Notice2022-15773
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Rules Regarding Complex Orders
Primary source
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Published
July 25, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 141 (Monday, July 25, 2022)</title>
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[Federal Register Volume 87, Number 141 (Monday, July 25, 2022)]
[Notices]
[Pages 44174-44178]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-15773]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95321; File No. SR-CboeEDGX-2022-033]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Rules Regarding Complex Orders
July 19, 2022.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on July 14, 2022, Cboe EDGX Exchange, Inc. (the
``Exchange'' or ``EDGX'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I and II 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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to
amend its Rules regarding complex orders. 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 (<a href="http://markets.cboe.com/us/options/regulation/rule_filings/edgx/">http://markets.cboe.com/us/options/regulation/rule_filings/edgx/</a>), 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
Currently, the definition of complex order in Rule 21.20(a)
provides that the term ``complex order'' means any order involving the
concurrent purchase and/or sale of two or more different series in the
same class (the ``legs'' or ``components'' of the complex order), for
the same account, in a ratio equal to or greater than one-to-three
(.333) and less than or equal to three-to-one (3.00) and for the
purposes of executing a particular investment strategy. As such, only
complex orders with a ratio equal to or greater than one-to-three
(.333) and less than or equal to three-to-one (3.00) may currently be
submitted for trading on the Exchange. The proposed rule change amends
the definition of complex order in Rule 21.20(a) to provide that a
``complex order'' is any order involving the concurrent purchase and/or
sale of two or more different series in the same class (the ``legs'' or
``components'' of the complex order), for the same account, in any
ratio and for the purposes of executing a particular investment
strategy. The Exchange notes that its affiliated options exchange, Cboe
Options, recently amended its complex order rules in the same manner as
proposed herein to permit complex orders with ratios less than one-to-
three and greater than three-to-one to be eligible for electronic
processing.\3\ The Exchange proposes to accept complex orders with
ratios larger than three-to-one or smaller than one-to-three for
execution in order to provide execution opportunities for all complex
orders, including those with investment strategies that do not fit
within the three-to-one ratio requirement (which opportunities are
afforded to those complex orders submitted to Cboe Options today).
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\3\ See Securities Exchange Act Release No. 94204 (February 9,
2022), 87 FR 8625 (February 15, 2022) (SR-CBOE-2021-046). The Cboe
Options' filing SR-CBOE-2021-046 also amended Cboe Option's complex
order rules to allow the minimum increment for bids and offers on
complex orders with any ratio to be in $0.01 or greater (legs were
already permitted to be executed in pennies on Cboe Options). The
Exchange notes that Rule 21.20(f)(1) currently provides that the
minimum increment for bids and offers on a complex order is $0.01,
and the components of a complex order may be executed in $0.01
increments, regardless of the minimum increments otherwise
applicable to the individual components of the complex order. As a
result, all complex orders (including those with larger ratios as
proposed in this filing) and their legs will be able to execute in
pennies, and all bids and offers on all complex orders (including
those with larger ratios, as proposed) will be able to be expressed
in a minimum increment of $0.01.
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While the proposed rule change will allow complex orders of any
ratio to be traded on the Exchange, the Exchange does not propose to
extend the complex order priority in Rule 21.20(f)(2)(A) afforded to
complex orders with ratios equal to or greater than one-to-three and
less than or equal to three-to-one to complex orders with larger
ratios. Instead, the proposed rule change amends Rule 21.20(f)(2)(A) to
provide that, if a complex order has a ratio less than one-to-three
(.333) or greater than three-to-one (3.00), the component(s) of the
complex order for the leg(s) with a Priority Customer order at the Best
Bid or Offer (``BBO'') must execute at a price that improves the price
of that Priority Customer order(s) on the Simple Book (the Exchange
notes that this proposed rule change is described below in further
detail). The proposed rule change also makes certain nonsubstantive
changes to the complex priority rule. The Exchange notes that execution
of complex orders with any ratio will continue to be required [sic] at
net prices: (i) that would cause any component of the complex strategy
to be executed at a price of zero; (ii) worse than the Synthetic Best
Bid or Offer (``SBBO'') or equal to the SBBO when there is a Priority
Customer order at the SBBO (except all-or-none (``AON''); (iii) that
would cause any component of the complex strategy to be executed at a
[[Page 44175]]
price worse than the individual component prices on the Simple Book; or
(iv) worse than the price that would be available if the complex order
legged into the Simple Book.
