Document ID: SEC-2019-1473-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2019-10-09T04:00Z

[Federal Register Volume 84, Number 196 (Wednesday, October 9, 2019)]
[Notices]
[Pages 54190-54193]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22011]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87210; File No. SR-CBOE-2019-068]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Move 
the Rules in Chapter XVII, Which Governs Exchange Disciplinary 
Procedures, of the Current Rulebook to Proposed Chapter 13 of the Shell 
Rulebook

October 3, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 26, 2019, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') 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

[[Page 54191]]

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.
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    \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).
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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 move the Rules in Chapter XVII, which governs Exchange disciplinary 
procedures, of the currently effective Rulebook (``current Rulebook'') 
to proposed Chapter 13 of the shell structure for the Exchange's 
Rulebook that will become effective upon the migration of the 
Exchange's trading platform to the same system used by the Cboe 
Affiliated Exchanges (as defined below) (``shell Rulebook''). 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
    In 2016, the Exchange's parent company, Cboe Global Markets, Inc. 
(formerly named CBOE Holdings, Inc.) (``Cboe Global''), which is also 
the parent company of Cboe C2 Exchange, Inc. (``C2''), acquired Cboe 
EDGA Exchange, Inc. (``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX'' or 
``EDGX Options''), Cboe BZX Exchange, Inc. (``BZX'' or ``BZX 
Options''), and Cboe BYX Exchange, Inc. (``BYX'' and, together with 
Cboe Options, C2, EDGX, EDGA, and BZX, the ``Cboe Affiliated 
Exchanges''). The Cboe Affiliated Exchanges are working to align 
certain system functionality, retaining only intended differences, 
between the Cboe Affiliated Exchanges, in the context of a technology 
migration. Cboe Options intends to migrate its trading platform to the 
same system used by the Cboe Affiliated Exchanges, which the Exchange 
expects to complete on October 7, 2019. In connection with this 
technology migration, the Exchange has a shell Rulebook that resides 
alongside its current Rulebook, which shell Rulebook will contain the 
Rules that will be in place upon completion of the Cboe Options 
technology migration.
    The Exchange proposes to relocate current Chapter XVII which 
governs Exchange disciplinary procedures, to proposed Chapter 13 in the 
shell Rulebook. The Exchange notes that in addition to relocating the 
disciplinary rules to proposed shell Chapter 13, the proposed rule 
change deletes the rules from the current Rulebook. The proposed rule 
change relocates the rules as follows:

 
------------------------------------------------------------------------
               Shell rule                          Current rule
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13.1 Disciplinary Jurisdiction.........  17.1 Disciplinary Jurisdiction.
13.2 Compliant and Investigation.......  17.2 Compliant and
                                          Investigation.
13.3 Expedited Proceeding..............  17.3 Expedited Proceeding.
13.4 Charges...........................  17.4 Charges.
13.5 Answer............................  17.5 Answer.
13.6 Hearing...........................  17.6 Hearing.
13.7 Summary Proceedings...............  17.7 Summary Proceedings.
13.8 Offers of Settlement..............  17.8 Offers of Settlement.
13.9 Decision..........................  17.9 Decision.
13.10 Review...........................  17.10 Review.
13.11 Judgment and Sanction............  17.11 Judgment and Sanction.
13.12 Service of Notice................  17.12 Service of Notice
13.13 Extension of Time Limits.........  17.13 Extension of Time Limits.
13.14 Reporting to Central Registration  17.14 Reporting to Central
 Depository.                              Registration Depository.
13.15 Imposition of Fines for Minor      17.50 Imposition of Fines for
 Rule Violations.                         Minor Rule Violations.
13.16 Ex Parte Communications..........  17.15 Ex Parte Communications.
------------------------------------------------------------------------

    The proposed changes are of a non-substantive nature and will not 
amend the relocated rules other than to update their numbers, conform 
paragraph structure and number/lettering format to that of the shell 
Rulebook, and make cross-reference changes to shell rules.
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.\5\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \6\ 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

[[Page 54192]]

proposed rule change is consistent with the Section 6(b)(5) \7\ 
requirement that the rules of an exchange not be designed to permit 
unfair discrimination between customers, issuers, brokers, or dealers.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ Id.
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    As stated, the proposed rule change makes no substantive changes to 
the rules. The proposed rule change is merely intended to relocate the 
Exchange's rules to the shell Rulebook and update their numbers, 
paragraph structure, including number and lettering format, and cross-
references to conform to the shell Rulebook as a whole in anticipation 
of the technology migration on October 7, 2019. As such, the proposed 
rule change is designed 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, by improving the way the Exchange's 
Rulebook is organized, making it easier to read, and, particularly, 
helping market participants better understand the rules of the 
Exchange, which will also result in less burdensome and more efficient 
regulatory compliance.

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 not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change is not 
intended as a competitive change, but rather, seeks to make non-
substantive rule changes in relocating the rules and updating cross-
references to shell rules in anticipation of the October 7, 2019 
technology migration. The Exchange also does not believe that the 
proposed rule change will impose any undue burden on competition 
because the relocated rule text is exactly the same as the Exchange's 
current rules, all of which have all been previously filed with the 
Commission.

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)(iii) of the Act \8\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
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. 
Because this proposal does not make any substantive changes to the 
rules but only moves them into the shell Rulebook, the Commission 
designates a shorter time under Rule 19b-4(f)(6)(iii) by waiving the 
five business prefiling period for this proposal.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \10\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ 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 asked the Commission to waive the five day prefiling requirement 
and the 30-day operative delay so that it may implement the proposed 
rule change in connection with the technology migration on October 7, 
2019. According to the Exchange, waiver of the prefiling requirement 
and the operative delay will help to avoid any potential confusion by 
providing investors with a complete Exchange Rulebook upon the 
completion of migration. The Commission believes that waiver of the 30-
day operative delay is consistent with the protection of investors and 
the public interest because the proposed rule change raises no new or 
novel issues as it does not substantively amend the relocated rules. 
Therefore, the Commission hereby waives the prefiling requirement and 
the operative delay and designates the proposal operative upon 
filing.\12\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ For purposes only of waiving the five day prefiling 
requirement and the 30-day operative delay, the Commission has also 
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 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 investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

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-2019-068 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-2019-068. 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-2019-068 and should be submitted on 
or before October 30, 2019.

[[Page 54193]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-22011 Filed 10-8-19; 8:45 am]
 BILLING CODE 8011-01-P