Document ID: SEC-2020-0885-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2020-06-05T04:00Z

[Federal Register Volume 85, Number 109 (Friday, June 5, 2020)]
[Notices]
[Pages 34688-34690]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12158]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88978; File No. SR-CBOE-2020-049]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 8.16 and Rule 9.2 To Temporarily Extend the Filing Deadline for 
Certain Supervision-Related Reports

June 1, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 29, 2020, Cboe Exchange, Inc. (``Exchange'') 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 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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend Rule 8.16 and Rule 9.2 to temporarily extend the filing 
requirements for certain supervision-related reports, currently given 
an extension through June 1, 2020, to June 30, 2020. 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://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
    Given current market conditions, the Exchange proposes to provide 
its Trading Permit Holders (``TPHs'') temporary relief from filing 
certain supervision-related reports pursuant to Rule 8.16 (Supervision) 
and Rule 9.2 (Supervision of Accounts).
    The Exchange has been closely monitoring the current situation 
regarding the novel coronavirus (``COVID-19'') pandemic. The Exchange 
understands COVID-19 has placed stress on market participants' 
information technology infrastructure and the required deployment of 
significant resources, including to implement and continuously adapt 
business continuity plans. On March 11, 2020, the World Health 
Organization characterized COVID-19 as a pandemic and to slow the 
spread of the disease, federal and state officials implemented social-
distancing measures, placed significant limitations on large 
gatherings, limited travel, and closed non-essential businesses, all of 
which are largely still in place for the foreseeable future. Indeed, in 
response to the pandemic, the Exchange has taken various actions to 
allow it to maintain fair and orderly markets, including the closure of 
its trading floor, which will remain inoperable into June 2020.\5\ The 
Exchange also notes that in response to COVID-19, the Financial 
Industry Reporting Authority (``FINRA'') recently reissued temporary 
relief for member firms by, among other things, extending the deadline 
for submitting their supervision-related reports (FINRA Rule 3120 
Report and FINRA Rule 3130 certification) from their initial extension 
deadlines of June 1, 2020 \6\ to June 30, 2020.\7\ The Exchange notes, 
too, that other options exchanges that had previously extended the 
supervisory report deadlines from April 1 to June 1 for their 
members,\8\ also plan to submit similar filings to, again, extend their 
deadlines through June 30, 2020.
---------------------------------------------------------------------------

    \5\ See Tradedesk Update No. C2020031204 (March 12, 2020) Novel 
Coronavirus Update, Trading Floor Closure; and Tradedesk Update No. 
C2020052603 (May 26, 2020) Cboe Options Trading Floor Re-Opening.
    \6\ See FINRA Regulatory Notice 20-08 (March 9, 2020) available 
at https://www.finra.org/rules-guidance/notices/20-08.
    \7\ See FINRA Regulatory Notice 20-08, FAQs, Supervision (May 
19, 2020) available at https://www.finra.org/rules-guidance/key-topics/covid-19/faq#supe.
    \8\ See Securities Exchange Act Release Nos. 88524 (March 31, 
2020), 85 FR 19198 (April 6, 2020) (SR-ISE-2020-14); and 88527 
(March 31, 2020), 85 FR 19190 (April 6, 2020) (SR-Phlx-2020-16).
---------------------------------------------------------------------------

    By way of background, Rule 8.16(g)(2) provides that by April 1 of 
each year each Trading Permit Holder shall submit to the Exchange 
written report on the Trading Permit Holder's supervision and 
compliance effort during the preceding year and on the adequacy of the 
Trading Permit Holder's ongoing compliance processes and procedures, 
and Rule 9.2(g) provides that by April 1 of each year each TPH 
organization that conducts a non-Trading Permit Holder customer 
business shall submit to the Exchange a written report on the TPH 
organization's supervision and compliance effort during the preceding 
year and on the adequacy of the TPH organization's ongoing compliance 
processes and procedures, and (3) Rule 9.2(h) provides that by April 1 
of each year, each TPH organization shall submit a copy of the report 
that paragraph (g) (of Rule 9.2) requires the TPH organization to 
prepare to its one or more control persons or, if the TPH organization 
has no control person, to the audit committee of its board of directors 
or its equivalent committee or group. Both Rules currently provide 
relief to TPHs and their employees by extending these deadlines to June 
1, 2020.\9\ However, as COVID-19 remains an ongoing pandemic, to meet 
the current June 1 deadlines in Rules 8.16 and 9.2, TPH personnel would 
have to divide their efforts and resources that are otherwise necessary 
to address continued disruptions and stresses as a result of the 
ongoing COVID-19 pandemic. Therefore, the Exchange proposes to extend 
the filing deadline through June 30, 2020, thus allowing TPH personnel 
that are tasked with organizing, compiling and filing such reports, but 
are also tasked with maintaining critical operations and sustainable 
business

