) (SR–ISE–2006–026); Securities 

Exchange Act Release No. 61802 (March 30, 2010), 

75 FR 17193, 17194 (April 5, 2010) (Notice of Filing 

of Amendment No. 2 and Order Granting 

Accelerated Approval of the Proposed Rule Change, 

as Modified by Amendment No. 2 Thereto, Relating 

to Professional Orders) (SR–PHLX–2010–005); 

Securities Exchange Act Release No. 61629 (March 

2, 2010), 75 FR 10851, 10851 (March 9, 2010) 

(Notice of Filing of Proposed Rule Change Relating 

to the Designation of a ‘‘Professional Customer’’) 

(SR–NYSEMKT–2010–018). 

4See, e.g., Securities and Exchange Act Release 

No. 62724 (August 16, 2010), 75 FR 51509 (August 

20, 2010) (Notice of Filing of a Proposed Rule 

Change by the NASDAQ Stock Market LLC To 

Adopt a Definition of Professional and Require That 

All Professional Orders Be Appropriately Marked) 

(SR–NASDAQ–2010–099); Securities and Exchange 

Act Release No. 65500 (October 6, 2011), 76 FR 

63686 (October 13, 2011) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

To Adopt a Definition of Professional and Require 

That All Professional Orders Be Appropriately 

Marked) (SR–BATS–2011–041); Securities 

Exchange Act Release No. 65036 (August 4, 2011), 

76 FR 49517, 49518 (August 10, 2011) (Notice of 

Filing and Immediate Effectiveness of Proposed 

Rule Change To Adopt a Definition of 

‘‘Professional’’ and Require That Professional 

Orders Be Appropriately Marked by BOX Options 

Participants) (SR–BX–2011–049); Securities 

Exchange Act Release No. 60931 (November 4, 

2009), 74 FR 58355, 58357 (November 12, 2009) 

(Notice of Filing of Proposed Rule Change, as 

Modified by Amendment No. 1, Related to 

Professional Orders) (SR–CBOE 2009–078); see also 

Securities Exchange Act Release 73628 (November 

18, 2014), 79 FR 69958, 69960 (November 24, 2014) 

(Notice of Filing and Immediate Effectiveness of a 

Proposed Rule Change Relating to Professional 

Orders) (SR–CBOE–2014–085). 

5See, e.g., Fees Schedule (Options Transaction 

Fees). 

6See, e.g., Rules 6.45A (Priority and Allocation of 

Equity Option Trades on the CBOE Hybrid System), 

6.45B (Priority and Allocation of Trades in Index 

Options and Options on ETFs on the CBOE Hybrid 

System). 

7See Securities Exchange Act Release No. 60931 

(November 4, 2009), 74 FR 58355, 58356 (November 

12, 2009) (Notice of Filing of Proposed Rule 

Change, as Modified by Amendment No. 1, Related 

to Professional Orders) (SR–CBOE 2009–078). 

8Notably, the Exchange’s Professional order rule 

was materially based upon a similar proposal by the 

International Securities Exchange, LLC (‘‘ISE’’) as 

set forth in SR–ISE–2006–026. See id. at 58356, note 

6. 

Exchange proposes to delete current 

Interpretation and Policy .01 to Rule 

1.1(ggg) and adopt new Interpretation 

and Policy .01 to Rule 1.1(ggg), setting 

forth amended standards for calculating 

average daily order submissions for 

Professional order counting purposes. 

The Exchange believes that the 

proposed rule change would provide 

additional clarity in the Rules and serve 

to promote the purposes for which the 

Exchange originally adopted Rule 

1.1(ggg) relating to Professionals. 

Background 

In general, ‘‘public customers’’ are 

granted certain marketplace advantages 

over other market participants, 

including Market-Makers, brokers and 

dealers of securities, and industry 

‘‘Professionals’’ on most U.S. options 

exchanges. The U.S. options exchanges, 

including CBOE, have adopted 

materially similar definitions of the 

term ‘‘Professional,’’ 1 which commonly 

refers to persons or entities that are not 

a brokers or dealers in securities and 

who or which place more than 390 

orders in listed options per day on 

average during a calendar month for 

their own beneficial account(s).2

Various exchanges adopted similar 

Professional rules for many of the same 

reasons, including, but not limited to 

the desire to create more competitive 

marketplaces and attract retail order 

flow.3 In addition, as several of the 

exchanges noted in their original 

Professional rule filings, their beliefs 

that disparate Professional rules and a 

lack of uniformity in the application of 

such rules across the options markets 

would not promote the best regulation 

and may, in fact, encourage regulatory 

arbitrage.4

Similar to other U.S. options 

exchanges, the Exchange grants ‘‘public 

customers’’ certain marketplace 

advantages over other market 

participants pursuant to the Exchange’s 

Fees Schedule 5 and the Rules.6 In 

general, public customers receive 

allocation and execution priority above 

equally priced competing interests of 

Market-Makers, broker-dealers, and 

other market participants. In addition, 

customer orders are generally exempt 

from transaction fees and certain 

Exchange surcharges. Similar to other 

U.S. options exchanges, the Exchange 

affords these marketplace advantages to 

public customers based on various 

business- and regulatory-related 

objectives, including, for example, to 

attract retail order flow to the Exchange 

and to provide competitive pricing. 

