Document ID: SEC-2018-1387-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2018-09-04T04:00Z

[Federal Register Volume 83, Number 171 (Tuesday, September 4, 2018)]
[Notices]
[Pages 44938-44942]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-19060]

[[Page 44938]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83968; File No. SR-CBOE-2018-060]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To Amend Exchange Rule 6.49A, Transfer 
of Positions

August 28, 2018.
    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 August 16, 2018, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') 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.
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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 6.49A to delete the provisions 
related to on-floor position transfers, amend the permissible reasons 
for and procedures related to off-floor position transfers, and make 
other nonsubstantive changes.
    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 Exchange proposes to amend Rule 6.49A to delete the provisions 
related to on-floor position transfers, amend the permissible reasons 
for and procedures related to off-floor position transfers, and make 
other nonsubstantive changes. Rule 6.49A specifies the circumstances 
under which Trading Permit Holders may effect transfers of positions, 
both on and off the trading floor, notwithstanding the prohibition in 
Rule 6.49(a).\3\
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    \3\ Paragraph (a) of Rule 6.49 (Transactions Off the Exchange) 
generally requires transactions of option contracts listed on the 
Exchange for a premium in excess of $1.00 to be effected on the 
floor of the Exchange or on another exchange.
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On-Floor Transfers
    Rule 6.49A(a)(2) permits certain position transfers to occur on the 
floor of the exchange or on another options exchange. The procedures 
for such on-floor position transfers are set forth in Rule 6.49A(b) and 
(c), as well as Interpretations and Policies .01 through .03. The 
Exchange no longer wants to make available on-floor transfers of 
positions, so the proposed rule change deletes paragraphs (a)(2), (b), 
and (c), and Interpretations and Policies .01 through .03 \4\ from Rule 
6.49A. The on-floor position transfer procedure is administratively 
burdensome on the Exchange, and is currently used by Trading Permit 
Holders on a limited basis. As the Exchange noted when the rule was 
adopted, the Exchange's ``on-floor'' procedure was intended to help 
ensure that Trading Permit Holders with a need to transfer positions in 
bulk as part of a sale or disposition of all or substantially all of a 
Trading Permit Holder's assets or options positions were able to get 
the best possible price for the positions while also ensuring that 
other Trading Permit Holders have an adequate opportunity to make bids 
and offers on the positions that are being transferred.\5\ In addition, 
the Exchange noted the ``on-floor'' position transfer procedure could 
be used by Market-Makers that, for reasons other than a forced 
liquidation, such as an extended vacation, wished to liquidate their 
entire, or nearly their entire, open positions in a single set of 
transactions, subject to certain restrictions.\6\
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    \4\ The Exchange proposes to move the provision in 
Interpretation and Policy .03 that states the on-floor transfer 
procedure is not to be used repeatedly or routinely in circumvention 
of the normal auction market process to proposed paragraph (g), as 
that provision applies to both the current on-floor and off-floor 
position transfer procedures.
    \5\ See Exchange Act Release No. 36647 (December 28, 1995), 61 
FR 566 (January 8, 1996) (Order Approving and Notice of Filing and 
Order Granting Accelerated Approval of Amendments No. 1 and 2 to a 
Proposed Rule Change Relating to the Transfer of Positions on the 
Floor of the Exchange in Cases of Dissolution and other Situations) 
(SR-CBOE-95-36).
    \6\ Id. Among other restrictions, repeated and frequent use of 
the on-floor procedure in Rule 6.49A by a TPH is not permitted.
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    For example, the Exchange's on-floor transfer of positions rule was 
also intended to address the common situation in which a Designated 
Primary Market-Maker (``DPM'') sold its business or in which a Market-
Maker, for reasons other than a forced liquidation, such as an extended 
vacation, wished to liquidate its entire, or nearly entire, position in 
a single set of transactions.\7\ Currently, because DPMs have been 
largely consolidated in the hands of firms rather than individuals, 
such transfers are, for the most part unnecessary; if an individual 
takes an extended vacation, another member of the firm handles the 
firm's book. Accordingly, the Exchange believes that the on-floor 
transfer of positions procedure no longer serves the uses for which is 
was originally adopted. The Exchange also notes that at least one other 
options exchange with a trading floor and a transfer of positions rule 
does not offer an on-floor transfer procedure.\8\
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    \7\ Id.
    \8\ See, e.g., Nasdaq OMX PHLX LLC (``Phlx'') 1058.
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Off-Floor Position Transfers
    Current Rule 6.49A(a)(1) lists the circumstances in which Trading 
Permit Holders may transfer their positions off the floor. The 
circumstances currently listed include: (i) The dissolution of a joint 
account in which the remaining Trading Permit Holder assumes the 
positions of the joint account; (ii) the dissolution of a corporation 
or partnership in which a former nominee of the corporation or 
partnership assumes the positions; (iii) positions transferred as part 
of a Trading Permit Holder's capital contribution to a new joint 
account, partnership, or corporation; (iv) the donation of positions to 
a not-for-profit corporation; (v) the transfer of positions to a minor 
under the Uniform Gifts to Minor law; and (vi) a merger or acquisition 
where continuity of ownership or management results.\9\
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    \9\ The Exchange notes that other options exchanges have adopted 
off-floor position transfer procedures based on, and substantially 
similar to, the Exchange's procedure in Rule 6.49A(a)(1). See, e.g., 
Nasdaq OMX PHLX LLC (``Phlx'') Rule 1058; and NYSE Arca, Inc. 
(``Arca'') Rule 6.78-O(d).

