Federal Register / Vol. 86, No. 111 / Friday, June 11, 2021 / Notices 31361 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5See Rule 5.7.03. 

6See Securities Exchange Act Release No. 74169 

(January 29, 2015), 80 FR 6145 (February 4, 2015) 

(SR–CBOE–2015–011), which implemented the 12 

leg per order requirement in current Rule 5.7(f)(4); 

see also Securities Exchange Act Release No. 75026 

(May 21, 2015), 80 FR 30514 (May 28, 2015) (SR– 

CBOE–2015–048). 

7Exchange systems have, since 2015, been 

enhanced and are able to support a greater number 

of legs per order ticket. 

8As similarly noted in the 2015 filing that 

implemented the 12 leg per order requirement 

currently reflected in Rule 5.7(f)(4), TPHs will not 

be required to make changes to their own or thirdparty vendor’s order entry and execution systems. 

However, to the extent a TPH wants to represent 

and execute a complex order (including SPX Combo 

Orders) in open outcry, the order must be entered 

on a single order ticket and cannot exceed 16 legs 

or, if for more than 16 legs, entered on fewest order 

tickets necessary (linked in a form and manner 

prescribed by the Exchange). For example, if a 

TPH’s order entry and execution system currently 

only supports the open outcry processing of a 

complex order with up to 12 legs, the system would 

not need to be enhanced if the TPH does not intend 

to represent and execute complex orders with more 

than 12 legs. If the TPH intends to represent and 

execute complex orders with more than 12 legs (i.e., 

complex orders with 13 to 16 legs), then the TPH 

may need to enhance its existing system or utilize 

a third-party vendor’s order entry and execution 

system that supports the open outcry processing of 

such orders on a single order ticket. See also SR– 

CBOE–2015–011, supra note 6. The Exchange 

additionally notes that it plans to implement the 

proposed change approximately 60 days after 

disseminating notice of the proposed change to its 

TPHs. The Exchange believes that this will provide 

TPHs that intend to represent and execute complex 

orders with more than 12 legs with ample time to 

enhance, if necessary, their existing systems or 

utilize a third-party vendor’s order entry and 

execution system that supports the open outcry 

processing of such orders on a single order ticket. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92116; File No. SR–CBOE– 

2021–036] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Its Rules in 

Connection With the Number of Legs 

of a Complex Order That May Be 

Entered on a Single Order Ticket at the 

Time of Systemization 

June 7, 2021. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on May 25, 

2021, Cboe Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘Cboe Options’’) filed 

with the Securities and Exchange 

Commission (‘‘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 proposal pursuant to 

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

Rule 19b–4(f)(6) thereunder.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

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

or ‘‘Cboe Options’’) proposes to amend 

its Rules in connection with the number 

of legs of a complex order that may be 

entered on a single order ticket at the 

time of systemization. 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 its 

Rules in connection with the number of 

legs of a complex order that may be 

entered on a single order ticket at the 

time of systemization. 

Specifically, Rule 5.7(f) currently 

provides that each order, cancellation 

of, or change to an order transmitted to 

the Exchange must be ‘‘systematized’’ in 

a format approved by the Exchange, 

either before it is sent to the Exchange 

or upon receipt on the Exchange’s 

trading floor. An order is systematized 

if (1) the order is sent electronically to 

the Exchange or (2) the order that is sent 

to the Exchange nonelectronically (e.g., 

telephone orders) is input electronically 

into the Exchange’s systems 

contemporaneously upon receipt on the 

Exchange, and prior to representation of 

the order. Any proprietary system 

approved by the Exchange on the 

Exchange’s trading floor that receives 

orders is considered an Exchange 

system for purposes of this Rule.5

Regarding the systemization of complex 

orders, Rule 5.7(f)(4) particularly 

provides that complex orders of 12 legs 

or less (one leg of which may be for an 

underlying security or security future, 

as applicable) must be entered on a 

single order ticket at time of 

systemization. If permitted by the 

Exchange (which the Exchange will 

announce by Regulatory Circular), 

complex orders of more than 12 legs 

(one leg of which may be for an 

underlying security or security future, 

as applicable) may be split across 

multiple order tickets, if the Trading 

Permit Holder representing the complex 

order uses the fewest order tickets 

necessary to systematize the order and 

identifies for the Exchange the order 

tickets that are part of the same complex 

order (in a form and manner prescribed 

by the Exchange). 