Prior to 2009, the Exchange 

designated all orders as either customer 

orders or non-customer orders based 

solely on whether or not the order was 

placed for the account of a registered 

securities broker or dealer. As nonbroker-dealer investors gained more 

access to electronic trading platforms, 

analytics technology, and market data 

services previously available only to 

securities brokers and dealers, the 

distinction between public customers 

and non-customers became less effective 

in promoting the intended purposes of 

the Exchange’s customer priority rules 

because certain customers were more 

similarly situated to broker-dealers. As 

the Exchange noted at the time, the 

Exchange no longer believed that the 

definitions of customer and noncustomer properly distinguished 

between the kind of nonprofessional 

retail investors that the order priority 

rules and fee exemptions were intended 

to benefit and non-broker-dealer 

professional traders with access to 

advanced market data information and 

sophisticated trading platforms that 

were not intended to benefit from those 

rules and exemptions.7 Furthermore, the 

Exchange believed that distinguishing 

solely between registered broker-dealers 

and non-broker-dealers with respect to 

order priority and fee exemptions was 

inconsistent with principles of fair 

competition and inappropriate in the 

marketplace given professional traders’ 

access to the same trading tools and 

market data services as broker-dealers 

while taking advantage of the same 

order priority and fee exemptions as 

retail investors. Accordingly, in 2009, 

the Exchange adopted a definition of 

‘‘Professional’’ under Rule 1.1(ggg) to 

further distinguish different types of 

orders placed on the Exchange.8

Under Rule 1.1(ggg), a Professional is 

defined as a person or entity that is not 

a securities broker or dealer that places 

more than 390 listed options orders per 

day on average during a calendar month 

for its own beneficial account(s). As 

discussed above, in large part, the 

Exchange’s Professional order rules 

were adopted to distinguish non-broker 

dealer individuals and entities that have 

access to information and technology 


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9See Rule 1.1(ggg). Notably, however, 

Professional orders are treated as public customer 

orders pursuant to certain rules, such as if the order 

is held by a broker and the broker crosses it with 

a facilitation order on the floor. 

10See Securities Exchange Act Release No. 60931 

(November 4, 2009), 74 FR 58355, 58356 (November 

12, 2009) (Notice of Filing of Proposed Rule 

Change, as Modified by Amendment No. 1, Related 

to Professional Orders) (SR–CBOE 2009–078); see, 

e.g., ISE Rule 100(a)(31A). 

11See Regulatory Circular RG09–148 

(Professional Orders). 

12See id. at Question 14. 

13See ISE Regulatory Information Circular 2014– 

007/Gemini Regulatory Information Circular 2014– 

011 (Priority Customer Orders and Professional 

Orders (FAQ)). 

14See Regulatory Circular RG09–148 

(Professional Orders); ISE Regulatory Information 

Circular 2014–007/Gemini Regulatory Information 

Circular 2014–011 (Priority Customer Orders and 

Professional Orders (FAQ)); MIAX Regulatory 

Circular 2014–69 (Priority Customer and 

Professional Interest Order Summary); NYSE Joint 

Regulatory Bulletin, NYSE Acra RBO–15–03, NYSE 

Amex RBO–15–06) (Professional Customer Orders); 

BOX Regulatory Circular RC–2015–21 (Professional 

Orders). 

15Compare NYSE Joint Regulatory Bulletin, 

NYSE Acra RBO–15–03, NYSE Amex RBO–15–06) 

(Professional Customer Orders) with Interpretation 

and Policy .01 to Rule 1.1(ggg); Regulatory Circular 

RG09–148 (Professional Orders); ISE Regulatory 

Information Circular 2014–007/Gemini Regulatory 

Information Circular 2014–011 (Priority Customer 

Orders and Professional Orders (FAQ)); and ISE 

Regulatory Information Circular 2009–179 (Priority 

Customer Orders and Professional Orders (FAQ)). 

that enable them to professionally trade 

listed options in a manner similar to 

brokers or dealers in securities from 

retail investors for order priority and/or 

transaction fees purposes. In general, 

Professionals are treated as brokers or 

dealers in securities under the 

Exchange’s rules, including, but not 

limited to with respect to order priority 

and fees.9 Rule 1.1(ggg) is substantially 

similar to the Professional order rules of 

other exchanges and was materially 

based upon the preexistent Professional 

order rules of other exchanges.10

After adopting Rule 1.1(ggg), the 

Exchange issued a Regulatory Circular, 

interpreting Rule 1.1(ggg).11 In 

particular, with respect to the counting 

of single original orders that are then 

broken up into multiple orders to 

achieve a specific execution strategy, 

the Exchange interpreted Rule 1.1(ggg) 

to allow such orders to be counted as 

one single order for Professional order 

counting purposes.12 Over time, 

however, the Exchange began to receive 

more and more questions as to what 

constitutes an ‘‘order’’ for Professional 

order counting purposes, including, but 

not limited to questions about how to 

count certain types of strategy orders 

and how to count ‘‘child’’ orders 

generated as part of specific ‘‘parent’’ 

execution strategies. 