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[[Page 44939]]

    The Exchange proposes to add clarifying language to the first 
sentence of Rule 6.49A(a) to state that existing positions in options 
listed on the Exchange of a Trading Permit Holder or of a Non-Trading 
Permit Holder that are to be transferred on, from, or to the books of a 
Clearing Trading Permit Holder may be transferred off the Exchange (an 
``off-floor transfer'') if the off-floor transfer involves one of the 
events listed in the Rule.\10\ The proposed rule change clarifies that 
Rule 6.49A does not apply to products other than options listed on the 
Exchange, consistent with the Exchange's other trading rules.\11\ It 
also clarifies that a Trading Permit Holder must be on one side of the 
transfer. The proposed rule change also clarifies that positions a 
Trading Permit Holder is transferring or receiving are held in the 
account of a Clearing Trading Permit Holder. This language is 
consistent with how off-floor transfers are currently effected. The 
proposed rule change also clarifies that both Trading Permit Holders 
and non-Trading Permit Holders may effect off-floor transfers, except 
under specified circumstances in which only a Trading Permit Holder may 
effect an off-floor transfer.\12\
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    \10\ It is possible for positions transfers to occur between two 
Non-Trading Permit Holders. For example, one Non-Trading Permit 
Holder may transfer positions on the books of a Clearing Trading 
Permit Holder to another Non-Trading Permit Holder pursuant to the 
proposed rule.
    \11\ Proposed paragraph (h) also clarifies that the off-floor 
transfer procedure only applies to positions in options listed on 
the Exchange, and that transfers of non-Exchange-listed options and 
other financial instruments are not governed by Rule 6.49A.
    \12\ See proposed subparagraphs (a)(5) and (7).
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    The Exchange notes off-floor transfers of positions in Exchange-
listed options may also be subject to applicable laws, rules, and 
regulations, including rules of other self-regulatory 
organizations.\13\ Except as explicitly provided in the proposed rule 
text, the proposed rule change is not intended to exempt off-floor 
position transfers from any other applicable rules or regulations, and 
proposed paragraph (h) makes this clear in the rule.
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    \13\ See proposed paragraph (h).
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    The proposed rule change adds four events where an off-floor 
transfer would be permitted to occur.
     Proposed subparagraph (a)(1) permits an off-floor transfer 
to occur if it, pursuant to Rule 4.6 or 4.22, is an adjustment or 
transfer in connection with the correction of a bona fide error in the 
recording of a transaction or the transferring of a position to another 
account, provided that the original trade documentation confirms the 
error. This proposed rule change codifies previous, long-standing 
Exchange guidance regarding what off-floor transfers are permissible 
and will permit transactions to be properly recorded in the originally 
intended accounts.\14\
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    \14\ See Cboe Options Regulatory Circular RG03-62. Note Rule 
4.22 was not referenced in that circular, as it did not exist at 
that time. However, it contains similar language regarding 
corrections of errors as Rule 4.6, and therefore the Exchange 
believes it is appropriate to include in the proposed rule change. 
The proposed rule change is also similar to Cboe Futures Exchange, 
LLC (``CFE'') Rule 420(a)(i).
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     Proposed subparagraph (a)(2) permits an off-floor transfer 
if it is a transfer of positions from one account to another account 
where there is no change in ownership involved (i.e., the accounts are 
for the same Person \15\), provided the accounts are not in separate 
aggregation units or otherwise subject to information barrier or 
account segregation requirements.\16\ The proposed rule change provides 
market participants with flexibility to maintain positions in accounts 
used for the same trading purpose in a manner consistent with their 
businesses. Such transfers are not intended to be transactions among 
different market participants, as there would be no change in ownership 
permitted under the provision, and would also not permit transfers 
among different trading units for which accounts are otherwise required 
to be maintained separately.\17\
