Document ID: SEC-2019-0775-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BZX Exchange, Inc.
Posted Date: 2019-06-06T04:00Z

[Federal Register Volume 84, Number 109 (Thursday, June 6, 2019)]
[Notices]
[Pages 26496-26498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11804]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85985; File No. SR-CboeBZX-2019-046]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Amending 
Rule 21.7 Concerning Openings Following Trading Halts

May 31, 2019.
    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 May 22, 2019, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') 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 Exchange 
filed the proposal as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX Options'') 
proposes to amend Rule 21.7. The text of the proposed rule change is 
provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

[[Page 26497]]

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 proposed rule change harmonizes how the opening auction process 
will be used following all trading halts. Currently, the Exchange opens 
trading following a Regulatory Halt (as defined below) in a different 
manner than it opens trading following a non-Regulatory Halt. 
Specifically, current Rule 21.7(a) provides that the Exchange will 
accept market and limit orders and quotes for inclusion in the opening 
process (the ``Opening Process'') immediately upon trading being halted 
in an option series due to the primary listing market for the 
applicable underlying security declaring a regulatory trading halt, 
suspension, or pause with respect to such security (a ``Regulatory 
Halt''), with respect to equity options. For equity options, where a 
User has entered instructions not to cancel its open orders upon a halt 
pursuant to Rule 20.3(b), such orders will be queued for participation 
in the Opening Process for a Regulatory Halt or will be cancelled for a 
halt that is not a Regulatory Halt. Where trading is halted pursuant to 
Rule 20.3, but it is not due to a Regulatory Halt, there will be no 
Order Entry Period and trading shall be resumed upon the determination 
by the Exchange that the conditions which led to the halt are no longer 
present or that the interests of a fair and orderly market are best 
served by a resumption of trading.
    The Exchange has determined to eliminate the distinction between 
how the opening auction process applies following a Regulatory Halt and 
a non-Regulatory Halt. The proposed rule change provides that the 
opening auction process following any trading halt will apply in the 
manner it currently applies following a Regulatory Halt. In other 
words, following a non-Regulatory Halt, there will be an Order Entry 
Period that begins immediately when the Exchange halts trading in a 
class. Additionally, in the event of a non-Regulatory Halt, the System 
will queue a User's orders and quotes resting on the book at the time 
of the trading halt for participation in the Opening Process following 
the trading halt, unless the User entered instructions to cancels its 
resting orders and quotes. This will provide Users with the ability to 
decide how its resting orders and quotes should be handled in the event 
of a non-Regulatory Halt, as they are currently able to do in the event 
of a Regulatory Halt. The Exchange also believes elimination of this 
distinction will eliminate potential investor confusion regarding how 
the System will handle orders and quotes in the event of a trading 
halt.\5\
---------------------------------------------------------------------------

    \5\ The proposed rule change also makes conforming changes 
throughout Rule 21.7, and other nonsubstantive changes to Rule 21.7.
---------------------------------------------------------------------------

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 proposed rule change will 
protect investors by eliminating potential confusion regarding how the 
Exchange will open series following trading halts, and by providing 
Users with flexibility regarding how the System will handle their 
orders and quotes following a non-Regulatory Halt (as they currently 
have following a Regulatory Halt).
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ Id.
---------------------------------------------------------------------------

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. The proposed rule change 
will not impose any burden on intramarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act. All 
Users will have the same flexibility regarding how the System will 
handle their orders and quotes following non-Regulatory Halts, which is 
the same flexibility currently available to Users following Regulatory 
Halts. If a User wants its orders and quotes to be handled following a 
non-Regulatory Halt in the manner they are today, that User can 
instruct the Exchange to do so. The proposed rule change will not 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
rule change only impacts how the Exchange will open series following a 
non-Regulatory Halt. The proposed change is not intended to be a 
competitive change, but rather to provide Users with flexibility with 
respect to the handling of their orders and quotes following a non-
Regulatory Halt.

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)(iii) of the Act \9\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of 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. 
The Exchange has satisfied this requirement.

---------------------------------------------------------------------------

[[Page 26498]]

    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-CboeBZX-2019-046 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-CboeBZX-2019-046. 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-CboeBZX-2019-046 and should be submitted 
on or before June 27, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-11804 Filed 6-5-19; 8:45 am]
 BILLING CODE 8011-01-P