Federal Register / Vol. 80, No. 4 / Wednesday, January 7, 2015 / Notices 911 

7 17 CFR 200.30–3(a)(27). 

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

2 17 CFR 240.19b–4. 

L. Method and Frequency of Processor 

Evaluation 

Not applicable. 

M. Dispute Resolution 

Not applicable. 

II. Rule 601(a) 

A. Equity Securities for Which 

Transaction Reports Shall Be Required 

by the Plan 

Not applicable. 

B. Reporting Requirements 

As a result of the amendment, the 

UTP Plan would require each 

Participant to report each trade as soon 

as practicable, but no more than 10 

seconds from the time of the trade. In 

addition, each Participant’s members 

would be required to establish and 

maintain collection and reporting 

procedures and facilities such as to 

assure that such last sale prices will be 

reported within not more than 10 

seconds (rather than the current 90 

seconds) following execution (or such 

shorter period as the Participants may 

approve), regardless of whether they do 

so 90 percent of the time under normal 

conditions. Currently, each Participant 

has 90 seconds to report 90 percent of 

its trades within 10 seconds following 

execution under normal conditions. 

C. Manner of Collecting, Processing, 

Sequencing, Making Available and 

Disseminating Last Sale Information 

Not applicable. 

D. Manner of Consolidation 

Not applicable. 

E. Standards and Methods Ensuring 

Promptness, Accuracy and 

Completeness of Transaction Reports 

The amendment will support the 

prompt reporting of transaction reports 

by reducing from 90 seconds to 10 

seconds the maximum amount of time 

by which each Participant must receive 

transaction reports from its members, 

subject to the Participants’ obligation to 

report trades as promptly as possible. 

F. Rules and Procedures Addressed to 

Fraudulent or Manipulative 

Dissemination 

Not applicable. 

G. Terms of Access to Transaction 

Reports 

Not applicable. 

H. Identification of Marketplace of 

Execution 

Not Applicable. 

III. Solicitation of Comments 

The Commission seeks general 

comments on Amendment No. 34. 

Interested persons are invited to submit 

written data, views, and arguments 

concerning the foregoing, including 

whether the proposal 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 S7– 

24–89 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 S7–24–89. 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 

Web site (http://www.sec.gov/rules/

sro.shtml). Copies of the submission, all 

written statements with respect to the 

proposed Plan Amendment that are 

filed with the Commission, and all 

written communications relating to the 

proposed Plan Amendment 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 the 

filing also will be available for Web site 

viewing and printing at the Office of the 

Secretary of the Committee, currently 

located at the CBOE, 400 S. LaSalle 

Street, Chicago, IL 60605. 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 S7–24–89 

and should be submitted on or before 

January 28, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30974 Filed 1–6–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73974; File No. SR–CBOE– 

2014–093] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Rule 6.54 

December 31, 2014. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on December 

30, 2014, 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 and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend its 

program that allows transactions to take 

place at a price that is below $1 per 

option contract through January 5, 2016. 

The text of the proposed rule change is 

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 


rljohnson on DSK3VPTVN1PROD with NOTICES
912 Federal Register / Vol. 80, No. 4 / Wednesday, January 7, 2015 / Notices 

