Document ID: SEC-2019-1533-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2019-10-21T04:00Z

[Federal Register Volume 84, Number 203 (Monday, October 21, 2019)]
[Notices]
[Pages 56265-56267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22829]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87309; File No. SR-CBOE-2019-085]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Relating 
to Move Certain Rules in Chapter XXVIII of the Currently Effective 
Rulebook to Proposed Section D of Chapter 4 of the Shell Structure for 
the Exchange's Rulebook That Will Become Effective Upon the Migration 
of the Exchange's Trading Platform

October 15, 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 October 3, 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, 
II, and III below, which Items have been prepared by the Exchange. 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.
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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 certain Rules in Chapter XXVIII of the currently effective 
Rulebook (``current Rulebook''), which governs Corporate Debit Security 
options, to proposed Section D of Chapter 4 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

[[Page 56266]]

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 certain rules in Chapter XXVIII, 
which govern Corporate Debt Security options, to proposed Section D of 
Chapter 4 in the shell Rulebook. The Exchange notes that in addition to 
relocating certain rules regarding Corporate Debt Security options to 
proposed Section D of Chapter 4 in the shell Rulebook, the proposed 
rule change deletes the rules from the current Rulebook. The proposed 
rule change relocates the rules as follows:

------------------------------------------------------------------------
              Current rule                        Proposed rule
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Introduction...........................  Introductory paragraph under
                                          Section D heading.
Rule 28.1 Definitions..................  Rule 4.30 Definitions.
Rule 28.5 Designation of Corporate Debt  Rule 4.31 Designation of
 Security Options.                        Corporate Debt Security
                                          Options.
Rule 28.6 Approval of Underlying         Rule 4.32 Approval of
 Corporate Debt Securities.               Underlying Corporate Debt
                                          Securities.
Rule 28.7 Terms of Corporate Debt        Rule 4.33 Terms of Corporate
 Security Options.                        Debt Security Options.
Rule 28.8 Series of Corporate Debt       Rule 4.34 Series of Corporate
 Security Options Open for Trading.       Debt Security Options Open for
                                          Trading.
Rule 28.17. FLEX Trading...............  Rule 4.35. FLEX Trading.
------------------------------------------------------------------------

    The proposed changes are of a non-substantive nature and will not 
amend the relocated rules other than to update their rule numbers, 
conform paragraph structure \3\ and number/lettering format to that of 
the shell Rulebook, and make cross-reference changes to shell rules.
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    \3\ The Exchange notes that the paragraph structure for 
definitions listed under rules in the shell Rulebook is in 
alphabetized format. Therefore, the same structure is used under 
proposed Rule 4.30.
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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.\4\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \5\ 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) \6\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\ 
Because the 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, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 
Commission has waived that requirement in this case.
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission 
may designate a shorter time if such action is consistent with the

[[Page 56267]]

protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative immediately. The Exchange notes that 
the proposed rule change is merely relocating certain rules to its 
shell rulebook--which includes corresponding updates to rule numbers, 
paragraph structure, and internal references--in order to conform these 
rules to the shell rulebook upon the technology migration explained 
above. The Exchange believes that the proposed rule change will make 
its rules easier to read and understand for all investors. The Exchange 
also asserts that the relocation of the rules explained above will not 
impose any significant burden on competition because the substance of 
the rules remains unchanged. The Commission agrees that allowing this 
proposed rule change to become operative upon filing in order to 
facilitate the Exchange's technology migration--without changing the 
substance of these Exchange Rules--is consistent with the protection of 
investors and the public interest. For this reason, the Commission 
hereby waives the 30-day operative delay and designates the proposal 
operative upon filing.\13\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission 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.

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-2019-085 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-2019-085. 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 offices 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-2019-085, and should be submitted 
on or before November 12, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12), (59).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-22829 Filed 10-18-19; 8:45 am]
 BILLING CODE 8011-01-P