Specifically, regarding the nonsubstantive changes to Rule
21.20(f)(2)(A), the proposed rule change combines subparagraph (ii)
with (v) (and renumbers the subparagraphs), as the provisions
ultimately mean the same thing. Specifically, Rule 21.20(f)(2)(A)(ii)
provides that the System does not execute a complex order pursuant to
Rule 21.20 at a net price worse than the SBBO or equal to the SBBO when
there is a Priority Customer order at the SBBO, except all-or-none
(``AON'') complex orders may only execute at prices better than the
SBBO. Therefore, if there is a Priority Customer Order comprising part
of the SBBO, a complex order could only execute by improving the SBBO,
which would require improvement of component prices. This is what
current Rule 21.20(f)(2)(A)(v) requires. Specifically, that provision
states that the System does not execute a complex order pursuant to
Rule 21.20 at a net price that would cause any component of the complex
strategy to be executed at a price ahead of a Priority Customer Order
on the Simple Book without improving the BBO of at least one component
of the complex strategy. Because these two provisions are interrelated,
the Exchange believes it is appropriate to combine them into proposed
Rule 21.20(f)(2)(A)(iv).\4\ The proposed rule change amends language in
proposed Rule 21.20(f)(2)(A)(iv) to provide that the System does not
execute a complex order at a net price worse than the SBBO or equal to
the SBBO when there is a Priority Customer order on any leg comprising
the SBBO and adds subparagraph (a) to additionally provide that if a
complex order has a ratio equal to or greater than one-to-three (.333)
and less than or equal to three-to-one (3.00), at least one component
of the complex order must execute at a price that improves the BBO for
that component, which is consistent with current functionality for
complex orders in ratios that may currently be submitted on the
Exchange. The proposed nonsubstantive rule changes to restructure Rule
21.20(f)(2)(A) have no impact on complex order priority and are
consistent with and align the Exchange's complex order priority rule
with Cboe Options Rule 5.33(f)(2), which governs Cboe Options complex
order priority.\5\
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\4\ The proposed rule change makes other nonsubstantive changes
to the sentence structure as a result of the combination of
provisions, as well as other nonsubstantive changes to the
formatting and paragraph structure for added clarity and consistency
with the structure of corresponding Cboe Options Rule 5.33(f)(2).
\5\ See Cboe Options Rule 5.33(f)(2)(A); and see Securities
Exchange Act Release No. 95006 (May 31, 2022), 87 FR 34334 (June 6,
2022) (SR-CBOE-2022-024).
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Regarding the proposed rule change to incorporate complex orders
with larger-ratios, as proposed, into the complex order priority
provision, the proposed rule change adds subparagraph (b) to Rule
21.20(f)(2)(A)(iv), as proposed. As described above, Rule
21.20(f)(2)(A)(iv), as proposed, provides that the System does not
execute a complex order at a net price worse than the SBBO or equal to
the SBBO when there is a Priority Customer order on any leg comprising
the SBBO, and, as proposed subparagraph (b) provides, if the complex
order has a ratio less than one-to-three (.333) or greater than three-
to-one (3.00), the component(s) of the complex order for the leg(s)
with a Priority Customer order at the BBO must execute at a price that
improves the price of that Priority Customer order(s) on the Simple
Book. As a result, to the extent a complex order with a ratio of four-
to-one (for example) is submitted for electronic execution, the complex
order may be executed at a net debit or credit price only if each leg
of the order betters the corresponding bid (offer) of a priority
customer order(s) in the Simple Book. Therefore, the complex order
priority rules will continue to protect Priority Customer interest on
the Simple Book. The proposed rule change regarding complex order
priority for complex order ratios less than one-to-three (.333) or
greater than three-to-one (3.00) is consistent with the corresponding
complex priority rule on Cboe Options \6\ as it applies to complex
order ratios less than one-to-three (.333) or greater than three-to-one
(3.00) electronically submitted to Cboe Options, as previously approved
by the Commission.\7\
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\6\ See Cboe Options Rule 5.33(f)(2)(A)(iv).