3See Securities Exchange Act Release Nos. 59188 

(December 30, 2008), 74 FR 480 (January 6, 

2009)(SR–CBOE–2008–133)(adopting the amended 

procedures on a temporary basis through January 

30, 2009), 59331 (January 30, 2009), 74 FR 6333 

(February 6, 2009)(extending the amended 

procedures on a temporary basis through May 29, 

2009), 60020 (June 1, 2009), 74 FR 27220 (June 8, 

2009)(SR–CBOE–2009–034)(extending the amended 

procedures on a temporary basis through June 1, 

2010), 62192 (May 28, 2010), 75 FR 31828 (June 4, 

2010)(SR–CBOE–2010–052)(extending the amended 

procedures on a temporary basis through June 1, 

2011); 64403 (May 4, 2011), 76 FR 27110 (May 10, 

2011)(SR–CBOE–2011–048)(extending the amended 

procedures on a temporary basis through December 

30, 2011); 65872 (December 2, 2011), 76 FR 76788 

(December 8, 2011)(SR–CBOE–2011–113)(extending 

the amended procedures on a temporary basis 

through June 29, 2012) 67144 (June 6, 2012), 77 FR 

35095 (June 12, 2012)(SR–CBOE–2012– 

053)(extending the amended procedures on a 

temporary basis through June 28, 2013), and 69854 

(June 25, 2013), 78 FR 39424 (July 1, 2013)(SR– 

CBOE–2013–063); 69893 (June 28, 2013), 78 FR 

40539 (July 5, 2013)(both extending the amended 

procedures on a temporary basis through January 5, 

2014) and 71090 (December 17, 2013), 78 FR 77532 

(December 23, 2013)(SR–CBOE–2013– 

118)(extending the amended procedures on a 

temporary basis through January 5, 2015). 4Currently the $1 cabinet trading procedures are 

limited to options classes traded in $0.05 or $0.10 

standard increment. The $1 cabinet trading 

procedures are not available in Penny Pilot Program 

classes because in those classes an option series can 

trade in a standard increment as low as $0.01 per 

share (or $1.00 per option contract with a 100 share 

multiplier). Because the temporary procedures 

allow trading below $0.01 per share (or $1.00 per 

option contract with a 100 share multiplier), the 

procedures are available for all classes, including 

those classes participating in the Penny Pilot 

Program. 

5As with other accommodation liquidations 

under Rule 6.54, transactions that occur for less 

than $1 are not be disseminated to the public on 

the consolidated tape. In addition, as with other 

accommodation liquidations under Rule 6.54, the 

transactions are exempt from the Consolidated 

Options Audit Trail (‘‘COATS’’) requirements of 

Exchange Rule 6.24, Required Order Information. 

However, the Exchange maintains quotation, order 

and transaction information for the transactions in 

the same format as the COATS data is maintained. 

In this regard, all transactions for less than $1 must 

be reported to the Exchange following the close of 

each business day. The rule also provides that 

transactions for less than $1 will be reported for 

clearing utilizing forms, formats and procedures 

established by the Exchange from time to time. In 

this regard, the Exchange initially intends to have 

clearing firms directly report the transactions to The 

Options Clearing Corporation (‘‘OCC’’) using OCC’s 

position adjustment/transfer procedures. This 

manner of reporting transactions for clearing is 

similar to the procedure that CBOE currently 

employs for on-floor position transfer packages 

executed pursuant to Exchange Rule 6.49A, 

Transfer of Positions. 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

8 Id. 

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 

An ‘‘accommodation’’ or ‘‘cabinet’’ 

trade refers to trades in listed options on 

the Exchange that are worthless or not 

actively traded. Cabinet trading is 

generally conducted in accordance with 

the Exchange Rules, except as provided 

in Exchange Rule 6.54, Accommodation 

Liquidations (Cabinet Trades), which 

sets forth specific procedures for 

engaging in cabinet trades. Rule 6.54 

currently provides for cabinet 

transactions to occur via open outcry at 

a cabinet price of $1 per option contract 

in any options series open for trading in 

the Exchange, except that the Rule is not 

applicable to trading in option classes 

participating in the Penny Pilot 

Program. Under the procedures, bids 

and offers (whether opening or closing 

a position) at a price of $1 per option 

contract may be represented in the 

trading crowd by a Floor Broker or by 

a Market-Maker or provided in response 

to a request by a PAR Official/OBO, a 

Floor Broker or a Market-Maker, but 

must yield priority to all resting orders 

in the PAR Official/OBO cabinet book 

(which resting cabinet book orders may 

be closing only). So long as both the 

buyer and the seller yield to orders 

resting in the cabinet book, opening 

cabinet bids can trade with opening 

cabinet offers at $1 per option contract. 

