UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C.  20460

OFFICE OF

CHEMICAL SAFETY AND

POLLUTION PREVENTION

MEMORANDUM

DATE:  	July 28, 2010

SUBJECT:	Indaziflam: Acute and Chronic Aggregate Dietary Exposure (Food and Drinking Water) and Risk Assessment for the Section 3 Registration on Pome Fruits, Stone Fruits, Citrus, Tree Nuts (including Pistachios), Grapes, Olives, and Processed Cane Sugar (Import).

PC Code:  080818	DP Barcode: D376909

Decision No.: 416570	Registration No.:  432-RLNR

Petition No.:  9F7589, 9E7588	Regulatory Action:  Section 3 Registration

Risk Assessment Type:  Single Chemical Aggregate, Dietary	Case No.:  NA

TXR No.:  NA	CAS No.:  730979-19-8

MRID No.:  NA	40 CFR:  §180.xxx (not yet established)

REVIEWER:	Elizabeth Holman, Chemist

		Michael Doherty, Ph.D., Senior Chemist

		William T. Drew, Chemist

Risk Assessment Branch II (RAB2)

Health Effects Division (HED; 7509P)

THROUGH:	Mohsen Sahafeyan, Chemist

                        Amelia Acierto, Chemist

Dietary Exposure Science Advisory Council

Health Effects Division (HED; 7509P)

and

Richard Loranger, Ph.D., Branch Senior Scientist

Risk Assessment Branch II (RAB2)

Health Effects Division (HED; 7509P)

TO:		Bethany Benbow/James Tompkins (RM25)

		Herbicide Branch

		Registration Division (7505P)

  SEQ CHAPTER \h \r 1   SEQ CHAPTER \h \r 1 Executive Summary

Acute and chronic aggregate dietary risk assessments (food and drinking water) were conducted using the Dietary Exposure Evaluation Model (DEEM-FCID, Version 2.03), which uses food consumption data from the U.S. Department of Agriculture (USDA’s) Continuing Surveys of Food Intakes by Individuals (CSFII) from 1994-1996 and 1998.  The analysis was performed to support a Section 3 registration for use of indaziflam [1,3,5-triazine-2,4-diamine, N-[(1R,2S)-2,3-dihydro-2,6-dimethyl-1H-inden-1-yl]-6-[(1S,1R)-fluoroethy l)] on pome fruits, stone fruits, citrus, tree nuts (including pistachios), grapes, olives, and processed cane sugar (tolerance only, no U.S. registration).

Acute Dietary Exposure (Food and Drinking Water) Results and Characterization

The acute analysis is based on tolerance-level residues and 100% crop treated assumptions.   DEEM-FCID( (Version 2.03) default processing factors were used for all commodities, with the exception of the empirically derived raisin processing factor of 2.8X.

The general U.S. population has a risk estimate that is well below HED’s level of concern (i.e. 100% of the acute population adjusted dose (aPAD)), utilizing <1% of the aPAD.  The most highly exposed population subgroup is all infants <1 year old, which utilizes 3% of the aPAD.

Chronic Dietary (Food and Drinking Water) Exposure Results and Characterization

The chronic analysis is based on tolerance-level residues and 100% crop treated assumptions.  DEEM-FCID( (Version 2.03) default processing factors were used for all commodities, with the exception of the empirically derived raisin processing factor of 2.8X.

The general U.S. population and all population subgroups have risk estimates that are well below HED’s level of concern (i.e., 100% of the chronic population adjusted dose (cPAD)).  The most highly exposed population subgroup is all infants <1 year old, which utilizes 10% of the cPAD.  The general U.S. population utilizes 3% of the cPAD.

Cancer Dietary (Food and Drinking Water) Exposure Results and Characterization

  SEQ CHAPTER \h \r 1  Based on the lack of evidence of carcinogenicity or genotoxicity, HED classified indaziflam as “Not likely to be carcinogenic to humans.”  Therefore, there is no concern for cancer risk and a separate cancer dietary exposure analysis was not performed.

I.	Introduction

Dietary risk assessment incorporates both exposure and toxicity of a given pesticide.  For acute and chronic assessments, the risk is expressed as a percentage of a maximum acceptable dose (i.e., the dose which HED has concluded will result in no unreasonable adverse health effects).  This dose is referred to as the population adjusted dose (PAD).  The PAD is equivalent to the point of departure (POD, NOAEL, LOAEL, e.g.) divided by the required uncertainty or safety factors.

For acute and non-cancer chronic exposures, HED is concerned when estimated dietary risk exceeds 100% of the PAD.  HED is generally concerned when estimated cancer risk exceeds one in one million.  References which discuss the acute and chronic risk assessments in more detail are available on the EPA/pesticides web site:  “Available Information on Assessing Exposure from Pesticides, A User’s Guide,” 6/21/2000, web link:  http://www.epa.gov/fedrgstr/EPA-PEST/2000/July/Day-12/6061.pdf;  or see SOP 99.6 (8/20/99).

This is the first food use and first dietary risk assessment conducted for indaziflam.

II.	Residue Information

Indaziflam is a new alkylazine herbicide being developed for non-selective pre-emergent and early post-emergent control of annual grass and dicot species in trees, nuts, vines, and turf.  This herbicide is a cellulose biosynthesis inhibitor and is active at rates of 50 to 100 g ai/ha.  The primary metabolite of indaziflam is fluoroethyldiaminotriazine (FDAT), which has been identified as a residue of concern for risk assessment and tolerance enforcement purposes.

The petitioner has proposed a new Section 3 use on pome fruits, stone fruits, citrus, tree nuts (including pistachios), grapes, and olives, and has requested a tolerance without a U.S. registration for residues in/on processed cane sugar.  See Table 1 for a summary of the HED-recommended tolerances (which include consideration of FDAT residues).

Table 1 – Summary of HED-Recommended Tolerances for Proposed New Uses of

                 Indaziflam

Commodity	Recommended Tolerance (ppm)

Fruit, citrus, Group 10	0.01

Fruit, pome, Group 11	0.01

Fruit, stone, Group 12	0.01

Nut, tree, Group 14	0.01

Pistachio	0.01

Almond, hulls	0.15

Grape	0.01

Olive	0.01

Sugarcane, sugar, refined	0.01

HED is making the conservative assumption of 100% crop treated.

Processing Factors:

Conducted at 5X the proposed maximum seasonal application rate, the submitted processing studies on pome fruit, stone fruit, citrus, and olives showed residues < limit of quantitation (LOQ) (0.01 ppm) in/on all samples of each raw agricultural commodity (RAC); therefore, processed samples were not analyzed and processing factors could not be calculated.  Although there was no evidence that residues of indaziflam concentrate in the processed commodities of these crops, default processing factors were included in the acute and chronic analysis as per current HED policy for screening-level dietary exposure assessments.

Although citrus RACs from submitted field trials and a processing study have total residues below the LOQ at a 5X exaggerated rate, data for the processed commodity of citrus oil is required due to the extremely high potential concentration factor (1000X).  Citrus oil was not analyzed during the originally submitted processing study.  The petitioner has been made aware of this issue and provided data from a preliminary analysis of citrus oil.  Although this interim report suggests that indaziflam residues are concentrated approximately 11.7X compared to those observed in citrus RACs, the total residues in citrus oil are still less than LOQ (0.01 ppm).  Therefore, HED does not believe that a tolerance for citrus oil is required, as no finite residues would be expected even at exaggerated rates.  Furthermore, since citrus oil does not appear as a commodity in DEEM, the actual concentration factor is not needed for the exposure analysis.

Also conducted at 5X the proposed maximum season application rate, the grape processing study relied on residue estimates between the limit of detection (LOD) and LOQ in order to calculate processing factors.  The calculated factor for grape juice (1.5X) is slightly greater than the theoretical maximum factor of 1.2X.  The calculated factor for raisins (2.8X) is less than the theoretical maximum (4.3X).  Thus, the empirical processing factor of 2.8X was used for raisins and the default processing factor of 1.2X was used for grape juice.

For sugarcane, samples from the processing study showed no quantifiable residues of indaziflam or FDAT following a 2X application rate, and the processed commodities of molasses and refined sugar were not analyzed.  Typically, HED requires that no residues of concern be found in a RAC following at least a 5X exaggerated application rate to make a finding that tolerances are not necessary in the processed commodity.  Based on information in the metabolism study, quantifiable residues of indaziflam or FDAT would not be expected in sugarcane even at a 5X treatment rate, with the highest observed total radioactive residue (TRR) of 0.005 ppm in the 2X metabolism study.     Therefore, HED does not believe that a processing factor is needed to assess residues of indaziflam and FDAT in refined sugar.

III.  Drinking Water Data

The drinking water residues used in the dietary risk assessment were provided by the Environmental Fate and Effects Division (EFED) in the following memorandum: “Tier 2 Drinking Water Exposure Assessment for the Section 3 New Chemical Registration of Indaziflam” (R.Baris, D356141/367447, 2/2/2010) and incorporated directly into this dietary assessment.  Water residues were incorporated in the DEEM-FCID into the food categories “water, direct, all sources” and “water, indirect, all sources.”

