Document ID: SEC-2013-1999-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2013-11-22T05:00Z

[Federal Register Volume 78, Number 226 (Friday, November 22, 2013)]
[Notices]
[Pages 70085-70087]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-28026]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70894; File No. SR-CHX-2013-19]

Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Correct Certain Rule Taxonomy Issues and Postpone Until December 2, 
2013 the Operative Date of an Approved Proposed Rule Change

November 18, 2013.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on November 12, 2013, Chicago Stock Exchange, Inc. (the 
``Exchange'' or ``CHX'') 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 self-
regulatory organization. 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\ 15 U.S.C. 78a.
    \3\ 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

    CHX proposes to amend Article 1, Rule 1 (Definitions); Article 20, 
Rule 9 (Cancellation or Adjustment of Bona Fide Error Trades); Article 
20, Rule 9A (Error Correction Transactions); and Article 20, Rule 11 
(Cancellation or Adjustment of Stock Leg Trades) to correct certain 
taxonomy issues and to adopt an operative date of December 2, 2013 for 
all changes that were approved by the Securities and Exchange 
Commission (the ``SEC'' or the ``Commission'') under 34-70791.
    The text of this proposed rule change is available on the 
Exchange's Web site at (www.chx.com) and in 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 CHX included statements 
concerning the purpose of and basis for the proposed rule changes 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 CHX 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Article 1, Rule 1 (Definitions); 
Article 20, Rule 9 (Cancellation or Adjustment of Bona Fide Error 
Trades); Article 20, Rule 9A (Error Correction Transactions); and 
Article 20, Rule 11 (Cancellation or Adjustment of Stock Leg Trades) to 
correct certain taxonomy issues and to adopt an operative date of 
December 2, 2013 for all changes that were approved by the Commission 
under 34-70791.\4\ Aside from these proposed amendments, the Exchange 
does not propose any other changes to the definitions or text approved 
under 34-70791.
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    \4\ See Securities Exchange Act Release No. 70791 (October 31, 
2013), 78 FR 66791 (November 6, 2013) (Order Approving a Proposed 
Rule Change to Adopt Standards for the Cancellation or Adjustment of 
Bona Fide Error Trades, the Submission of Error Correction 
Transactions, and the Cancellation or Adjustment of Stock Leg Trades 
of Stock-Option or Stock-Future Orders).
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Background
    On September 4, 2013, the Exchange filed with the Commission, 
pursuant to Section 19(b)(1) of the Act \5\ and Rule 19b-4 
thereunder,\6\ a proposed rule change to amend CHX Article 20, Rule 9 
to outline and clarify the Exchange's current requirements for the 
cancellation of trades based on Bona Fide Error; to adopt CHX Article 
20, Rule 9A to detail the Exchange's current requirements for Error 
Correction Transactions; and to adopt CHX Article 20, Rule 11 to amend 
the Exchange's current requirements for the cancellation of the stock 
leg trade of a Stock-Option order, to establish new requirements for 
the adjustment of the stock leg trade of a Stock-Option order, and to 
allow the stock leg trade of Stock-Future orders to be cancelled or 
adjusted.\7\ The proposed rule change was published for comment in the 
Federal Register on September 18, 2013.\8\ The Commission received no 
comments on the proposal. The

[[Page 70086]]