In November 2014, in response to 

these questions, the Exchange clarified 

its Professional order rule by adopting 

Interpretation and Policy .01 to Rule 

1.1(ggg). Specifically, the Exchange 

codified its interpretation that, for 

Professional order counting purposes, 

‘‘parent’’ orders that are placed on a 

single ticket and entered for the 

beneficial account(s) of a person or 

entity that is not a broker or dealer in 

securities and that are broken into 

multiple parts by a broker or dealer, or 

by an algorithm housed at a broker or 

dealer, or by an algorithm licensed from 

a broker or dealer that is housed with 

the customer in order to achieve a 

specific execution strategy, including, 

but not limited to basket trades, program 

trades, portfolio trades, basis trades, and 

benchmark hedges, should count as one 

single order for Professional order 

counting purposes. This interpretation 

was a clarification in the Rules based on 

the Exchange’s past interpretations of 

Rule 1.1(ggg) and similar interpretations 

set forth in a previously issued ISE/ISE 

Gemini, LLC (‘‘Gemini’’) Joint 

Regulatory Information Circular.13

The Exchange’s adoption of 

Interpretation and Policy .01 to Rule 

1.1(ggg), however, has not clarified the 

Exchange’s Professional rule 

completely. The advent of new multi-leg 

spread products and the proliferation of 

the use of complex orders and 

algorithmic execution strategies by both 

institutional and retail market 

participants continue to raise questions 

as to what constitutes an ‘‘order’’ for 

Professional order counting purposes. 

For example, do multi-leg spread orders 

(which on the Exchange may be up to 

12 legs) or strategy orders such as 

volatility orders constitute a single order 

or multiple orders for Professional order 

counting purposes? The Exchange’s 

Professional rule does not fully address 

these issues and there is no common 

interpretation across the U.S. options 

markets. In fact, CBOE is the only U.S. 

options exchange to have adopted any 

interpretation of how certain types of 

orders should be counted under its 

Professional rule. The Exchange 

believes that additional clarity is needed 

regarding the application of Rule 

1.1(ggg). Accordingly, the Exchange is 

proposing to amend Interpretation and 

Policy .01 to Rule 1.1(ggg) to address 

how various new execution and order 

strategies should be treated under the 

Exchange’s Professional rule. 

Moreover, the Exchange believes that 

a new Interpretation and Policy would 

better serve to accomplish the 

Exchange’s stated goals for its 

Professional rule. Under current 

Interpretation and Policy .01 to Rule 

1.1(ggg) many market participants using 

sophisticated execution strategies and 

trading algorithms who would typically 

be considered professional traders are 

not identified under the Exchange’s 

Professional rule. The Exchange 

believes that these types of market 

participants have access to technology 

and market information akin to brokerdealers. The Exchange also believes that 

a new Interpretation and Policy to Rule 

1.1(ggg) is warranted to ensure that 

public customers are afforded the 

marketplace advantages that they are 

intended to be afforded over other types 

of market participants on the Exchange. 

The Exchange notes that despite the 

adoption of materially similar 

Professional rules across the markets, 

exchanges’ interpretations of their 

respective Professional rules vary. 

Although Professionals are similarly 

defined by exchanges as non-brokerdealer persons or entities that place 

more than 390 orders in listed options 

for their own beneficial account(s) per 

day on average during a calendar 

month, there is no consistent definition 

across the markets as to what constitutes 

an ‘‘order’’ for Professional order 

counting purposes. While several 

options exchanges, including CBOE, 

have attempted to clarify their 

interpretations of their Professional 

rules through regulatory and 

information notices and circulars,14

many of the options exchanges have not 

issued any guidance regarding the 

application of their Professional rules. 

Furthermore, where exchanges have 

issued such interpretive guidance, those 

interpretations have not necessarily 

been consistent.15 As a result, the 

Exchange believes that the rather than 

helping to promote the best regulation 

and discourage regulatory arbitrage, the 

Professional rules have become a basis 

of intermarket competition. As noted 

above, CBOE is the only U.S. options 

exchange that has adopted interpretive 

guidance regarding its Professional rule 

in its rules. 

The Exchange believes that a new set 

of standards and a more detailed 

counting regime than the Exchange’s 

current Professional order rules provide 

would allow the Exchange to better 

compete for order flow and help ensure 

deeper levels of liquidity on the 

Exchange. The Exchange also believes 

that the proposed rule change would 

help to remove impediments to and 

help perfect the mechanism of a free 

and open market and a national market 

system by increasing competition in the 

marketplace. Accordingly, the Exchange 

proposes to amend the Rules by deleting 


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16Notably, however, if the customer herself were 

to enter the same four identical orders to buy 250 

XYZ $5 January calls at a limit price of $1 prior to 

sending the orders, those orders would count as 

four separate orders for Professional order counting 

purposes because the orders would not have been 

broken into multiple ‘‘child’’ orders on the same 

side (buy/sell) and series as the ‘‘parent’’ order by 

a broker or dealer, or by an algorithm housed at a 

broker or dealer or by an algorithm licensed from 

a broker or dealer, but which is housed with the 

customer. 