\7\ See Securities Exchange Act Release No. 94204 (February 9,
2022), 87 FR 8625 (February 15, 2022) (SR-CBOE-2021-046). SR-CBOE-
2021-046 did not make any changes to complex orders with ratios
equal to or greater than one-to-three (.333) and less than or equal
to three-to-one (3.00) available on Cboe Options and Cboe Options
continues to allow trading in such complex orders with smaller
ratios today. Likewise, the Exchange notes that this proposal does
not make any changes to currently permissible complex order ratios
(equal to or greater than one-to-three (.333) and less than or equal
to three-to-one (3.00)) and such complex orders with smaller ratios
will continue to be available for trading on the Exchange,
consistent with Cboe Options.
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The proposed rule change next corrects an error in the introductory
paragraph of Rule 21.20(b) and the definition of COA-eligible and Do-
Not-COA orders in Rule 21.20(b). Regarding the introductory paragraph
to Rule 21.20(b), there is a stray clause (including a bracket) that
was inadvertently left in this provision upon a previous rule change to
harmonize the Exchange's complex order rule with the complex order
rules of its affiliated options exchanges, Cboe C2 Exchange Inc.
(``C2'') and Cboe Options.\8\ Therefore, the proposed rule change
removes the stray clause and corrects language within the provision to
be consistent with corresponding C2 Rule 5.33(b) and Cboe Options Rule
5.33(b), as intended.
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\8\ See Securities Exchange Act Release Nos. 86353 (July 11,
2019), 84 FR 34230 (July 7, 2019) (SR-CboeEDGX-2019-039); and 87015
(September 19, 2019), 84 FR 50504 (September 25, 2019) (SR-CBOE-
2019-060).
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Regarding the definition of COA-eligible and Do-Not-COA orders in
Rule 21.20(b), the Exchange's System currently determines whether an
order is ``COA-eligible'' by comparing the price of an order to resting
interest on the same side as the order in the Simple Book and in the
Complex Order Book (``COB''). However, the current definition
inadvertently inversed the relevant terms and compares the price of a
buy complex order to the synthetic best offer (``SBO'') and sell
complex orders and compares the price of a sell complex order to the
synthetic best bid (``SBB'') and buy complex orders, which would be
opposite-side interest. The proposed rule change corrects this error
and revises the definition to provide that whether a complex order is
COA-eligible will be determined by comparing the order's price to same-
side interest, which is consistent with current System functionality.
Specifically, a ``COA-eligible'' complex order is a buy (sell) complex
order with User instructions to (or which default to) initiate a COA
that is priced (A) equal to or higher (lower) than the SBB (SBO)
(provided that if any of the bids or offers on the Simple Book that
comprise the SBB (SBO) is represented by a Priority Customer order, the
complex order must be priced at least $0.01 higher (lower) than the SBB
(SBO) and (B) higher (lower) than the price of buy (sell) complex
orders resting at the top of the COB. This is consistent with the
provisions that will cause a COA to terminate early, pursuant to which
a COA will end early because of incoming same-side interest.\9\
Additionally, the
[[Page 44176]]
proposed rule change is consistent with the Exchange's affiliated
options exchanges', Cboe Options and C2, definitions of ``COA-
eligible'' order.\10\
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\9\ Specifically, Rule 21.20(d)(3) provides that the COA
response time interval terminates early (A) when the System receives
a non-COA-eligible order on the same side as the COA-eligible order
that initiated the COA but with a price better than the COA price,
in which case the System terminates the COA and processes the COA-
eligible order pursuant to Rule 21.20(d)(5) and posts the new order
to the COB; (B) when the System receives an order in a leg of the
complex order that would improve the SBBO on the same side as the
COA-eligible order that initiated the COA to a price equal to or
better than the COA price, in which case the System terminates the
COA and processes the COA-eligible order pursuant to Rule
21.20(d)(5), posts the new order to the Simple Book, and updates the
SBBO; or (C) if the System receives a Priority Customer Order that
would join or improve the SBBO on the same side as the COA in
progress to a price equal to or better than the COA price, in which
case the System terminates the COA and processes the COA-eligible
order pursuant to Rule 21.20(d)(5), posts the new order to the
Simple Book, and updates the SBBO.