Based on a review of the available environmental fate data, the Residues of Concern Knowledgebase Subcommittee (ROCKS) determined that the four major transformation products that maintain the dual ring structure of indaziflam should be included in the drinking water exposure assessment since they may be of toxicological concern (i.e., they are assumed to be of equal or lower toxicity to the parent in the absence of toxicological data) (G.Kramer, D371659, 2/18/2010).  These transformation products include: triazine indanone, indaziflam-carboxylic acid, indaziflam-olefin, and indaziflam-hydroxyethyl.  In order to account for residues of these transformation products, the Environmental Fate and Effects Division (EFED) calculated drinking water concentrations for total indaziflam residues which included indaziflam and similarly structured degradates.  EFED also calculated separate concentration estimates for FDAT plus dihydroamino triazine (ROI1; a degradate of FDAT).  Drinking water concentrations were based on maximum seasonal application rates for citrus (0.134 lb ai/A), which is higher than turf application rates (0.094 lb ai/A) and thus protective of drinking water scenarios and populations.  As noted above, HED has included the drinking water residue estimates for FDAT and ROI1 directly in the indaziflam assessment due to the available toxicity data indicating the neurotoxic endpoints for indaziflam are protective of toxicity from these degradates.  The drinking water concentrations used to estimate exposure via drinking water are included in Table 2.

Surface water estimates were calculated using the Pesticide Root Zone Model (PRZM, v3.12.2, 5/12/2005) and the Exposure Analysis Modeling System (EXAMS, v<IP_ADDRESS>, 4/25/2005).  These simulation models are coupled to generate daily exposures and 1-in-10 year estimated drinking water concentrations of indaziflam residues that may occur in surface water bodies adjacent to application sites receiving indaziflam through runoff and spray drift.  Groundwater estimates were calculated using the Screening Concentration in Ground Water (SCI-GROW v2.3, Jul. 29, 2003) regression model.  These models and their descriptions are available at the EPA internet site:   HYPERLINK "http://www.epa.gov/oppefed1/models/water/"  http://www.epa.gov/oppefed1/models/water/ .

Table 2 - Summary of Estimated Surface Water and Groundwater Concentrations for

                Indaziflam

Exposure Duration	Indaziflam	FDAT + ROI1	Combined*

	Surface, ppb a	Ground, ppb b	Surface, ppb a	Ground, ppb b	Surface, ppb Ground, ppb

Acute	48	1.6	19	1.1	84	3.7

Chronic (non-cancer)	14	1.6	6	1.1	26	3.7

* Residue estimates for FDAT and ROI1 have been converted to indaziflam equivalents (molecular weight ratio = 301÷157 = 1.92) and included directly in the indaziflam concentration estimates.

a From the PRZM and EXAMS

b From the SCI-GROW model assuming a maximum seasonal use rate of 0.134 lb ai/A for citrus.

RAB2 has selected the most conservative estimate in order to be sufficiently protective of human health.  The above residue estimates for FDAT and ROI1 were stoichiometrically converted to indaziflam equivalent and included directly in the indaziflam concentration estimates.  Thus, following this stoichiometric conversion, the combined maximum surface water concentration in surface water was 84 ppb for the acute analysis and 26 ppb for the chronic analysis.  These values were used in the acute and chronic dietary analyses, respectively.

IV.	DEEM-FCID( Program and Consumption Information

Indaziflam acute and chronic dietary exposure assessments were conducted separately using the DEEM-FCID(, Version 2.03, which incorporates consumption data from USDA’s CSFII, 1994-1996 and 1998.  The 1994-96, 98 data are based on the reported consumption of more than 20,000 individuals over two non-consecutive survey days.  Foods “as consumed” (e.g., apple pie) are linked to EPA-defined food commodities (e.g. apples, peeled fruit - cooked; fresh or N/S; baked; or wheat flour - cooked; fresh or N/S, baked) using publicly available recipe translation files developed jointly by USDA/ARS and EPA.  For chronic exposure assessment, consumption data are averaged for the entire U.S. population and within population subgroups, but for acute exposure assessment are retained as individual consumption events.  Based on analysis of the 1994-96, 98 CSFII consumption data, which took into account dietary patterns and survey respondents, HED concluded that it is most appropriate to report risk for the following population subgroups: the general U.S. population, all infants (<1 year old), children 1-2, children 3-5, children 6-12, youth 13-19, adults 20-49, females 13-49, and adults 50+ years old.

For chronic dietary exposure assessment, an estimate of the residue level in each food or food-form (e.g., orange or orange juice) on the food commodity residue list is multiplied by the average daily consumption estimate for that food/food form to produce a residue intake estimate. The resulting residue intake estimate for each food/food form is summed with the residue intake estimates for all other food/food forms on the commodity residue list to arrive at the total average estimated exposure.  Exposure is expressed in mg/kg body weight/day and as a percent of the cPAD.  This procedure is performed for each population subgroup.

For the acute exposure assessment, individual one-day food consumption data are used on an individual-by-individual basis.  The reported consumption amounts of each food item can be multiplied by residue point estimate and summed to obtain a total daily pesticide exposure for a deterministic exposure, or “matched” in multiple random pairings with residue values and then summed in a probabilistic assessment.  The resulting distribution of exposures is expressed as a percentage of the aPAD on both a user (i.e., only those who reported eating relevant commodities/food forms) and a per capita (i.e., those who reported eating the relevant commodities as well as those who did not) basis.  In accordance with HED policy, per capita exposure and risk are reported for all tiers of analysis.

V.	Toxicological Information

The Health Effects Division (HED) has evaluated the toxicology database for indaziflam.  The RAB2 risk assessment team reviewed the toxicology data for indaziflam with regard to the acute and chronic reference doses and the toxicological endpoint selection.  Table 3 below provides a summary of the doses and endpoints recommended for use in the dietary exposure assessments.    SEQ CHAPTER \h \r 1  There was no evidence of carcinogenicity observed in the two-year dietary rat or mouse carcinogenicity bioassays.  Genotoxicity studies (reverse gene mutation in bacteria, forward gene mutation in mammalian cells and in vitro and in vivo chromosomal aberration assays) were negative.  Based on the lack of evidence of carcinogenicity or genotoxicity, HED classified indaziflam as “Not likely to be carcinogenic to humans.”

HED recommends reduction of the FQPA safety factor to 1X.  The toxicity database for indaziflam is complete, including the required studies that characterize potential susceptibility of infants and children. There was no evidence of increased quantitative or qualitative pre- and/or postnatal susceptibility; developmental effects in the rat were observed only at high doses in the presence of maternal/parental toxicity.  Although indaziflam causes neurotoxicity, the effects are well characterized and served as the basis for endpoint selection.  Therefore, this assessment is protective of potential neurotoxicity and other effects which occurred at higher doses.

Table 3 - Summary of Toxicological Doses and Endpoints for Indaziflam for Use in Dietary

                Human Health Risk Assessments

Exposure/

Scenario	Point of Departure	Uncertainty/FQPA Safety Factors	RfD, PAD, Level of Concern for Risk Assessment	Study and Toxicological Effects

Acute Dietary (All Populations, including Infants and Children and Females 13-49 years of age)	NOAEL = 50 mg/kg/day	UFA= 10X

UFH= 10X

FQPA SF= 1X   	Acute RfD = 0.5

mg/kg/day

aPAD = 0.5 mg/kg/day	Acute oral neurotoxicity in the rat

LOAEL = 100 mg/kg/day, based on decreased motor and locomotor activity in females.

Chronic Dietary (All Populations)	NOAEL = 2 mg/kg/day	UFA= 10X

UFH= 10X

FQPA SF= 1X   	Chronic RfD = 0.02

mg/kg/day

cPAD = 0.02 mg/kg/day	Chronic oral (dietary) toxicity in the dog

LOAEL = 6/7 mg/kg/day M/F, based on nerve fiber degenerative lesions in the brain, spinal cord and sciatic nerve.

Cancer (oral, dermal, inhalation)	Classification:  “Not likely to be Carcinogenic to Humans,” based on no evidence of carcinogenicity in the two-year dietary rat or mouse carcinogenicity bioassays.  Genotoxicity studies (reverse gene mutation in bacteria, forward gene mutation in mammalian cells and in vitro and in vivo chromosomal aberration assays) were negative.

Point of Departure (POD) = A data point or an estimated point that is derived from observed dose-response data and used to mark the beginning of extrapolation to determine risk associated with lower environmentally relevant human exposures.  NOAEL = no observed adverse effect level.  LOAEL = lowest observed adverse effect level.  UF = uncertainty factor.  UFA = extrapolation from animal to human (interspecies).  UFH = potential variation in sensitivity among members of the human population (intraspecies).  FQPA SF = FQPA Safety Factor.  PAD = population adjusted dose (a = acute, c = chronic).  RfD = reference dose.

VI.	Results/Discussion

As stated above, for acute and chronic assessments, HED is concerned when dietary risk exceeds 100% of the PAD.  The DEEM-FCID( analysis estimates the dietary exposure of the U.S. population and various population subgroups.  The results reported in Table 4 are for the general U.S. Population, all infants (<1 year old), children 1-2, children 3-5, children 6-12, youth 13-19, females 13-49, adults 20-49, and adults 50+ years.

Results of Acute Dietary (Food and Drinking Water) Exposure Analysis

Table 4 lists the results of the acute dietary exposure analysis.  The acute dietary risk estimates for the general U.S. population utilized <1% of the aPAD at the 95th percentile.  The most highly exposed population subgroup was all infants (<1 yr old), which utilized 3% of the aPAD at the 95th percentile.  All population exposures are well below HED’s level of concern.

Results of Chronic Dietary (Food and Drinking Water) Exposure Analysis

Table 4 lists the results of the chronic dietary exposure analysis.  The chronic dietary risk estimates for the general U.S. population utilized 3% of the cPAD.  The most highly exposed population subgroup was all infants (<1 yr old), which utilized 10% of the cPAD.  All population exposures are well below HED’s level of concern.

