48550 Federal Register / Vol. 82, No. 200 / Wednesday, October 18, 2017 / Notices 

47 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See CBOE Rules 6.2B, 6.13, 6.14A, and 6.53A. 

4See CBOE Rule 6.13A. 

5See CBOE Rule 7.4. 

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– 

BatsEDGA–2017–26, and should be 

submitted on or before November 8, 

2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.47

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–22518 Filed 10–17–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81862; File No. SR–CBOE– 

2017–064] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing of a 

Proposed Rule Change Relating to the 

Creation of an Electronic-Only Order 

Type 

October 12, 2017. 

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 

September 29, 2017, 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 a rule change 

to create an electronic-only order type. 

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 

Background 

Exchange Rules describe the process 

by which orders sent into the CBOE will 

execute electronically and/or via 

manual handling on the Exchange floor. 

Orders entered by Trading Permit 

Holders (‘‘TPHs’’) that are marketable 

against the Exchange’s disseminated 

quotation may execute automatically 3

or after an electronic auction process 

such as the Exchange’s Simple Auction 

Liaison (‘‘SAL’’).4 In addition, eligible 

orders may be entered into the 

Exchanges electronic order book.5

Orders that do not execute via 

electronic processing and are not 

entered into the electronic book are, by 

default, routed to either a Public 

Automated Routing (‘‘PAR’’) 

workstation or an Order Management 

Terminal (‘‘OMT’’) designated by the 

TPH entering the order. Orders routed to 

a PAR or OMT can then be executed in 

open outcry on the Exchange floor. 

CBOE Rule 6.12 describes the process 

for routing orders through the 

Exchange’s order handling system 

(‘‘OHS’’). Rule 6.12 states, ‘‘The order 

handling system is a feature within the 

Hybrid System to route orders for 

automatic execution, book entry, open 

outcry, or further handling by a broker, 

agent, or PAR Official, in a manner 

consistent with Exchange Rules and the 

Act (e.g., resubmit the order to the 

Hybrid System for automatic execution, 

route the order from a booth to a PAR 

workstation, cancel the order, contact 

the customer for further instructions, 

and/or otherwise handle the order in 

accordance with Exchange Rules and 

the order’s terms).’’ 

Rule 6.12(a) states, ‘‘Orders may route 

through the order handling system for 

electronic processing in the Hybrid 

System or to a designated order 

management terminal or PAR 

Workstation in any of the circumstances 

described below. Routing designations 

may be established based on various 

parameters defined by the Exchange, 

order entry firm or Trading Permit 

Holder, as applicable.’’ Rule 6.12(a)(1) 

further states, ‘‘Under Rules 6.2B, 6.13 

and 6.53C, orders or the remaining 

balance of orders initially routed from 

an order entry firm for electronic 

processing that are not eligible for 

automatic execution or book entry will 

by default route to a PAR workstation 

designated by the order entry firm. If an 

order entry firm has not designated a 

PAR workstation or if a PAR 

workstation is unavailable, the 

remaining balance will route to an order 

management terminal designated by the 

order entry firm. If it is not eligible to 

route to a PAR workstation or order 

management terminal designated by the 

order entry firm, the remaining balance 

will be returned to the order entry 

firm.’’ 

Rule 6.12A describes PAR 

functionality. Rule 6.12A specifies that 

orders will be routed to PAR in 

accordance with TPH and Exchange 

order routing parameters. And the 

orders terms. [sic] Rule 6.12A further 

specifies that once an order is on PAR 

the PAR user may (a) submit the order 

electronically, (b) execute the order in 

open outcry, (c) route the order to a 

designated OMT or return the order to 

the order entry firm, or (d) route the 

order to an away exchange. 

Proposed Rule 

The Exchange is proposing a new type 

of order within CBOE Rule 6.53, 

electronic-only. The proposed rule 

states, ‘‘An electronic-only order is an 

order to buy or sell that is to be 

executed in whole or in part via 

electronic processing on the Exchange 

without routing the order to a PAR 

workstation or an order management 

terminal for manual handling on the 

Exchange floor. Electronic-only orders 

will be cancelled if routing for manual 

handling would be required under 

Exchange Rules.’’ 

Exchange systems will recognize 

electronic-only orders and will only 

allow the orders to (a) auto-execute 

electronically, (b) route to an electronic 

exchange auction process, or (c) route to 

the electronic book. If Exchange systems 


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Federal Register / Vol. 82, No. 200 / Wednesday, October 18, 2017 / Notices 48551 

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

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

8 Id. 

determine that, based on the existing 

routing parameters, an electronic-only 

order would route to a PAR or a OMT, 

the order will be cancelled back to the 

TPH who entered the order. The 

cancellation will be accompanied by a 

reason code that indicates it occurred 

because the order was designated 

electronic-only. 

