Document ID: SEC-2023-0355-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Futures Exchange, LLC
Posted Date: 2023-03-28T04:00Z

[Federal Register Volume 88, Number 59 (Tuesday, March 28, 2023)]
[Notices]
[Pages 18356-18358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06321]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97183; File No. SR-CFE-2023-001]

Self-Regulatory Organizations; Cboe Futures Exchange, LLC; Notice 
of a Filing of a Proposed Rule Change To Update Regulatory Independence 
Policies

March 22, 2023.
    Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 10, 2023 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. 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 
March 10, 2023.
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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 is proposing to update CFE Policy and Procedure XIII (Cboe 
Global Markets, Inc. and Subsidiaries Regulatory Independence Policy 
for Regulatory Group Personnel) (``P&P XIII'') and CFE Policy and 
Procedure XIV (Cboe Global Markets, Inc. and Subsidiaries Regulatory 
Independence Policy for Non-Regulatory Group Personnel) (``P&P XIV'') 
(collectively, ``Regulatory Independence Policies'' or ``Policies'') of 
the Policies and Procedures Section of the CFE Rulebook.
    The scope of this filing is limited solely to the application of 
the proposed rule change 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. 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, Proposed Rule Change

1. Purpose
    CFE is a subsidiary of Cboe Global Markets, Inc. (``CGM''). CGM, 
CFE, and other U.S. trading venue subsidiaries of CGM previously 
adopted the Regulatory Independence Policies and make updates to the 
Regulatory Independence Policies from time to time. The Regulatory 
Independence Policies are incorporated into the Policies and Procedures 
Section of the CFE Rulebook in P&P XIII and P&P XIV.
    The updates to the Regulatory Independence Policies being made by 
the proposed rule change include the following:
    The titles of the Regulatory Independence Policies are proposed to 
be updated. The title of the Regulatory Independence Policy in P&P XIII 
is proposed to be Cboe Global Markets, Inc. and Subsidiaries Regulatory 
Independence Policy for Cboe U.S. Exchanges (Regulatory Group Personnel 
Version) and the title of the Regulatory Independence Policy in P&P XIV 
is proposed to be Cboe Global Markets, Inc. and Subsidiaries Regulatory 
Independence Policy for Cboe U.S. Exchanges (Non-Regulatory Group 
Personnel Version). The titles of the Regulatory Independence Policies 
are proposed to be updated in order to reflect that the Policies are 
applicable to Cboe U.S. Exchanges, as further described in the 
following paragraph.
    Similarly, the provisions of the Regulatory Independence Policies 
are proposed to be revised to make clear that they apply to Cboe U.S. 
Exchanges. Cboe U.S. Exchanges under the Policies include Cboe 
Exchange, Inc., Cboe C2 Exchange, Inc., Cboe BZX Exchange, Inc., Cboe 
BYX Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., 
CFE, Cboe Digital Exchange, LLC (``Cboe Digital''), and Cboe SEF, LLC 
(``Cboe SEF''). All of these trading venues are currently referenced in 
the Regulatory Independence Policies with the exception of Cboe 
Digital.
    The Regulatory Independence Policies are proposed to be updated to 
apply to Cboe Digital. Cboe Digital is a designated contract market 
(``DCM'') registered with the CFTC that became a subsidiary of CGM 
during 2022.
    Each Regulatory Independence Policy is proposed to be revised to 
specifically refer to the other Regulatory Independence Policy as a 
companion version of that Regulatory Independence Policy. This proposed 
change is intended (i) to make clear to anyone reviewing the Regulatory 
Independence Policy applicable to Regulatory Group personnel that there 
is a related Regulatory Independence Policy with similar provisions 
that applies to Non-Regulatory Group personnel and (ii) to make clear 
to anyone reviewing the Regulatory Independence Policy applicable to 
Non-Regulatory Group personnel that there is a related Regulatory 
Independence Policy with similar provisions that applies to Regulatory 
Group personnel.
    The Regulatory Independence Policies are proposed to be revised to 
update the definition of the Regulatory Group under the Policies to 
refer to those employees supporting the regulatory functions of the 
Cboe U.S. Exchanges and to indicate that those employees include (i) 
all regulatory employees in the Regulatory Division for the Cboe U.S. 
Exchanges; (ii) any employee of any Cboe Company (as defined below) who 
is performing services for the Regulatory Group, including for example, 
when providing such services, Legal Division and Compliance Department 
employees as well as systems and database personnel who are assigned to 
work on matters for the Regulatory Group; and (iii) employees of a 
regulatory services provider providing regulatory services for a Cboe 
U.S. Exchange pursuant to any Regulatory Services Agreement (``RSA''). 
All other employees of any Cboe Company are

[[Page 18357]]