Table 4 - Summary of Dietary Exposure and Risk for Indaziflam1

Population Subgroup*

Acute Dietary

(95th percentile)

Chronic Dietary

Cancer

Dietary Exposure (mg/kg/day)

% aPAD

Dietary Exposure

(mg/kg/day)

% cPAD

Dietary Exposure

(mg/kg/day)

Risk

General U.S. Population	0.004478	<1	0.000600	3	N/A	N/A

All Infants (< 1 year old)	0.016674	3	0.001922	10

Children 1-2 years old	0.007148	1	0.001061	5

Children 3-5 years old	0.006459	1	0.000929	5

Children 6-12 years old	0.004447	<1	0.000606	3

Youth 13-19 years old	0.003648	<1	0.000438	2

Adults 20-49 years old	0.004104	<1	0.000542	3

Adults 50+ years old	0.003711	<1	0.000571	3

Females 13-49 years old	0.004117	<1	0.000543	3

1The value for the highest exposed population in the acute and chronic risk assessment is bolded.

VII.	Characterization of Inputs/Outputs

As the exposure estimates to all population subgroups are below HED’s level of concern, it was not necessary to make refinements to the acute or chronic dietary analysis.  If it had been necessary to refine the analysis, field trial values could have been used in place of tolerance level residues.  In addition, estimates of percent crop treated could have been used.

VIII.	 Conclusions

Based on very conservative assumptions, the acute and chronic dietary risk estimates are well below HED’s level of concern for the general U.S. population and all population subgroups, including those comprised of infants and children.  Based on the conservative nature of the acute and chronic dietary endpoints and the drinking water assessment, exposure and risk to indaziflam are not expected to be underestimated.

HED notes that EPA is in the process of formally changing the citrus and pome fruit crop group definitions.  These dietary analyses account for the revised crop group definitions.  Therefore, new dietary exposure analyses will not be required if the registrant wishes to pursue registrations for the revised crop groups after they are implemented.

IX.	List of Attachments

Attachment 1: Residue Input File for Acute Analysis

Attachment 2: Residue Input File for Chronic Analysis

Attachment 3: Results of Acute Dietary Exposure Analysis

Attachment 4: Results of Chronic Dietary Exposure Analysis

X. References

D356141/367447, R.Baris; February 2, 2010.  Tier 2 Drinking Water Exposure Assessment for the Section 3 New Chemical Registration of Indaziflam.

D371659, G. Kramer; February 18, 2010.  Indaziflam.  Report of the Residues of Concern Knowledgebase Subcommittee (ROCKS).

Attachment 1:  Acute Analysis Indaziflam Residue Input File

Filename: F:\Indaziflam\Dietary\Indaziflam Acute Food Uses + Water.R98

Chemical: Indaziflam

RfD(Chronic): .02 mg/kg bw/day  NOEL(Chronic): 2 mg/kg bw/day

RfD(Acute): .5 mg/kg bw/day  NOEL(Acute):  50 mg/kg bw/day

Date created/last modified: 07-14-2010/18:48:21/8          Program ver. 2.03

------------------------------------------------------------------------ --------

  EPA    Crop                                   Def Res     Adj.Factors   Comment

  Code    Grp  Commodity Name                    (ppm)       #1    #2

-------- ---- -------------------------------  ----------  ------ ------  -------

95001750 O    Grape                              0.010000   1.000  1.000

95001760 O    Grape, juice                       0.010000   1.200  1.000

95001761 O    Grape, juice-babyfood              0.010000   1.200  1.000

95001770 O    Grape, leaves                      0.010000   1.000  1.000

95001780 O    Grape, raisin                      0.010000   2.800  1.000

95001790 O    Grape, wine and sherry             0.010000   1.000  1.000

95002350 O    Olive                              0.010000   1.000  1.000

95002360 O    Olive, oil                         0.010000   1.000  1.000

95003620 O    Sugarcane, sugar                   0.010000   1.000  1.000

95003621 O    Sugarcane, sugar-babyfood          0.010000   1.000  1.000

86010000 O    Water, direct, all sources         0.084000   1.000  1.000

86020000 O    Water, indirect, all sources       0.084000   1.000  1.000

10001060 10   Citrus citron                      0.010000   1.000  1.000

10001070 10   Citrus hybrids                     0.010000   1.000  1.000

10001800 10   Grapefruit                         0.010000   1.000  1.000

10001810 10   Grapefruit, juice                  0.010000   2.100  1.000

10001970 10   Kumquat                            0.010000   1.000  1.000

10001990 10   Lemon                              0.010000   1.000  1.000

10002000 10   Lemon, juice                       0.010000   2.000  1.000

10002001 10   Lemon, juice-babyfood              0.010000   2.000  1.000

10002010 10   Lemon, peel                        0.010000   1.000  1.000

10002060 10   Lime                               0.010000   1.000  1.000

10002070 10   Lime, juice                        0.010000   2.000  1.000

10002071 10   Lime, juice-babyfood               0.010000   2.000  1.000

10002400 10   Orange                             0.010000   1.000  1.000

10002410 10   Orange, juice                      0.010000   1.800  1.000

10002411 10   Orange, juice-babyfood             0.010000   1.800  1.000

10002420 10   Orange, peel                       0.010000   1.000  1.000

10003070 10   Pummelo                            0.010000   1.000  1.000

10003690 10   Tangerine                          0.010000   1.000  1.000

10003700 10   Tangerine, juice                   0.010000   2.300  1.000

11000070 11   Apple, fruit with peel             0.010000   1.000  1.000

11000080 11   Apple, peeled fruit                0.010000   1.000  1.000

11000081 11   Apple, peeled fruit-babyfood       0.010000   1.000  1.000

11000090 11   Apple, dried                       0.010000   8.000  1.000

11000091 11   Apple, dried-babyfood              0.010000   8.000  1.000

11000100 11   Apple, juice                       0.010000   1.300  1.000

11000101 11   Apple, juice-babyfood              0.010000   1.300  1.000

11000110 11   Apple, sauce                       0.010000   1.000  1.000

11000111 11   Apple, sauce-babyfood              0.010000   1.000  1.000

11001290 11   Crabapple                          0.010000   1.000  1.000

11002100 11   Loquat                             0.010000   1.000  1.000

11002660 11   Pear                               0.010000   1.000  1.000

11002661 11   Pear-babyfood                      0.010000   1.000  1.000

11002670 11   Pear, dried                        0.010000   6.250  1.000

11002680 11   Pear, juice                        0.010000   1.000  1.000

11002681 11   Pear, juice-babyfood               0.010000   1.000  1.000

11003100 11   Quince                             0.010000   1.000  1.000

12000120 12   Apricot                            0.010000   1.000  1.000

12000121 12   Apricot-babyfood                   0.010000   1.000  1.000

12000130 12   Apricot, dried                     0.010000   6.000  1.000

12000140 12   Apricot, juice                     0.010000   1.000  1.000

12000141 12   Apricot, juice-babyfood            0.010000   1.000  1.000

12000900 12   Cherry                             0.010000   1.000  1.000

12000901 12   Cherry-babyfood                    0.010000   1.000  1.000

12000910 12   Cherry, juice                      0.010000   1.500  1.000

12000911 12   Cherry, juice-babyfood             0.010000   1.500  1.000

12002300 12   Nectarine                          0.010000   1.000  1.000

12002600 12   Peach                              0.010000   1.000  1.000

12002601 12   Peach-babyfood                     0.010000   1.000  1.000

12002610 12   Peach, dried                       0.010000   7.000  1.000

12002611 12   Peach, dried-babyfood              0.010000   7.000  1.000

12002620 12   Peach, juice                       0.010000   1.000  1.000

12002621 12   Peach, juice-babyfood              0.010000   1.000  1.000

12002850 12   Plum                               0.010000   1.000  1.000

12002851 12   Plum-babyfood                      0.010000   1.000  1.000

12002860 12   Plum, prune, fresh                 0.010000   1.000  1.000

12002861 12   Plum, prune, fresh-babyfood        0.010000   1.000  1.000

12002870 12   Plum, prune, dried                 0.010000   5.000  1.000

12002871 12   Plum, prune, dried-babyfood        0.010000   5.000  1.000

12002880 12   Plum, prune, juice                 0.010000   1.400  1.000

12002881 12   Plum, prune, juice-babyfood        0.010000   1.400  1.000

14000030 14   Almond                             0.010000   1.000  1.000

14000031 14   Almond-babyfood                    0.010000   1.000  1.000

14000040 14   Almond, oil                        0.010000   1.000  1.000

14000041 14   Almond, oil-babyfood               0.010000   1.000  1.000

14000590 14   Brazil nut                         0.010000   1.000  1.000

14000680 14   Butternut                          0.010000   1.000  1.000

14000810 14   Cashew                             0.010000   1.000  1.000

14000920 14   Chestnut                           0.010000   1.000  1.000

14001550 14   Filbert                            0.010000   1.000  1.000

14001560 14   Filbert, oil                       0.010000   1.000  1.000

14001850 14   Hickory nut                        0.010000   1.000  1.000

14002130 14   Macadamia nut                      0.010000   1.000  1.000

14002690 14   Pecan                              0.010000   1.000  1.000

14002820 14   Pistachio                          0.010000   1.000  1.000

14003910 14   Walnut                             0.010000   1.000  1.000

Attachment 2:  Chronic Analysis Indaziflam Residue Input File

Filename: F:\Indaziflam\Dietary\Indaziflam Chronic Food Uses + Water.R98

Chemical: Indaziflam

RfD(Chronic): .02 mg/kg bw/day  NOEL(Chronic): 2 mg/kg bw/day

RfD(Acute): .5 mg/kg bw/day  NOEL(Acute):  50 mg/kg bw/day

Date created/last modified: 07-14-2010/18:50:34/8          Program ver. 2.03

------------------------------------------------------------------------ --------

