Document ID: SEC-2021-0378-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Futures Exchange, LLC
Posted Date: 2021-03-18T04:00Z

[Federal Register Volume 86, Number 51 (Thursday, March 18, 2021)]
[Notices]
[Pages 14790-14792]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05555]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91308; File No. SR-CFE-2021-004]

Self-Regulatory Organizations; Cboe Futures Exchange, LLC; Notice 
of a Filing of a Proposed Rule Change Regarding Order Information

March 12, 2021.
    Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 4, 2021 Cboe Futures 
Exchange, LLC (``CFE'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change described 
in Items I, II, and III below, which Items have been prepared by 
CFE.\2\ 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

[[Page 14791]]

under Section 5c(c) of the Commodity Exchange Act (``CEA'') \3\ on 
March 1, 2021.
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    \1\ 15 U.S.C. 78s(b)(7).
    \2\ The Commission notes that the Exchange originally filed its 
proposed rule change regarding order information on March 1, 2021 
(SR-CFE-2021-003). SR-CFE-2021-003 was subsequently withdrawn and 
replaced by this filing in order to correct certain technical errors 
with the filing and typographical errors in the Exhibit 1.
    \3\ 7 U.S.C. 7a-2(c).
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I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    CFE Trading Privilege Holders (``TPHs'') may interface with CFE's 
trading system (``CFE System'') by utilizing either the Financial 
Information Exchange (``FIX'') protocol or the Binary Order Entry 
(``BOE'') protocol. CFE plans to enhance the BOE protocol by 
implementing a new version of the Binary Order Entry protocol (``BOE 
Version 3''). In reviewing its rules in connection with the preparation 
for the implementation of BOE Version 3, the Exchange identified 
proposed rule updates to further clarify how certain existing system 
attributes function which are not changing as a result of the 
implementation of BOE Version 3. The proposed rule change includes rule 
updates of this type that the Exchange is making in connection with 
CFE's implementation of BOE Version 3.
    The scope of this filing is limited solely to the application of 
the rule amendments to security futures that may be traded on CFE. 
Although no security futures are currently listed for trading on CFE, 
CFE may list security futures for trading in the future.
    CFE is making the rule amendments included in this proposed rule 
change in conjunction with other rule amendments being made by CFE in 
connection with its implementation of the BOE Version 3 that are not 
required to be submitted to the Commission pursuant to Section 19(b)(7) 
of the Act \4\ and thus are not included as part of this rule change.
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    \4\ 15 U.S.C. 78s(b)(7).
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    The rule amendments included as part of this proposed rule change 
are to apply to all products traded on CFE, including both non-security 
futures and any security futures that may be listed for trading on CFE. 
CFE is submitting these rule amendments to the Commission under Section 
19(b)(7) of the Act \5\ because they relate to reporting requirements 
that would apply with respect to any security futures that may be 
traded on CFE.
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    \5\ 15 U.S.C. 78s(b)(7).
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    The text of the proposed rule change is attached as Exhibit 4 to 
the filing but is not attached to the publication of this notice.

