Document ID: SEC-2017-0197-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: CBOE Futures Exchange, LLC
Posted Date: 2017-02-08T05:00Z

[Federal Register Volume 82, Number 25 (Wednesday, February 8, 2017)]
[Notices]
[Pages 9803-9804]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-02536]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79931; File No. SR-CFE-2017-001]

Self-Regulatory Organizations; CBOE Futures Exchange, LLC; Notice 
of Filing of a Proposed Rule Change Regarding Block Trades

February 2, 2017.
    Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 19, 2017 CBOE 
Futures Exchange, LLC (``CFE'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change described in Items I, II, and III below, which 
Items have been prepared by CFE. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons. CFE also has filed this proposed rule change with the 
Commodity Futures Trading Commission (``CFTC''). CFE filed a written 
certification with the CFTC under Section 5c(c) of the Commodity 
Exchange Act (``CEA'') \2\ on January 19, 2017.
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    \1\ 15 U.S.C. 78s(b)(7).
    \2\ 7 U.S.C. 7a-2(c).
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I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    The Exchange proposes to amend CFE Rule 415 related to Block 
Trades. The scope of this filing is limited solely to the application 
of the proposed rule amendments to security futures that may be traded 
on CFE. Although no security futures are currently listed for trading 
on CFE, CFE may list security futures for trading in the future. The 
text of the proposed rule change is attached as Exhibit 4 to the filing 
but is not attached to the publication of this notice.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CFE 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. CFE 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
    CFE Rule 415 sets forth requirements relating to Block Trades. The 
proposed rule change adds paragraph (l) to Rule 415 which relates to 
the front running of Block Trades. Proposed Rule 415(l) makes clear 
that no person may engage in the front running of a Block Trade when 
acting on material non-public information regarding an impending 
transaction by another person, acting on non-public information 
obtained through a confidential employee/employer relationship, broker/
customer relationship, or in breach of a pre-existing duty. Proposed 
Rule 415(l) would apply to all products traded on CFE, including both 
non-security futures and security futures.
    The proposed rule change is being made in connection with other 
proposed amendments to Rule 415 which are not included as part of this 
proposed rule change. Those proposed amendments are to be included in 
new paragraph (k) of Rule 415.\3\ The provisions of proposed Rule 
415(k) are intended to clarify certain restrictions relating to 
disclosure and use of non-public information regarding Block Trades and 
the extent to which counterparties to a Block Trade may enter into pre-
hedging or anticipatory hedging transactions in connection with Block 
Trades. Proposed Rule 415(k) would only apply to non-security futures, 
and the Exchange is including a sentence in proposed Rule 415(k) to

[[Page 9804]]

make clear that its provisions do not apply to security futures.
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    \3\ Paragraph (k) will be filed simultaneously with paragraph 
(l) with CFTC which is why the provisions of paragraph (l) are 
marked as existing rule text in Exhibit 4.
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    The Exchange is also re-lettering certain paragraphs in Rule 415 to 
accommodate for the new provisions that are being added.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\4\ in general, and furthers the 
objectives of Sections 6(b)(5) \5\ and 6(b)(7) \6\ in particular in 
that it is designed:
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78f(b)(7).
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     To prevent fraudulent and manipulative acts and practices,
     to promote just and equitable principles of trade, and
     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.
    The Exchange believes that the proposed rule change would provide 
additional guidance to CFE market participants related to the front 
running of Block Trades. The proposed rule change would also contribute 
to enhanced protection of CFE's market and market participants.

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

    CFE does not believe that the proposed rule change will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act, in that the proposed rule change is consistent 
with similar guidance provided by other designated contracts 
markets.\7\ The Exchange believes that the proposed rule change is 
equitable and not unfairly discriminatory in that the rule amendments 
included in the proposed rule change would apply equally to all market 
participants.
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    \7\ These designated contract markets are Chicago Mercantile 
Exchange, Inc. (``CME''), The Board of Trade of the City of Chicago, 
Inc., New York Mercantile Exchange, Inc., New York Mercantile 
Exchange, Inc., and Commodity Exchange, Inc. See, CME Submission No. 
16-470 (November 15, 2016), which is available on the CFTC's Web 
site.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change will become operative on February 2, 2017. 
At any time within 60 days of the date of effectiveness of the proposed 
rule change, the Commission, after consultation with the CFTC, may 
summarily abrogate the proposed rule change and require that the 
proposed rule change be refiled in accordance with the provisions of 
Section 19(b)(1) of the Act.\8\
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    \8\ 15 U.S.C. 78s(b)(1).
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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-CFE-2017-001 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-CFE-2017-001. 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 such 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-CFE-2017-001, and should be 
submitted on or before March 1, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(73).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-02536 Filed 2-7-17; 8:45 am]
 BILLING CODE 8011-01-P