  EPA    Crop                                   Def Res     Adj.Factors   Comment

  Code    Grp  Commodity Name                    (ppm)       #1    #2

-------- ---- -------------------------------  ----------  ------ ------  -------

95001750 O    Grape                              0.010000   1.000  1.000

95001760 O    Grape, juice                       0.010000   1.200  1.000

95001761 O    Grape, juice-babyfood              0.010000   1.200  1.000

95001770 O    Grape, leaves                      0.010000   1.000  1.000

95001780 O    Grape, raisin                      0.010000   2.800  1.000

95001790 O    Grape, wine and sherry             0.010000   1.000  1.000

95002350 O    Olive                              0.010000   1.000  1.000

95002360 O    Olive, oil                         0.010000   1.000  1.000

95003620 O    Sugarcane, sugar                   0.010000   1.000  1.000

95003621 O    Sugarcane, sugar-babyfood          0.010000   1.000  1.000

86010000 O    Water, direct, all sources         0.026000   1.000  1.000

86020000 O    Water, indirect, all sources       0.026000   1.000  1.000

10001060 10   Citrus citron                      0.010000   1.000  1.000

10001070 10   Citrus hybrids                     0.010000   1.000  1.000

10001800 10   Grapefruit                         0.010000   1.000  1.000

10001810 10   Grapefruit, juice                  0.010000   2.100  1.000

10001970 10   Kumquat                            0.010000   1.000  1.000

10001990 10   Lemon                              0.010000   1.000  1.000

10002000 10   Lemon, juice                       0.010000   2.000  1.000

10002001 10   Lemon, juice-babyfood              0.010000   2.000  1.000

10002010 10   Lemon, peel                        0.010000   1.000  1.000

10002060 10   Lime                               0.010000   1.000  1.000

10002070 10   Lime, juice                        0.010000   2.000  1.000

10002071 10   Lime, juice-babyfood               0.010000   2.000  1.000

10002400 10   Orange                             0.010000   1.000  1.000

10002410 10   Orange, juice                      0.010000   1.800  1.000

10002411 10   Orange, juice-babyfood             0.010000   1.800  1.000

10002420 10   Orange, peel                       0.010000   1.000  1.000

10003070 10   Pummelo                            0.010000   1.000  1.000

10003690 10   Tangerine                          0.010000   1.000  1.000

10003700 10   Tangerine, juice                   0.010000   2.300  1.000

11000070 11   Apple, fruit with peel             0.010000   1.000  1.000

11000080 11   Apple, peeled fruit                0.010000   1.000  1.000

11000081 11   Apple, peeled fruit-babyfood       0.010000   1.000  1.000

11000090 11   Apple, dried                       0.010000   8.000  1.000

11000091 11   Apple, dried-babyfood              0.010000   8.000  1.000

11000100 11   Apple, juice                       0.010000   1.300  1.000

11000101 11   Apple, juice-babyfood              0.010000   1.300  1.000

11000110 11   Apple, sauce                       0.010000   1.000  1.000

11000111 11   Apple, sauce-babyfood              0.010000   1.000  1.000

11001290 11   Crabapple                          0.010000   1.000  1.000

11002100 11   Loquat                             0.010000   1.000  1.000

11002660 11   Pear                               0.010000   1.000  1.000

11002661 11   Pear-babyfood                      0.010000   1.000  1.000

11002670 11   Pear, dried                        0.010000   6.250  1.000

11002680 11   Pear, juice                        0.010000   1.000  1.000

11002681 11   Pear, juice-babyfood               0.010000   1.000  1.000

11003100 11   Quince                             0.010000   1.000  1.000

12000120 12   Apricot                            0.010000   1.000  1.000

12000121 12   Apricot-babyfood                   0.010000   1.000  1.000

12000130 12   Apricot, dried                     0.010000   6.000  1.000

12000140 12   Apricot, juice                     0.010000   1.000  1.000

12000141 12   Apricot, juice-babyfood            0.010000   1.000  1.000

12000900 12   Cherry                             0.010000   1.000  1.000

12000901 12   Cherry-babyfood                    0.010000   1.000  1.000

12000910 12   Cherry, juice                      0.010000   1.500  1.000

12000911 12   Cherry, juice-babyfood             0.010000   1.500  1.000

12002300 12   Nectarine                          0.010000   1.000  1.000

12002600 12   Peach                              0.010000   1.000  1.000

12002601 12   Peach-babyfood                     0.010000   1.000  1.000

12002610 12   Peach, dried                       0.010000   7.000  1.000

12002611 12   Peach, dried-babyfood              0.010000   7.000  1.000

12002620 12   Peach, juice                       0.010000   1.000  1.000

12002621 12   Peach, juice-babyfood              0.010000   1.000  1.000

12002850 12   Plum                               0.010000   1.000  1.000

12002851 12   Plum-babyfood                      0.010000   1.000  1.000

12002860 12   Plum, prune, fresh                 0.010000   1.000  1.000

12002861 12   Plum, prune, fresh-babyfood        0.010000   1.000  1.000

12002870 12   Plum, prune, dried                 0.010000   5.000  1.000

12002871 12   Plum, prune, dried-babyfood        0.010000   5.000  1.000

12002880 12   Plum, prune, juice                 0.010000   1.400  1.000

12002881 12   Plum, prune, juice-babyfood        0.010000   1.400  1.000

14000030 14   Almond                             0.010000   1.000  1.000

14000031 14   Almond-babyfood                    0.010000   1.000  1.000

14000040 14   Almond, oil                        0.010000   1.000  1.000

14000041 14   Almond, oil-babyfood               0.010000   1.000  1.000

14000590 14   Brazil nut                         0.010000   1.000  1.000

14000680 14   Butternut                          0.010000   1.000  1.000

14000810 14   Cashew                             0.010000   1.000  1.000

14000920 14   Chestnut                           0.010000   1.000  1.000

14001550 14   Filbert                            0.010000   1.000  1.000

14001560 14   Filbert, oil                       0.010000   1.000  1.000

14001850 14   Hickory nut                        0.010000   1.000  1.000

14002130 14   Macadamia nut                      0.010000   1.000  1.000

14002690 14   Pecan                              0.010000   1.000  1.000

14002820 14   Pistachio                          0.010000   1.000  1.000

14003910 14   Walnut                             0.010000   1.000  1.000

Attachment 3: Results of Indaziflam Acute Dietary Exposure Analysis

U.S. Environmental Protection Agency                                  Ver. 2.02

DEEM-FCID ACUTE Analysis for INDAZIFLAM                          (1994-98 data)

Residue file: Indaziflam Acute Food Uses + Water.R98

Adjustment factor #2 NOT used.

Analysis Date: 07-14-2010/18:56:22    Residue file dated: 07-14-2010/18:48:21/8

NOEL (Acute) =  50.000000 mg/kg body-wt/day

Daily totals for food and foodform consumption used.

Run Comment: ""

======================================================================== =======

Summary calculations (per capita):

      95th Percentile             99th Percentile             99.9th Percentile

 Exposure  % aRfD     MOE    Exposure  % aRfD     MOE    Exposure  % aRfD    MOE

---------- ------- -------- ---------- ------- -------- ---------- ------- --------

U.S. Population:

  0.004478    0.90   11166    0.008357    1.67    5983    0.016691    3.34  2995

All infants:

  0.016674    3.33    2998    0.023770    4.75    2103    0.042158    8.43  1186

Children 1-2 yrs:

  0.007148    1.43    6995    0.012071    2.41    4142    0.017758    3.55  2815

Children 3-5 yrs:

  0.006459    1.29    7741    0.010103    2.02    4948    0.016072    3.21  3111

Children 6-12 yrs:

  0.004447    0.89   11243    0.007503    1.50    6663    0.010232    2.05  4886

Youth 13-19 yrs:

  0.003648    0.73   13707    0.006069    1.21    8239    0.010775    2.15  4640

Adults 20-49 yrs:

  0.004104    0.82   12183    0.006806    1.36    7346    0.012311    2.46  4061

Adults 50+ yrs:

  0.003711    0.74   13474    0.005298    1.06    9437    0.008828    1.77  5663

Females 13-49 yrs:

  0.004117    0.82   12144    0.006575    1.32    7604    0.011697    2.34  4274

Attachment 4:  Results of Indaziflam Chronic Dietary Exposure Analysis

U.S. Environmental Protection Agency                                 Ver. 2.00

DEEM-FCID Chronic analysis for INDAZIFLAM                       (1994-98 data)

Residue file name: F:\Indaziflam\Dietary\Indaziflam Chronic Food Uses + Water.R98

                                                 Adjustment factor #2 NOT used.

