Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices 68733 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). As required under Rule 

19b–4(f)(6)(iii), OCC provided the Commission with 

written notice of its intent to file the proposed rule 

change, along with a brief description and the text 

of the proposed rule change, at least five business 

days prior to the date of filing the proposed rule 

change, or such shorter time as designated by the 

Commission. 

5See, OCC Rules 901(f), 901(g) and 1403(a). 

6The revised Application Documents will 

contain an ‘‘other’’ category of applicant, which 

could be used in the event a sole proprietor applies 

for clearing membership at OCC. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Kevin M. O’ Neill, 

Deputy Secretary. 

[FR Doc. 2014–27187 Filed 11–17–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73577; File No. SR–OCC– 

2014–20] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing and Immediate Effectiveness 

of a Proposed Rule Change Notice of 

Filing of Proposed Rule Change to 

Concerning Updates to Clearing 

Member Documents 

November 12, 2014. 

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 November 

10, 2014, The Options Clearing 

Corporation (‘‘OCC’’) 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 OCC. OCC filed the proposed rule 

change pursuant to Section 19(b)(3)(A) 3

of the Act and Rule 19b-4(f)(6) 4

thereunder. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

This proposed rule change by The 

Options Clearing Corporation (‘‘OCC’’) 

would update the various contracts and 

forms that, in conjunction with OCC’s 

By-Laws and Rules, establish and 

govern the relationship between OCC 

and each clearing member (collectively, 

the ‘‘Clearing Member Documents’’). 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, 

OCC 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. OCC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

1. Purpose 

This proposed rule change would 

amend the Clearing Member Documents 

in order to: (i) Reduce the number of 

documents by eliminating outdated 

documents and combining similar 

documents, when possible; (ii) reflect 

OCC’s current business and operational 

processes; and (iii) reflect changes in 

applicable law and conform the 

documents to OCC’s current By-Laws 

and Rules. The proposed changes to the 

Clearing Member Documents would not 

alter any of the requirements for initial 

or continued OCC clearing membership. 

Background 

The Clearing Member Documents, in 

conjunction with OCC’s By-Laws and 

Rules, establish the relationship 

between OCC and each clearing member 

and serve as the legal foundation of 

OCC’s ongoing legal and operational 

relationship with clearing members. 

OCC recently completed a 

comprehensive review (the ‘‘Review’’) 

of the Clearing Membership Documents 

with a view to revising the documents 

and ensuring that they are consistent 

with OCC’s By-Laws and Rules and 

current operational processes. 

The Clearing Member Documents fall 

into five general categories: 

1. Application Documents. These are 

the primary documents used to identify 

an applicant’s qualifications to become 

a clearing member of OCC. 

2. Core Agreements. These documents 

establish the contractual agreement 

between OCC and a clearing member 

and provide OCC with authority to carry 

out critical tasks related to clearing 

membership. These include, among 

other agreements, the Clearing Member 

Agreement and various authorizations 

to draft and authorized signature forms. 

3. Services Agreements. These 

documents govern the provision by OCC 

of various services to clearing members, 

such as internet and data distribution 

services. 

4. Appointment Forms. These 

documents permit clearing members 

that are not participants in National 

Securities Clearing Corporation 

(‘‘NSCC’’) and the Fixed Income 

Clearing Corporation (‘‘FICC’’) to, as 

applicable, effect settlement of 

physically-settled equity options, single 

stock futures and Treasury securities 

option contracts through appointment of 

another clearing member as its agent 

with respect to settlement of the 

relevant product.5

5. Product and Account Specific 

Forms. These documents facilitate a 

clearing member’s ability to clear 

certain products or allow a clearing 

member to establish certain types of 

accounts such as a market maker subaccount. 

Proposed Updates to the Clearing 

Member Documents 

A primary focus of the Review was to 

eliminate outdated documents and 

consolidate documents when possible. 

The Review resulted in the number of 

distinct Clearing Member Documents 

being reduced from 39 to 21, either by 

eliminating documents that are no 

longer operationally required by OCC or 

by consolidating and streamlining 

previously distinct documents, each 

requiring separate execution, into one 

document. Attached as Exhibit 3 is a 

document that lists each of the current 

Clearing Member Documents and each 

of the proposed Clearing Member 

Documents after the consolidation and 

streamlining effort of the Review. 

