[Federal Register Volume 82, Number 25 (Wednesday, February 8, 2017)]
[Notices]
[Pages 9916-9929]
[FR Doc No: 2017-02555]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79950; File No. SR-CBOE-2017-012]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of a Proposed Rule Change Relating to
the Consolidated Audit Trail

February 2, 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 January 30, 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, II, and III below, which Items have been prepared by the
Exchange.\3\ The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Exchange originally filed this proposed rule change on
January 17, 2017 under File No. SR-CBOE-2017-006, and the Exchange
subsequently withdrew that filing on January 30, 2017 and filed this
proposed rule change.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to adopt Chapter VI, Section F to implement
the compliance rule (``Compliance Rule'') regarding the National Market
System Plan Governing the Consolidated Audit Trail (the ``CAT NMS
Plan'' or the ``Plan''). The text of the proposed rule change is
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
    Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA
Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2
Options Exchange, Incorporated, CBOE, Chicago Stock Exchange, Inc.,
Financial Industry Regulatory Authority, Inc. (``FINRA''),
International Securities Exchange, LLC, Investors' Exchange LLC, ISE
Gemini, LLC, ISE Mercury, LLC, Miami International Securities Exchange
LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., NASDAQ PHLX LLC, The NASDAQ
Stock Market LLC, National Stock Exchange, Inc., New York Stock
Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc. (collectively, the
``Participants'') filed with the Commission, pursuant to Section 11A of
the Act \4\ and Rule 608 of Regulation

NMS thereunder,\5\ the CAT NMS Plan.\6\ The Participants filed the Plan
to comply with Rule 613 of Regulation NMS under the Act. The Plan was
published for comment in the Federal Register on May 17, 2016,\7\ and
approved by the Commission, as modified, on November 15, 2016.\8\
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    \4\ 15 U.S.C. 78k-1.
    \5\ 17 CFR 242.608.
    \6\ See Letter from the Participants to Brent J. Fields,
Secretary, Commission, dated September 30, 2014; and Letter from
Participants to Brent J. Fields, Secretary, Commission, dated
February 27, 2015. On December 24, 2015, the Participants submitted
an amendment to the CAT NMS Plan. See Letter from Participants to
Brent J. Fields, Secretary, Commission, dated December 23, 2015.
    \7\ Securities Exchange Act Rel. No. 77724 (Apr. 27, 2016), 81
FR 30614 (May 17, 2016).
    \8\ Securities Exchange Act Rel. No. 79318 (Nov. 15, 2016), 81
FR 84696 (Nov. 23, 2016) (``Approval Order'').
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    The Plan is designed to create, implement and maintain a
consolidated audit trail (``CAT'') that would capture customer and
order event information for orders in NMS Securities and OTC Equity
Securities, across all markets, from the time of order inception
through routing, cancellation, modification, or execution in a single
consolidated data source. Each Participant is required to enforce
compliance by its Industry Members, as applicable, with the provisions
of the Plan, by adopting a Compliance Rule applicable to their Industry
Members.\9\ As is described more fully below, proposed Chapter VI,
Section F sets forth the Compliance Rule to require Industry Members to
comply with the provisions of the CAT NMS Plan. Proposed Section F
includes twelve proposed Rules covering the following areas: (1)
Definitions; (2) clock synchronization; (3) Industry Member Data
reporting; (4) Customer information reporting; (5) Industry Member
information reporting; (6) time stamps; (7) clock synchronization rule
violations; (8) connectivity and data transmission; (9) development and
testing; (10) recordkeeping; (11) timely, accurate and complete data;
and (12) compliance dates. Each of these proposed Rules are discussed
in detail below.
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    \9\ See SEC Rule 613(g)(1).
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(1) Definitions
    Proposed Rule 6.85 (Definitions) sets forth the definitions for the
terms used in proposed Section F. Each of the defined terms in proposed
Rule 6.85 is discussed in detail in this section.