17For purposes of this proposed Interpretation 

and Policy, the term ‘‘strategy order’’ is intended to 

mean an execution strategy, trading instruction, or 

algorithm whereby multiple ‘‘child’’ orders on both 

sides of a series and/or multiple series are generated 

prior to being sent to any or multiple U.S. options 

exchange(s). 

18The Exchange recognizes that with respect to 

customers and, in particular, the counting of 

customer orders for Professional purposes, 

paragraphs (b)(2) and (c)(3) of proposed 

Interpretation and Policy .01 to Rule 1.1(ggg) 

contain language that is somewhat redundant and 

superfluous. Because non-professional customers 

may not simultaneously or nearly simultaneously 

enter multiple limit orders to buy and sell the same 

security (i.e. act as Market-Makers) (see Rule 6.8C), 

a ‘‘parent’’ customer order that is broken into 

multiple ‘‘child’’ orders on both sides (buy/sell) 

must necessarily be placed across multiple series. 

Accordingly, when considered in conjunction with 

the prohibitions in Rule 6.8C, the operation of 

paragraphs (b)(2) and (c)(3) of proposed 

Interpretation and Policy .01 to Rule 1.1(ggg) would 

be the same even if the proposed rule were only 

applied to ‘‘child’’ orders placed in multiple series. 

The Exchange, however, has determined to include 

references to ‘‘both sides (buy/sell) of a series’’ in 

the text of proposed Interpretation and Policy .01 

to Rule 1.1(ggg) to reinforce the concepts 

underlying the Exchange’s proposed Professional 

order counting structure. 

19A ‘‘volatility’’ or ‘‘volatility-type’’ order may be 

characterized as an order instruction or 

combination to buy/sell contracts at a specific 

implied volatility rather than at a specific price or 

premium. Because implied volatility is a key 

determinant of the premium on an option, some 

traders may wish to take positions in specific 

contract months in an effort to take advantage of 

perceived changes in implied volatility arising 

before, during, or after earnings or in a certain 

company when specific or broad market volatility 

is predicted to change. In certain cases, depending 

on where a customer’s account is housed or the 

trading capabilities of the participant involved, an 

options trader may trade and position for 

movements in the price of the option based on 

implied volatility using a ‘‘volatility’’ or ‘‘volatilitytype’’ order or trading instruction by setting a limit 

for the volatility level they are willing to pay or 

receive. In such cases, premiums may be calculated 

in percentage terms rather than premiums. 

20An option’s vega is a measure of the impact of 

changes in the underlying volatility on the option 

price. Specifically, the vega of an option expresses 

current Interpretation and Policy .01 to 

Rule 1.1(ggg) and, in its place, adopt a 

new Interpretation and Policy with 

respect to Professional order counting. 

Proposal 

The Exchange proposes to delete 

current Interpretation and Policy .01 to 

Rule 1.1(ggg) and replace it with a new 

Interpretation and Policy setting forth a 

more detailed counting regime for 

calculating average daily orders for 

Professional order counting purposes. 

Specifically, the Exchange’s proposed 

Interpretation and Policy would make 

clear how to count complex orders, 

‘‘parent/child’’ orders that are broken 

into multiple orders, and ‘‘cancel/

replace’’ orders for Professional order 

counting purposes. 

Under the Exchange’s proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg), all orders would count as one 

single order for Professional counting 

purposes, unless otherwise specified 

under the Rules. Proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg) would provide that except as 

noted below, each order of any order 

type counts as one order for Professional 

order counting purposes. Paragraph (a) 

of proposed Interpretation and Policy 

.01 to Rule 1.1(ggg) would discuss 

complex orders. Under paragraph (a)(1) 

of proposed Interpretation and Policy 

.01 to Rule 1.1(ggg), a complex order 

comprised of four (4) legs or fewer 

would count as a single order. 

Conversely, paragraph (a)(2) of proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg) would provide that a complex 

order comprised of five (5) legs or more 

counts as multiple orders with each 

option leg counting as its own separate 

order. The Exchange believes the 

distinction between complex orders 

with up to four legs from those with five 

or more legs is appropriate in light of 

the purposes for which Rule 1.1(ggg) 

was adopted. In particular, the 

Exchange notes that multi-leg complex 

order strategies with five or more legs 

are more complex in nature and thus, 

more likely to be used by professional 

traders than traditional two, three, and 

four leg complex order strategies such as 

the strangle, straddle, butterfly, collar, 

and condor strategies, which are 

oftentimes used by retail investors. 

Thus, the types of complex orders 

traditionally placed by retail investors 

would continue to count as only one 

order while the more complex strategy 

orders that are typically used by 

professional traders would count as 

multiple orders for Professional order 

counting purposes. 