Moreover, the Review did not result in 

any new substantive legal requirements 

being imposed upon clearing members. 

In addition, a significant number of 

the Clearing Member Documents are 

proposed to be updated to reflect terms 

used in OCC’s By-Laws and Rules that 

have been revised since the Clearing 

Member Documents were created or last 

updated, as applicable. Set forth below 

is a summary of the significant updates 

proposed to be made to the Clearing 

Member Documents. The proposed 

revisions to the Clearing Member 

Documents will not result in any 

substantive changes to OCC’s 

membership requirements. 

Application Documents 

OCC proposes to revise the 

Application Documents to eliminate 

sole proprietorship from the category of 

applicants 6 because OCC staff deemed 

it extremely unlikely that a sole 

proprietor would apply for clearing 

membership. The Application for 

Membership itself would be updated to 

include new categories of products an 


tkelley on DSK3SPTVN1PROD with NOTICES
68734 Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices 

7OCC also proposes to memorialize its existing 

practice that clearing members keep current 

information provided to OCC such as information 

provided pursuant to OCC Rule 203. 

8OCC also requires clearing members who use 

the internet as their primary means of 

communicating with OCC to maintain a back-up 

communication channel. See Securities Exchange 

Act Release No. 70704 (October 17, 2013), 78 FR 

63263 (October 23, 2013) (SR–OCC–2013–10). 

applicant may apply to be approved to 

clear that have been added by OCC 

since the Application for Membership 

was created. The Application for 

Membership would also be streamlined 

to include representations and 

information previously obtained 

through separate forms. 

In addition to the changes described 

above, OCC proposes to revise the Letter 

of Authorization applicants for clearing 

membership provide to OCC, which 

authorizes an applicant’s primary 

regulatory agency to directly notify OCC 

of an applicant’s violation, or suspected 

violation, of the regulatory agency’s 

financial requirements, and of an 

applicant’s impending operational 

difficulties. OCC is proposing to 

broaden such authorization so that OCC 

may receive notification of an 

applicant’s violation of any rule or 

regulation of the agency, and 

notification of the agency’s knowledge 

of the applicant’s violation of the rules 

of any relevant self-regulatory 

organization. 

Core Agreements 

Like the Application Documents, the 

Core Agreements would be revised to 

eliminate the Sole Proprietorship 

category. OCC also proposes to revise 

the Clearing Member Agreement and 

Non-U.S. Clearing Member Agreement 

to remove outdated corporate 

procedures such as requiring a corporate 

seal, and to consolidate multiple 

signature pages that were formerly 

contained in separate documents into a 

single signature page included within 

the Clearing Agreement and the NonU.S. Clearing Member Agreement.7 In 

addition, the Core Agreements would 

generally be streamlined to reduce 

unnecessary documents and to reduce 

the operational burden on clearing 

members. Specifically, the multiple 

versions of the Authorizations to Draft, 

which permit OCC to draft a clearing 

member’s bank account, and the 

Clearing Member Certificate and 

Authorized Signatures, which certifies 

the individuals authorized to execute 

documents and submit instructions on 

behalf of a clearing member 

(‘‘Authorized Signatories’’), would be 

consolidated from separate forms based 

on the organizational form of the 

clearing member into single documents. 

Furthermore, clearing members 

established as corporations would no 

longer be required to obtain a board of 

director’s resolution in order to 

authorize specified officers to act on 

behalf of the corporation as Authorized 

Signatories. The requirement to obtain a 

board resolution presented a significant 

burden for these clearing members and 

was determined to be overly ministerial 

and unnecessary from a legal or 

operational perspective. Accordingly, 

the revised Clearing Member 

Authorized Signatory Certificate would 

only require corporate clearing 

members, like clearing members that are 

organized as limited liability companies 

or partnerships, to provide a 

certification by any officer that holds 

the rank of vice president or higher 

setting forth a list (including specimen 

signatures) of the corporation’s 

Authorized Signatories. Moreover, this 

certificate would also permit clearing 

members to designate a person as 

‘‘Designated Representative’’ of the 

clearing member. Designated 

Representatives, which do not have to 

be an Authorized Signatory, would be 

able to take action on behalf of the 

clearing member in connection with 

day-to-day routine operational matters 

such as submitting instructions through 

OCC’s ENCORE system, ENCORE 

Security Updates and sub account and 

data distribution service changes. The 

creation of a Designate Representative is 

intended to facilitate a completion of 

routine operational matters. 