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    \15\ Rule 1.1(ff) defines ``Person'' as an individual, 
partnership (general or limited), joint stock company, corporation, 
limited liability company, trust or unincorporated organization, or 
any governmental entity or agency or political subdivision thereof.
    \16\ The proposed rule change is similar to CFE Rule 420(a)(ii).
    \17\ Various rules (for example, Regulation SHO in certain 
circumstances) require accounts to be maintained separately, and the 
proposed rule change is consistent with those rules.
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     Proposed subparagraph (a)(3) similarly permits an off-
floor transfer if it is a consolidation of accounts \18\ where no 
change in ownership is involved. This proposed rule change is similar 
to rules of other options exchanges.\19\
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    \18\ This refers to the consolidation of entire accounts (e.g., 
combining two separate accounts (including the positions in each 
account into a single account)).
    \19\ See, e.g., Phlx Rule 1058(a)(7); and Arca Rule 6.78-
O(d)(1)(vii).
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     Proposed subparagraph (a)(10) permits an off-floor 
transfer if it is a transfer of positions through operation of law from 
death, bankruptcy, or otherwise.\20\ This provision is consistent with 
applicable laws, rules, and regulations that legally require transfers 
in certain circumstances. This proposed rule change is consistent with 
the purposes of other circumstances in the current rule, such as the 
transfer of positions to a minor or dissolution of a corporation.
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    \20\ The proposed rule change is similar to CFE Rule 
420(a)(iii).
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    The Exchange believes these proposed events have similar purposes 
as those in the current rule, which is to permit market participants to 
move positions from one account to another and to permit transfers upon 
the occurrence of significant, non-recurring events.\21\ As noted 
above, the proposed rule change is consistent with current Exchange 
guidance or rules of other self-regulatory organizations.
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    \21\ See proposed paragraph (g).
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    The proposed rule change renumbers current subparagraphs (a)(1)(i) 
through (v) to be proposed subparagraphs (a)(5) through (9) and moves 
current subparagraph (a)(1)(vi) to proposed subparagraph (a)(4), with 
nonsubstantive changes. These permissible circumstances for off-floor 
transfers are consistent with the rules of other options exchanges.\22\
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    \22\ See, e.g., Phlx Rule 1058(a)(1) through (6); and Arca Rule 
6.78-O(d)(1)(i) through (vi).
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    Proposed paragraph (b) codifies Exchange guidance regarding certain 
restrictions on permissible off-floor transfers related to netting of 
open positions and to margin and haircut treatment. Proposed 
subparagraph (b)(1) states, unless otherwise permitted by Rule 6.49A, 
when effecting an off-floor transfer pursuant to paragraph (a), no 
position may net against another position (``netting''), and no 
position transfer may result in preferential margin or haircut 
treatment.\23\ Netting occurs when long positions and short positions 
in the same series ``offset'' against each other, leaving no or a 
reduced position. For example, if a Trading Permit Holder wanted to 
transfer 100 long calls to another account that contained short calls 
of the same options series as well as other positions, even if the 
transfer is permitted pursuant to one of the 10 permissible events 
listed in the Rule, the Trading Permit Holder could not transfer the 
offsetting series, as they would net against each other and close the 
positions.
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    \23\ See Cboe Options Regulatory Circular RG03-62. For example, 
positions may not transfer from a customer, joint back office, or 
firm account to a Market-Maker account. However, positions may 
transfer from a Market-Maker account to a customer, joint back 
office, or firm account (assuming no netting of positions occurs).
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    However, netting is permitted for off-floor transfers on behalf of 
a Market-Maker account for transactions in multiply listed options 
series on different options exchanges, but only if the Market-Maker 
nominees are trading