\10\ See Cboe Options Rule 5.33(b)(5), and C2 Rule 5.33(b)(2);
and see Securities Exchange Act Release No. 95006 (May 31, 2022), 87
FR 34334 (June 6, 2022) (SR-CBOE-2022-024).
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Finally, the proposed rule change updates Rule 21.20(g) to reflect
that the System accepts for electronic processing complex orders with
more than four legs. Current Rule 21.20(g) states that a complex order
may execute against orders and quotes resting in the Simple Book
pursuant to Rule 21.20(d)(5)(A) and (e) if it can execute in full or in
a permissible ratio and if it has no more than a maximum number of legs
(which the Exchange determines on a class-by-class basis and may be
two, three or four) subject to certain restrictions, including that
non-Customer complex orders with two option legs that are both buy or
both sell and that are both calls or both puts may not leg into the
Simple Book and all complex orders with three or four option legs that
are all buy or all sell may not leg into the Simple Book. The proposed
rule change modifies the parenthetical regarding legging restrictions
to indicate that the maximum number the Exchange may determine on a
class-by-class basis may be up to 16, as the Exchange's System
currently accepts complex orders with up to that many legs for
electronic processing.\11\ The proposed rule change makes no changes to
which or how complex orders may leg into the Simple Book but rather
updates this provision to reflect current functionality. This proposed
rule change, too, is consistent with the corresponding Cboe Options
rule.\12\
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\11\ See Cboe Notice C2021060800, Cboe Options Introduces 16-Leg
Maximum for Non-FLEX Complex Orders (June 8, 2021), available at
Cboe Options Introduces 16-Leg Maximum for Non-FLEX Complex Orders;
see also Cboe US Options Complex Book Process (technical
specifications last updated June 3, 2022), Section 2.3.2, available
at US Options Complex Book Process.
\12\ See Cboe Options Rule 5.33(g); and see Securities Exchange
Act Release No. 95006 (May 31, 2022), 87 FR 34334 (June 6, 2022)
(SR-CBOE-2022-024).
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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.\13\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \14\ 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) \15\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ 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 benefit investors, because it will provide market
participants with execution opportunities on the Exchange for all their
complex trading and hedging strategies, regardless of ratio. Market
participants may determine that investment and hedging strategies with
ratios greater than three-to-one or less than one-to-three are
appropriate for their investment purposes, and the Exchange believes it
will benefit market participants if they have the flexibility to submit
their investment and hedging strategies on the Exchange to achieve
their desired investment results. The proposed rule change will further
remove impediments to and perfect the mechanism of a free and open
market and a national market system, as it will allow complex orders to
be submitted on the Exchange in the same manner as complex orders may
already be submitted on its affiliated options exchange, Cboe
Options,\16\ which currently permits orders of any ratio to be
submitted to the exchange, as previously approved by the
Commission.\17\
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\16\ The Exchange notes that its affiliated options exchange,
C2, also intends to file a similar rule filing to allow complex
orders of any ratio to be submitted on C2.
\17\ See supra note 9. Prior to the Commission's approval of SR-
CBOE-2022-046, larger ratio complex orders were already permitted to
be submitted to Cboe Options' trading floor for execution in open
outcry. The Commission's approval of SR-CBOE-2022-046 allowed larger
ratio complex orders to be submitted for electronic trading.
