Document ID: SEC-2021-1307-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2021-09-24T04:00Z

[Federal Register Volume 86, Number 183 (Friday, September 24, 2021)]
[Notices]
[Pages 53134-53137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-20654]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93059; File No. SR-CBOE-2021-054]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Make 
Certain Corrections and Other Clarifying Changes to the Rules

September 20, 2021.
    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 16, 2021, 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 make certain corrections and other clarifying changes to the Rules. 
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

[[Page 53135]]

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
    The Exchange proposes to make non-substantive changes to its Cboe 
Exchange Rulebook (``Rulebook'') in order to correct certain errors and 
make certain clarifications throughout the Rules.
    The proposed rule change corrects cross-reference errors in Rules 
1.1, 5.5, 5.6, 5.50, 5.51, 5.80 and 5.91 that are currently inaccurate, 
as follows:

------------------------------------------------------------------------
   Rule location of current       Current cross-      Revised/accurate
  inaccurate cross-reference        reference         cross-reference
------------------------------------------------------------------------
5.5 (System Access and          5.9..............  5.10.
 Connectivity) paragraph
 (b)(2).
5.6 (Order Types, Order         5.88.............  5.85.
 Instructions, and Times-in-
 Force) paragraph (c)
 (definition of ``Compression
 or Position Compression Cross
 (``PCC'') Order'').
5.50 (Market-Maker              Paragraph (g)....  Paragraph (h).
 Appointments) paragraph
 (h)(1).
5.50 (Market-Maker              Paragraph (g) and  Incorrect cross-
 Appointments) paragraphs (i),   paragraph (h).     references to
 (i)(1), (i)(2) and (i)(3).                         paragraph (g) should
                                                    be paragraph (h) and
                                                    incorrect cross
                                                    reference to
                                                    paragraph (h) should
                                                    be paragraph (i).
5.51 (Market-Maker              8.26.............  8.19.
 Obligations) paragraph (c).
5.80 (Admission to and Conduct  Chapter 3........  Chapter 13.
 on the Trading Floor)
 paragraph (c)(1)(C).
5.91 (Floor Broker              8.26.............  8.19.
 Responsibilities) paragraph
 (d)(2).
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    The proposed rule change also corrects paragraph numbering and 
lettering in Rules 5.34 and 6.22. Current Rule 5.34(a)(4) jumps from 
subparagraph (C) to (E), Rule 5.34(c) jumps from subparagraph (10) to 
(12), and Rule 6.22 jumps from paragraph (c) to (e). The proposed rule 
change corrects these paragraph formatting errors by updating Rule 
5.34(a)(4)(E) to (D), Rule 5.34(c)(12) to (11), and Rule 6.22(e) to 
(d).
    The proposed rule change removes extraneous rule text from Rule 
5.81(h). Specifically, the proposed rule change removes an extraneous 
``or'' at the end of the first sentence in that paragraph. The proposed 
rule change also amends Rule 6.5 to remove the term Voluntary 
Professional Customer as the Exchange no longer recognizes the concept 
of Voluntary Professional Customers and no longer uses the term in its 
Rules.\5\ Additionally, the proposed rule change replaces the term 
``TPH Department'' with the term ``Exchange'' in Rules 3.7, 3.8, 3.10, 
3.11, 3.13, 3.15, 3.50, 3.59, 3.60, and 3.61. In 2018, the Exchange 
renamed its ``TPH Department'' to be called ``Membership Services.'' 
The proposed rule change removes reference to a ``summary fine under 
Rule 13.15'' in Rule 6.1(a)(1), which governs late transaction reports, 
as a pattern and practice of late reporting without exceptional 
circumstances may no longer be subject to a summary fine under 
13.15.\6\ The proposed rule change seeks to use the term the 
``Exchange'' as it does throughout the Rulebook when referring to 
actions taken by the Exchange or information that market participants 
needs to send to the Exchange. The Exchange prefers to use the term 
``Exchange'' rather than reference a specific department to permit 
internal reorganization or changing of department names without the 
need for a rule filing. Pursuant to Rule 1.5, the Exchange will 
communicate to TPHs through notices, regulatory circulars, or other 
communication where to send information to the Exchange (including to 
which department such information should be directed).
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    \5\ See Securities Exchange Act Release No. 86173 (June 20, 
2019), 84 FR 30267 (June 26, 2019) (SR-CBOE-2019-027).
    \6\ See Securities Exchange Act Release No. 92702 (August 18, 
2021), 86 FR 47346 (August 24, 2021) (SR-CBOE-2021-045).
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    The proposed rule change relocates Rule 8.43(j) to Rule 8.35(d). 
The Exchange previously restructured its Rulebook in connection with a 
2019 technology migration. Prior to restructuring, the provision 
currently in Rule 8.43(j) (former Rule 24A.7(d)), which specifically 
governs FLEX reporting requirements, was a part of former Rule 24A.7, 
which governed FLEX position limits and general requirements, including 
reporting. Former Rule 24A.7 was relocated to current Rule 8.35.\7\ 
Current Rule 8.43 (former Rule 4.13), instead, governs reports related 
to non-FLEX position limits. The provision in Rule 8.43(j) (former 
24A.7(d)) was not previously included in the Rule governing reports 
related to non-FLEX position limits (current Rule 8.43/former Rule 
4.13) nor did the Exchange intend for this provision to become a part 
of the Rule governing non-FLEX reports related to position limits 
(current Rule 8.43, former Rule 4.13). However, upon restructuring its 
Rulebook and relocating its Rules related to position and exercise 
limits, the Exchange inadvertently relocated the provision in regarding 
FLEX reporting requirements to Rule 8.43.\8\ Therefore, the proposed 
rule change corrects this inadvertent relocation by moving the 
provision in Rule 8.43(j) back to Rule 8.35 (as Rule 8.35(d)), the 
appropriate location for FLEX reporting requirements.\9\
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    \7\ See Securities Exchange Act Release No. 87261 (October 9, 
2019), 84 FR 55351 (October 16, 2019) (SR-CBOE-2019-096).
    \8\ See id.
    \9\ In light of the proposed rule change to relocate Rule 
8.43(j) to Rule 8.35(d), the proposed rule change also updates 
cross-references within this provision.
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    The proposed rule change also makes a non-substantive clarification 
in Rules 5.54, 5.55 and 5.56 in connection with Designated Primary 
Market-Makers (``DPMs''), Lead Market-Makers (``LMMs''), and Primary 
Market-Makers (``PMMs'') continuous quoting requirements, respectively. 
Specifically, the Exchange proposes to add clarity to these Rules by 
making the definition of continuous electronic quoting explicit in 
each. All Market Makers, including DPMs, PMMs, and LMMs, are required 
to provide continuous electronic quotes by submitting continuous bids 
and offers for 90% of the time during Regular Trading Hours. The 
definition