(A) Account Effective Date
(i) Customer Information Approach
    SEC Rule 613 requires that numerous data elements be reported to
the CAT to ensure there is sufficient information to create the
lifecycle of an order, and provide regulators with sufficient detail
about an order to perform their regulatory duties. Certain required
elements are intended to ensure that the regulators can identify the
Customer's associated with orders. For example, SEC Rule
613(c)(7)(i)(A) requires an Industry Member to report the ``Customer-
ID'' for each Customer for the original receipt or origination of an
order. ``Customer-ID'' is defined in SEC Rule 613(j)(5) to mean ``with
respect to a customer, a code that uniquely and consistently identifies
such customer for purposes of providing data to the Central
Repository.'' SEC Rule 613(c)(8) requires Industry Members to use the
same Customer-ID for each Customer. The SEC granted the Participants
exemptive relief to permit the use of an alternative approach to the
requirement that an Industry Member report a Customer-ID for every
Customer upon original receipt or origination.\10\ The alternative
approach is called the Customer Information Approach.
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    \10\ See Securities Exchange Act Release No. 77265 (March 1,
2016), 81 FR 11856 (March 7, 2016) (``Exemption Order''); see also
Letter from Participants to Brent J. Fields, Secretary, Commission,
dated January 30, 2015 at 12 (``Exemptive Request Letter''); and CAT
NMS Plan at Appendix C, Section A.1(a)(iii).
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    Under the Customer Information Approach, the CAT NMS Plan would
require each Industry Member to assign a unique Firm Designated ID to
each Customer. As the Firm Designated ID, Industry Members would be
permitted to use an account number or any other identifier defined by
the firm, provided each identifier is unique across the firm for each
business date (i.e., a single firm may not have multiple separate
customers with the same identifier on any given date). Prior to their
commencement of reporting to the CAT, Industry Members would submit an
initial set of Customer information to the Central Repository,
including the Firm Designated ID, Customer Identifying Information and
Customer Account Information (which may include, as applicable, the
Customer's name, address, date of birth, individual tax payer
identifier number (``ITIN'')/social security number (``SSN''),
individual's role in the account (e.g., primary holder, joint holder,
guardian, trustee, person with power of attorney) and LEI and/or Larger
Trader ID (``LTID'')). This process is referred to as the customer
definition process.
    In accordance with the Customer Information Approach, Industry
Members would be required to report only the Firm Designated ID for
each new order submitted to the Central Repository, rather than the
``Customer-ID'' with individual order events. Within the Central
Repository, each Customer would be uniquely identified by identifiers
or a combination of identifiers such as ITIN/SSN, date of birth, and as
applicable, LEI and LTID. The Plan Processor would be required to use
these unique identifiers to map orders to specific Customers across all
Industry Members and Participants. To ensure information identifying a
Customer is up to date, Industry Members would be required to submit to
the Central Repository daily and periodic updates for reactivated
accounts, newly established accounts, and revised Firm Designated IDs
or associated reportable Customer information.
(ii) Definition of Account Effective Date
    In connection with the Customer Information Approach, Industry
Members would be required to report Customer Account Information to the
Central Repository. ``Customer Account Information'' is defined in SEC
Rule 613(j)(4) to ``include, but not be limited to, account number,
account type, customer type, date account opened, and large trader
identifier (if applicable).'' Therefore, when reporting Customer
Account Information, an Industry Member is required to report the date
an account was opened. The Participants requested and received an
exemption to allow an ``Account Effective Date'' to be reported in lieu
of an account open date in certain limited circumstances. The
definition of ``Account Effective Date'' as set forth in paragraph (a)
of proposed Rule 6.85 describes those limited circumstances in which an
Industry Member may report an ``Account Effective Date'' rather than
the account open date. The proposed definition is the same as the
definition of ``Account Effective Date'' set forth in Section 1.1 of
the CAT NMS Plan, provided, however, that specific dates have replaced
the descriptions of those dates set forth in Section 1.1 of the Plan.