As noted above Exchange Rules 

specify that order routing designations 

may be established based on various 

parameters defined by the Exchange, 

order-entry firm or TPH as applicable. 

Functionally, ‘‘electronic-only’’ will act 

as an order handling designation from 

the TPH that will prevent an order from 

routing to a PAR or OMT. TPHs are 

today free to set routing designations for 

their orders and move or cancel orders 

as needed. In today’s world, if an order 

is routed to a PAR or OMT and TPH 

who entered the order prefers the order 

not be handled manually, they are free 

to resubmit the order electronically or 

cancel the order. However, today, it 

could result in a manual and timeconsuming process of contacting a PAR 

broker or OMT operator and informing 

them of their instructions regarding an 

order. As such, the electronic order type 

is simply creating an easy and 

convenient way for market participants 

to indicate they want a specific order to 

avoid manual handling. 

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 facilitation 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. 

As mentioned above, electronic-only 

will act as an order routing designation 

and does not materially change how 

orders can be handled or processed 

today. The electronic-only designation 

will simply allow order entry firms and 

TPH to avoid potentially timeconsuming steps of retrieving or 

resubmitting their orders from PAR or 

OMT. Accordingly the Rule change is 

specifically designed to remove 

impediments to and perfect the 

mechanism of a free and open market. 

The proposed rule will not permit 

unfair discrimination between 

customers, issuers, brokers, or dealers as 

it is available to any TPH who routes an 

order to the Exchange electronically. 

The electronic-only designation does 

not provide or remove any routing 

destinations or functionality TPHs do 

not already have today through less 

automated means. The electronic-only 

designation simply makes keeping an 

order in the electronic space faster and 

less labor intensive on TPHs. 

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. Specifically, 

the electronic-only order designation 

will be available to all TPHs who route 

orders electronically to the exchange. 

Further, the electronic-only designation 

acts only as a more convenient 

alternative to TPHs already defined 

ability to set their own routing 

parameters on the orders they send to 

the Exchange. As such, the Exchange 

does not anticipate the proposed change 

will result in a reduction of business or 

order flow to any market participant. 

Finally, the proposed change will not 

affect TPHs ability to route or request 

routing of orders to better priced 

markets outside CBOE. 

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 

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 Number SR– 

CBOE–2017–064 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–2017–064. 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–CBOE– 


ethrower on DSK3G9T082PROD with NOTICES
48552 Federal Register / Vol. 82, No. 200 / Wednesday, October 18, 2017 / Notices 

9 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)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5The term ‘‘Member’’ is defined as ‘‘any 

registered broker or dealer that has been admitted 

to membership in the Exchange.’’ See Exchange 

Rule 1.5(n). 

6 ‘‘Firm’’ applies to any transaction identified by 

a Member for clearing in the Firm range at the OCC, 

excluding any Joint Back Office transaction. See the 

Exchange’s fee schedule available at http://

www.bats.com/us/options/membership/fee_

schedule/bzx/. 

7 ‘‘Broker Dealer’’ applies to any order for the 

account of a broker dealer, including a foreign 

broker dealer, that clears in the Customer range at 

the Options Clearing Corporation (‘‘OCC’’). Id. 

8 ‘‘Joint Back Office’’ applies to any transaction 

identified by a Member for clearing in the Firm 

range at the OCC that is identified with an origin 

code as Joint Back Office. A Joint Back Office 

participant is a Member that maintains a Joint Back 

Office arrangement with a clearing broker-dealer. 

Id. 

9 ‘‘Penny Pilot Securities’’ are those issues quoted 

pursuant to Exchange Rule 21.5, Interpretation and 

Policy .01. Id. ‘‘Non-Penny Pilot’’ refers to all other 

issues. 

10Fee code NF is appended to Firm, Broker 

Dealer and Joint Back Office orders in Non-Penny 

Pilot Securities that add liquidity. Orders that yield 

fee code NF are provided a standard rebate of $0.30 

per contract. Id. 

11 ‘‘ADV’’ means average daily volume calculated 

as the number of contracts added or removed, 

combined, per day. Id. 