[[Page 53136]]

of continuous quoting requirements is explicit in Rule 5.52(d)(2), 
which provides for a 90% timing requirement for a Market-Maker's 
continuous electronic quotes.\10\ The proposed rule change merely 
proposes to make the same requirement explicit, thus providing 
additional clarity in the Rules governing electronic quoting 
requirements for DPMs, LMMs and PMMs. This is the continuous electronic 
quoting requirement to which DPMs, LMM and PMMs are currently subject.
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    \10\ The Exchange notes that the 90% timing requirement for a 
Market-Maker applies while the Market-Maker is ``required to provide 
electronic quotes in an appointed option class on a given trading 
day'' as provided in Rule 5.52(d)(2), while the 90% timing 
requirement for a DPM, LMM and PMM applies ``during Regular Trading 
Hours'', as provided in Rules 5.54(a)(1), 5.55(a)(1), and 5.56(a), 
respectively.
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    Finally, the proposed rule change also makes a non-substantive 
clarification in Rule 1.1 under the definition of Capacity. The 
definition of ``L'' Capacity code provides that it is for the account 
of a non-Trading Permit Holder affiliate. The Exchange notes that the 
``L'' Capacity code is specifically defined in and for the purposes 
described in the Cboe Options Fees Schedule. Therefore, the proposed 
rule change adds language to the definition of ``L'' Capacity code to 
make this explicit, thereby providing additional clarity in the Rule.
(a) 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.\11\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \12\ 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) \13\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ Id.
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    In particular, the Exchange believes the proposed rule change will 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general, will protect 
investors and the public interest by correcting errors and inaccuracies 
and clarifying text within the Rules. Specifically, by correcting 
inaccurate cross-references, errors in certain Rule text and in Rule 
numbering and lettering, updating a defined term, relocating an 
inadvertently moved Rule to its original and appropriate location and 
adding clarifying language regarding the timing requirement for 
continuous quoting requirements, which is the same for all Market-
Makers,\14\ in the Rules governing quoting requirements for DPMs, LMMs, 
PMMs, as well as clarifying language in regarding the application of 
the L Capacity code (i.e., for purposes of the Fees Schedule), the 
proposed rule change is designed to protect investors by making the 
Rulebook more accurate and adding clarity to the Rules, thereby 
mitigating any potential investor confusion. The proposed rule change 
will have no impact on trading on the Exchange, as all the proposed 
rule changes are nonsubstantive in nature.
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    \14\ See supra note 6.
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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 filing, but rather simply updates the Rules 
to correct certain errors and add clarity. The proposed rule change 
makes no substantive changes to the Rules, and thus will have no impact 
on trading on the Exchange.

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 
proposal.

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 \15\ and Rule 19b-
4(f)(6) thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 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. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \17\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \18\ 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 30-day operative delay. The 
Exchange notes that the proposed rule change will have no impact on 
trading on the Exchange, as it does not make any substantive changes to 
the Rules. Rather, the proposal corrects minor errors and makes non-
substantive clarifications to mitigate any potential investor 
confusion. 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 is non-substantive in nature 
as it corrects outdated or incorrect cross references and paragraph 
numbering, relocates some text, and makes non-substantive 
clarifications to add clarity to avoid any potential for confusion. 
Therefore, the Commission hereby waives the operative delay and 
designates the proposal as operative upon filing.\19\
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ 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

[[Page 53137]]

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-2021-054 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-2021-054. 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-2021-054 
and should be submitted on or before October 15, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-20654 Filed 9-23-21; 8:45 am]
BILLING CODE 8011-01-P