Document ID: SEC-2014-1023-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: CBOE Futures Exchange, LLC
Posted Date: 2014-06-19T04:00Z

[Federal Register Volume 79, Number 118 (Thursday, June 19, 2014)]
[Notices]
[Pages 35196-35198]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-14310]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72392; File No. SR-CFE-2014-002]

Self-Regulatory Organizations; CBOE Futures Exchange, LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to the Notification and Reporting Provisions for Exchange of 
Contract for Related Position Transactions and Block Trades

June 13, 2014.
    Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 21, 2014 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 May 
21, 2014.
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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

    CFE proposes to revise the notification and reporting provisions 
contained in CFE Rules 414 (Exchange of Contract for Related Position) 
(``ECRP'') and 415 (Block Trading).
    The scope of this filing is limited solely to the application of 
the rule changes to security futures traded on CFE. The only security 
futures currently traded on CFE are traded under Chapter 16 of CFE's 
Rulebook which is applicable to Individual Stock Based and Exchange-
Traded Fund Based Volatility Index (``Volatility Index'') security 
futures.
    The text of the proposed rule change is attached as Exhibit 4 to 
the filing submitted by the Exchange but is not attached to the 
published notice of the filing.

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

[[Page 35197]]

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
    Last year, CFE implemented a two-phased expansion of extended 
trading hours in CBOE Volatility Index (``VIX'') futures. Because the 
CFE Help Desk was staffed to support VIX futures trading during longer 
hours, CFE amended the notification and reporting provisions for ECRP 
transactions and Block Trades for all products traded on CFE, including 
security futures.\3\
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    \3\ See Securities Exchange Act Release Nos. 70611 (October 4, 
2013) (Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change Relating to the Notification and Reporting Provisions 
for Exchange of Contract for Related Position Transactions and Block 
Trades) (SR-CFE-2013-005) and 70789 (October 31, 2013) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to the Notification Provisions for Exchange of Contract for 
Related Position Transactions and Block Trades) (SR-CFE-2013-006).
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    CFE is again expanding extended trading hours in VIX futures to be 
nearly 24 hours a day, five days a week. As a result, the Exchange is 
changing the time frames during which ECRP transactions and Block 
Trades may be reported. Those time frames will be whenever the Exchange 
is open for trading VIX futures and from 3:15 p.m. to 3:30 p.m. 
(Chicago time) Monday through Friday. ECRP transactions and Block 
Trades will not be able to be consummated in a CFE contract outside of 
trading hours for the contract unless the transaction is fully reported 
to the Exchange during these time frames and by no later than the 
reporting deadline for these types of transactions (which is currently 
no later than ten minutes after the transaction is agreed upon for all 
CFE contracts).
    The Exchange is also limiting the manner in which notification of 
ECRP transactions and Block Trades may be provided to the CFE Help 
Desk. Specifically, the manner of notification must be made by email 
and notification by phone will no longer be permitted.
    Finally, the Exchange is clarifying that ECRP transactions and 
Block Trades in an expiring contract on the last trading day for that 
contract may not occur after the termination of trading hours in the 
expiring contract on that trading day. An ECRP transaction or Block 
Trade in an expiring contract that occurs during the trading hours for 
that contract may be reported to the Exchange after those trading 
hours, but only if the transaction is fully reported to the Exchange by 
no later than the reporting deadline referenced above.
    To effectuate these changes, CFE is amending the notification and 
reporting provisions of CFE Rule 414 (which sets forth requirements 
relating to ECRP transactions) and CFE Rule 415 (which sets forth 
requirements relating to Block Trades).
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 Section 6(b)(5) \5\ in particular in that it is designed 
to foster cooperation and coordination with persons engaged in 
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.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change would benefit 
investors and market participants because it would enhance CFE's ECRP 
and Block Trade reporting provisions by extending the time frames 
during which ECRP transactions and Block Trades may be reported. The 
Exchange also believes that requiring notification of ECRP transactions 
and Block Trades to be made only by email would benefit the marketplace 
by creating a record evidencing the parties' specific details of the 
trade previously agreed upon. The Exchange believes that the proposed 
rule change is equitable and not unfairly discriminatory because 
amended CFE Rules 414 and 415 would apply to all TPHs and Authorized 
Reporters and do not discriminate between 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 rule change makes enhancements to 
CFE's Block Trade and ECRP reporting process. In addition, the Exchange 
believes that the expansion of the ability to report Block Trades and 
ECRP transactions in security futures in conjunction with the expansion 
of trading hours in VIX futures will promote competition because it 
will provide for the reporting and dissemination of security futures 
Block Trades and ECRPs during additional time frames which will serve 
to promote additional transparency and thus potential further price 
competition.

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 or after June 6, 
2014.
    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.\6\
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    \6\ 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-2014-002 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-2014-002. 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

[[Page 35198]]

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 offices 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-2014-002, and should be submitted on or before July 
10, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-14310 Filed 6-18-14; 8:45 am]
BILLING CODE 8011-01-P