[[Page 44940]]

for the same Trading Permit Holder organization, and the options 
transactions on the different options exchanges clear into separate 
exchange-specific accounts because they cannot easily clear into the 
same Market-Maker account at the Clearing Corporation. In such 
instances, all Market-Maker positions in the exchange-specific accounts 
for the multiply listed class would be automatically transferred on 
their trade date into one central Market-Maker account (commonly 
referred to as a ``universal account'') at the Clearing 
Corporation.\24\ Positions cleared into a universal account would 
automatically net against each other. Options exchanges permit 
different naming conventions with respect to Market-Maker account 
acronyms (for example, lettering versus numbering and number of 
characters), which are used for accounts at the Clearing Corporation. A 
Market-Maker may have a nominee with an appointment in class XYZ on 
Cboe Options, and have another nominee with an appointment in class XYZ 
on Phlx, but due to account acronym naming conventions, those nominees 
may need to clear their transactions into separate accounts (one for 
Cboe Options transactions and another for Phlx transactions) at the 
Clearing Corporation rather into a universal account (in which account 
the positions may net). The proposed rule change permits off-floor 
transfers from these separate exchange-specific accounts into the 
Market-Maker's universal account in this circumstance to achieve this 
purpose.
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    \24\ Id.
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    Proposed paragraph (c) states the transfer price, to the extent it 
is consistent with applicable laws, rules, and regulations, including 
rules of other self-regulatory organizations, and tax and accounting 
rules and regulations, at which an off-floor transfer is effected may 
be:
    (1) The original trade prices of the positions that appear on the 
books of the trading Clearing Trading Permit Holder, in which case the 
records of the transfer must indicate the original trade dates for the 
positions; \25\ provided, transfers to correct errors bona fide errors 
pursuant to proposed subparagraph (a)(1) must be transferred at the 
correct original trade prices;
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    \25\ Phlx Rule 1058(c) requires position transfers to occur at 
the same prices that appear on the books of the transferring member.
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    (2) mark-to-market prices of the positions at the close of trading 
on the transfer date;
    (3) mark-to-market prices of the positions at the close of trading 
on the trade date prior to the transfer date; \26\ or
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    \26\ For example, for a transfer that occurs on a Tuesday, the 
transfer price may be based on the closing market price on Monday.
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    (4) the then-current market price of the positions at the time the 
off-floor transfer is effected.\27\
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    \27\ The proposed rule change is similar to CFE Rule 420(c).
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    This proposed rule change provides market participants that effect 
off-floor transactions with flexibility to select a transfer price 
based on the circumstances of the transfer and their business. However, 
for corrections of bona fide errors, because those transfers are 
necessary to correct processing errors that occurred at the time of 
transaction, those transfers would occur at the original transaction 
price, as the purpose of the transfer is to create the originally 
intended result of the transaction.
    Proposed paragraph (d) requires a Trading Permit Holder and its 
Clearing Trading Permit Holder (to the extent that the Trading Permit 
Holder is not self-clearing) to submit to the Exchange, in a manner 
determined by the Exchange, written notice prior to effecting an off-