Commission approved the proposed rule change on October 31, 2013.\9\
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    \5\ 15 U.S.C. 78s(b)(1).
    \6\ 17 CFR 240.19b-4.
    \7\ The Exchange notes that SR-CHX-2013-16 does not explicitly 
provide an operative date for the proposed amendments to CHX rules.
    \8\ See Securities Exchange Act Release No. 70381 (September 12, 
2013), 78 FR 57431 (September 18, 2013) (SR-CHX-2013-16) 
(``Notice'').
    \9\ See supra note 4.
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Taxonomy Amendments
    After SR-CHX-2013-16 was filed on September 4, 2013, the Exchange 
filed SR-CHX-2013-14 on September 24, 2013,\10\ which, among other 
things, adopted Article 1, Rule 1(hh) to define the term ``Customer'' 
as ``any person or entity other than a broker or dealer registered with 
the Commission.'' However, since the Exchange had already proposed to 
adopt Article 1, Rule 1(hh) to define ``Bona Fide Error'' pursuant to 
SR-CHX-2013-16, when the Commission approved SR-CHX-2013-16 on October 
31, 2013, Article 1, Rule 1(hh) now provided definitions for both 
``Customer'' and ``Bona Fide Error.''
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    \10\ See Securities Exchange Act Release No. 70597 (October 2, 
2013), 78 FR 62728 (October 22, 2013) (SR-CHX-2013-14) (``Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating 
to Registration, Qualification, Supervision, and Continuing 
Education of Individuals Associated with Participant Firms'').
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    Thus, the Exchange now proposes to move the definition of ``Bona 
Fide Error'' from current Article 1, Rule 1(hh) to proposed Article 1, 
Rule 1(ii). Correspondingly, the Exchange proposes to amend Article 20, 
Rule 9(a), Rule 9(b)(2), and Rule 9A(a)(1) to reflect that ``Bona Fide 
Error'' is defined under proposed Article 1, Rule 1(ii).
    Consequently, the Exchange proposes to move the definition of 
``Stock-Option'' from current Article 1, Rule 1(ii) to proposed Article 
1, Rule 1(jj) and the definition of ``Stock-Future'' from current 
Article 1, Rule 1(jj) to proposed Article 1, Rule 1(kk). 
Correspondingly, the Exchange proposes to amend Article 20, Rule 11(a) 
to reflect that ``Stock-Option'' is defined under proposed Article 1, 
Rule 1(jj) and ``Stock-Future'' is defined under proposed Article 1, 
Rule 1(kk).
Proposed Operative Date
    The Exchange proposes to suspend the operative date for all rule 
changes that were approved under 34-70791 to December 2, 2013.\11\ The 
Exchange submits that the proposed December 2, 2013 operative date is 
reasonable in light of the significant changes that were approved under 
34-70791.
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    \11\ See supra note 4.
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    As such, the Exchange now proposes to adopt language that provides 
that certain CHX rules shall be operative as of December 2, 2013. 
Specifically, directly above proposed Article 1, Rule 1(ii), the 
Exchange proposes to insert language that provides that paragraphs 
(ii)-(kk) shall be operative as of December 2, 2013. Also, directly 
above current Article 20, Rule 9(a), the Exchange proposes to insert 
language that provides that current Rule 9 shall be operative as of 
December 2, 2013. In addition, directly above current Article 20, Rule 
9A(a), the Exchange proposes to insert language that provides that 
current Rule 9A shall be operative as of December 2, 2013. Moreover, 
directly above current Article 20, Rule 11(a), the Exchange proposes to 
adopt language that provides that current Rule 11 shall be operative as 
of December 2, 2013.
    Moreover, since the changes approved under 34-70791 resulted in the 
previous version of Article 20, Rule 9 being superseded by current 
Article 20, Rule 9, the Exchange proposes to reincorporate the previous 
version of Article 20, Rule 9 verbatim as a separate rule from current 
Article 20, Rule 9, while inserting language to it stating that the 
previous version of Article 20, Rule 9 shall be operative through 
December 1, 2013. The Exchange submits that this sunset provision is 
necessary to avoid confusion to our Participants and to facilitate a 
smooth transition into the approved rules.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6(b) of the Act.\12\ 
Specifically, the proposal is consistent with Section 6(b)(5) of the 
Act,\13\ which requires exchange rules to promote just and equitable 
principles of trade, remove impediments to, and perfect the mechanism 
of, a free and open market and a national market system, and, in 
general, protect investors and the public interest. The proposal is 
also consistent with Section 6(b)(1) of the Act,\14\ which requires 
that an exchange be so organized and has the capacity to be able to 
carry out the purposes of 15 U.S.C. 78a et seq. and to comply, and to 
enforce compliance by its members and persons associated with its 
members, with the provisions of 15 U.S.C. 78a et seq., the rules and 
regulations thereunder, and the rules of the exchange.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5)
    \14\ 15 U.S.C. 78f(b)(1)
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    The Exchange believes that the proposed taxonomy corrections 
fulfill these requirements because it promotes clarity of CHX rules by 
ensuring that there is only one definition per citation. Similarly, the 
reinsertion of previous version of Article 20, Rule 9 also fulfills 
these requirements because it promotes clarity of CHX rules by 
providing that the previous version of Rule 9 shall be in the effect 
through December 1, 2013. Moreover, the proposed operative date of 
December 2, 2013 for all rule changes approved under 34-70791 fulfill 
these requirements and, in particular, Section 6(b)(1), because the 
December 2, 2013 operative date will facilitate the proper 
implementation of complex functionalities, which will, in turn, allow 
the Exchange to better enforce compliance by its Participants of the 
rules approved under 34-70791.

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

    The Exchange believes the proposal is consistent with Section 
6(b)(8) of the Act \15\ in that it does not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The proposed rule changes correct non-substantive 
taxonomy issues and set an operative date for functionality that has 
already been approved by the Commission.\16\ Accordingly, the Exchange 
does not believe that the proposed rule change will have any effect on 
competition.
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    \15\ 15 U.S.C. 78(f)(b)(8).
    \16\ See supra note 4.
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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 either solicited or received.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\ 
Because the 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \17\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \18\ 17 CFR 240.19b-4(f)(6).

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[[Page 70087]]

    A proposed rule change filed under Rule 19b-4(f)(6) \19\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b- 4(f)(6)(iii),\20\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing.
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    \19\ 17 CFR 240.19b-4(f)(6).
    \20\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the Exchange to provide the Commission with 
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.
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
The proposed taxonomy changes and non-substantive and should make the 
Exchange's rules easier to understand. The Exchange states that a 
temporary delay in the operation of SR-CHX-2013-16 will facilitate the 
proper implementation of complex functionalities, which in turn will 
allow it to better enforce compliance with the approved rules. Based on 
that representation, the Commission believes that delayed 
implementation is consistent with the protection of investors and the 
public interest. For these reasons, the Commission hereby waives the 
30-day operative delay and designates the proposal operative upon 
filing.\21\
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    \21\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such 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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \22\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \22\ 15 U.S.C. 78s(b)(2)(B).
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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 No. SR-CHX-2013-19 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File No. SR-CHX-2013-19. 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 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 No. SR-CHX-2013-19 and should be 
submitted on or before December 13, 2013.
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    \23\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-28026 Filed 11-21-13; 8:45 am]
BILLING CODE 8011-01-P