Analysis Date 07-14-2010/18:54:02     Residue file dated: 07-14-2010/18:50:34/8

Reference dose (RfD, Chronic) = .02 mg/kg bw/day

======================================================================== =======

                    Total exposure by population subgroup

------------------------------------------------------------------------ -------

                                                    Total Exposure

                                         -----------------------------------

          Population                         mg/kg             Percent of

           Subgroup                       body wt/day             Rfd

--------------------------------------   -------------       ---------------

U.S. Population (total)                     0.000600                 3.0%

U.S. Population (spring season)             0.000595                 3.0%

U.S. Population (summer season)             0.000639                 3.2%

U.S. Population (autumn season)             0.000582                 2.9%

U.S. Population (winter season)             0.000584                 2.9%

Northeast region                            0.000564                 2.8%

Midwest region                              0.000604                 3.0%

Southern region                             0.000566                 2.8%

Western region                              0.000681                 3.4%

Hispanics                                   0.000683                 3.4%

Non-hispanic whites                         0.000584                 2.9%

Non-hispanic blacks                         0.000575                 2.9%

Non-hisp/non-white/non-black                0.000733                 3.7%

All infants (< 1 year)                      0.001922                 9.6%

Nursing infants                             0.000733                 3.7%

Non-nursing infants                         0.002374                11.9%

Children 1-6  yrs                           0.000951                 4.8%

Children 7-12 yrs                           0.000572                 2.9%

Females 13-19 (not preg or nursing)         0.000428                 2.1%

Females 20+ (not preg or nursing)           0.000579                 2.9%

Females 13-50 yrs                           0.000568                 2.8%

Females 13+ (preg/not nursing)              0.000579                 2.9%

Females 13+ (nursing)                       0.000802                 4.0%

Males 13-19 yrs                             0.000445                 2.2%

Males 20+ yrs                               0.000521                 2.6%

Seniors 55+                                 0.000571                 2.9%

Children 1-2 yrs                            0.001061                 5.3%

Children 3-5 yrs                            0.000929                 4.6%

Children 6-12 yrs                           0.000606                 3.0%

Youth 13-19 yrs                             0.000438                 2.2%

Adults 20-49 yrs                            0.000542                 2.7%

Adults 50+ yrs                              0.000571                 2.9%

Females 13-49 yrs                           0.000543                 2.7%

Indaziflam                                              Dietary Exposure Assessment                                       DP Barcode: D376909

PC Code: 080818

                    Page   PAGE  3  of   NUMPAGES  16


[Federal Register Volume 82, Number 54 (Wednesday, March 22, 2017)]
[Notices]
[Pages 14768-14774]
[FR Doc No: 2017-05608]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80264; File No. SR-CBOE-2017-021]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Related to Complex Orders

March 16, 2017.
    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 March 6, 2017, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') 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 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange seeks to amend its rules related to complex orders.
The text of the proposed rule change is provided below.

(additions are italicized; deletions are [bracketed])

* * * * *

Chicago Board Options Exchange, Incorporated Rules

* * * * *

Rule 6.53C. Complex Orders on the Hybrid System

    (a)-(c) No change.
    (d) Process for Complex Order RFR Auction: Prior to routing to
the COB or once on PAR, eligible complex orders may be subject to an
automated request for responses (``RFR'') auction process.
    (i) For purposes of paragraph (d):
    (1) ``COA'' is the automated complex order RFR auction process.
    (2) A ``COA-eligible order'' means a complex order that, as
determined by the Exchange on a class-by-class basis, is eligible
for a COA considering the order's size, complex order type (as
defined in paragraphs (a) and (b) above) and complex order origin
types (as defined in subparagraph (c)(i) above). Complex orders
processed through a COA may be executed without consideration to
prices of the same complex orders that might be available on other
exchanges.
    (ii) Initiation of a COA:
    (A) The System will send an RFR message to all Trading Permit
Holders who have elected to receive RFR messages on receipt of (1) a
COA-eligible order with two or more legs (including orders submitted
for electronic processing from PAR) that is better than the same
side of the derived net market or (2) a complex order with three or
more legs that [(A)] meets the class, size, and complex order type
parameters of subparagraph (d)(i)(2) and [is better than the same
side of the derived net market or (B)] is marketable against the
derived net market[, designated as immediate or cancel and meets the
class and size parameters of subparagraph (d)(i)(2)]. Complex orders
as described in subparagraph (ii)(A)(2) will initiate a COA
regardless of the order's routing parameters or handling
instructions (except for orders routed for manual handling).
Immediate or cancel orders that are not marketable against the
derived net market in accordance with subparagraph (ii)(A)(2)[(B)]
will be cancelled. The RFR message will identify the component
series, the size and side of the market of the COA-eligible order
and any contingencies, if applicable.
    (B) No change.
    (iii)-(ix) No change.
* * * * *

    The text of the proposed rule change is also available on the
Exchange's Web site (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
    On February 25, 2016, the Exchange submitted immediately effective
filing SR-CBOE-2016-014, which amended Exchange rules related to the
initiation of a complex order auction (``COA'').\5\ The purpose of SR-
CBOE-2016-014 (as well as predecessor filings SR-CBOE-2015-081 \6\ and
SR-CBOE-2014-017) \7\ was to limit a potential source of unintended
Market-Maker risk related to how the Exchange's Hybrid Trading System
(the ``System'') \8\ calculates risk parameters under Rule 8.18 when
complex orders leg into the market.\9\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 77297 (March 4,
2016), 81 FR 12764 (March 10, 2016) (SR-CBOE-2016-014) (``2016
Notice).
    \6\ See Securities Exchange Act Release No. 76106 (October 8,
2015), 80 FR 62125 (October 15, 2015) (SR-CBOE-2015-081) (``2015
Notice).
    \7\ See Securities Exchange Act Release No. 72986 (September 4,
2014), 79 FR 53798 (September 10, 2014) (SR-CBOE-2014-017)
(``Approval Order'').
    \8\ The System is a trading platform that allows automatic
executions to occur electronically and open outcry trades to occur
on the floor of the Exchange. To operate in this ``hybrid''
environment, the Exchange has a dynamic order handling system that
has the capability to route orders to the trade engine for automatic
execution and book entry, to Trading Permit Holder and PAR Official
workstations located in the trading crowds for manual handling, and/
or to other order management terminals generally located in booths
on the trading floor for manual handling. Where an order is routed
for processing by the Exchange order handling system depends on
various parameters configured by the Exchange and the order entry
firm itself.
    \9\ See the Approval Order, the 2015 Notice, and the 2016
Notice.
---------------------------------------------------------------------------

Quote Risk Monitor
    Under Rule 8.18, CBOE offers Market-Makers that are obligated to
provide and maintain continuous electronic quotes in an option class
the Quote Risk Monitor Mechanism (``QRM''), which is functionality to
help Market-Makers manage their quotes and related risk. Market-Makers
with appointments in classes that trade on the System must, among other
things, provide and maintain continuous electronic quotes in a
specified percentage of series in each class for a specified percentage
of time.\10\ To comply with this requirement, each Market-Maker may use
its own proprietary quotation and risk management system to determine
the prices and sizes at which it quotes. In addition, each Market-Maker
may use QRM.
---------------------------------------------------------------------------

    \10\ See Rules 8.7(d)(ii)(iv) (Market-Makers), 8.13(d)
(Preferred Market-Makers), 8.15A(b)(i) (Lead Market-Makers) and
8.85(a)(i) (Designated Primary Market-Makers).
---------------------------------------------------------------------------

    A Market-Maker's risk in a class is not limited to the risk in a
single series of that class. Rather, a Market-Maker is generally
actively quoting in multiple classes, and each class may comprise
hundreds or thousands of individual series. The System automatically
executes orders against a Market-Maker's quotes in accordance with the
Exchange's priority and allocation rules.\11\ As a result, a Market-
Maker has exposure and risk in all series in which it is quoting in
each of its appointed classes. QRM is an optional functionality that
helps Market-Makers, and TPH organizations with which a Market-Maker is
associated, limit this overall exposure and risk.
---------------------------------------------------------------------------

    \11\ See Rules 6.45 and 6.53C.
---------------------------------------------------------------------------

    Specifically, if a Market-Maker elects to use QRM, the System will
cancel a Market-Maker's quotes in all series in an appointed class if
certain parameters the Market-Maker establishes are triggered. Market-
Makers may set the following QRM parameters (Market-Makers may set
none, some or all of these parameters):
     A maximum number of contracts for that class (the
``contract limit'') and a specified rolling time period in seconds
within which such contract limit is to be measured (the ``measurement
interval'');
     a maximum cumulative percentage (which is the sum of the
percentages of the original quoted size of each side of each series
that trade) (the ``cumulative percentage limit'') that the Market-Maker
is willing to trade within a specified measurement interval; or
     a maximum number of series for which either side of the
quote is fully traded (the ``number of series fully traded'') within a
specified measurement interval.
    If the Exchange determines the Market-Maker has traded more than
the contract limit or cumulative percentage limit, or has traded at
least the number of series fully traded, of a class during the
specified measurement interval, the System will cancel all of the
Market-Maker's electronic quotes in that class (and any other cases
with the same underlying security) until the Market-Maker refreshes
those quotes (a ``QRM Incident''). A Market-Maker, or TPH organization
with which the Market-Maker is associated, may also specify a