    Specifically, paragraph (a)(i) defines ``Account Effective Date to
mean, with regard to those circumstances in which an Industry Member
has established a trading relationship with an institution but has not
established an account with that institution: (A) When the trading
relationship was established prior to November 15, 2018 for Industry
Members other than Small Industry Members, or prior to November 15,
2019 for Small Industry Members, either (1) the date the relationship
identifier was established within the Industry Member; (2) the date
when trading began (i.e., the date the first order was received) using
the relevant relationship identifier; or (3) if both dates are
available, the earlier date will be used to the extent that the dates
differ; or (B) when the trading relationship was established on or
after November 15,

2018 for Industry Members other than Small Industry Members, or on or
after November 15, 2019 for Small Industry Members, the date the
Industry Member established the relationship identifier, which would be
no later than the date the first order was received.
    Paragraph (a)(ii) states that an ``Account Effective Date'' means,
where an Industry Member changes back office providers or clearing
firms prior to November 15, 2018 for Industry Members other than Small
Industry Members, or prior to November 15, 2019 for Small Industry
Members, the date an account was established at the relevant Industry
Member, either directly or via transfer.
    Paragraph (a)(iii) states that an ``Account Effective Date'' means,
where an Industry Member acquires another Industry Member prior to
November 15, 2018 for Industry Members other than Small Industry
Members, or prior to November 15, 2019 for Small Industry Members, the
date an account was established at the relevant Industry Member, either
directly or via transfer.
    Paragraph (a)(iv) states that ``Account Effective Date'' means,
where there are multiple dates associated with an account established
prior to November 15, 2018 for Industry Members other than Small
Industry Members, or prior to November 15, 2019 for Small Industry
Members, the earliest available date.
    Paragraph (a)(v) states that an ``Account Effective Date'' means,
with regard to Industry Member proprietary accounts established prior
to November 15, 2018 for Industry Members other than Small Industry
Members, or prior to November 15, 2019 for Small Industry Members: (A)
The date established for the account in the Industry Member or in a
system of the Industry Member or (B) the date when proprietary trading
began in the account (i.e., the date on which the first orders were
submitted from the account). With regard to paragraphs (a)(ii) through
(v), the Account Effective Date will be no later than the date trading
occurs at the Industry Member or in the Industry Member's system.
(B) Active Account
    Under the Customer Information Approach, Industry Members are
required to report Customer Identifying Information and Customer
Account Information for only those accounts that are active. This will
alleviate the need for Industry Members to update such information for
non-active accounts, but still ensure that the Central Repository will
collect audit trail data for Customer accounts that have any Reportable
Events. Accordingly, paragraph (b) of proposed Rule 6.85 defines an
``Active Account'' as an account that has had activity in Eligible
Securities within the last six months. This is the same definition as
set forth in Section 1.1 of the CAT NMS Plan.
(C) Allocation Report
(i) Allocation Report Approach
    SEC Rule 613(c)(7)(vi)(A) requires each Industry Member to record
and report to the Central Repository ``the account number for any
subaccounts to which the execution is allocated (in whole or in
part).'' The SROs requested and received from the SEC exemptive relief
from SEC Rule 613 for an alternative to this approach (``Allocation
Report Approach''). The Allocation Report Approach would permit
Industry Members to record and report to the Central Repository an
Allocation Report that includes, among other things, the Firm
Designated ID for any account(s) to which executed shares are allocated
when an execution is allocated in whole or part in lieu of requiring
the reporting of the account number for any subaccount to which an
execution is allocated, as is required by SEC Rule 613.\11\ Under SEC
Rule 613, regulators would be able to link the subaccount to which an
allocation was made to a specific order. In contrast, under the
Allocation Report Approach, regulators would only be able to link an
allocation to the account to which it was made, and not to a specific
order.
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    \11\ See Exemptive Request Letter at 26-27; and Exemption Order.
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(ii) Definition of Allocation Report
    To assist in implementing the Allocation Report Approach, paragraph
(c) of proposed Rule 6.85 defines an ``Allocation Report.''