Services Agreement 

OCC proposes to revise its Agreement 

for OCC Services to reduce the number 

of documents that a clearing member is 

required to execute and to move 

common contractual provisions from 

individual supplements to the 

Agreement for OCC Services into the 

master services agreement. Currently, 

the Agreement for OCC Services is a 

one-page master services agreement that 

further requires a clearing member to 

execute up to five different supplements 

setting forth the terms of various 

services that OCC may provide clearing 

members. Each supplement contains 

provisions pertinent to the particular 

service as well as a number of 

contractual provisions that are common 

across all supplements. OCC proposes to 

streamline this set of agreements by 

moving such common provisions to the 

revised Agreement for OCC Services. As 

a result, each of the supplements would 

contain only terms and conditions 

specific to the particular service being 

selected. These changes would not 

affect the any substantive terms of the 

Agreement for OCC Services or any of 

its supplements. 

In addition to streamlining the 

Agreement for OCC Services, OCC 

proposes to eliminate the supplement 

for internet access and move the 

substantive provisions of such 

supplement into the master services 

agreement. Due to the large scale, 

industry wide, adoption of the internet 

as the primary means of communication 

between entities in the financial 

industry, OCC believes that the master 

services agreement, and not a 

supplement, is the more appropriate 

location for contractual provisions 

pertaining to clearing member internet 

access.8 OCC is also proposing to 

generally update the Agreement for OCC 

Services to include or expand on 

standard contract terms such as 

provisions governing severability, 

waiver, governing law and assignment. 

Appointment Forms 

The Appointment of Clearing Member 

Agreement permits clearing members 

that are not participants in NSCC to 

settle physically settled equity options 

and single stock futures through NSCC 

by appointing an ‘‘Appointed Clearing 

Member.’’ OCC propose to update the 

agreement to require that the Appointed 

Clearing Member maintain the net 

capital required by OCC Rule 309A and 

remain subject to OCC Rule 309A until 

the appointment is terminated. OCC 

Rule 309A was not in place when the 

Appointment of an Appointed Clearing 

Member Agreement was created. 

In addition, the Designation of 

Clearing Member Agreement permits 

clearing members that are not 

participants in FICC to effect settlement 

of physically-settled Treasury securities 

options through a ‘‘Designated Clearing 

Member’’ that is a participant in FICC. 

OCC proposes to revise the agreement to 

be more consistent with the 

Appointment of Clearing Member 

Agreement. Specifically, OCC proposes 

to amend the Designation of Clearing 

Member Agreement to: (1) Provide that 

certain failures under the agreement 

may be treated as a default or rule 

violation under OCC’s By-Laws and 

Rules; (2) provide that the designation 

would remain effective for 30 calendar 

days after notice of revocation of the 

designation, and would remain effective 

thereafter with respect to obligations 

incurred prior to the effective date of the 

revocation; and (3) require additional 

representations from the Designated 

Clearing Member regarding its 

continued participation in FICC. 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices 68735 

9Market making firms may have employees that 

trade across multiple exchanges, with each 

exchange identifying such employees with a 

different acronym(s). OCC’s Universal Market 

Maker Subaccount service ensures that all trades 

entered into by a market marking firm are directed 

to a specified subaccount of its clearing firm at OCC 

for position and margin processing purposes. 

10 15 U.S.C. 78q–1(b)(3)(F). 

11 17 CFR 240.17Ad–22(d)(1). 12 15 U.S.C. 78q–1(b)(3)(I). 

Product and Account Specific Forms 

OCC proposes to eliminate two 

product specific forms, the Portfolio 

Margining Notice and the Futures 

Customers’ Segregated Account Letter, 

as they are no longer operationally 

necessary. Specifically, and with respect 

to the Futures Customers’ Segregated 

Account Letter, OCC’s By-Laws and 

Rules contain the relevant customer 

segregated funds language required for 

Derivatives Clearing Organizations such 

as OCC by the Commodity Futures 

Trading Commission. OCC is also 

proposing to revise the Universal 

Market Maker Subaccount Letter, which 

is used to request an automated service 

whereby OCC directs transactions into 

‘‘universal’’ market maker subaccount 

for a designated market maker or 

designated group of market makers that 

trade across multiple exchanges,9 to 

conform the indemnity language to the 

standard indemnity language used in 

the other Clearing Member Documents. 