Paragraph (b) of proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg) would provide details relating 

to the counting of ‘‘parent/child’’ orders. 

Under paragraph (b)(1) of proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg), a ‘‘parent’’ order that is placed 

for the beneficial account(s) of a person 

or entity that is not a broker or dealer 

in securities that is broken into multiple 

‘‘child’’ orders on the same side (buy/

sell) and series as the ‘‘parent’’ order by 

a broker or dealer, or by an algorithm 

housed at a broker or dealer or by an 

algorithm licensed from a broker or 

dealer, but which is housed with the 

customer, counts as one order even if 

the ‘‘child’’ orders are routed across 

multiple exchanges. Essentially, this 

paragraph would describe how orders 

placed for public customers, which are 

‘‘worked’’ by a broker in order to receive 

best execution should be counted for 

Professional order counting purposes. 

Paragraph (b)(1) of proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg) would permit larger ‘‘parent’’ 

orders (which may be simple orders or 

complex orders consisting of up to four 

legs), to be broken into multiple smaller 

orders on the same side (buy/sell) and 

in the same series (or complex orders 

consisting of up to four legs) in order to 

attempt to achieve best execution for the 

overall order. 

For example, if a customer were to 

enter an order to buy 1,000 XYZ $5 

January calls at a limit price of $1, 

which the customer’s broker then broke 

into four separate orders to buy 250 

XYZ $5 January calls at a limit price of 

$1 in order to achieve a better 

execution, the four ‘‘child’’ orders 

would still only count as one order for 

Professional order counting purposes 

(whether or not the four separate orders 

were sent to the same or different 

exchanges for execution).16 Similarly, in 

the case of a complex order, if a 

customer were to enter an order to buy 

1,000 XYZ $5 January(sell)/March(buy) 

calendar spreads (with a 1:1 ratio on the 

legs), at a net debit limit price of $0.20, 

which the customer’s broker then broke 

into four separate orders to buy 250 

XYZ $5 January/March calendar spreads 

(each with a 1:1 ratio on the legs), each 

at a net debit limit price of $0.20, the 

four ‘‘child’’ orders would still only 

count as one order for Professional order 

counting purposes (whether or not the 

four separate orders were sent to the 

same or different exchanges for 

execution). 

Conversely, under paragraph (b)(2) of 

proposed Interpretation and Policy .01 

to Rule 1.1(ggg), a ‘‘parent’’ order 

(including a strategy order) 17 that is 

broken into multiple ‘‘child’’ orders on 

both sides (buy/sell) of a series 18 and/ 

or multiple series counts as multiple 

orders, with each ‘‘child’’ order 

counting as a new and separate order. 

Accordingly, under this provision, 

strategy orders, which are most often 

used by sophisticated traders best 

characterized as ‘‘Professionals,’’ would 

count as multiple orders for each child 

order entered as part of the overall 

strategy. For example, if a customer 

were to enter a volatility order 19 or 

‘‘vega’’ order 20 with her broker by 


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Federal Register / Vol. 81, No. 27 / Wednesday, February 10, 2016 / Notices 7177 

the change in the price of the option for every 1% 

change in underlying volatility. 21Notably, with respect to the types of ‘‘parent’’ 

orders (including strategy orders) described in 

paragraph (b)(2) to proposed Interpretation and 

Policy .01 to Rule 1.1(ggg), such orders would be 

received only as multiple ‘‘child’’ orders the U.S. 

options exchange receiving such orders. The 

‘‘parent’’ order would be broken apart before being 

sent by the participant to the exchange(s) as 

multiple ‘‘child’’ orders. See supra at note 19. 

which multiple ‘‘child’’ orders were 

then sent to the Exchange across 

multiple series in a particular option 

class, each order entered would count as 

a separate order for Professional order 

counting purposes. Likewise, if the 

customer instructed her broker to buy a 

variety of calls across various option 

classes as part of a basket trade, each 

order entered by the broker in order to 

obtain the positions making up the 

basket would count as a separate order 

for Professional counting purposes.21

The Exchange believes that the 

distinctions between ‘‘parent’’ and 

‘‘child’’ orders in paragraph (b) to 

proposed Rule 1.1(ggg) are appropriate. 

The Exchange notes that paragraph (b) 

to proposed Interpretation and Policy 

.01 to Rule 1.1(ggg) is not aimed at 

capturing orders that are being 

‘‘worked’’ or broken into multiple 

orders to avoid showing large orders to 

the market in an effort to elude frontrunning and to achieve best execution 

as is typically done by brokers on behalf 

of retail clients. Rather, paragraph (b) to 

proposed Interpretation and Policy .01 

to Rule 1.1(ggg) is aimed at identifying 

‘‘child’’ orders of ‘‘parent’’ orders 

generated by algorithms that are 

typically used by sophisticated traders 

to continuously update their orders in 

concert with market updates in order to 

keep their overall trading strategies in 

balance. The Exchange believes that 

these types of ‘‘parent/child’’ orders 

typically used by sophisticated traders 

should count as multiple orders. 