12 ‘‘OCV’’ means the total equity and ETF options 

volume that clears in the Customer range at the 

Options Clearing Corporation (‘‘OCC’’) for the 

month for which the fees apply, excluding volume 

on any day that the Exchange experiences an 

Exchange System Disruption and on any day with 

a scheduled early market close. Id. 

13 ‘‘ADAV’’ means average daily added volume 

calculated as the number of contracts added per 

day. See the Exchange’s fee schedule available at 

http://www.bats.com/us/options/membership/fee_

schedule/bzx/. 

14 ‘‘Away Market Maker’’ applies to any 

transaction identified by a Member for clearing in 

the Market Maker range at the OCC, where such 

Member is not registered with the Exchange as a 

Market Maker, but is registered as a market maker 

on another options exchange. Id. 

15 ‘‘Non-Customer’’ applies to any transaction 

identified by a Member for clearing which is not in 

the Customer range at the OCC, excluding any 

transaction for a Broker Dealer or a ‘‘Professional’’ 

as defined in Exchange Rule 16.1. Id. 

16 ‘‘Penny Pilot Securities’’ are those issues 

quoted pursuant to Exchange Rule 21.5, 

Interpretation and Policy .01. Id. Non-Penny 

securities are all other securities. 

2017–064 and should be submitted on 

or before November 8, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–22537 Filed 10–17–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81866; File No. SR– 

BatsBZX–2017–65] 

Self-Regulatory Organizations; Bats 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change Related to Fees 

for Use on the Exchange’s Equity 

Options Platform 

October 12, 2017. 

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 October 

2, 2017, Bats BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) 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 Exchange has 

designated the proposed rule change as 

one establishing or changing a member 

due, fee, or other charge imposed by the 

Exchange under Section 19(b)(3)(A)(ii) 

of the Act 3 and Rule 19b–4(f)(2) 

thereunder,4 which renders the 

proposed rule change effective upon 

filing with the Commission. 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 filed a proposal to 

amend the fee schedule applicable to 

Members 5 and non-Members of the 

Exchange pursuant to BZX Rules 15.1(a) 

and (c). 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at www.bats.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 

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 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 Exchange proposes to amend its 

fee schedule for its equity options 

platform (‘‘BZX Options’’) to adopt a 

new Firm,6 Broker Dealer 7 and Joint 

Back Office 8 Non-Penny Pilot 9 Add 

Volume Tier under footnote 8. 

The Exchange currently offers three 

Firm, Broker Dealer and Joint Back 

Office Non-Penny Add Volume Tiers 

under footnote 8, which provide an 

enhanced rebate ranging from $0.33 to 

$0.82 per contract for qualifying orders 

that add liquidity in Non Penny Pilot 

Securities and yield fee code NF.10 The 

Exchange now proposes to add a new 

Tier 3 and to re-number current Tier 3 

as Tier 4. 

Currently under Tier 3, to be renumbered as Tier 4, a Member’s orders 

that yield fee code NF receive an 

enhanced rebate of $0.82 per contract 

where the Member has an: (i) ADV 11

greater than or equal to 2.30% of 

average OCV; 12 (ii) ADAV 13 in Away 

Market Maker,14 Firm, Broker Dealer 

and Joint Back Office orders greater than 

or equal to 1.65% of average OCV; and 

(iii) ADAV in Non-Customer 15 NonPenny 16 orders greater than or equal to 

0.20% of average OCV. The Exchange 

proposes to adopt new Tier 3, which 

would be similar to re-numbered Tier 4 

but would have lower criteria and a 

lower rebate. Specifically, pursuant to 

new Tier 3 a Member’s orders that yield 

fee code NF would receive an enhanced 

rebate of $0.53 per contract where the 

Member has an: (i) ADV greater than or 

equal to 2.30% of average OCV; (ii) 

ADAV in Away Market Maker, Firm, 

Broker Dealer and Joint Back Office 

orders greater than or equal to 1.45% of 

average OCV; and (iii) ADAV in NonCustomer Non-Penny orders greater 

than or equal to 0.20% of average OCV. 

Thus, the second criterion is lower, 

requiring an ADAV in applicable orders 

greater than or equal to 1.45% of 

average OCV rather than 1.65% of 

average OCV. Otherwise the criteria of 

Tier 3 are the same as Tier 4. The 

Exchange also notes that the proposed 

enhanced rebate of $0.53 is also the 

same as the enhanced rebate provided 

pursuant to Tier 2. 

Implementation Date 

The Exchange proposes to implement 

the above changes to its fee schedule on 

October 2, 2017. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule changes are consistent 


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