The Exchange has temporarily 

amended the procedures through 

January 5, 2015 to allow transactions to 

take place in open outcry at a price of 

at least $0 but less than $1 per option 

contract.3 These lower priced 

transactions are traded pursuant to the 

same procedures applicable to $1 

cabinet trades, except that (i) bids and 

offers for opening transactions are only 

permitted to accommodate closing 

transactions in order to limit use of the 

procedure to liquidations of existing 

positions, and (ii) the procedures are 

also available for trading in option 

classes participating in the Penny Pilot 

Program.4 The Exchange believes that 

allowing a price of at least $0 but less 

than $1 better accommodates the closing 

of options positions in series that are 

worthless or not actively traded, 

particularly due to market conditions 

which may result in a significant 

number of series being out-of-themoney. For example, a market 

participant might have a long position 

in a call series with a strike price of 

$100 and the underlying stock might 

now be trading at $30. In such an 

instance, there might not otherwise be a 

market for that person to close-out the 

position even at the $1 cabinet price 

(e.g., the series might be quoted no 

bid).5

The purpose of the instant rule 

change is to extend the operation of 

these temporary procedures through 

January 5, 2016, so that the procedures 

can continue without interruption while 

CBOE considers whether to seek 

permanent approval of the temporary 

procedures. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

section 6(b) of the Act.6 Specifically, the 

Exchange believes the proposed rule 

change is consistent with the section 

6(b)(5) 7 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) 8 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 allowing for liquidations at a price 

less than $1 per option contract better 

facilitates the closing of options 

positions that are worthless or not 

actively trading. Further, the Exchange 

believes the proposal is consistent with 

the Act because the proposed extension 

is of appropriate length to allow the 

Exchange and the Commission to 

continue to assess the impact of the 

Exchange’s authority to allow 

transactions to take place in open outcry 

at a price of at least $0 but less than $1 

per option in accordance with its 

attendant obligations and conditions, 

including the process for submitting 

such transactions to OCC for clearing. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE 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 believes that allowing for 

liquidations at a price less than $1 per 

option contract better facilitates the 


rljohnson on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 4 / Wednesday, January 7, 2015 / Notices 913 

9The Exchange has satisfied this requirement. 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). 

12 Id. 

13For purposes only of waiving the operative 

delay, the Commission has considered the proposed 

rule’s impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 14 17 CFR 200.30–3(a)(12). 

closing of options positions that are 

worthless or not actively trading. The 

Exchange believes this promotes fair 

and orderly markets, as well as assists 

the Exchange in its ability to effectively 

attract order flow and liquidity to its 

market, and ultimately benefit all CBOE 

Trading Permit Holders (‘‘TPHs’’) and 

all investors. 

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 the proposed rule change does 

not make any changes to Exchange 

rules, but simply extends an existing 

temporary program. Further, the 

program is available to all market 

participants through CBOE TPHs. 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, again, the proposed rule 

change does not make any changes to 

Exchange rules, but simply extends an 

existing temporary program. Moreover, 

to the extent that the program makes 

CBOE a more attractive marketplace, as 

noted above, the program is available to 

all market participants through CBOE 

TPHs. 

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 rule 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 if consistent 

with the protection of investors and the 

public interest, provided that the selfregulatory organization has given the 

Commission written notice of its intent 

to file the proposed rule change at least 

five business days prior to the date of 

filing of the proposed rule change or 

such shorter time as designated by the 

Commission,9 the proposed rule change 

has become effective pursuant to section 

19(b)(3)(A) of the Act 10 and Rule 19b– 

4(f)(6) thereunder.11

Under Rule 19b–4(f)(6) of the Act,12

the proposal does not become operative 

for 30 days after the date of its filing, or 

such shorter time as the Commission 

may designate if consistent with the 

protection of investors and the public 

interest. The Exchange has requested 

that the Commission waive the 30-day 

operative delay period after which a 

proposed rule change under Rule 19b4(f)(6) becomes operative so that the 

pilot may continue without 

interruption. The Commission believes 

that waiver of the 30-day operative 

delay is consistent with the protection 

of investors and the public interest 

because it will allow the pilot to 

continue uninterrupted, thereby 

avoiding any potential investor 

confusion that could result from a 

temporary interruption in the pilot and 

allowing members to continue to benefit 

from the program. Based on the 

foregoing, the Commission hereby 

waives the 30-day operative delay and 

designates the proposal operative upon 

filing.13

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

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–2014–093 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CBOE-2014–093. 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 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; 

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–CBOE2014–093 and should be submitted on 

or before January 28, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30972 Filed 1–6–15; 8:45 am] 

BILLING CODE 8011–01–P 


rljohnson on DSK3VPTVN1PROD with NOTICES