Paragraph (c) of proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg), would discuss the counting of 

orders that are cancelled and replaced. 

Similar to the distinctions drawn in 

paragraph (b) of proposed Interpretation 

and Policy .01 to Rule 1.1(ggg), 

paragraph (c) of proposed Interpretation 

and Policy .01 to Rule 1.1(ggg) would 

essentially separate orders that are 

cancelled and replaced as part of an 

overall strategy from those that are 

cancelled and replaced by a broker that 

is ‘‘working’’ the order to achieve best 

execution or attempting to time the 

market. Specifically, paragraph (c)(1) of 

proposed Interpretation and Policy .01 

to Rule 1.1(ggg) would provide that 

except as otherwise provided in the rule 

(and specifically as provided under 

paragraph (c)(2) to proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg)), any order that cancels and 

replaces an existing order counts as a 

separate order (or multiple new orders 

in the case of a complex order 

comprised of five (5) legs or more). For 

example, if a trader were to enter a nonmarketable limit order to buy an option 

contract at a certain net debit price, 

cancel the order in response to market 

movements, and then reenter the same 

order once it became marketable, those 

orders would count as two separate 

orders for Professional order counting 

purposes even though the terms of both 

orders were the same. 

Paragraph (c)(2) of proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg) would specify the exception to 

paragraph (c)(1) of proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg) and would provide that an 

order that cancels and replaces any 

‘‘child’’ order resulting from a ‘‘parent’’ 

order that is placed for the beneficial 

account(s) of a person or entity that is 

not a broker, or dealer in securities that 

is broken into multiple ‘‘child’’ orders 

on the same side (buy/sell) and series as 

the ‘‘parent’’ order by a broker or dealer, 

by an algorithm housed at a broker or 

dealer, or by an algorithm licensed from 

a broker or dealer, but which is housed 

with the customer, would not count as 

a new order. For example, if a customer 

were to enter an order with her broker 

to buy 10,000 XYZ $5 January calls at 

a limit price of $1, which the customer’s 

broker then entered, but could not fill 

and then cancelled to avoid having to 

rest the order in the book as part of a 

strategy to obtain a better execution for 

the customer and then resubmitted the 

remainder of the order, which would be 

considered a ‘‘child’’ of the ‘‘parent’’ 

order, once it became marketable, such 

orders would only count as one order 

for Professional order counting 

purposes. Again, similar to paragraph 

(b) of proposed Interpretation and 

Policy .01 to Rule 1.1(ggg), the Exchange 

notes that paragraph (c) to proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg) is not aimed at capturing orders 

that are being ‘‘worked’’ or being 

cancelled and replaced to avoid 

showing large orders to the market in an 

effort to elude front-running and to 

achieve best execution as is typically 

done by brokers on behalf of retail 

clients. Rather, paragraph (c) to 

proposed Interpretation and Policy .01 

to Rule 1.1(ggg) is aimed at identifying 

‘‘child’’ orders of ‘‘parent’’ orders 

generated by algorithms that are 

typically used by sophisticated traders 

to continuously update their orders in 

concert with market updates in order to 

keep their overall trading strategies in 

balance. The Exchange believes that 

paragraph (c)(2) to proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg) is consistent with these goals. 

Accordingly, consistent with 

paragraph (c)(1) of proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg), under paragraph (c)(3) of 

proposed Interpretation and Policy .01 

to Rule 1.1(ggg), an order that cancels 

and replaces any ‘‘child’’ order resulting 

from a ‘‘parent’’ order (including a 

strategy order) that generates ‘‘child’’ 

orders on both sides (buy/sell) of a 

series and/or in multiple series would 

count as a new order. For example, if an 

investor were to seek to make a trade (or 

series of trades) to take a long vega 

position at a certain percentage limit on 

a basket of options, the investor may 

need to cancel and replace several of the 

‘‘child’’ orders entered to achieve the 

overall execution strategy several times 

to account for updates in the prices of 

the underlyings. In such a case, each 

‘‘child’’ order placed to keep the overall 

execution strategy in place would count 

as a new and separate order even if the 

particular ‘‘child’’ order were being 

used to replace a slightly different 

‘‘child’’ order that was previously being 

used to keep the same overall execution 

strategy in place. The Exchange believes 

that the distinctions between cancel/

replace orders in paragraph (c) to 

proposed Rule 1.1(ggg) are appropriate 

as such orders are typically generated by 

algorithms used by sophisticated traders 

to keep strategy orders continuously in 

line with updates in the markets. As 

such, the Exchange believes that in most 

cases, cancel/replace orders should 

count as multiple orders. 