considered non-Regulatory Group Personnel under the Policies.
    The Regulatory Independence Policies are proposed to be revised to 
add references to Cboe Digital where appropriate and to note regulatory 
provisions that CFE, Cboe Digital, and Cboe SEF are required to enforce 
and how those obligations apply to each of those entities. As proposed 
to be revised in this respect, the Regulatory Independence Polices 
would provide that: Under the CEA, CFE, Cboe Digital, and Cboe SEF are 
required to enforce compliance by their trading privilege holders and 
participants and their related parties with the CEA, the regulations of 
the CFTC, and, to the extent applicable, that exchange's rules, certain 
rules of the Federal Reserve Board (for CFE), certain rules of The 
Options Clearing Corporation (for CFE) or Cboe Clear Digital, LLC (for 
Cboe Digital), and the Act, and rules and regulations promulgated 
pursuant to the SEA (for CFE). These proposed additions of references 
to Cboe Digital in the Regulatory Independence Policies do not 
substantively change the descriptions in the Policies of the regulatory 
provisions that CFE is required to enforce and how those obligations 
apply to CFE.
    The Regulatory Independence Policies are proposed to be updated to 
define the term Member under the Policies to encompass a trading permit 
holder, trading privilege holder, permit holder, member, participant, 
or other person or entity with trading privileges on a market of a Cboe 
U.S. Exchange. The Regulatory Independence Policies are also proposed 
to be revised to utilize the term Member in place of the term trading 
permit holder since the term Member is a broader term and captures the 
various types of members on the Cboe U.S. Exchanges.
    The Regulatory Independence Policies are proposed to be revised to 
specifically note that the Cboe U.S. Exchanges may enter into RSAs with 
regulatory service providers.
    The Regulatory Independence Policies are proposed to be amended to 
reference the Cboe U.S. Exchanges in various provisions within the 
Policies instead referencing a Cboe Company in instances in which the 
applicable provision is intended to refer more specifically to the Cboe 
U.S. Exchanges instead of to the broader term Cboe Company. A Cboe 
Company includes CGM, the Cboe U.S. Exchanges, and any other subsidiary 
or affiliate of CGM. The proposed rule change also includes other 
proposed revisions which reference both the Cboe U.S. Exchanges and any 
other Cboe Company where the applicable provision is meant to apply to 
both. These proposed amendments are proposed clarifying changes and are 
not intended to alter the current substantive provisions of the 
Regulatory Independence Policies. Instead, they are intended to use 
more precise terminology and to further clarify which entities various 
provisions are intended to reference. For example, one of these 
provisions currently reads: All regulatory decisions shall be made 
without regard to the actual or perceived business interests of the 
Cboe Companies or any of their trading permit holders. As it is 
proposed to be revised, this provision would read: All regulatory 
decisions shall be made without regard to the actual or perceived 
business interests of the Cboe U.S. Exchanges and any other Cboe 
Companies or any of the Cboe U.S. Exchange Members.
    The Regulatory Independence Policies are proposed to be revised to 
make clear that regulatory matters under the Policies include, among 
other things, any regulatory investigation, examination, inquiry, or 
complaint that is being investigated or brought by the CFTC.
    The Regulatory Independence Policies are proposed to be updated to 
refer to the Regulatory Oversight Committees of the Cboe U.S. Exchanges 
instead of to Regulatory Oversight and Compliance Committees, which was 
a name for those committees that was previously used by some of the 
Cboe U.S. Exchanges.
    The Regulatory Independence Policies are proposed to be amended to 
provide that regulatory matters may be discussed with the CGM Risk 
Committee in connection with its oversight of CGM's risk assessment and 
risk management, including risks related to Cboe U.S. Exchanges' 
compliance with applicable laws, regulations, and policies. Similarly, 
the Regulatory Independence Policies are proposed to be amended to 
provide that the Chief Regulatory Officer of the applicable Cboe U.S. 
Exchange will have direct access to the CGM Risk Committee Chair to 
discuss matters related to oversight of CGM's risk assessment and risk 
management, including risks related to Cboe U.S. Exchanges' compliance 
with applicable laws, regulations, and policies. Similar provisions 
currently apply with respect to the CGM Board and CGM Audit Committee 
and references to the CGM Risk Committee and CGM Risk Committee Chair 
are proposed to be added to the Policies in this regard in light of the 
role of the CGM Risk Committee with regard to risk assessment and risk 
management.
    The Regulatory Independence Policies are also proposed to be 
updated to include various non-substantive and technical revisions 
which do not affect the content and substance of the Policies. For 
example, the Securities Exchange Act of 1934 is currently referred to 
in the Regulatory Independence Policies as the Securities and Exchange 
Act of 1934 and is currently defined in short form in the Policies as 
the ``Act''. The Regulatory Independence Policies are proposed to be 
revised to correct the references to that statute by removing the word 
``and'' from within the current references to the full name of that 
statute and by also changing the defined term for that statute within 
the Polices from the ``Act'' to the ``SEA''. As another example, bullet 
point lists within the Regulatory Independence Policies are proposed to 
be revised so that each bullet point within the lists starts with a 
lower case word instead of a capitalized word.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\3\ in general, and furthers the 
objectives of Sections 6(b)(1) \4\ and 6(b)(5) \5\ in particular, in 
that it is designed:
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(1).
    \5\ 15 U.S.C. 78f(b)(5).
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     to enable the Exchange to enforce compliance by its 
Trading Privilege Holders and persons associated with its Trading 
Privilege Holders 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 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 proposed rule change retains the current substantive provisions 
of the Regulatory Independence Policies within CFE's rules while 
updating the Policies to clarify that they apply to the Cboe U.S. 
Exchanges, which now includes Cboe Digital, and to make clarifying 
updates to titles, terms, definitions, and provisions within the 
Policies where appropriate and necessary. By retaining the current 
substantive provisions of the Regulatory Independence Policies within 
CFE's rules, the proposed rule change

[[Page 18358]]

contributes to minimizing conflicts of interest in the decision-making 
process of CFE and to the preservation of the independence of the 
Exchange's Regulatory Group as it performs regulatory functions for the 
Exchange. The Exchange believes that the proposed rule change is 
equitable and not unfairly discriminatory in that the Regulatory 
Independence Policies apply equally in relation to all CFE Trading 
Privilege Holders.

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 proposed rule change contributes 
to 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 competition because the Regulatory 
Independence Policies apply equally in relation to all CFE Trading 
Privilege Holders.

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 24, 2023. 
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 [email protected]. Please include 
File Number SR-CFE-2023-001 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-2023-001. 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-2023-001, and should be submitted on 
or before April 18, 2023.

    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)(73).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-06321 Filed 3-27-23; 8:45 am]
BILLING CODE 8011-01-P