2. Statutory Basis 

OCC believes that the proposed rule 

change is consistent with Section 

17A(b)(3)(F) of the Act,10 because the 

proposed rule change will remove 

impediments to and perfect the 

mechanism of a national system for the 

prompt and accurate clearance and 

settlement of securities transactions. 

The proposed rule change will achieve 

this purpose by, as set forth in Rule 

17Ad–22(d)(1),11 providing for a wellfounded, transparent and enforceable 

legal framework between OCC and its 

clearing members as well as between 

OCC and applicants for clearing 

membership. The proposed rule change 

will reduce the number of Clearing 

Member Documents by eliminating 

outdated agreements and combining 

similar agreements, updating the 

Clearing Member Documents to reflect 

OCC’s current business and operational 

processes, and conforming the Clearing 

Member Documents to OCC’s current 

By-Laws and Rules. These changes will 

more clearly set forth the legal 

relationship between OCC and its 

clearing members, as well as applicants 

for clearing membership, thereby 

removing any potential impediments 

that may have resulted from OCC 

continuing to use outdated Clearing 

Member Documents. The proposed rule 

change is not inconsistent with the 

existing rules of OCC, including any 

other rules proposed to be amended. 

(B) Clearing Agency’s Statement on 

Burden on Competition 

OCC does not believe that the 

proposed rule change would impose a 

burden on competition.12 The updated 

Clearing Member Documents affect 

applicants for clearing membership as 

well as current clearing members since 

OCC intends to have each current 

clearing member re-execute the Clearing 

Member Documents applicable to its 

particular membership. No substantive 

requirements for clearing membership 

are proposed to be changed. 

With respect to applicants for clearing 

membership, OCC believes that the 

proposed rule change will make the 

application process easier since the new 

Clearing Member Documents will 

consolidate clarified and more 

consistent with OCC’s By-Laws and 

Rules. In addition, OCC will ask each 

current clearing member to re-execute 

only the Clearing Member Documents 

applicable to its particular membership. 

This request, which will be made of all 

clearing members, is administrative in 

nature and will not affect competition 

among clearing members. Accordingly, 

OCC does not believe that this proposed 

rule change will impose a burden on 

competition. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants or Others 

Written comments on the proposed 

rule change were not and are not 

intended to be solicited with respect to 

the proposed rule change and none have 

been received. 

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 and the public interest; 

(ii) impose any burden on 

competition; and 

(iii) become operative for 30 days 

from the day 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 and Rule 19b–4(f)(6) thereunder. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

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 for (http://www.sec.gov/rules/ 

sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

OCC–2014–20 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–OCC–2014–20. 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 of submission. 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 Section, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of OCC and on OCC’s Web site at 

http://www.theocc.com/components/

docs/legal/rules_and_bylaws/sr_occ_14_

20.pdf. 

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 

Number SR–OCC–2014–20 and should 


tkelley on DSK3SPTVN1PROD with NOTICES
68736 Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6)(iii). 

4SR–CHX–2014–15 was immediately effective 

upon filing, but is not yet operative. The Exchange 

anticipates that the changes effected under SR– 

CHX–2014–15 will become operative in the first 

quarter of 2015, pursuant to an Information 

Memorandum by the Exchange to its Participants 

published two weeks prior to such time. See 

Exchange Act Release No. 73150 (September 19, 

2014), 79 FR 57603 (September 25, 2014) (SR–CHX– 

2014–15) (‘‘Notice of Filing and Immediate 

Effectiveness of a Proposed Rule Change to Adopt 

the CHX Routing Services’’). 

5Market and cross orders are always handled 

Immediate Or Cancel (‘‘IOC’’). See CHX Article 1, 

Rule 2(a)(2) and (3); see also CHX Article 1, Rule 

2(d)(4). 