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Additionally, the proposed rule change will continue to protect
priority customer order interest on the Simple Book, as all complex
orders with a ratio greater than three-to-one or less than one-to-three
will be executed only if each leg of the order improves the price of a
priority customer order on the Simple Book on each leg. Again, as noted
above, the proposed rule change regarding complex order priority for
complex order ratios less than one-to-three (.333) or greater than
three-to-one (3.00) is consistent with the corresponding complex
priority rule on Cboe Options as it applies to larger ratio orders
submitted for electronic trading on Cboe Options.\18\
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\18\ See supra note 8.
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The proposed nonsubstantive rule changes make no changes to how
complex orders are processed or executed, but rather update the Rules
to reflect more accurately current System functionality and to make
clarifying and simplifying changes, which the Exchange believes will
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, protect investors
and the public interest. The proposed change to the introductory
paragraph to Rule 21.20(b) removes a stray clause, inadvertently left
in the rules, and replaces it with language that is consistent with
corresponding C2 and Cboe Options rules, as intended.\19\ The proposed
amendments to the definition of COA-eligible order in Rule 21.20(b)
corrects an inadvertent error in the definition. Specifically, the
System compares the price of the order to same-side interest rather
than opposite-side interest but the current language inadvertently
inverts the terms. As such, the proposed rule change corrects this
inadvertent error, and thus provides additional transparency in the
Rules, ultimately benefiting investors. This is consistent with the
provisions that will cause a COA to terminate early, pursuant to
[[Page 44177]]
which a COA will end early because of incoming same-side interest.\20\
Additionally, the proposed rule change is consistent with Cboe Option's
definition of ``COA-eligible'' order.\21\
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\19\ See supra note 10.
\20\ Specifically, Rule 21.20(d)(3) provides that the COA
response time interval terminates early (A) when the System receives
a non-COA-eligible order on the same side as the COA-eligible order
that initiated the COA but with a price better than the COA price,
in which case the System terminates the COA and processes the COA-
eligible order pursuant to Rule 21.20(d)(5) and posts the new order
to the COB; (B) when the System receives an order in a leg of the
complex order that would improve the SBBO on the same side as the
COA-eligible order that initiated the COA to a price equal to or
better than the COA price, in which case the System terminates the
COA and processes the COA-eligible order pursuant to Rule
21.20(d)(5), posts the new order to the Simple Book, and updates the
SBBO; or (C) if the System receives a Priority Customer Order that
would join or improve the SBBO on the same side as the COA in
progress to a price equal to or better than the COA price, in which
case the System terminates the COA and processes the COA-eligible
order pursuant to Rule 21.20(d)(5), posts the new order to the
Simple Book, and updates the SBBO.
\21\ See supra note 12.
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The other nonsubstantive proposed rule change to the provisions
regarding complex order priority in Rule 21.20(f)(2)(A) is intended to
simplify the rule text regarding when legs of complex orders must
improve prices of orders on the Simple Book, while adding clarity to
the rule text through an update in its formatting and aligning such
provision with Cboe Option's corresponding complex priority rule. This
proposed rule change has no impact on electronic complex order priority
while still increasing investor understanding.
Finally, the proposed rule change to the provision regarding
complex order legging in Rule 21.20(g) will protect investors, as it
merely updates the provision to reflect that the System accepts for
electronic processing complex orders with more than four legs. The
proposed rule change makes no changes to which or how complex orders
may leg into the Simple Book but rather updates this provision to
reflect current functionality and align with Cboe Options corresponding
rule.\22\
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\22\ See supra note 9.
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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 that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe the proposed rule change to allow for complex orders in any
ratio to be submitted to the Exchange will impose any burden on
intramarket competition, as the proposed rule change will apply in the
same manner to all Options Members. Options Members will have the
discretion to submit complex orders with any ratio for trading on the
Exchange. The Exchange does not believe the proposed rule change will
impose any burden on intermarket competition as it relates to the
execution of orders on the Exchange and will continue to protect
Priority Customer Orders on the Simple Book. The Exchange believes the
proposed rule change may promote competition, as market participants
will have additional flexibility to execute their trading and hedging
strategies in any ratio, and in the same manner that is already
permitted on the Exchange's affiliated options exchange, Cboe Options.
