Document ID: SEC-2016-0979-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: CBOE Futures Exchange, LLC
Posted Date: 2016-06-07T04:00Z

[Federal Register Volume 81, Number 109 (Tuesday, June 7, 2016)]
[Notices]
[Pages 36637-36638]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-13312]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77956; File No. SR-CFE-2016-001]

Self-Regulatory Organizations; CBOE Futures Exchange, LLC; Notice 
of Proposed Rule Change Regarding the Reporting Time for Exchange of 
Contract for Related Position Transactions and Block Trades That 
Involve Trade at Settlement Transactions

June 1, 2016.
    Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 12, 2016 CBOE Futures 
Exchange, LLC (``CFE'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``SEC'' or ``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 May 
12, 2016.
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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 Rule 404A (Trade at Settlement Transactions) defines a TAS 
transaction as a transaction in a CFE contract at a price equal to the 
daily settlement price, or a specified differential above or below the 
daily settlement price, for the contract on a trading day. The actual 
amount is determined subsequent to the transaction based upon the daily 
settlement price of the contract.
    CFE is submitting this amendment in conjunction with CFE's 
submission of a separate rule certification to the CFTC to change the 
end of trading hours for TAS transactions in CBOE Volatility Index 
(``VX'') futures from three minutes prior to the close of regular 
trading hours at the end of a business day to two minutes prior to the 
close of regular trading hours at the end of a business day.\3\ This 
change to TAS trading hours in VX futures means that the trading hours 
for TAS transactions in VX futures will end at 3:13 p.m.\4\ instead of 
3:12 p.m.
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    \3\ See CFE Rule Certification Submission Number CFE-2016-006 
submitted to the CFTC on May 12, 2016.
    \4\ All times referenced are Chicago time.
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    CFE currently permits TAS transactions only in VX futures. 
Extending the TAS trading hours in VX futures by one minute will 
provide market participants that engage in TAS transactions toward the 
end of TAS trading hours a better sense of the likely daily settlement 
price and how many contracts need to be traded utilizing TAS 
transactions in order to execute hedging and roll strategies.
    As a result of the change in TAS trading hours described above, the 
Exchange proposes a corollary change to amend its rules related to the 
reporting time for Exchange of Contract for Related Position (``ECRP'') 
transactions and Block Trades that involve TAS transactions. The scope 
of this filing is limited solely to the application of the rule 
amendments to security futures that may be traded on CFE. 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, the Proposed Rule Change

1. Purpose
    As previously mentioned, he Exchange has submitted a rule filing 
certification to the CFTC to extend the trading hours for TAS 
transactions in VX futures from 3:12 p.m. to 3:13 p.m. As such, the 
Exchange is proposing to amend CFE Rules 414 and 415, which set forth 
the reporting requirements for ECRP transactions and Block Trades that 
involve TAS transactions, in order to align the reporting time frames 
with the revised trading hours for VX TAS transactions. Although the 
revisions to these reporting time frames are being made as a result of 
the change in trading hours for VX TAS transactions, the revised 
reporting time frames in the

[[Page 36638]]

proposed rule change would apply to any product listed on CFE, 
including a security future, in the event that CFE were to amend its 
rules to permit TAS transactions in that product.
Reporting Time Frame for ECRP Transactions That Involve TAS 
Transactions
    Paragraph (i) of CFE Rule 414 (Exchange of Contract for Related 
Position) currently provides (i) that the CFE legs of TAS ECRP 
transactions which are reported to CFE after 3:12 p.m. Monday through 
Thursday will be submitted for clearing for the next business day and 
(ii) that TAS ECRP transactions may not be reported after 3:12 p.m. on 
Friday. The proposed rule change changes the references in Rule 414(i) 
from 3:12 p.m. to 3:13 p.m. to be consistent with the change in TAS 
trading hours.
    CFE believes this extension is justified because it will allow CFE 
to align its ECRP transaction reporting requirements with the revised 
trading hours for VX TAS transactions.
Reporting Time Frame for Block Trades That Involve TAS Transactions
    Paragraph (g) of CFE Rule 415 (Block Trades) currently provides (i) 
that TAS Block Trades which are reported to CFE after 3:12 p.m. Monday 
through Thursday will be submitted for clearing for the next business 
day and (ii) that TAS Block Trades may not be reported after 3:12 p.m. 
on Friday. The proposed rule change changes the references in Rule 
415(g) from 3:12 p.m. to 3:13 p.m. to be consistent with the change in 
TAS trading hours.
    CFE believes this extension is justified because it will allow CFE 
to align its Block Trade reporting requirements with the revised 
trading hours for VX TAS transactions.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Sections 6(b)(5) \6\ and 6(b)(7) \7\ in particular in 
that it is designed:
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78f(b)(7).
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     To foster coordination of the Exchange's reporting 
provisions relating to TAS ECRP and Block Trades with the revised 
trading hours for VX TAS transactions; and
     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 Exchange believes that the proposed rule change would benefit 
market participants because it would provide them with additional time 
to report ECRP transactions and Block Trades that involve TAS 
transactions that market participants wish to have cleared on the same 
business day as the calendar day of the transaction to align with the 
revised trading hours for TAS transactions in VX futures.
    In addition, the proposed rule change benefits market participants 
by allowing the reporting of ECRP transactions and Block Trades that 
involve TAS transactions on Fridays to be done during the entire time 
period that TAS transactions in VX futures are permitted in order to be 
consistent with the change in TAS trading hours for VX futures.

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. Specifically, the Exchange believes that the 
proposed rule change will not burden competition because the new 
reporting time provisions for ECRP transactions and Block Trades that 
involve TAS transactions will align with the revised trading hours for 
VX TAS transactions and will apply to equally all market participants.

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 effective on or after May 26, 
2016, on a date to be announced by the Exchange through the issuance of 
a circular. 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.\8\
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    \8\ 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 rule-comments@sec.gov. Please include 
File Number SR-CFE-2016-001 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-2016-001. 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 Web site (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 Web site 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 such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CFE-2016-001, and should be 
submitted on or before June 28, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(73).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-13312 Filed 6-6-16; 8:45 am]
 BILLING CODE 8011-01-P