6See CHX Article 20, Rule 8(b). 

be submitted on or before December 9, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–27195 Filed 11–17–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73572; File No. SR–CHX– 

2014–18] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change Concerning 

Certain Order Types, Modifiers and 

Related Functionality 

November 10, 2014. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on October 

31, 2014, the Chicago Stock Exchange, 

Inc. (‘‘CHX’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘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 

various CHX Rules to clarify the 

operation of certain order types, 

modifiers and LULD price sliding and to 

substantively modify the operation of 

the cross order type and Cross With Size 

order handling functionality. Aside 

from the proposed amendments to the 

cross order type and Cross With Size 

order handling functionality, the 

Exchange does not propose to 

substantively modify the operation of 

any other functionality. The Exchange 

has designated this proposal as noncontroversial and provided the 

Commission with the notice required by 

Rule 19b–4(f)(6)(iii) under the Act.3

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 

CHX included statements concerning 

the purpose of and basis for the 

proposed rule changes 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 

CHX 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 

various CHX Rules to clarify the 

operation of certain order types, 

modifiers and LULD price sliding and to 

substantively modify the operation of 

the cross order type and Cross With Size 

order handling functionality. Aside 

from the proposed amendments to the 

cross order type and Cross With Size 

order handling functionality, the 

Exchange does not propose to 

substantively modify the operation of 

any other functionality. 

Amended CHX Article 1, Rule 1(pp) 

(Working Price) 

Under SR–CHX–2014–15, the 

Exchange adopted, inter alia, the term 

‘‘Working Price,’’ which is defined as 

‘‘the most aggressive price at which a 

resting limit order, as defined under 

Article 1, Rule 2(a)(1), can execute 

within the Matching System, in 

compliance with Rule 611 of Regulation 

NMS.’’ 4 While Rule 611 of Regulation 

NMS is one of the factors that determine 

the price at which an order for an NMS 

security could permissibly execute, 

other rules and plans such as Rule 201 

of Regulation SHO and LULD would 

also determine the most aggressive price 

at which an order could permissibly 

execute. Thus, the Exchange proposes to 

amend CHX Article 1, Rule 1(pp) to 

provide that ‘‘Working Price’’ means the 

most aggressive price at which a resting 

limit order can execute within the 

Matching System in compliance with 

‘‘CHX Rules and relevant securities law 

and regulations, including Rule 611 of 

Regulation NMS and Rule 201 

Regulation SHO.’’ 

Amended CHX Article 1, Rule 2(a)(1) 

(Limit Order) and CHX Article 1, Rule 

2(c) (Order Display Modifiers) 

Current CHX Rules imply, but do not 

explicitly state, that a limit order not 

marked Reserve Size or Do Not Display 

is fully displayable. Specifically, CHX 

Article 1, Rule 2(c) lists three order 

display modifiers, where paragraph 

(c)(1) defines ‘‘Always Quote,’’ which 

requires the unexecuted balance of an 

order priced at the CHX Best Bid or 

Offer (‘‘BBO’’) to be cancelled if it could 

not be displayed; paragraph (c)(2) 

defines ‘‘Do Not Display,’’ which 

requires the order to be fully hidden; 

and paragraph (c)(3) defines ‘‘Reserve 

Size,’’ which requires the order to be 

partially displayed and partially hidden. 

Given that there is no order modifier 

requiring that an order be fully 

displayable, it can be inferred from CHX 

Article 1, Rule 2(c) that limit orders are 

fully displayable, unless marked 

otherwise. 

In the interest of clarity, the Exchange 

proposes to amend CHX Article 1, Rule 

2(a)(1) to add a sentence to the current 

definition of ‘‘limit order’’ to provide 

that ‘‘all limit orders are fully 

displayable, unless marked Do Not 

Display, as defined under paragraph 

(c)(2), or Reserve Size, as defined under 

paragraph (c)(3).’’ Moreover, since order 

display modifiers are only relevant for 

orders that post to the CHX Book 5 and 

the CHX Book only contains resting 

limit orders,6 the Exchange proposes to 

amend CHX Article 1, Rule 2(c) to 

provide that ‘‘one or more order display 

modifiers may be applied to limit 

orders, subject to the requirements of 

Article 20, Rule 5, so long as the 

modifier is compatible with other 

applicable order modifiers/terms.’’ 

Amended CHX Article 1, Rule 2(b)(1)(A) 

(BBO Intermarket Sweep Order (‘‘ISO’’)) 

Current CHX Article 1, Rule 2(b)(1)(A) 

defines BBO ISO and provides, in 

pertinent part, that a BBO ISO is a limit 

order modifier that marks an order as 

required by SEC Rule 600(b)(30) that is 

to be executed against any orders at the 


tkelley on DSK3SPTVN1PROD with NOTICES