maximum number of QRM Incidents that may occur on an Exchange-wide
basis during a specified measurement interval. If the Exchange
determines that a Market-Maker or TPH Organization, as applicable, has
reached its QRM Incident limit during the specified measurement
interval, the System will cancel all of the Market-Maker's or TPH
Organization's quotes, as applicable, and the Market-Maker's orders
resting in the book in all classes and prevent the Market-Maker and TPH
organization from sending additional quotes or orders to the Exchange
until the earlier to occur of (1) the Market-Maker or TPH organization
reactivates this ability or (2) the next trading day.
    The purpose of the QRM functionality is to allow Market-Makers to
provide liquidity across most series in their appointed classes without
being at risk of executing the full cumulative size of all their quotes
before being given adequate opportunity to adjust their quotes. For
example, if a Market-Maker can enter quotes with a size of 25 contracts
in 100 series of class ABC, its potential exposure is 2,500 contracts
in ABC. To mitigate the risk of having all 2,500 contracts in ABC
execute without the opportunity to evaluate its positions, the Market-
Maker may elect to use QRM. If the Market-Maker elects to use the
contract limit functionality and sets the contract limit at 100 and the
measurement interval at five seconds for ABC, the System will
automatically cancel the Market-Maker's quotes in all series of ABC if
100 or more contracts in series of ABC execute during any five-second
period.
    To assure that all quotations are firm for their full size, the
System performs the parameter calculations after an execution against a
Market-Maker's quote occurs. For example, using the same parameters in
class ABC as above, if a Market-Maker has executed a total of 95
contracts in ABC within the previous three seconds, a quote in a series
of ABC with a size of 25 contracts continues to be firm for all 25
contracts. An incoming order in that series could execute all 25
contracts of that quote, and, following the execution, the total size
parameter would add 25 contracts to the previous total of 95 for a
total of 120 contracts executed in ABC. Because the total size executed
within the previous five seconds now exceeds the 100 contract limit for
ABC, the System would, following the execution, immediately cancel all
of the Market-Maker's quotes in series of ABC. The Market-Maker would
then enter new quotes for series in ABC. Thus, QRM limits the amount by
which a Market-Maker's executions in a class may exceed its contract
limit to the largest size of its quote in a single series of the class
(or 25 in this example).
Proposal
    SR-CBOE-2016-014 indicated that the Exchange would announce the
implementation date of that rule change in a Regulatory Circular to be
published no later than 90 days following the effective date of that
filing and that the implementation date would be no later than 180 days
following the effective date of that filing. The Exchange was unable to
make the necessary system changes in time to meet the deadlines set
forth in SR-CBOE-2016-014. Thus, the Exchange proposes to revise the
implementation date of SR-CBOE-2016-014. In conjunction with revising
the implementation date of SR-CBOE-2016-014, the Exchange is proposing
to revise the relevant rule text of Rule 6.53C to modify the manner in
which the rule text describes complex orders that will initiate a COA.
    The purpose of the rule filings in this series (SR-CBOE-2014-017,
SR-CBOE-2015-081, and SR-CBOE-2016-014), including the instant filing,
is to limit a potential source of unintended Market-Maker risk related
to how the System calculates risk parameters under Rule 8.18 when
complex orders leg into the market.\12\ As discussed above, and
described in the previous filings, by checking the risk parameters
following each execution in a series, the risk parameters allow a
Market-Maker to provide liquidity across multiple series of a class
without being at risk of executing the full cumulative size of all its
quotes. This is not the case, however, when a complex order legs into
the regular market (i.e. the market for individual, or simple, orders).
Because the execution of each leg of a complex order is contingent on
the execution of the other legs, the execution of all the legs in the
regular market is processed as a single transaction, not as a series of
individual transactions.
---------------------------------------------------------------------------

    \12\ Rule 6.53C(c)(ii)(1) provides that complex orders in the
complex order book (``COB'') may execute against individual orders
or quotes in the book provided the complex order can be executed in
full (or a permissible ratio) by the orders and quotes in the book.
Rule 6.53C(d)(v)(1) provides that orders that are eligible for the
complex order auction (``COA'') may trade with individual orders and
quotes in the book provided the COA-eligible order can be executed
in full (or a permissible ratio) by the orders and quotes in the
book. COA is an automated request for responses (``RFR'') auction
process. Upon initiation of a COA, the Exchange sends an RFR message
to all Trading Permit Holders who have elected to receive RFR
messages, which RFR message identifies the series, size and side of
the market of the COA-eligible order and any contingencies. Eligible
market participants may submit responses during a response time
interval. At the conclusion of the response time interval, COA-
eligible orders are allocated in accordance with Rule 6.53C(d)(v),
including against individual orders and quotes in the book.
---------------------------------------------------------------------------

    For example, if market participants enter into the System
individual orders to buy 25 contracts for the Jan 30 call, Jan 35 call,
Jan 40 call and Jan 45 call in class ABC, the System processes each
order as it is received and calculates the Market-Makers parameters in
class ABC following the execution of each 25-contract call. However, if
a market participant enters into the System a complex order to buy all
four of these strikes in class ABC 25 times, which complex order
executes against bids and offers for the individual series (i.e. legs
into the market), the System will calculate the Market-Maker's
parameters in class ABC following the execution of all 100 contracts.
If the Market-Maker had set the same parameters in class ABC as
discussed above (100-contract limit with five-second measurement
interval) and had executed 95 contracts in class ABC within the
previous three seconds, the amount by which the next transaction might
exceed 100 is limited to the largest size of its quote in a single
series of the class. In that example, since the largest size of the
Market-Maker's quotes in any series was 25 contracts, the Market-Maker
could not have exceeded the 100-contract limit by more than 20
contracts (95 + 25 = 120). However, with respect to the complex order
with four legs 25 times, the next transaction against the Market-
Maker's quotes potentially could be as large as 100 contracts
(depending upon whether there are other market participants at the same
price), creating the potential in this example for the Market-Maker to
exceed the 100-contract limit by 95 contracts (95 + 100 = 195) instead
of 20 contracts.
    As this example demonstrates, legging of complex orders into the
regular market presents higher risk to Market-Makers than executing
their quotes against individual orders entered in multiple series of a
class in the regular market, because it may result in Market-Makers
exceeding their risk parameters by a greater number of contracts. This
risk is directly proportional to the number of legs associated with a
complex order. Market-Makers have expressed concerns to the Exchange
regarding this risk.
    In order to alleviate this potential risk to Market-Makers, the
Exchange, in SR-CBOE-2015-081, amended Rule 6.53C(d) to, among other
things, provide that a COA will be initiated when a complex order with
three or more legs is designated as immediate or cancel (``IOC'') and
meets the class, marketability, and size parameters of

subparagraph (d)(i)(2).\13\ The Exchange observed IOC orders causing
the risk to Market-Makers described above and believed the previous
amendment proposed in SR-CBOE-2015-081 would reduce that risk by
initiating a COA in those circumstances. SR-CBOE-2016-014 attempted to
fine tune this requirement by amending Rule 6.53C(d)(ii)(A)(2)(B) to
provide that a COA will be initiated when a complex order with three or
more legs that is marketable against the derived net market is
designated as immediate or cancel and the order meets the class and
size parameters of subparagraph (d)(i)(2). SR-CBOE-2016-014 also
hardcoded the price at which an order could initiate a COA.
---------------------------------------------------------------------------

    \13\ See Rule 6.53C(d)(ii)(A)(2)(B). The Exchange has not yet
implemented the changes described in SR-CBOE-2015-081 in
anticipation of this proposal.
---------------------------------------------------------------------------

    The Exchange is proposing to further fine tune the rule text by
amending Rule 6.53C(d)(ii)(A)(1) and (2).\14\ Currently the term COA-
eligible order in Rule 6.53C(d)(ii)(A)(1) is used in relation to orders
with two legs. The Exchange is proposing to keep the term COA-eligible
as the starting point for orders with three or more legs as well,\15\
because all orders with two or more legs that are COA-eligible (i.e.,
meets the class, size, order type, and origin code parameters of Rule
6.53C(d)(i)(2)) will be treated the same by the Exchange--meaning the
number of legs of an order under Rule 6.53C(d)(ii)(A)(1) will not be a
factor in determining whether a complex order will or will not COA. In
order to effectuate this change the Exchange is also modifying
subparagraph (ii)(A)(2)(A) because all orders with three legs or more
that are priced better than the same side of the derived net market
will only COA if they are COA-eligible under subparagraph (ii)(A)(1),
which means the current rule text of (ii)(A)(2)(A) is unnecessary. The
Exchange notes that the difference between the current rule text with
regards to orders with three legs that are priced better than the same
side of the derived net market is that current subparagraph
(ii)(A)(2)(A) requires a complex order with three or more legs that
meets the class, size, and order type parameter to COA, regardless of
the origin code, and proposed subparagraph (ii)(A)(1) provides that the
origin code is an additional parameter the Exchange may set with
regards to complex orders with three legs that are priced better than
the same side of the derived net market. The Exchange believes it's
appropriate to apply the origin code parameter to such orders because
the flexibility allows the Exchange to use its considerable expertise
in an effort to ensure COAs are beneficial to the marketplace, which is
why the Exchange is proposing this particular rule change and why the
Exchange developed the COA origin code parameter in 2008.\16\ Applying
the origin code parameter to complex orders with three legs that are
priced better than the same side of the derived net market is
consistent with the manner in which the rule text was written prior to
SR-CBOE-2014-017. To illustrate, SR-CBOE-2008-082 added the origin type
parameter to the definition of a COA-eligible order, such that a COA-
eligible order was defined as:
---------------------------------------------------------------------------

    \14\ As with SR-CBOE-2015-081 and SR-CBOE-2016-014, this
proposed change applies to Hybrid classes only, and not Hybrid 3.0
classes. The Exchange does not believe the risk discussed in this
rule filing is present in Hybrid 3.0 classes because in Hybrid 3.0
classes complex orders are not legged into the regular market. See
Rule 6.53C.10 (providing flexibility for the Exchange to determine
to not allow marketable complex orders entered into COB and/or COA
to automatically execute against individual quotes residing in the
EBook).
    \15\ See Proposed Rule 6.53C(d)(ii)(A)(1).
    \16\ See Securities Exchange Act Release No. 58326 (August 7,
2008), 73 FR 47986 (August 15, 2008) (SR-CBOE-2008-82).