Finally, paragraph (c)(4) of proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg) would codify the Exchange’s 

‘‘pegged’’ order interpretation in the text 

of the Rules. Paragraph (c)(4) of 

proposed Interpretation and Policy .01 

to Rule 1.1(ggg) would provide that 

notwithstanding the provisions of 

paragraph (c)(2) above, an order that 

cancels and replaces any ‘‘child’’ order 

resulting from a ‘‘parent’’ order being 

‘‘pegged’’ to the Exchange’s best bid or 

offer (‘‘BBO’’) or national best bid or 

offer (‘‘NBBO’’) or that cancels and 

replaces any ‘‘child’’ order pursuant to 

an algorithm that uses BBO or NBBO in 

the calculation of ‘‘child’’ orders and 

attempts to move with or follow the 

BBO or NBBO of a series would count 

as a new order each time the order 

cancels and replaces in order to attempt 

to move with or follow the BBO or 

NBBO. This interpretation is similar to 

the Exchange’s current interpretation of 


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7178 Federal Register / Vol. 81, No. 27 / Wednesday, February 10, 2016 / Notices 

22See CBOE Regulatory Circular RG09–148 

(Professional Orders) at Question 12. 

23See Securities Exchange Act Release No. 60931 

(November 4, 2009), 74 FR 58355 (November 12, 

2009) (Notice of Filing of Proposed Rule Change, as 

Modified by Amendment No. 1, Related to 

Professional Orders) (SR–CBOE 2009–078). 

24See id. 

25 15 U.S.C. 78f(b). 

26 15 U.S.C. 78f(b)(5). 

27 Id. 

its Professional order rules, but adds 

clarifying language to the Exchange’s 

current interpretation and the Rules.22

The Exchange believes that paragraph 

(c)(4) is appropriate to make clear that 

‘‘pegged’’ strategy orders that are 

typically used by sophisticated traders 

should be counted as multiple orders 

even though such orders may cancel/

replace orders in on the same side (buy/ 

sell) of the market in a single series in 

order to achieve an overall order 

strategy. 

Under current Rule 1.1(ggg), in order 

to properly represent orders entered on 

the Exchange according to the 

Professional order rules, Trading Permit 

Holders (‘‘TPHs’’) are required to 

indicate whether public customer orders 

are ‘‘Professional’’ orders.23 This 

requirement will remain the same. To 

comply with this requirement, TPHs are 

required to review their customers’ 

activity on at least a quarterly basis to 

determine whether orders that are not 

for the account of a broker or dealer 

should be represented as customer 

orders or Professional orders.24 Orders 

for any customer that had an average of 

more than 390 orders per day during 

any month of a calendar quarter must be 

represented as Professional orders for 

the next calendar quarter. TPHs are 

required to conduct a quarterly review 

and make any appropriate changes to 

the way in which they are representing 

orders within five days after the end of 

each calendar quarter. While TPHs only 

will be required to review their accounts 

on a quarterly basis, if during a quarter 

the Exchange identifies a customer for 

which orders are being represented as 

public customer orders but that has 

averaged more than 390 orders per day 

during a month, the Exchange will 

notify the TPH and the TPH will be 

required to change the manner in which 

it is representing the customer’s orders 

within five days. Because Rule 1.1(ggg) 

only requires that TPHs conduct a lookback to determine whether their 

customers are averaging more than 390 

orders per day at the end of each 

calendar quarter, the Exchange proposes 

an effective date of April 1, 2016 for 

proposed Interpretation and Policy .01 

to Rule 1.1(ggg) to ensure that all orders 

during the next quarterly review will be 

counted in the same manner and that 

proposed Interpretation and Policy .01 

to Rule 1.1(ggg) will not be applied 

retroactively. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.25 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 26 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) 27 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 proposed Interpretation and Policy 

.01 to Rule 1.1(ggg) provides a more 

conservative order counting regime for 

Professional order counting purposes 

that would identify more traders as 

Professionals to which the Exchange’s 

definition of Professional was designed 

to apply and create a better competitive 

balance for all participants on the 

Exchange, consistent with the Act. As 

the options markets have evolved to 

become more electronic and more 

competitive, the Exchange believes that 

the distinction between registered 

broker-dealers and professional traders 

who are currently treated as public 

customers has become increasingly 

blurred. More and more, the category of 

public customer today includes 

sophisticated algorithmic traders 

including former market makers and 

hedge funds that trade with a frequency 

resembling that of broker-dealers. The 

Exchange believes that it is reasonable 

under the Act to treat those customers 

who meet the high level of trading 

activity established in the proposal 

differently than customers who do not 

meet that threshold and are more typical 

retail investors to ensure that 

professional traders do not take 

advantage of priority and fee benefits 

intended for public customers. 

The Exchange notes that it is not 

unfair to differentiate between different 

types of investors in order to achieve 

certain marketplace balances. The Rules 

currently differentiate between public 

customers, broker-dealers, MarketMakers, Designated Primary MarketMakers (‘‘DPMs’’) and the like. These 

differentiations have been recognized to 

be consistent with the Act. The 

Exchange does not believe that the 

current rules of CBOE and other 

exchanges that accord priority to all 

public customers over broker-dealers are 

unfairly discriminatory. Nor does the 

Exchange believe that it is unfairly 

discriminatory to accord priority to only 

those customers who on average do not 

place more than one order per minute 

(390 per day) under the counting regime 

that the Exchange proposes. The 

Exchange believes that such 

differentiations drive competition in the 

marketplace and are within the business 

judgment of the Exchange. Accordingly, 

the Exchange also believes that its 

proposal is consistent with the 

requirement of Section 6(b)(8) of the Act 

that the rules of an exchange not impose 

an unnecessary or inappropriate burden 

upon competition in that it treats 

persons who should be deemed 

Professionals, but who may not be 

under current Interpretation and Policy 

.01 to Rule 1.1(ggg) in a manner so that 

they do not receive special priority 

benefits. 

