Notice2023-00989
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 5.6 Concerning All-or-None Orders With the Size of One Contract
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 19, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 12 (Thursday, January 19, 2023)</title>
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[Federal Register Volume 88, Number 12 (Thursday, January 19, 2023)]
[Notices]
[Pages 3446-3448]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-00989]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96662; File No. SR-CBOE-2023-004]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 5.6 Concerning All-or-None Orders With the Size of One Contract
January 13, 2023.
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 January 5, 2023, 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
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
Text of the Proposed Rule Change
(a) Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'')
proposes to amend Rule 5.6. The text of the proposed rule change is
provided below.
(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe Exchange, Inc.
* * * * *
Rule 5.6. Order Types, Order Instructions, and Times-in-Force
(a)-(b) No change.
(c) Order Instructions. An ``Order Instruction'' is a processing
instruction a User may apply to an order (multiple instructions may
apply to a single order), subject to the restrictions set forth in
Rule 5.5(c) with respect to orders and bulk messages submitted
through bulk ports and any other restrictions set forth in the
Rules, when entering it into the System for electronic or open
outcry processing and includes:
[[Page 3447]]
All-or-None or AON
An ``All-or-None'' or ``AON'' order is an order to be executed
in its entirety or not at all. An AON order may be a market or limit
order. Users may not designate an AON order as All Sessions or RTH
and Curb.
(1)-(6) No change.
(7) The System disregards an AON instruction on an order with a
size of one contract.
* * * * *
The text of the proposed rule change is also available on the
Exchange's website (<a href="http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx">http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx</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
The Exchange proposes to amend Rule 5.6. Specifically, the proposed
rule change codifies in new subparagraph (7) of the definition of an
All-or-None (``AON'') order in Rule 5.6(c) that the System will
disregard an AON instruction on an order with a size of one contract.
An AON order is an order to be executed in its entirety or not at
all.\3\ Any order for one contract (regardless of whether it has an AON
instruction) may only be executed in its entirety or not at all, as the
Exchange does not permit executions of partial contracts. Therefore, an
AON instruction on such an order is unnecessary. If a market
participant submits an order for one contract with an AON instruction,
that order would execute in the same manner as an order for one
contract without an AON instruction. However, in certain circumstances,
the System handles orders with AON instructions differently than non-
AON orders. For example, pursuant to Rule 5.32(a)(3), AON orders are
generally last in priority. Such provisions may prevent or delay
executions of one-lot orders with AON instructions, despite the fact
that they would otherwise execute in the same manner as one-lot orders
without AON instructions. The Exchange believes it is appropriate to
treat all one-lot orders (which are functionally like AON orders (as
they can only execute in their entirety or not at all)) as non-AON
orders so such orders that unnecessarily include an AON instruction,
including AON orders from customers, do not lose otherwise lose
priority.
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\3\ Rule 5.6(c).
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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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The Exchange believes the proposed rule change will promote just
and equitable principles of trade and remove impediments to and perfect
the mechanism of a free and open market and a national market system,
because the System will handle and prioritize all one-lot orders, which
are functionally like AON orders (as they can only execute in their
entirety or not at all), in the same manner. The Exchange believes it
is equitable to treat all one-lot AON orders as non-AON orders so such
orders do not lose priority despite inclusion of an instruction that
has no practical impact on its execution. The Exchange believes the
proposed rule change may benefit and protect market participants that
submit one-lot orders with unnecessary AON instructions, as it may
improve the priority (and possibly increase execution opportunities) of
such orders. Additionally, because the proposed rule change codifies
current System behavior, it adds transparency and clarity to the Rules,
which ultimately benefits investors.
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 that the proposed rule change will impose any intramarket
burden that is not necessary or appropriate in furtherance of the
purposes of the Act because it applies to all orders for one contract
with AON instructions in the same manner. Additionally, as described
above, by disregarding an AON instruction on an order for one contract,
the System handles and prioritizes all one-lot orders that may execute
in their entirety or not at all (and thus all one-lot orders) in the
same manner. The Exchange does not believe that the proposed rule
change will impose any intermarket burden that is not necessary or
appropriate in furtherance of the purposes of the Act because it only
impacts how the System internally handles and prioritizes one-lot
orders with AON instructions on the Exchange.
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) of the Act \7\ and Rule 19b-
4(f)(6) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 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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[[Page 3448]]
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \9\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange requested
that the Commission waive the 30-day operative delay so that the
proposal may become operative immediately upon filing. The codification
of the new System functionality to treat all one-lot AON orders as non-
AON orders, so that such orders do not lose priority, may benefit and
protect investors sooner with the waiver of the operative delay. The
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest as
the proposed rule change does not raise any new or novel issues.
Accordingly, the Commission hereby waives the 30-day operative delay
and designates the proposed rule change operative upon filing.\10\
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\9\ 17 CFR 240.19b-4(f)(6)(iii).
\10\ 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
<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#3e4c4b525b135d5153535b504a4d7e4d5b5d10595148"><span class="__cf_email__" data-cfemail="b6c4c3dad39bd5d9dbdbd3d8c2c5f6c5d3d598d1d9c0">[email protected]</span></a>. Please include
File Number SR-CBOE-2023-004 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-CBOE-2023-004. 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-CBOE-2023-004 and should be submitted on
or before February 9, 2023.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-00989 Filed 1-18-23; 8:45 am]
BILLING CODE 8011-01-P
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