The Exchange notes that it adopted 

the 12 leg maximum per order ticket in 

2015 as a result of Exchange system 

limitations.6 At that time, the Exchange 

could only support the processing of up 

to 12 legs on a single order ticket for 

representation and execution in open 

outcry as a complex order.7 Based on 

customer feedback, the Exchange 

understands that there are order entry 

and execution systems used by Trading 

Permit Holders (‘‘TPHs’’) that are able to 

support at least 16 legs. If a TPH with 

a system that can support 16 legs on a 

single order ticket receives a complex 

order for more than 12 legs to route to 

an Exchange system for execution on 

the Exchange’s trading floor, it must 

break up the order to comply with Rule 

5.7(f)(4). As such, the Exchange 

proposes to amend Rule 5.7(f)(4) to 

increase the 12 leg maximum per single 

order ticket to a maximum of 16 legs per 

single order ticket at time of 

systemization. Pursuant to proposed 

Rule 5.7(f)(4), complex orders of 16 legs 

or less (one leg of which may be for an 

underlying security or security future, 

as applicable) must be entered on a 

single order ticket at time of 

systemization and orders of more than 

16 legs may be split across multiple 

order tickets.8 The TPH representing the 

complex order must continue to use the 

fewest order tickets necessary to 

systematize the order and to identify for 

the Exchange the order tickets that are 

part of the same complex order. In 

addition, the proposed rule change also 


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31362 Federal Register / Vol. 86, No. 111 / Friday, June 11, 2021 / Notices 

9An ‘‘SPX Combo Order’’ is an order to purchase 

or sell one or more SPX option series and the 

offsetting number of SPX combinations defined by 

the delta. See Rule 5.6(c). 10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(5). 

12 Id. 

13See also supra note 7. 

14See also supra note 8. 

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

16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

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

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of 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. 

updates paragraph (3) under the 

definition of SPX Combo Order 9 in Rule 

5.6(c), which currently reflects the same 

12 leg maximum per single order ticket 

at time of systemization, to provide that 

an SPX Combo Order for 16 legs or 

fewer must be entered on a single order 

ticket at time of systemization and that 

an SPX Combo Order for more than 16 

legs may be represented or executed as 

a single SPX Combo Order in 

accordance with Rule 5.85(e) if it is split 

across multiple order tickets and the 

Trading Permit Holder representing the 

SPX Combo Order uses the fewest order 

tickets necessary to systematize the 

order and identifies for the Exchange 

the order tickets that are part of the 

same SPX Combo Order. 

Due to Exchange system limitations 

that may prevent a complex order with 

more than a certain number of legs from 

being entered on a single order ticket for 

representation and execution in open 

outcry, the single order ticket leg 

limitations in place are intended to 

provide consistency in processing and 

in order to continue to enhance the 

Exchange’s audit trail by reducing the 

number of tickets required for larger 

complex orders. Notwithstanding the 

necessity of order ticket leg maximums 

given Exchange system limitations, the 

Exchange notes that splitting an order 

across multiple order tickets takes 

additional time, can leave room for 

error, and requires additional TPH 

administrative resources as a TPH must 

identify for the Exchange the order 

tickets that are part of the same complex 

order (in a form and manner prescribed 

by the Exchange). The proposed rule 

change is designed to reduce the 

number of complex orders that TPHs 

need to break up into multiple order 

tickets. As a result, the proposed rule 

change ultimately allows TPHs to more 

effectively and efficiently systematize 

complex orders for execution in open 

outcry. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (‘‘Act’’) 

and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.10 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 11 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)12 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 allow 

TPHs to submit order tickets for their 

open outcry complex orders (including 

SPX Combo Orders) in a manner that is 

more compatible with the processing 

capacity that their order entry systems 

are able to support today,13 thus 

reducing the number of complex orders 

that need to be broken up into multiple 

order tickets. By allowing TPHs to more 

effectively and efficiently systematize 

complex orders with a large amount of 

legs for execution in open outcry within 

the processing capacity limits of the 

order entry systems they use, the 

Exchange believes the proposed rule 

change removes impediments to and 

perfects the mechanism of a free and 

open market and national market 

system. The Exchange notes that the 

proposed rule change does not impact 

the current manner in which TPHs may 

represent a complex order in open 

outcry, nor does it impact the 

permissible number of legs or 

permissible ratios of complex orders. 