Also, other options exchanges are welcome to modify their systems to
permit higher/lower ratio orders to execute electronically or on their
trading floors.
The proposed nonsubstantive rule changes are not intended for
competitive purposes, but rather to clarify certain provisions and
correct certain language. The Exchange does not believe that the
proposed nonsubstantive rule changes will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act, because all changes will apply
in the same manner to all investors. The proposed nonsubstantive rule
changes have no impact on trading and thus will not change how any
investors' complex orders are processed or executed on the Exchange. As
noted above, the proposed rule change makes no changes to electronic
complex order priority, which orders can initiate a COA, or how complex
orders may leg into the Simple Book. The Exchange does not believe that
the proposed nonsubstantive rule changes will impose any burden on
intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act, because the proposed rule
changes have no impact on how complex orders trade, as they make
primarily clarifying updates, corrections, and other nonsubstantive
changes.
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
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)(iii) of the Act \23\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\24\
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\23\ 15 U.S.C. 78s(b)(3)(A)(iii).
\24\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 under Rule 19b-4(f)(6) \25\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\26\ the Commission
may 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 complex orders with any ratio currently are eligible for
electronic processing on Cboe Options, and that the proposal does not
introduce any new or novel functionality.\27\ The Exchange states that
waiver of the operative delay will benefit investors by providing them
with the flexibility to submit bona-fide multi-legged trading or
hedging strategies in any ratio to the Exchange. In addition, the
Exchange states that the proposed non-substantive rule changes clarify
certain provisions and correct certain language, and that waiver of the
operative delay with respect to these changes will protect investors
and the public interest by providing investors with additional
transparency regarding the Exchange's rules as soon as possible.
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\25\ 17 CFR 240.19b-4(f)(6).
\26\ 17 CFR 240.19b-4(f)(6)(iii).
\27\ See supra note 3.
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The Commission believes that waiver of the 30-day operative delay
is consistent with the protection of investors and the public interest.
The Commission believes that the proposal will benefit investors by
providing investors with an additional venue for trading complex orders
with any ratio, including complex orders with a ratio less than one-to-
three or greater than three-to-one. As discussed above, the
[[Page 44178]]
Commission approved a Cboe Options proposal allowing complex orders
with any ratio to trade electronically and to be quoted, as well as
executed, in $0.01 increments.\28\ The Commission notes that the
priority provisions in proposed Exchange Rule 21.20(f)(2)(A)(iv)(b) for
complex orders with a ratio less than one-to-three or greater than
three-to-one--which require each component leg of such an order with a
Priority Customer order at the BBO to execute at a price that improves
the price of the Priority Customer order(s) on the Simple Book--is
consistent with Cboe Options Rule 5.33(f)(2)(A)(iv)(b). Accordingly,
the Exchange's proposal to allow market participants to submit complex
orders with any ratio to the Exchange does not raise new or novel
regulatory issues. The Commission believes that the proposed non-
substantive changes to Exchange Rules 21.20(b), 21.20(f)(2)(A), and
21.20(g) will clarify and help to ensure the accuracy of the Exchange's
rules by correcting, updating, and streamlining the Exchange's rules.
The Commission notes that these proposed changes are consistent with
the rules of Cboe Options.\29\ Accordingly, the Commission waives the
operative delay and designates the proposed rule change operative upon
filing.\30\
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\28\ See supra note 3.
\29\ See Cboe Options Rules 5.33(b), 5.33(f)(2)(A), and 5.33(g).
\30\ 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#ee9c9b828bc38d8183838b809a9dae9d8b8dc0898198"><span class="__cf_email__" data-cfemail="780a0d141d551b1715151d160c0b380b1d1b561f170e">[email protected]</span></a>. Please include
File Number SR-CboeEDGX-2022-033 on the subject line.
Paper Comments
<bullet> 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-CboeEDGX-2022-033. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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-CboeEDGX-2022-033, and should be
submitted on or before August 15, 2022.
For the Commission, by the Division of Trading and Markets, pant
to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-15773 Filed 7-22-22; 8:45 am]
BILLING CODE 8011-01-P
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