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 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
    CFE Rule 403 (Order Entry and Maintenance of Front-End Audit Trail 
Information) currently requires that single Orders, Bulk Messages, and 
Quotes submitted to the CFE System must contain specified information 
or they will be rejected or canceled back to the sender. CFE is 
proposing to amend Rule 403 to further clarify certain of its 
provisions.
    Specifically, CFE is proposing to amend Rule 403 in the following 
ways:
    Current Rule 403(b) enumerates the information that a single Order 
is required to contain. CFE is proposing to revise Rule 403(b) to 
clarify that the provisions of Rule 403(b) do not apply to Cancel 
Orders or to Cancel Replace/Modify Orders.
    CFE is proposing to add new Rule 403(c) to address the information 
that a Cancel Order is required to contain. Specifically, proposed new 
Rule 403(c) provides that each Cancel Order must contain (i) the Client 
Order ID of the Order to be canceled; (ii) the Executing Firm ID 
(``EFID''); (iii) the Order Entry Operator ID; (iv) a manual Order 
indicator; and (v) any additional information as may be prescribed from 
time to time by the Exchange.
    Similarly, CFE is proposing to add new Rule 403(d) to address the 
information that a Cancel Replace/Modify Order is required to contain. 
In particular, proposed new Rule 403(d) provides that each Cancel 
Replace/Modify Order must contain (i) a Client Order ID; (ii) the 
Client Order ID of the Order to be canceled; (iii) the EFID; (iv) the 
Order Entry Operator ID; (v) a manual Order indicator; (vi) the Order 
type; (vii) the price or premium; (viii) the quantity; and (ix) any 
additional information as may be prescribed from time to time by the 
Exchange.
    To account for the proposed addition of paragraphs (c) and (d) to 
Rule 403, CFE proposes to change the paragraph lettering of current 
paragraphs (c) through (g) of Rule 403 to be paragraphs (e) through (i) 
of Rule 403.
    Current Rule 403(e) (which is now proposed to be Rule 403(g)) 
provides that any single Order, Bulk Message, or Quote that does not 
contain required information in a form and manner prescribed by the 
Exchange will be rejected or canceled back to the sender by the CFE 
System. CFE proposes to revise this provision to make clear that any 
single Order, Bulk Message, or Quote that does not contain required or 
permitted information in a form and manner prescribed by the Exchange 
will be rejected or canceled back to the sender by the CFE System or 
the match capacity allocation through which the single Order, Bulk 
Message, or Quote was submitted will be disconnected by the CFE System.
    For example, with the implementation of BOE Version 3, any Order 
submitted through a unit match capacity allocation must be for a CFE 
contract processed by the matching unit for that unit match capacity 
allocation. If the Order contains a contract identifier for a contract 
processed by a different matching unit, it would contain information 
that is not permitted to be included in an Order from that unit match 
capacity allocation. Accordingly, the Order would rejected or canceled 
back to the sender by the CFE System.
    In other more limited situations, there may be invalid information 
included in an Order message submitted by a TPH which triggers the 
match capacity allocation through which the Order was submitted to be 
disconnected by the CFE System. For example, if a TPH submits an Order 
with a message type that is not a documented message type for CFE, the 
match capacity allocation through which the Order was submitted would 
be disconnected. Disconnecting a match capacity allocation in these 
situations allows the TPH to ascertain why an invalid message was 
submitted before the TPH reconnects the match capacity allocation and 
recommences sending Orders through the match capacity allocation.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Sections

[[Page 14792]]

6(b)(1) \7\ and 6(b)(5) \8\ in particular in that it is designed:
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(1).
    \8\ 15 U.S.C. 78f(b)(5).
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     To enable the Exchange to enforce compliance by its TPHs 
and persons associated with its TPHs with the provisions of the rules 
of the Exchange,
     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 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.
    The Exchange believes that the proposed rule change serves to 
strengthen CFE's ability to carry out its responsibilities as a self-
regulatory organization. First, the proposed rule change provides 
guidance to TPHs regarding the type of information that must be 
included within Cancel Orders and Cancel Replace/Modify Orders. Second, 
the proposed rule change contributes to enhancing the effectiveness of 
CFE's audit trail program by helping to assure that required 
information is included within Cancel Orders and Cancel Replace/Modify 
Orders and that single Orders, Bulk Messages, and Quotes without 
required information or with non-permitted information are not accepted 
by the CFE System. Third, the proposed rule change furthers CFE's 
ability to enforce compliance with CFE rules since the Exchange plans 
to utilize this audit trail information in connection with its 
surveillance of CFE's market and in connection with reviewing trading 
activity on CFE's market for rule compliance. The Exchange believes 
that the proposed rule change is equitable and not unfairly 
discriminatory in that the rule amendments included in the proposed 
rule change would apply equally to all TPHs.

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

    CFE does not believe that the proposed rule change will impose any 
burden on inter-market competition not necessary or appropriate in 
furtherance of the purposes of the Act, in that the proposed rule 
change will enhance CFE's ability to carry out its responsibilities as 
a self-regulatory organization. The Exchange believes that the proposed 
rule change will not impose any undue burden on intra-market 
competition because the rule amendments included in the proposed rule 
change would apply equally to all TPHs.

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 March 15, 2021. 
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.\9\
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    \9\ 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-2021-004 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-2021-004. 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-CFE-2021-004, and should be submitted on 
or before April 8, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(73).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-05555 Filed 3-17-21; 8:45 am]
BILLING CODE 8011-01-P