Specifically, an ``Allocation Report'' means a report made to the
Central Repository by an Industry Member that identifies the Firm
Designated ID for any account(s), including subaccount(s), to which
executed shares are allocated and provides the security that has been
allocated, the identifier of the firm reporting the allocation, the
price per share of shares allocated, the side of shares allocated, the
number of shares allocated to each account, and the time of the
allocation; provided, for the avoidance of doubt, any such Allocation
Report shall not be required to be linked to particular orders or
executions. This is the same definition as set forth in Section 1.1 of
the CAT NMS Plan.
(D) Business Clock
    To create the required audit trail, Industry Members are required
to record the date and time of various Reportable Events to the Central
Repository. Industry Members will use ``Business Clocks'' to record
such dates and times. Accordingly, paragraph (d) of proposed Rule 6.85
defines the term ``Business Clock'' as a clock used to record the date
and time of any Reportable Event required to be reported under proposed
Section F. This is the same definition as set forth in Section 1.1 of
the CAT NMS Plan, except CBOE proposes to replace the phrase ``under
SEC Rule 613'' at the end of the definition in Section 1.1 of the Plan
with the phrase ``under this Rule Series.'' This change is intended to
recognize that the Industry Members' obligations with regard to the CAT
are set forth in proposed Section F.
(E) CAT
    Paragraph (e) of proposed Rule 6.85 defines the term ``CAT'' to
mean the consolidated audit trail contemplated by SEC Rule 613. This is
the same definition as set forth in Section 1.1 of the CAT NMS Plan.
(F) CAT NMS Plan
    Paragraph (f) of proposed Rule 6.85 defines the term ``CAT NMS
Plan'' to mean the National Market System Plan Governing the
Consolidated Audit Trail, as amended from time to time.
(G) CAT-Order-ID
(i) Daisy Chain Approach
    Under the CAT NMS Plan, the Daisy Chain Approach is used to link
and reconstruct the complete lifecycle of each Reportable Event in CAT.
According to this Approach, Industry Members assign their own
identifiers to each order event. Within the Central Repository, the
Plan Processor later replaces the identifier provided by the Industry
Member for each Reportable Event with a single identifier, called the
CAT Order-ID, for all order events pertaining to the same order. This
CAT Order-ID is used to link the Reportable Events related to the same
order.
(ii) Definition of CAT-Order-ID
    To implement the Daisy Chain Approach, paragraph (g) of proposed
Rule 6.85 defines the term ``CAT-Order-ID.'' The term ``CAT-Order-ID''
is defined to mean a unique order identifier or series of unique order
identifiers that allows the Central Repository to efficiently and
accurately link all Reportable Events for an order, and all orders that
result from the aggregation or disaggregation of such

order. This is the same definition as set forth in SEC Rule 613(j)(1),
and Section 1.1 of the CAT NMS Plan defines ``CAT-Order-ID'' by
reference to SEC Rule 613(j)(1).
(H) CAT Reporting Agent
    The CAT NMS Plan permits an Industry Member to use a third party,
such as a vendor, to report the required data to the Central Repository
on behalf of the Industry Member.\12\ Such a third party, referred to
in this proposed Section F as a ``CAT Reporting Agent,'' would be one
type of a Data Submitter, that is, a party that submits data to the
Central Repository. Paragraph (h) of proposed Rule 6.85 defines the
term ``CAT Reporting Agent'' to mean a Data Submitter that is a third
party that enters into an agreement with an Industry Member pursuant to
which the CAT Reporting Agent agrees to fulfill such Industry Member's
obligations under proposed Section F.
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    \12\ Appendix C, Section A.1(a) of the CAT NMS Plan.
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    This definition is based on FINRA's definition of a ``Reporting
Agent'' as set forth in FINRA's rule related to its Order Audit Trail
System (``OATS''). Specifically, FINRA Rule 7410(n) defines a
``Reporting Agent'' as a third party that enters into any agreement
with a member pursuant to which the Reporting Agent agrees to fulfill
such member's reporting obligations under Rule 7450. The Reporting
Agent for OATS fulfills a similar role to the CAT Reporting Agent.