floor transfer from or to the account of a Trading Permit 
Holder(s).\28\ The notice must indicate:
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    \28\ This notice provision applies only to transfers involving a 
Trading Permit Holder's positions and not to positions of Non-
Trading Permit Holder parties, as they are not subject to the Rules. 
In addition, no notice would be required to effect off-floor 
transfers to correct bona fide errors pursuant to proposed 
subparagraph (a)(1).
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     The Exchange-listed options positions to be transferred;
     the nature of the transaction;
     the enumerated provision(s) under proposed paragraph (a) 
pursuant to which the positions are being transferred;
     the name of the counterparty(ies);
     the anticipated transfer date;
     the method for determined the transfer price; and
     any other information requested by the Exchange.
    The proposed notice will ensure the Exchange is aware of all off-
floor transfers so that it can monitor and review them (including the 
records that must be retained pursuant to proposed paragraph (e)) to 
determine whether they are effected in accordance with the Rules. 
Additionally, requiring notice from the Trading Permit Holder(s) and 
its Clearing Trading Permit Holder(s) will ensure both parties are in 
agreement with respect to the terms of the off-floor transfer. The 
proposed rule change is similar to rules of other options 
exchanges.\29\ As noted in proposed subparagraph (d)(2), receipt of 
notice of an off-floor transfer does not constitute a determination by 
the Exchange that the off-floor transfer was effected or reported in 
conformity with the requirements of Rule 6.49A. Notwithstanding 
submission of written notice to the Exchange, Trading Permit Holders 
and Clearing Trading Permit Holders that effect off-floor transfers 
that do not conform to the requirements of Rule 6.49A will be subject 
to appropriate disciplinary action in accordance with the Rules.
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    \29\ See, e.g., Phlx Rule 1058(b) and (c); and Arca Rule 6.78-
O(d)(2).
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    Similarly, proposed paragraph (e) requires each Trading Permit 
Holder and each Clearing Trading Permit Holder that is a party to an 
off-floor transfer must make and retain records of the information 
provided in the written notice to the Exchange pursuant to proposed 
subparagraph (d)(1), as well as information on the actual Exchange-
listed options that are ultimately transferred, the actual transfer 
date, and the actual transfer price (and the original trade dates, if 
applicable), and any other information the Exchange may request the 
Trading Permit Holder or Clearing Trading Permit Holder provide. The 
proposed rule change is similar to rules of other options 
exchanges.\30\
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    \30\ See, e.g., Phlx Rule 1058(c); and Arca Rule 6.78-O(c).
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    The proposed rule change moves current paragraph (d) regarding 
other exemptions to proposed paragraph (f). The exemptions permitted by 
this paragraph are those approved by the Exchange's president.\31\ The 
proposed rule change permits the President or a designee to grant an 
exemption to the Rule 6.49(a) prohibition if, in his or her judgment, 
allowing the off-floor transfer is necessary or appropriate for the 
maintenance of a fair and orderly market and the protection of 
investors and is in the public interest, including due to unusual or 
extraordinary circumstances such as the market value of the Person's 
positions will be comprised by having to comply with the requirement to 
trade on the Exchange pursuant to the normal auction process or, when 
in the judgment of President or his or her designee, market conditions 
make trading on the Exchange impractical. The proposed rule change 
updates language consistent with the change to only permit off-floor 
transfers. Additionally, the additional circumstances in which the 
President or