A complex order that, as determined by the Exchange on a class-by-
class basis, is eligible for a COA considering the order's
marketability (defined as a number of ticks away from the current
market), size, complex order type (as defined in paragraphs (a) and
(b) above) and complex order origin types (as defined in
---------------------------------------------------------------------------
subparagraph (c)(i) above).\17\

    \17\ Id.
---------------------------------------------------------------------------

    Making current subparagraph (ii)(A)(2)(A) inapplicable to complex
orders that are priced better than the derived net market and making
subparagraph (ii)(A)(1) applicable to all such orders (i.e., allowing
the origin code parameter to apply to complex orders that are priced
better than the same side of the derived net market) is consistent with
the Act because it essentially reverts rule text regarding COA-eligible
orders back to how the rule text read prior to SR-CBOE-2014-017.
    Additionally, prior to SR-CBOE-2014-017, the rule text essentially
provided that any COA-eligible order will COA (as long as a member
requested that a particular order COA), and as previously noted, what
determines COA-eligibility has included the origin code parameter since
2008.\18\ To illustrate, SR-CBOE-2005-65, which created COA, provided
that a COA would be initiated ``[o]n receipt of a COA-eligible order
and request from the member representing the order that it be
COA'd[.]'' \19\ SR-CBOE-2015-089 removed the requirement that an order
include a request to initiate a COA, and instead implemented the
opposite--a ``do-not-COA'' request that is only allowed for certain
orders.\20\ This particular proposed rule change essentially provides
that all COA-eligible orders will COA (unless the ``do-not-COA
provision of Rule 6.53C(d)(ii)(B) applies) provided that the complex
order is priced better than the same side of the derived net market,
except the proposal goes further by allowing certain orders that are
not COA-eligible to still COA according to proposed subparagraph
(ii)(A)(2). In short, it was consistent with the Securities Exchange
Act of 1934 (the ``Act'') to: Initiate a COA for COA-eligible order
when COA was established in 2005; include the origin type parameter in
the COA-eligibility definition when the origin type parameter was
applied to the COA-eligibility definition in 2008; and allow COA-
eligible orders to COA unless a ``do-not-COA'' accompanies certain
orders when the ``do-not-COA'' request was established in 2015. Thus,
it remains consistent with the Act to initiate a COA for a COA-eligible
order today, which is essentially all proposed subparagraph (ii)(A)(1)
states. It similarly remains consistent with the Act to allow COA-
eligibility to include the origin type parameter and to COA all COA-
eligible orders unless particular orders defined in Rule
6.53C(d)(ii)(B) include a ``do-not-COA'' request.
---------------------------------------------------------------------------

    \18\ Id.
    \19\ See Securities Exchange Act Release No. 54135 (July 12,
2006), 71 FR 41287 (July 20, 2006) (SR-CBOE-2005-65).
    \20\ See current Rule 6.53C(d)(ii)(B), which provides:
Notwithstanding subparagraph (ii)(A)(1), Trading Permit Holders may
request on an order-by-order basis that an incoming COA-eligible
order with two legs not COA (a ``do-not-COA'' request).
Notwithstanding subparagraph (ii)(A)(2), the System will reject back
to a Trading Permit Holder any complex order described in that
subparagraph that includes a do-not-COA request. Any complex order
in subparagraph (ii)(A)(2) on PAR will COA even if the PAR operator
includes a do-not-COA request. If a two-legged order with a do-not-
COA request rests on PAR, then the PAR operator may not request that
the order COA. An order initially submitted to the Exchange with a
do-not-COA request may still COA after it has rested on the COB
pursuant to Interpretation and Policy .04. Securities Exchange Act
Release No. 76622 (December 11, 2015), 80 FR 78803 (December 17,
2015) (SR-CBOE-2015-089).
---------------------------------------------------------------------------

    The Exchange also notes that adding the words ``or more'' to
current subparagraph (ii)(A)(1) to provide that a COA-eligible order
``with two legs or more'' will COA is consistent with the Exchange Act
because it is no different than not identifying the number of legs at
all, which is how the rule text read from COA's inception in 2005 until
the

Exchange submitted SR-CBOE-2014-017. As previously noted, SR-CBOE-2005-
65, provided that a COA would be initiated ``[o]n receipt of a COA-
eligible order and request from the member representing the order that
it be COA'd[.]'' \21\ In both cases--a ``COA-eligible order with two or
more legs'' as proposed or ``a COA-eligible order'' as provided in SR-
CBOE-2005-65-- the phrase means a complex order with two or more legs.
In fact, there really is no purpose to identifying the number of legs
of a COA-eligible order in subparagraph (d)(ii)(A)(1), but it might
provide some kind of clarity to market participants, considering that
proposed subparagraph (d)(ii)(A)(2) will indicate that that particular
provision applies to complex orders with three or more legs. Thus, it
was consistent with the Act to initiate a COA upon receipt of COA-
eligible order when COA was established in 2005, and it remains
consistent with the Act to initiate a COA for a COA-eligible order,
even if the rule text indicates that a COA will be initiated upon
receipt of a COA-eligible order with two or more legs.
---------------------------------------------------------------------------

    \21\ See Securities Exchange Act Release No. 54135 (July 12,
2006), 71 FR 41287 (July 20, 2006) (SR-CBOE-2005-65).
---------------------------------------------------------------------------

    The purpose of proposed subparagraph (2) of Rule 6.53C(d)(ii)(A) is
simply to allow certain orders with three legs that will not COA under
subparagraph (1) to COA pursuant to subparagraph (2). Proposed Rule
6.53C(d)(ii)(A)(2) provides that a COA will be initiated upon receipt
of a complex order with three or more legs that meets the class, size,
and complex order type parameters of subparagraph (d)(i)(2) and is
marketable against the derived net market. In short, if an order with
three or more legs does not COA pursuant to Rule 6.53C(d)(ii)(A)(1)--
because it is not COA-eligible--it may still COA pursuant to Rule
6.53C(d)(ii)(A)(2), as long as the order meets the class, size, complex
order type parameters of subparagraph (d)(i)(2) and is marketable
against the derived net market.
    The Exchange notes that the flaw with SR-CBOE-2016-014 lies in
current rule 6.53C(d)(ii)(A)(2)(B), which provides that a COA will be
initiated when a complex order with three or more legs:

is marketable against the derived net market, designated as
immediate or cancel and meets the class and size parameters of
subparagraph (d)(i)(2).

    This provision would prevent the Exchange from initiating a COA for
an order that does not have the IOC contingency--even though the order
has three or more legs, the order is marketable against the derived net
market, and the order meets the class the class and size parameters of
subparagraph (d)(i)(2). As previously noted, the purpose of the rule
filings in this series (SR-CBOE-2014-017, SR-CBOE-2015-081, and SR-
CBOE-2016-014), including the instant filing, is to limit a potential
source of unintended Market-Maker risk related to how the System
calculates risk parameters under Rule 8.18 when complex orders leg into
the market. Complex orders with three or more legs that are not
designated as IOC may still cause the risk to Market-Makers; thus, it
is prudent for the Exchange to include the order type parameter in
proposed Rule 6.53C(d)(ii)(A)(2) instead of singling out IOCs. The
Exchange believes the reason SR-CBOE-2016-014 specifically identified
IOCs in Rule 6.53C(d)(ii)(A)(2)(B) is because IOC's are not currently
COA-eligible so all IOC orders with two or more legs do not currently
initiate a COA and identifying IOCs in the rule text provided further
notice to market participants that orders designated as IOC may COA.
However, the Exchange believes it's unnecessary to identify IOCs in the
rule text in this manner--although the Exchange notes that the rule
text will continue to state that IOCs that are not marketable against
the derived net market in accordance with subparagraph (ii)(A)(2) will
be cancelled, which serves as notice to market participants that IOCs
will initiate a COA in certain circumstances, especially considering
that upon filing this proposal the Exchange will also be publishing a
circular that identifies IOCs as a contingency that may initiate a COA
in certain circumstances.
    The Exchange also notes that SR-CBOE-2016-014 proposed to treat all
market participants the same when the Exchange received an order with
three or more legs that met the class, size, complex order type
parameters of subparagraph (d)(i)(2) and was better than the same side
of the derived net market. Proposed subparagraph (2) of Rule
6.53C(d)(ii)(A) will continue to treat all market participants the same
when the Exchange receives an order with three or more legs that meets
the class, size, and complex order type parameters of subparagraph
(d)(i)(2)--except the Exchange will only utilize subparagraph (2) when
the incoming order is marketable against the derived net market--
instead of when the orders is priced better than the same side of the
derived net market as SR-CBOE-2016-014 proposed. Ultimately, the
Exchange believes this proposal represents much simpler rule text than
what was proposed in SR-CBOE-2016-014.
    In sum, if a complex order with two or more legs is COA-eligible
and priced better than the same side of the derived net market, the
order will initiate a COA. If a complex order with three more legs is
not otherwise COA-eligible it will still initiate a COA if it is
marketable against the derived net market and it meets the class, size,
and order type parameters. To illustrate, assuming all of the non-price
specific requirements are met, a complex order with two or more legs
under subparagraph (d)(ii)(A)(1) will initiate a COA if the derived net
market is 1-1.20 and the complex order is to buy at $1.01 or higher or
to sell at 1.19 or lower.\22\ As described above, assuming the non-
price specific requirements are met, a complex order with three legs
under subparagraph (d)(ii)(A)(2) will initiate a COA if the derived net
market is 1--1.20 and the complex order is to buy at $1.20 or higher or
to sell at $1.00 or lower. Initiating a COA in these situations will
relieve the risk to Market-Makers noted above and throughout this
series of rule filings, which helps promote just and equitable
principles of trade by relieving risk to Market-Makers allowing them to
more efficiently and effectively provide important liquidity.
---------------------------------------------------------------------------