(I) Central Repository
    Paragraph (i) of proposed Rule 6.85 defines the term ``Central
Repository'' to mean the repository responsible for the receipt,
consolidation, and retention of all information reported to the CAT
pursuant to SEC Rule 613 and the CAT NMS Plan. This is the same
definition as set forth in Section 1.1 of the CAT NMS Plan, except CBOE
uses the phrase ``CAT NMS Plan'' in place of the phrase ``this
Agreement.''
(J) Compliance Threshold
    Paragraph (j) of proposed Rule 6.85 defines the term ``Compliance
Threshold'' as having the meaning set forth in proposed Rule 6.95(d).
This definition has the same substantive meaning as the definition set
forth in Section 1.1 of the CAT NMS Plan. As discussed in detail below
with regard to proposed Rule 6.95(d), each Industry Member is required
to meet a separate compliance threshold which will be an Industry
Member-specific rate that may be used as the basis for further review
or investigation into the Industry Member's performance with regard to
the CAT. This Industry Member-specific rate is the ``Compliance
Threshold.''
(K) Customer
    Industry Members are required to submit to the Central Repository
certain information related to their Customers, including Customer
Identifying Information and Customer Account Information, as well as
data related to their Customer's Reportable Events. Accordingly,
paragraph (k) of proposed Rule 6.85 proposes to define the term
``Customer.'' Specifically, the term ``Customer'' would be defined to
mean: (i) The account holder(s) of the account at an Industry Member
originating the order; and (ii) any person from whom the Industry
Member is authorized to accept trading instructions for such account,
if different from the account holder(s). This is the same definition as
set forth in SEC Rule 613(j)(3), except CBOE proposes to replace the
references to a registered broker-dealer or broker-dealer with a
reference to an Industry Member for consistency of terms used in
proposed Section F. CBOE also notes that Section 1.1 of the CAT NMS
Plan defines ``Customer'' by reference to SEC Rule 613(j)(3).
(L) Customer Account Information
    As discussed above, under the Customer Information Approach,
Industry Members are required to report Customer Account Information to
the Central Repository as part of the customer definition process.
Accordingly, CBOE proposes to define the term ``Customer Account
Information'' to clarify what customer information would need to be
reported to the Central Repository.
    Paragraph (l) of proposed Rule 6.85 defines the term ``Customer
Account Information'' to include, in part, account number, account
type, customer type, date account opened, and large trader identifier
(if applicable). Proposed Rule 6.85(l), however, provides an
alternative definition of ``Customer Account Information'' in two
limited circumstances. First, in those circumstances in which an
Industry Member has established a trading relationship with an
institution but has not established an account with that institution,
the Industry Member will: (i) Provide the Account Effective Date in
lieu of the ``date account opened''; (ii) provide the relationship
identifier in lieu of the ``account number''; and (iii) identify the
``account type'' as a ``relationship.'' Second, in those circumstances
in which the relevant account was established prior to November 15,
2018 for Industry Members other than Small Industry Members, or prior
to November 15, 2019 for Small Industry Members, and no ``date account
opened'' is available for the account, the Industry Member will provide
the Account Effective Date in the following circumstances: (i) Where an
Industry Member changes back office providers or clearing firms and the
date account opened is changed to the date the account was opened on
the new back office/clearing firm system; (ii) where an Industry Member
acquires another Industry Member and the date account opened is changed
to the date the account was opened on the post-merger back office/
clearing firm system; (iii) where there are multiple dates associated
with an account in an Industry Member's system, and the parameters of
each date are determined by the individual Industry Member; and (iv)
where the relevant account is an Industry Member proprietary account.
The proposed definition is the same as the definition of ``Customer
Account Information'' set forth in Section 1.1 of the CAT NMS Plan,
provided, however, that specific dates have replaced the descriptions
of those dates set forth in Section 1.1 of the Plan.
(M) Customer Identifying Information
    As discussed above, under the Customer Information Approach,
Industry Members are required to report Customer Identifying
Information to the Central Repository as part of the customer
definition process. Accordingly, CBOE proposes to define the term
``Customer Account Information'' to clarify what Customer information
would need to be reported to the Central Repository.
