Document ID: SEC-2018-0978-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2018-06-26T04:00Z

[Federal Register Volume 83, Number 123 (Tuesday, June 26, 2018)]
[Notices]
[Pages 29844-29846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13620]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83486; File No. SR-CBOE-2018-043]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Rule Governing Crowd Space Disputes

June 20, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on 
June 7, 2018, Cboe Exchange, Inc. (``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 Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 24.21 relating to Crowd Space 
Disputes. 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 purpose of this rule change is to amend Rule 24.21 (Index Crowd 
Space Dispute Resolution Procedures). By way of background, Rule 24.21 
provides for guidelines and procedures to resolve disputes concerning 
the right of Trading Permit Holders (``TPHs'') to occupy a certain 
space in certain index option trading pits.
    Particularly, the Exchange proposes to amend subparagraphs (b) and 
(g) of Rule 24.21, which provisions relate to the Space Mediator and 
the Crowd Space Dispute Resolution (``CSDR'') panel, respectively. 
Currently, the rule provides that the Space Mediator \3\ will select a 
CSDR Panel (``Panel'')

[[Page 29845]]

composed of seven TPHs to hear and resolve a space dispute. The rule 
provides that the Space Mediator selects six members of the Panel from 
members of the Exchange (other than the Space Mediator himself) and of 
those six members, three members shall be TPHs who trade in the trading 
station where the dispute has arisen and three shall be TPHs who do not 
trade in the trading station where the dispute has arisen. The seventh 
Panel member shall be a Floor Official designated by the Exchange.
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    \3\ As defined in Cboe Options Rule 24.21(b).
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    The Exchange is seeking to reduce the number of TPHs that must be 
appointed to a Panel. Specifically, the Exchange proposes that Panels 
be comprised of 5 TPHs, two of whom trade in a trading station where 
the dispute has arisen and two of whom trade outside of the trading 
station where the dispute has arisen. The fifth Panel member would be a 
TPH Floor Official that may trade in or out of the trading station 
where the dispute has arisen. The Exchange desires this reduction in 
Panel size because it has become increasingly burdensome for the 
Exchange to designate a sufficient number of TPHs to sit on any given 
Panel, as fewer TPHs are willing to perform these functions and often 
times there are conflicts limiting the pools of available TPHs. The 
Exchange notes that the proposed change to state that the fifth panel 
member must be a ``TPH'' Floor Official is not a substantive change, 
but rather reflects the Exchange's current practice with respect to 
staffing Panels (i.e., the Space Mediator does not appoint Floor 
Officials that are Exchange employees).
    The Exchange also proposes to eliminate the language providing that 
the Space Mediator selects members of the Panel ``other than the Space 
Mediator himself''. Particularly, the Exchange notes that Space 
Mediator currently is, and has been for some time, an Exchange 
employee. Additionally, the Exchange does not intend in the future to 
appoint a Space Mediator that is a TPH. Since all Panels are to be 
comprised of TPHs (and thereby could not include the Space Mediator), 
the Exchange believes the above-mentioned language is unnecessary and 
therefore proposes to eliminate it. Similarly, the Exchange proposes to 
make clear in subparagraph (b) of Rule 24.21 that the Space Mediator 
shall be an Exchange employee, to provide clarity in the rules and 
reflect current practice. Lastly, the Exchange proposes to move the 
sentence ``The selection of all Panel members will be according to the 
sole discretion of the Space Mediator'' within subparagraph (g) to make 
the rule easier to read, as this sentence applies to the Panel in its 
entirety.
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.\4\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \5\ 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) \6\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ Id.
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    In particular, over the years, fewer TPHs have made themselves 
available to serve on Panels. The Exchange notes that service on a 
Panel is voluntary and it cannot force any TPH to serve on a Panel. As 
such, it has become increasingly burdensome to appoint a sufficient 
number of TPHs to the Panels. The Exchange believes reducing the number 
of Panel members will remove impediments to, and perfect the mechanism 
of, a free and open market because it will assist the Exchange in being 
able to appoint a sufficient number of TPHs to a Panel in a timely 
manner. The Exchange notes that the composition requirements of 
ensuring there are Panel members both in and outside of the station 
where the dispute occurred still ensures a fair balance.
    The Exchange also believes the proposed changes to make explicit 
that the Floor Official panel member must be a TPH and that the Space 
Mediator must be an Exchange employee provides transparency and clarity 
in the rules, which alleviates confusion, thereby protecting investors 
and the public interest. The Exchange also notes these changes do not 
reflect substantive changes from current practice, but rather clarifies 
and codifies the Exchange's current practice.

B. Self-Regulatory Organization's Statement on Burden on Competition

    Cboe Options 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 proposed rule change 
merely reduces the number of Panel members that must serve on a Panel 
and clarifies and codifies current practices relating to the spot 
dispute process and thus has no impact on current trading on Cboe 
Options. Therefore, the proposed rule change has no impact on 
competition.

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 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 form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CBOE-2018-043 on the subject line.

[[Page 29846]]

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-2018-043. 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 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-2018-043 and should be submitted on 
or before July 17, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-13620 Filed 6-25-18; 8:45 am]
 BILLING CODE 8011-01-P