    \22\ As previously noted, the price at which an order may
initiate a COA was hardcoded by SR-CBOE-2016-014. This proposal
makes no changes to the price at which an order may initiate a COA.
---------------------------------------------------------------------------

    As previously noted, the Exchange was unable to implement the
amendments made by SR-CBOE-2016-014 in the timeframe set forth in SR-
CBOE-2016-014. Thus, the Exchange will announce the implementation date
of amendments made in SR-CBOE-2016-014, as modified by this proposed
rule change, in a Regulatory Circular to be published no later than 90
days following the effective date of this filing. The implementation
date will be no later than 180 days following the effective date of
this filing.
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.\23\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \24\ 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) \25\ requirement that the rules of an exchange not be designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78f(b).
    \24\ 15 U.S.C. 78f(b)(5).
    \25\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes the proposed rule change is
consistent with the purpose of SR-CBOE-2014-017, SR-CBOE-2015-081, and
SR-CBOE-2016-14, which was to alleviate a potential risk to Market-
Makers that arises through the use of QRM. Complex orders with three or
more legs that are designated that meet the class, size, and order type
(including IOCs) parameters of subparagraph (d)(i)(2) and that are
marketable against the derived net market (which the Exchange has
identified as potentially causing risk to Market-Makers) will initiate
a COA, which helps promote just and equitable principles of trade by
relieving risk to Market-Makers allowing them to more efficiently and
effectively provide important liquidity. Orders that are designated as
IOC and meet the class and size parameters of subparagraph (d)(i)(2),
but that are not marketable against the derived net market, will be
cancelled, which allows order entry firms to use their own
sophisticated technology to manage their orders helping to remove
impediments to and perfect the mechanism of a free and open market. SR-
CBOE-2016-014 removed the Exchange's flexibility to determine that
price at which an order may initiate a COA, and this proposal makes no
changes in that regard. Although the Exchange prefers flexibility, the
Exchange does not foresee the need to retain flexibility in this regard
and hardcoding the parameter may help avoid confusion with regards to
the price at which a complex order may initiate a COA, which also helps
to remove impediments to and perfect the mechanism of a free and open
market.
    The Exchange also believes the proposed rule change to initiate a
COA upon receipt of complex orders with three or more legs that meet
the class, size, and order type (including IOCs) parameters of
subparagraph (d)(i)(2) and that are marketable against the derived net
market is consistent with the requirement that Market-Makers' quotes be
firm under Rule 602 of Regulation NMS.\26\ The proposed rule change
does not relieve Market-Makers of their obligation to provide ``firm''
quotes. If a complex order in a Hybrid class with three or more legs
goes through COA and then legs into the market for execution upon
completion of the COA, at which point the complex order would execute
against a Market-Maker's quotes based on priority rules, the Market-
Maker must execute its quotes against the order at its then-published
bid or offer up to its published quote size, even if such execution
would cause the Market-Maker to significantly exceed its risk
parameters. However, prior to the end of COA (and thus prior to a
complex order legging into the market), a Market-Maker may adjust its
published quotes to manage its risk in a class as it deems necessary,
including to prevent executions that would exceed its risk parameters.
In this case, the firm quote rule does not obligate the Market-Maker to
execute its quotes against the complex order at the quote price and
size that was published when the order entered the System and initiated
the COA. Rather, the Market-Maker's firm quote obligation applies only
to its disseminated quote at the time an order is presented to the
Market-Maker for execution, which presentation does not occur until the
System processes the order against the leg markets after completion of
the COA.\27\ Thus, the proposed rule change is consistent with the firm
quote rule.
---------------------------------------------------------------------------

    \26\ Rule 602(b)(2) obligates a Market-Maker to execute any
order to buy or sell a subject security presented to it by another
broker or dealer or any other person belonging to a category of
persons with whom the Market-Maker customarily deals, at a price at
least as favorable to the buyer or sell as the Market-Maker's
published bid or offer in any amount up to its published quotation
size. Rule 602(b)(3) provides that no Market-Maker is obligated to
execute a transaction for any subject security to purchase or sell
that subject security in an amount greater than its revised
quotation size if, prior to the presentation of an order for the
purchase or sale of a subject security, the Market-Maker
communicated to the Exchange a revised quotation size. Similarly, no
Market-Maker is obligated to execute a transaction for any subject
security if, before the order sought to be executed is presented,
the Market-Maker has communicated to the Exchange a revised bid or
offer. CBOE Rule 8.51 imposes a similar obligation (Market-Maker
must sell (buy) at least the established number of contracts at the
offer (bid) which is displayed when the Market-Maker receives a buy
(sell) order at the trading station where the reported security is
located for trading; however, no Market-Maker is obligated to
execute a transaction for a listed option when, prior to the
presentation of an order to sell (buy) to the Market-Maker, the
Market-Maker has communicated to the Exchange a revised quote).
    \27\ See Staff Legal Bulletin No. 16, Transaction in Listed
Options Under Exchange Act Rule 11Ac1-1, U.S. Securities and
Exchange Commission, Division of Market Regulation, January 20, 2004
(``Scenario 3: When an Order is ``Presented'' . . . If an individual
market maker generates its own quotations . . . and exchange systems
route incoming orders to the responsible broker-dealer with
priority, when is an order presented to a responsible broker-dealer?
Response:. . . . When each market maker is the responsible broker-
dealer with respect to its own quote, an order is presented to it
when received by the market maker from the exchange system.''). When
a complex order is processing through COA, the order is still in the
System and has not yet been presented to a broker or dealer
(including a Market-Maker) for execution. Only after completion of
the COA, when the System allocates the complex order for execution
in accordance with priority rules, will that order be ``presented''
to the Market-Maker for firm quote purposes.
---------------------------------------------------------------------------

    The Exchange also notes making subparagraph (ii)(A)(2)(A)
inapplicable to complex orders that are priced better than the derived
net market and making subparagraph (ii)(A)(1) applicable to all such
orders is consistent with the Act because it essentially reverts rule
text regarding COA-eligible orders back to how the rule text read prior
to SR-CBOE-2014-017. Prior to SR-CBOE-2014-017, the rule text
essentially provided that any COA-eligible order will COA.\28\ This
proposed rule change essentially provides the same, except certain
orders that are not COA-eligible may still COA according to proposed
subparagraph (ii)(A)(2). Thus, it was consistent with the Securities
Exchange Act of 1934 (the ``Act'') to initiate a COA-eligible order
when COA was established in 2005, and it remains consistent with the
Act to initiate a COA-eligible order.
---------------------------------------------------------------------------

    \28\ See Securities Exchange Act Release No. 54135 (July 12,
2006), 71 FR 41287 (July 20, 2006) (SR-CBOE-2005-65).
---------------------------------------------------------------------------

    The Exchange also notes that adding the words ``or more'' to
current subparagraph (ii)(A)(1) to provide that a COA-eligible order
``with two legs or more'' will COA is consistent with the Exchange Act
because it is no different than not identifying the number of legs at
all, which is how the rule text read from COA's inception in 2005 \29\
until the Exchange submitted SR-CBOE-2014-017. In both cases--a ``COA-
eligible order with two or more legs'' or ``a COA-eligible order''--the
phrase means a complex order with two or more legs. In fact, there
really is no purpose to identifying the number of legs of a COA-
eligible order in subparagraph (d)(ii)(A)(1), but it might provide some
kind of clarity to market participants, considering that proposed
subparagraph (d)(ii)(A)(2) will indicate that that particular provision
applies to complex orders with three or more legs. Thus, it was
consistent with the Act to initiate a COA-eligible order when COA was
established in 2005, and it remains

consistent with the Act to initiate a COA-eligible order, even if the
rule text indicates that a COA will be initiated upon receipt of a COA-
eligible order with two or more legs.
---------------------------------------------------------------------------

    \29\ [sic]
---------------------------------------------------------------------------

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

    CBOE does not believe that the proposed rule change will impose any
burden on intramarket or intermarket competition that is not necessary
or appropriate in furtherance of the purposes of the Act. The Exchange
does not believe the proposed rule change will impose any burden on
intramarket competition because all IOC orders will be treated equally
by the Exchange. The proposed rule change is intended to reduce risk to
Market-Makers that are quoting in the regular market. CBOE believes
that the proposed rule change will promote competition by encouraging
Market-Makers to increase the size of and to more aggressively price
their quotes, which will increase liquidity on the Exchange. To the
extent that the rule change makes CBOE a more attractive marketplace,
market participants are free to become Trading Permit Holders on CBOE
and other exchanges are free to amend their rules in a similar manner.
Furthermore, the Exchange does not believe the proposed rule change
will impose any burden on intermarket competition because the rule
change does not materially affect the outcome or purpose of SR-CBOE-
2014-017, SR-CBOE-2015-081, or SR-CBOE-2016-014, which was to alleviate
potential risk to Market-Makers using QRM. The Exchange also does not
believe that the hardcoding of the price at which a complex order may
initiate a COA, as described in SR-CBOE-2016-014, will impose a burden
on competition. Finally, the Exchange does not believe initiating a COA
for a COA-eligible order pursuant to Rule 6.53C(d)(ii)(A)(1) will
impose any burden on competition as the Exchange has initiated a COA
for such orders since the inception of COA in 2005.

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 \30\ and Rule 19b-
4(f)(6) thereunder.\31\
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78s(b)(3)(A).
    \31\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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.
---------------------------------------------------------------------------

    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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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 change 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

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2017-021 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-2017-021. 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 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. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2017-021 and should be
submitted on or before April 12, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05608 Filed 3-21-17; 8:45 am]
 BILLING CODE 8011-01-P