    Paragraph (m) of proposed Rule 6.85 defines the term ``Customer
Identifying Information'' to mean information of sufficient detail to
identify a Customer. With respect to individuals, ``Customer
Identifying Information'' includes, but is not limited to: Name,
address, date of birth, individual tax payer identification number
(``ITIN'')/social security number (``SSN''), individual's role in the
account (e.g., primary holder, joint holder, guardian, trustee, person
with the power of attorney). With respect to legal entities, ``Customer
Identifying Information'' includes, but is not limited to, name,
address, Employer Identification Number (``EIN'')/Legal Entity
Identifier (``LEI'') or other comparable common entity identifier, if
applicable. The definition further notes that an Industry Member that
has an LEI for a Customer must submit the Customer's LEI in addition to
other information of sufficient detail to

identify the Customer. This is the same definition as set forth in
Section 1.1 of the CAT NMS Plan.
(N) Data Submitter
    The CAT NMS Plan uses the term ``Data Submitter'' to refer to any
person that reports data to the Central Repository.\13\ Such Data
Submitters may include those entities that are required to submit data
to the Central Repository (e.g., national securities exchanges,
national securities associations and Industry Members), third-parties
that may submit data to the CAT on behalf of CAT Reporters (i.e., CAT
Reporting Agents), and outside parties that are not required to submit
data to the CAT but from which the CAT may receive data (e.g.,
securities information processors (``SIPs'')). To include this term in
proposed Section F, CBOE proposes to define ``Data Submitter'' in
paragraph (n) of proposed Rule 6.85. Specifically, paragraph (n) of
proposed Rule 6.85 defines a ``Data Submitter'' to mean any person that
reports data to the Central Repository, including national securities
exchanges, national securities associations, broker-dealers, the SIPs
for the CQS, CTA and the UTP Plans and the Plan for Reporting of
Consolidated Options Last Sale Reports and Quotation Information
(``OPRA''), and certain other vendors or third parties that may submit
data to the Central Repository on behalf of Industry Members.
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    \13\ Appendix C, Section A.1(a) of the CAT NMS Plan.
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(O) Eligible Security
    The reporting requirements of proposed Section F only apply to
Reportable Events in Eligible Securities. Currently, an Eligible
Security includes NMS Securities and OTC Equity Securities.
Accordingly, paragraph (o) of proposed Rule 6.85 defines the term
``Eligible Security'' to include: (i) All NMS Securities; and (ii) all
OTC Equity Securities. The terms ``NMS Securities'' and ``OTC Equity
Securities'' are defined, in turn, below. This is the same definition
as set forth in Section 1.1 of the CAT NMS Plan.
(P) Error Rate
(i) Maximum Error Rate
    Under the CAT NMS Plan, the Operating Committee sets the maximum
Error Rate that the Central Repository would tolerate from an Industry
Member reporting data to the Central Repository.\14\ The Operating
Committee reviews and resets the maximum Error Rate, at least
annually.\15\ If an Industry Member reports CAT data to the Central
Repository with errors such that their error percentage exceeds the
maximum Error Rate, then such Industry Member would not be in
compliance with the CAT NMS Plan or Rule 613.\16\ As such, CBOE or the
SEC ``may [sic] take appropriate action against an Industry Member for
failing to comply with its CAT reporting obligations.\17\ The CAT NMS
Plan sets the initial Error Rate at 5%.\18\ It is anticipated that the
maximum Error Rate will be reviewed and lowered by the Operating
Committee once Industry Members begin to report to the Central
Repository.\19\
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    \14\ Section 6.5(d)(i) of the CAT NMS Plan.
    \15\ Appendix C, Section A.3(b) of the CAT NMS Plan.
    \16\ Appendix C, Section A.3(b) of the CAT NMS Plan; Rule
613(g)-(h).
    \17\ Appendix C, Section A.3(b) of the CAT NMS Plan.
    \18\ Section 6.5(d)(i) of the CAT NMS Plan.
