Document ID: SEC-2018-1914-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2018-12-12T05:00Z

[Federal Register Volume 83, Number 238 (Wednesday, December 12, 2018)]
[Notices]
[Pages 63941-63943]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-26830]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84733; File No. SR-CHX-2018-06]

Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend CHX Article 22, Rule 6(a)

December 6, 2018.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on November 27, 2018, the Chicago Stock Exchange, Inc. (``CHX'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 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

    The Exchange proposes to amend CHX Article 22, Rule 6(a) to remove 
the requirement that the Exchange file with the Securities and Exchange 
Commission (the ``Commission'') a Form 19b-4(e) for each ``new 
derivative securities product'' that will commence trading on the 
Exchange pursuant to unlisted trading privileges. The proposed rule 
change is available on the Exchange's website at www.nyse.com, at the 
principal office of the Exchange, 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 self-regulatory organization 
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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend CHX Article 22, 
Rule 6(a) to remove the requirement that the Exchange file with the 
Commission a Form 19b-4(e) for each ``new derivative securities 
product'' that will commence trading on the Exchange pursuant to 
unlisted trading privileges. The Exchange notes that a substantially 
identical proposed rule change by NYSE National, Inc. (``NYSE 
National'') was recently approved by the Commission.\4\
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    \4\ See Securities Exchange Act Release No. 83289 (May 17, 
2018), 83 FR 23968 (May 23, 2018) (Order Approving File No. SR-
NYSENat-2018-02).
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    CHX Article 22, Rule 6(a) sets forth the requirement for the 
Exchange to file with the Commission a Form 19b-4(e) with respect to 
each ``new derivative securities product'' that is traded pursuant to 
unlisted trading privileges. However, the Exchange believes that it 
should not be necessary to file a Form 19b-4(e) with the Commission if 
it begins trading a ``new derivative securities product'' pursuant to 
unlisted trading privileges, because Rule 19b-4(e)(1) under the Act 
refers to the ``listing and trading'' of a ``new derivative securities 
product.'' The Exchange believes that the requirements of that rule 
refer to when an exchange lists and trades a ``new derivative 
securities product'', and not when an exchange seeks only to trade such 
product pursuant to unlisted trading privileges pursuant to Rule 12f-2 
under the Act.\5\ Therefore, the Exchange proposes to delete the 
requirement in Article 22, Rule 6(a) for the Exchange to file a Form 
19b-4(e) with the Commission with respect to each ``new derivative 
securities product'' it begins trading pursuant to unlisted trading 
privileges.
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    \5\ 17 CFR 240.12f-2.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) \6\ of the Act in general, and 
furthers the

[[Page 63942]]

objectives of Section 6(b)(5) of the Act \7\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
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. Specifically, eliminating the requirement to file a 
Form 19b-4(e) for each ``new derivative securities product'' the 
Exchange begins trading on an unlisted trading privileges basis removes 
an unnecessary regulatory requirement thereby providing for a more 
efficient process for adding a ``new derivative securities product'' to 
trading on the Exchange on an unlisted trading privileges basis.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    As noted above, the Commission recently approved a substantially 
identical proposed rule change by NYSE National.\8\ In particular, the 
Commission noted in the approval order that it ``believes that the 
filing of a Form 19b-4(e) is not required when an Exchange is trading a 
new derivative securities product on a UTP basis only'' \9\ and also 
found that the NYSE National's proposed rule change is ``consistent 
with the requirements of Section 6(b)(5) of the Act.'' \10\ The Nasdaq 
Stock Market LLC (``Nasdaq''), Nasdaq PHLX LLC (``PHLX''), Nasdaq BX, 
Inc. (``BX'') and Investors Exchange LLC (``IEX'') also recently 
amended their rules to remove the requirement to file with the 
Commission a Form 19b-4(e) for each ``new derivative securities 
product'' traded on each of those exchanges pursuant to unlisted 
trading privileges.\11\
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    \8\ See Securities Exchange Act Release No. 83289 (May 17, 
2018), 83 FR 23968 (May 23, 2018) (Order Approving File No. SR-
NYSENat-2018-02).
    \9\ See supra note 8 at page 23975 at footnote 149.
    \10\ See supra note 8 at page 23975-6.
    \11\ See Securities Exchange Act Release Nos. 84488 (October 25, 
2018), 83 FR 54801 (October 31, 2018) (SR-NASDAQ-2018-082); 84542 
(November 6, 2018), 83 FR 56385 (November 13, 2018) (SR-Phlx-2018-
67); 84546 (November 7, 2018), 83 FR 56888 (November 14, 2018) (SR-
BX-2018-051); and 83609 (July 9, 2018), 83 FR 32704 (July 13, 2018) 
(SR-IEX-2018-14).
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    For these reasons, the Exchange believes the proposed rule change 
is consistent with the requirements of Section 6(b)(5) of the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. To the contrary, removing 
the requirement to file a Form 19b-4(e) will serve to enhance 
competition by providing for the efficient addition of new derivative 
securities products for trading pursuant to unlisted trading privileges 
on the Exchange. To the extent that a competitor marketplace believes 
that the proposed rule change places it at a competitive disadvantage, 
it may file with the Commission a proposed rule change to adopt the 
same or similar rule.

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

    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; or (iii) become operative prior to 
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 \12\ and Rule 19b-4(f)(6) 
thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The Commission notes that CHX's proposal does not present any 
new or novel issues. Thus, the Commission believes that waiver of the 
30-day operative delay is consistent with the protection of investors 
and the public interest and hereby waives the 30-day operative delay 
and designates the proposed rule change to be operative upon 
filing.\14\
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    \14\ For purposes only of waiving 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.

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-CHX-2018-06 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-CHX-2018-06. 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-CHX-2018-06 and should be submitted on 
or before January 2, 2019.

[[Page 63943]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-26830 Filed 12-11-18; 8:45 am]
BILLING CODE 8011-01-P