The proposed rule change merely 

increases the leg limit per single order 

ticket, which may increase trading 

efficiencies for TPHs by allowing TPHs 

to reduce the number of order tickets 

submitted for their larger complex 

orders,14 while continuing to provide 

consistency in processing and further 

enhancing the Exchange’s audit trail (as 

fewer orders will require multiple 

tickets). This, in turn, serves to protect 

investors by promoting transparency, 

assisting in surveillance, and providing 

the Exchange the ability to better 

enforce compliance by its TPHs with the 

Act and the Exchange Rules. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange does not believe that the 

proposed rule change will impose any 

burden on intramarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act 

because a maximum number of legs per 

single order ticket will continue apply 

equally to all market participants that 

systematize complex orders (including 

SPX Combo Orders) for execution in 

open outcry. 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 is not competitive 

in nature nor does it relate to trading on 

the Exchange. Rather, it relates solely to 

the manner in which market 

participants systematize complex orders 

for trading on the Exchange’s trading 

floor. 

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 15 and Rule 19b– 

4(f)(6) thereunder.16

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 


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Federal Register / Vol. 86, No. 111 / Friday, June 11, 2021 / Notices 31363 

17 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4The Exchange originally filed to amend the Fee 

Schedule on May 3, 2021 (SR–NYSEArca–2021–34), 

then withdrew and refiled on May 12, 2021 (SR– 

NYSEArca–2021–42) and May 21, 2021 (SR– 

NYSEArca–2021–45), which latter filing the 

Exchange withdrew on June 2, 2021. 

5See Fee Schedule, NYSE Arca OPTIONS: 

TRADE-RELATED CHARGES FOR STANDARD 

OPTIONS, TRANSACTION FEE FOR MANUAL 

EXECUTIONS—PER CONTRACT. 

6See, e.g., Nasdaq PHLX LLC (‘‘Phlx’’) Pricing 

Schedule, available at: https://

listingcenter.nasdaq.com/rulebook/phlx/rules/ 

Phlx%20Options%207 (providing $0.35 per 

contract rate for manual transactions by market 

makers); Cboe Exchange, Inc. (‘‘Cboe’’) Fee 

Schedule, available at: https://cdn.cboe.com/ 

resources/membership/Cboe_FeeSchedule.pdf 

(providing $0.35 per contract rate for manual 

transactions by market makers). 

7See Rules 6.37A–O(b) (setting forth the 

continuous quoting obligations of LMMs to provide 

two-sided quotations in its appointed issues for 

90% of the time the Exchange is open for trading 

in each issue) and 6.82–O(c) (regarding additional 

obligations specific to LMMs, including that LMMs 

that operate on the Trading Floor are required to be 

Continued 

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 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

CBOE–2021–036 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CBOE–2021–036. 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 20549–1090, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CBOE–2021–036, and 

should be submitted on or before July 2, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–12243 Filed 6–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92123; No. SR–NYSEArca– 

2021–50] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Modify the NYSE Arca 

Options Fee Schedule 

June 7, 2021. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on June 2, 

2021, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

the ‘‘Exchange’’) 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 self-regulatory 

organization. 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 modify the 

NYSE Arca Options Fee Schedule (‘‘Fee 

Schedule’’) regarding the charges 

applicable to Manual transactions by 

NYSE Arca Market Makers and Lead 

Market Makers. The Exchange proposes 

to implement the fee change effective 

June 2, 2021.4 The proposed rule change 

is available on the Exchange’s website at 

www.nyse.com, at the principal office of 

the Exchange, 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 

self-regulatory organization 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this filing is to modify 

the Fee Schedule regarding the charges 

for Manual executions by NYSE Arca 

Market Makers (‘‘Market Makers’’) and 

Lead Market Makers (‘‘LMMs’’). 

Currently, Market Makers are charged 

$0.25 per contract for Manual 

executions, and LMMs are charged 

$0.18 per contract for Manual 

executions.5

The Exchange proposes to modify the 

rates charged for Manual executions to 

$0.35 per contract for Market Makers 

and $0.30 per contract for LMMs. The 

proposed rate for Market Makers is 

competitive and intended to align the 

Exchange’s fees for Manual transactions 

by Market Makers with those charged by 

other markets.6 The proposed rate for 

LMMs would reduce the existing 

disparity between rates charged to 

LMMs and Market Makers from seven 

cents ($0.07) to five ($0.05), which 

disparity the Exchange believes 

continues to be justified given the 

heightened obligations and additional 

fees imposed on LMMs.7


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