[[Page 34689]]

continuity plans, and otherwise adjusting the TPH's trading operations 
in line with evolving market conditions and initiatives to address such 
conditions to focus their attention on those immediate needs.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act No. 88528 (March 31, 2020), 85 
FR 19196 (April 6, 2020) (SR-CBOE-2020-029).
---------------------------------------------------------------------------

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.\10\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \11\ 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) \12\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes that the proposed rule will 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities. The proposed rule change will 
allow the Exchange to extend temporary relief to its TPHs by issuing 
another extension of certain supervisory reporting deadlines from June 
1, 2020 to June 30, 2020 in light of the ongoing COVID-19 crisis. The 
Exchange understands this pandemic has caused, and continues to cause, 
stress on market participants' information technology infrastructure 
and the deployment of significant resources to address ongoing 
disruptions and continued stresses. By allowing the Exchange to re-
extend the deadlines for filing certain supervision related reports in 
Rules 8.16 and 9.2, the Exchange believes the proposed rule will allow 
TPH personnel, who would normally be tasked with organizing and 
compiling such reports, to focus their attention on maintaining 
critical operations and sustainable business continuity plans, and 
otherwise adjusting their trading operations in line with evolving 
market conditions and initiatives in response to the ongoing COVID-19 
pandemic. The Exchange also believes the proposed rule change removes 
impediments to and perfects the mechanism of a free and open market and 
a national market system because, as noted above, FINRA has also re-
extended the time for their members to file supervision-related reports 
from June 1, 2020 to June 30, 2020.\13\ Additionally, as indicated 
above, other options exchanges that had previously extended the 
supervisory report deadlines from April 1 to June 1 for their 
members,\14\ plan to submit similar filings to re-extend their 
deadlines through June 30, 2020.
---------------------------------------------------------------------------

    \13\ See supra note 7.
    \14\ See supra note 8.
---------------------------------------------------------------------------

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 is 
not intended to address competitive issues. The Exchange does not 
believe the proposed rule would impose any burden on intramarket 
competition that is not necessary or appropriate in furtherance of the 
Act, because the additional June 30, 2020 extension for supervision-
related reports in Rules 8.16 and 9.2 will apply equally to all TPHs. 
The Exchange does not believe that the proposed rule change would 
impose any burden on intermarket competition because it relates only to 
the extension of the filing deadline for supervision-related reports. 
Additionally, and as stated above, FINRA has recently notified its 
members that the filing deadline for their supervision-related reports 
has again been extended from June 1, 2020 to June 30, 2020,\15\ and 
other options exchanges plan to file for the same relief through June 
30, 2020, as well.
---------------------------------------------------------------------------

    \15\ See supra note 7.
---------------------------------------------------------------------------

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 \16\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\17\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \18\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \19\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay so 
that the proposed rule change may become operative upon filing. The 
Commission notes that the proposed rule change would allow the 
Exchange, in light of the COVID-19 pandemic, to provide temporary 
relief for TPHs by extending the deadline for supervision-related 
reports in Rules 8.16 and 9.2 from June 1, 2020 to June 30, 2020, 
consistent with the extension FINRA has provided its members for 
supervision-related reports and certifications required pursuant to 
FINRA Rule 3120 and FINRA Rule 3130. The Commission believes that 
waiver of the 30-day operative delay is consistent with the protection 
of investors and the public interest. Accordingly, the Commission 
hereby waives the operative delay and designates the proposed rule 
change operative upon filing.\20\
---------------------------------------------------------------------------

    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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

[[Page 34690]]

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 rule-comments@sec.gov. Please include 
File Number SR-CBOE-2020-049 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-2020-049. 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-2020-049 and should be submitted on 
or before June 26, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-12158 Filed 6-4-20; 8:45 am]
 BILLING CODE 8011-01-P