[[Page 44941]]

a designee may grant an exemption are similar to those that the 
President or a designee may consider when taking action under emergency 
conditions pursuant to Rule 6.17.
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    \31\ Similar to the rules of other exchanges, the proposed rule 
change also lets a designee of the Exchange president grant an 
exemption. See, e.g., Arca Rule 6.78-O(f).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\32\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \33\ 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) \34\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \32\ 15 U.S.C. 78f(b).
    \33\ 15 U.S.C. 78f(b)(5).
    \34\ Id.
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    The Exchange believes that permitting the off-floor transfers in 
very limited circumstances such as where there is no change in 
beneficial ownership, to contribute to a non-profit corporation, to 
transfer to a minor or a transfer by operation of law is reasonable to 
allow a TPH to accomplish certain goals efficiently. The rule permits 
off-floor transfers in situations involving dissolutions of entities or 
accounts, for purposes of donations, mergers or by operation of law. 
For example, a TPH that is undergoing a structural change and a one-
time movement of positions may require a transfer of positions or a TPH 
that is leaving a firm that will no longer be in business may require a 
transfer of positions to another firm. Also, a TPH may require a 
transfer of positions to make a capital contribution. The above-
referenced circumstances are non-recurring situations where the 
transferor continues to maintain some ownership interest or manage the 
positions transferred. By contrast, repeated or routine off-floor 
transfers between entities or accounts--even if there is no change in 
beneficial ownership as a result of the transfer--is inconsistent with 
the purposes for which Rule 6.49A was adopted. Accordingly, the 
Exchange believes that such activity should not be permitted under the 
rules and thus, seeks to adopt language in proposed paragraph (e) to 
Rule 6.49A that the transfer of positions procedures set forth in Rule 
6.49A are intended to facilitate non-recurring movements of positions.
    The Exchange believes that the proposed rule change to eliminate 
the on-floor position transfer procedure promotes just and equitable 
principles of trade, helps remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and 
promotes efficient administration of the Exchange, as it eliminates a 
complex procedure that is of limited use to Trading Permit Holders 
today but still imposes an administrative burden on the Exchange.
    The Exchange believes the proposed rule change benefits investors, 
as it adds transparency to the Rules by codifying certain long-standing 
guidance regarding what types of off-floor transfers are permissible. 
The purpose of the additional circumstances in which market 
participants may conduct off-floor transfers is consistent with the 
purpose of the circumstances currently permitted in Rule 6.49A. 
Therefore, the proposed rule change will provide market participants 
that experience these limited, non-recurring events with an efficient 
and effective means to transfer positions in these situations. It also 
permits presidential exemptions when they are necessary or appropriate 
for the maintenance of a fair and orderly market and the protection of 
investors and are in the public interest. The Exchange believes the 
proposed rule change regarding permissible transfer prices provides 
market participants with flexibility to determine the price appropriate 
for their business, which maintain cost bases in accordance with normal 
accounting practices and removes impediments to a free and open market.
    The proposed rule change requiring notice and maintenance of 
records will ensure the Exchange is able to review off-floor transfers 
for compliance with the Rules, which prevents fraudulent and 
manipulative acts and practices. The requirement to retain records is 
consistent with the requirements of Rule 17a-3 and 17a-4 under the Act.
    As discussed above, the proposed rule change is similar to rules of 
other options exchanges, and thus further removes impediments to and 
perfects the mechanism of a free and open market.

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 Exchange does not 
believe the proposed rule change will impose any burden on intramarket 
competition, as the amended off-floor transfer procedure will apply to 
all Trading Permit Holders in the same manner. Use of the off-floor 
transfer procedure is voluntary, and all Trading Permit Holders may use 
the procedure to transfer position off the floor as long as the 
criteria in the proposed rule are satisfied. The current on-floor 
position transfer procedure is of limited use to Trading Permit Holders 
today but still imposes an administrative burden on the Exchange. The 
proposed elimination of the on-floor position transfer promotes 
efficient administration of the Exchange, as it eliminates this complex 
procedure that is limited in application. Market participants will 
still be able to effect transactions on the Exchange pursuant to the 
normal auction process if an off-floor transfer is not permissible.
    The proposed rule change also provides market participants that 
experience the limited permissible, non-recurring events with an 
efficient and effective means to transfer positions in these 
situations. The Exchange believes the proposed rule change regarding 
permissible transfer prices provides market participants with 
flexibility to determine the price appropriate for their business, 
which determine prices in accordance with normal accounting practices 
and removes impediments to a free and open market. The Exchange does 
not believe the proposed notice and record requirements are unduly 
burdensome to market participants, as they are similar to requirements 
in the rules of other options exchanges, as discussed above. The 
Exchange believes these are reasonable requirements that will ensure 
the Exchange is aware of all off-floor transfers so that it can monitor 
and review them to determine whether they are effected in accordance 
with the Rules.
    The Exchange does not believe the proposed rule change will impose 
any burden on intermarket competition. The proposed off-floor position 
transfer procedure is not intended to be a competitive trading tool. 
The Exchange does not believe the proposed changes to the off-floor 
position transfer procedure are material, as they codify certain 
longstanding guidance and clarify the procedure. This procedure is

[[Page 44942]]

of limited application during unique circumstances. Additionally, as 
discussed above, the proposed rule change in part is similar to rules 
of other options exchanges. The Exchange believes having similar rules 
related to off-floor transfer positions to those of other options 
exchanges will reduce the administrative burden on market participants 
of determining whether their off-floor transfers comply with multiple 
sets of rules.

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 written 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 [email protected]. Please include 
File Number SR-CBOE-2018-060 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-2018-060. 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-2018-060 and should be submitted on 
or before September 25, 2018.
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    \35\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-19060 Filed 8-31-18; 8:45 am]
 BILLING CODE 8011-01-P