Furthermore, the Exchange believes 

that the proposed rule change will 

protect investors and the public interest 

by helping to assure that retail 

customers continue to receive the 

appropriate marketplace advantages in 

the CBOE marketplace as intended, 

while furthering competition among 

marketplace professionals by treating 

them in the same manner as other 

similarly situated market participants. 

The Exchange believes that it is 

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

Act not to afford market participants 

with similar access to information and 

technology as that of brokers and 

dealers of securities with marketplace 

advantages over such marketplace 

competitors. The Exchange also believes 

that the proposed Interpretation and 

Policy would help to remove burdens 

on competition and promote a more 

competitive marketplace by affording 

certain marketplace advantages only to 

those for whom they are intended. 

Finally, the Exchange believes that the 

proposed rule change sets forth a more 

detailed and clear regulatory regime 

with respect to calculating average daily 

order entry for Professional order 


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Federal Register / Vol. 81, No. 27 / Wednesday, February 10, 2016 / Notices 7179 

28 17 CFR 200.30–3(a)(12). 

counting purposes. The Exchange 

believes that this additional clarity and 

detail will eliminate confusion among 

market participants, which is in the 

interests of all investors and the general 

public. 

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. As discussed 

above, the Exchange does not believe 

that the current rules of CBOE and other 

exchanges that accord priority to all 

public customers over broker-dealers are 

unfairly discriminatory. Nor does the 

Exchange believe that it is unfairly 

discriminatory to accord priority to only 

those customers who on average do not 

place more than one order per minute 

(390 per day) under the counting regime 

that the Exchange proposes. The 

Exchange believes that its proposal does 

not impose an undue burden on 

competition. The Exchange notes that 

one of the purposes of the Professional 

rules is to help ensure fairness in the 

marketplace and promote competition 

among all market participants. The 

Exchange believes that proposed 

Interpretation and Policy .01 to Rule 

1.1(ggg) would help establish more 

competition among market participants 

and promote the purposes for which the 

Exchange’s Professional rule was 

originally adopted. The Exchange does 

not believe that the Act requires it to 

provide the same incentives and 

discounts to all market participants 

equally, so as long as the exchange does 

not unfairly discriminate among 

participants with regard to access to 

exchange systems. The Exchange 

believes that here, that is clearly the 

case. 

Rather than burden competition, the 

Exchange believes that the proposed 

rule change promotes competition by 

ensuring that retail investors continue to 

receive the appropriate marketplace 

advantages in the CBOE marketplace as 

intended, while furthering competition 

among marketplace professionals by 

treating them in the same manner under 

the Rules as other similarly situated 

market participants by ensuring that 

market participants with similar access 

to information and technology (i.e. 

Professionals and broker-dealers), 

receive similar treatment under the 

Rules while retail investors receive the 

benefits of order priority and fee 

waivers that are intended to apply to 

public customers. 

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 written comments on the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the Exchange consents, the Commission 

will: 

A. by order approve or disapprove 

such proposed rule change, or 

B. institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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 No. SR– 

CBOE–2016–005 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 

No. SR–CBOE–2016–005. 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 Web site (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 Web site 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 will also be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File No. SR–CBOE– 

2016–005 and should be submitted on 

or before March 2,2016. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2016–02602 Filed 2–9–16; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release Nos. 33–10034; 34–77064; File No. 

265–27] 

SEC Advisory Committee on Small and 

Emerging Companies; Meeting 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Notice of meeting. 

SUMMARY: The Securities and Exchange 

Commission Advisory Committee on 

Small and Emerging Companies is 

providing notice that it will hold a 

public meeting on Thursday, February 

25, 2016, in Multi-Purpose Room LL– 

006 at the Commission’s headquarters, 

100 F Street NE., Washington, DC. The 

meeting will begin at 9:30 a.m. (EST) 

and will be open to the public. The 

meeting will be webcast on the 

Commission’s Web site at www.sec.gov. 

Persons needing special 

accommodations to take part because of 

a disability should notify the contact 

person listed below. The public is 

invited to submit written statements to 

the Committee. The agenda for the 

meeting includes matters relating to 

rules and regulations affecting small and 

emerging companies under the federal 

securities laws. 

DATES: The public meeting will be held 

on Thursday, February 25, 2016. 

Written statements should be received 

on or before February 23, 2016. 

ADDRESSES: The meeting will be held at 

the Commission’s headquarters, 100 F 


asabaliauskas on DSK9F6TC42PROD with NOTICES2