Document ID: SEC-2019-1449-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2019-10-07T04:00Z

[Federal Register Volume 84, Number 194 (Monday, October 7, 2019)]
[Notices]
[Pages 53548-53550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21734]

[[Page 53548]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87183; File No. SR-CBOE-2019-065]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to Move 
the Rules in Chapter XVIII, Which Governs Exchange Arbitrations, of the 
Currently Effective Rulebook to Proposed Chapter 14 of the Shell 
Structure for the Exchange's Rulebook

October 1, 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 25, 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 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 XVIII, which governs Exchange 
arbitrations, of the currently effective Rulebook (``current 
Rulebook'') to proposed Chapter 14 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 XVIII which 
governs arbitrations, to proposed Chapter 14 in the shell Rulebook. The 
Exchange notes that in addition to relocating the arbitration rules to 
proposed shell Chapter 14, the proposed rule change deletes the rules 
from the current Rulebook. The proposed rule change relocates the rules 
as follows:

------------------------------------------------------------------------
               Shell rule                          Current rule
------------------------------------------------------------------------
        Chapter 14. Arbitration             Chapter XVIII. Arbitration
------------------------------------------------------------------------
14.1 Matters Subject to Arbitration....  18.1 Matters Subject to
                                          Arbitration.
14.2 FINRA Jurisdiction over             18.1A FINRA Jurisdiction over
 Arbitrations Against TPHs.               Arbitrations Against TPHs.
14.3 Procedures in TPH Controversies...  18.2 Procedures in TPH
                                          Controversies.
14.4 Arbitration.......................  18.3 Arbitration.
14.5 Class Action Claims...............  18.3A Class Action Claims.
14.6 Simplified Arbitration............  18.4 Simplified Arbitration.
14.7 Waiver of Hearing.................  18.5 Waiver of Hearing.
14.8 Time Limitation upon Submission...  18.6 Time Limitation upon
                                          Submission.
14.9 Dismissal or Termination of         18.7 Dismissal or Termination
 Proceedings.                             of Proceedings.
14.10 Settlements......................  18.8 Settlements.
14.11 Tolling of Time Limitation(s) for  18.9 Tolling of Time
 the Institution of Legal Proceedings     Limitation(s) for the
 and Extension of Time Limitation(s)      Institution of Legal
 for Submission to Arbitration.           Proceedings and Extension of
                                          Time Limitation(s) for
                                          Submission to Arbitration.
14.12 Designation of Number of           18.10 Designation of Number of
 Arbitrators.                             Arbitrators.
14.13 Notice of Selection of             18.11 Notice of Selection of
 Arbitrators.                             Arbitrators.
14.14 Challenges.......................  18.12 Challenges.
14.15 Disclosures Required of            18.13 Disclosures Required of
 Arbitrators.                             Arbitrators.
14.16 Disqualification or Other          18.14 Disqualification or Other
 Disability of Arbitrators.               Disability of Arbitrators.
14.17 Initiation of Proceedings........  18.15 Initiation of
                                          Proceedings.
14.18 Designation of Time and Place of   18.16 Designation of Time and
 Hearings.                                Place of Hearings.

[[Page 53549]]

 
14.19 Representation by Counsel........  18.17 Representation by
                                          Counsel.
14.20 Attendance at Hearings...........  18.18 Attendance at Hearings.
14.21 Failure to Appear................  18.19 Failure to Appear.
14.22 Adjournments.....................  18.20 Adjournments.
14.23 Acknowledgement of Pleadings.....  18.21 Acknowledgement of
                                          Pleadings.
14.24 General Provisions Governing Pre-  18.22 General Provisions
 Hearing Proceeding.                      Governing Pre-Hearing
                                          Proceeding.
14.25 Evidence.........................  18.24 Evidence.
14.26 Interpretation of Code and         18.25 Interpretation of Code
 Enforcement of Arbitrator Rulings.       and Enforcement of Arbitrator
                                          Rulings.
14.27 Determinations of Arbitrators....  18.26 Determinations of
                                          Arbitrators.
14.28 Record of Proceedings............  18.27 Record of Proceedings.
14.29 Oaths of the Arbitrators and       18.28 Oaths of the Arbitrators
 Witnesses.                               and Witnesses.
14.30 Amendments.......................  18.29 Amendments.
14.31 Reopening of Hearings............  18.30 Reopening of Hearings.
14.32 Awards...........................  18.31 Awards.
14.33 Miscellaneous....................  18.32 Miscellaneous.
14.34 Schedule of Fees.................  18.33 Schedule of Fees.
14.35 Requirements when Using Pre-       18.35 Requirements when Using
 Dispute Arbitration Agreements with      Pre-Dispute Arbitration
 Customers.                               Agreements with Customers.
14.36 Failure to Honor Award...........  18.37 Failure to Honor Award.
------------------------------------------------------------------------

    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 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) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \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

[[Page 53550]]

the Commission to waive the 30-day operative delay. The Exchange 
believes that waiver of the operative delay is appropriate because, as 
the Exchange discussed above, its proposal does not make any 
substantive changes to the Exchange Rules, but merely relocates 
arbitration rules to the shell Rulebook that the Exchange wishes to 
maintain post migration. Accordingly, its proposal is designed to 
preserve its arbitration rules after October 7, 2019. The Commission 
believes that waiver of the 30-day operative delay is consistent with 
the protection of investors and the public interest because the 
proposal does not raise any new or novel issues and does not make any 
substantive changes to the rules. Therefore, the Commission hereby 
waives the operative delay and designates the proposal as 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 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).
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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 shall 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-2019-065 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-2019-065. 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-2019-065 and should be submitted on 
or before October 28, 2019.

    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. 2019-21734 Filed 10-4-19; 8:45 am]
 BILLING CODE 8011-01-P