Document ID: SEC-2021-0303-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2021-03-03T05:00Z

[Federal Register Volume 86, Number 40 (Wednesday, March 3, 2021)]
[Notices]
[Pages 12499-12500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04309]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91211; File No. SR-CBOE-2021-011]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
an Exchange Rule Relating to Inactive Nominees

February 25, 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 February 19, 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 amend an Exchange Rule relating to Inactive Nominees. The text of 
the proposed rule change is provided below.
    (additions are italicized; deletions are [bracketed])

* * * * *

Rules of Cboe Exchange, Inc.

* * * * *

Rule 3.9. Responsible Persons and Nominees

* * * * *
    (e) A TPH organization may designate one or more inactive 
nominees. An ``inactive nominee'' of a TPH organization is an 
individual who is eligible to become an effective nominee of that 
organization with respect to any Floor Broker Trading Permit or 
Market-Maker Floor Trading Permit which the organization holds. The 
following requirements shall apply to inactive nominees:
    (1) To become an inactive nominee of a TPH organization, an 
individual must be approved to be a Trading Permit Holder and become 
an effective nominee of the TPH organization, with authorized 
trading functions, within 90 days of the approval to be a Trading 
Permit Holder;
    (2) an individual may be an inactive nominee of only one TPH 
organization; and
    (3) an inactive nominee shall have no rights or privileges of a 
Trading Permit Holder and shall have no right of access to the 
trading floor of the Exchange to trade as a Trading Permit Holder, 
unless and until the inactive nominee becomes an effective Trading 
Permit Holder pursuant to Rule 3.11.[; and
    (4) if at any time an individual remains an inactive nominee for 
9 consecutive months, the individual's eligibility to be a Trading 
Permit Holder will be terminated and the individual must reapply to 
be a Trading Permit Holder in order to again become eligible for 
inactive nominee status.]

* * * * *
    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
    The Exchange proposes to amend a certain requirement related to 
inactive nominees. Specifically, the Exchange proposes to amend Cboe 
Options Rule 3.9 (Responsible Persons and Nominees) with respect to 
inactive nominee status. By way of background, an inactive nominee is 
an individual who is eligible to become an effective nominee of that 
organization with respect to any Floor Broker Trading Permit or Market-
Maker Floor Trading Permit which the organization holds.\5\ An inactive 
nominee shall have no rights or privileges of a TPH and shall have no 
right of access to the trading floor of the Exchange to trade as a TPH, 
unless and until the inactive nominee becomes an effective TPH.\6\ To 
become an inactive nominee of a TPH organization, an individual must be 
approved to be a TPH and become an effective nominee of the TPH 
organization, with authorized trading functions, within 90 days of the 
approval to be a TPH.\7\ Additionally, if at any time an individual 
remains an inactive nominee for 9 consecutive months, the individual's 
eligibility to be a TPH will be terminated and the individual must 
reapply to be a TPH in order to again become eligible for inactive 
nominee status.\8\
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    \5\ See Cboe Rule 3.9(e).
    \6\ See Cboe Rule 3.9(e)(3).
    \7\ See Cboe Rule 3.9(e)(1).
    \8\ See Cboe Rule 3.9(e)(4).
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    The Exchange proposes to eliminate Rule 3.9(e)(4) which provides 
that if an individual remains an inactive nominee for 9 consecutive 
months, the individual's eligibility to be a TPH will be terminated and 
the individual must reapply to be a TPH in order to again become 
eligible for inactive nominee status. Particularly, the Exchange 
doesn't believe the 9-month inactive status deadline adds any 
meaningful value, but rather is an arbitrary administrative requirement 
that the Exchange believes is unnecessary and no longer wishes to (nor 
does it believe is required to) maintain. For example, if a TPH 
organization wishes to add a new inactive nominee, such organization 
can merely request that the Exchange make that individual ``effective'' 
in the System and then request that the nominee be switched to the 
inactive status in the system just moments later to restart the clock. 
The Exchange does not believe such a deadline is necessary and 
therefore does not wish to maintain it.
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

[[Page 12500]]

and, in particular, the requirements of Section 6(b) of the Act.\9\ 
Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \10\ 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) \11\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 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 by eliminating an arbitrary and 
administrative process that the Exchange believes is outdated and an 
administrative burden to both TPHs and the Exchange. As noted above, 
the Exchange also does not believe such requirement adds meaningful 
value. The Exchange also does not believe it's required to maintain the 
requirement and notes that other exchanges similarly do not include 
such requirement. The Exchange notes that it is not substantively 
changing any rights or obligations of nominees of floor Trading 
Permits.

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. Particularly, the Exchange 
does not believe that the proposed rule change will impose any burden 
on intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because the proposed change 
applies to all TPHs. The proposed rule change also does not address 
competitive issues, but rather, amends a requirement relating to 
nominees, particularly inactive nominees, to eliminate a practice that 
the Exchange no longer believes is necessary. The Exchange does not 
believe that the proposed rule change will impose any burden on 
intermarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because the proposed change only 
affects TPHs of Cboe Options.

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 \12\ and Rule 19b-4(f)(6) thereunder.\13\ 
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, 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)(iii) of the Act \14\ and Rule 
19b-4(f)(6)(iii) thereunder.\15\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 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 complied with this requirement.
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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-CBOE-2021-011 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-2021-011. 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; the Commission does not edit 
personal identifying information from submissions. 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. All submissions should refer to 
File Number SR-CBOE-2021-011 and should be submitted on or before March 
24, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-04309 Filed 3-2-21; 8:45 am]
BILLING CODE 8011-01-P