    \19\ Appendix C, Section A.3(b) of the CAT NMS Plan.
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    The CAT NMS Plan requires the Plan Processor to: (1) Measure and
report errors every business day; (2) provide Industry Members daily
statistics and error reports as they become available, including a
description of such errors; (3) provide monthly reports to Industry
Members that detail an Industry Member's performance and comparison
statistics; (4) define educational and support programs for Industry
Members to minimize Error Rates; and (5) identify, daily, all Industry
Members exceeding the maximum allowable Error Rate. To timely correct
data-submitted errors to the Central Repository, the CAT NMS Plan
requires that the Central Repository receive and process error
corrections at all times. Further, the CAT NMS Plan requires that
Industry Members be able to submit error corrections to the Central
Repository through a web-interface or via bulk uploads or file
submissions, and that the Plan Processor, subject to the Operating
Committee's approval, support the bulk replacement of records and the
reprocessing of such records. The Participants, furthermore, require
that the Plan Processor identify Industry Member data submission errors
based on the Plan Processor's validation processes.\20\
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    \20\ Approval Order at 84718.
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(ii) Definition of Error Rate
    To implement the requirements of the CAT NMS Plan related to the
Error Rate, CBOE proposes to define the term ``Error Rate'' in proposed
Rule 6.85. Paragraph (p) of proposed Rule 6.85 defines the term ``Error
Rate'' to mean the percentage of Reportable Events collected by the
Central Repository in which the data reported does not fully and
accurately reflect the order event that occurred in the market. This is
the same definition as set forth in SEC Rule 613(j)(6), and Section 1.1
of the CAT NMS Plan defines ``Error Rate'' by reference to SEC Rule
613(j)(6).
(Q) Firm Designated ID
    As discussed above, under the Customer Information Approach, the
CAT NMS Plan would require each Industry Member to assign a unique Firm
Designated ID to each Customer. Industry Members would be permitted to
use as the Firm Designated ID an account number or any other identifier
defined by the firm, provided each identifier is unique across the firm
for each business date (i.e., a single firm may not have multiple
separate customers with the same identifier on any given date).
Industry Members would be required to report only the Firm Designated
ID for each new order submitted to the Central Repository, rather than
the ``Customer-ID'' with individual order events. Accordingly, CBOE
proposes to define the term ``Firm Designated ID'' in proposed Rule
6.85. Specifically, paragraph (q) of proposed Rule 6.85 defines the
term ``Firm Designated ID'' to mean a unique identifier for each
trading account designated by Industry Members for purposes of
providing data to the Central Repository, where each such identifier is
unique among all identifiers from any given Industry Member for each
business date. This is the same definition as set forth in Section 1.1
of the CAT NMS Plan. Industry Members would be permitted to use an
account number or any other identifier defined by the firm, provided
each identifier is unique across the firm for each business date (i.e.,
a single firm may not have multiple separate customers with the same
identifier on any given date).
(R) Industry Member
    Paragraph (r) of proposed Rule 6.85 defines the term ``Industry
Member'' to mean a member of a national securities exchange or a member
of a national securities association.'' This is the same definition as
set forth in Section 1.1 of the CAT NMS Plan.
(S) Industry Member Data
    Paragraph (s) of proposed Rule 6.85 states that the term ``Industry
Member Data'' has the meaning set forth in Rule 6.87(a)(ii). This
definition has the same substantive meaning as the definition set forth
in Section 1.1 of the CAT NMS Plan. The definition of ``Industry

Member Data'' is discussed more fully in the discussion below regarding
proposed Rule 6.87(a)(ii).
(T) Initial Plan Processor
    Paragraph (t) of proposed Rule 6.85 defines the term ``Initial Plan
Processor'' to mean the first Plan Processor selected by the Operating
Committee in accordance with SEC Rule 613, Section 6.1 of the CAT NMS
Plan and the National Market System Plan Governing the Process for
Selecting a Plan Processor and Developing a Plan for the Consolidated
Audit Trail. This is the same definition as set forth in Section 1.1 of
the CAT NMS Plan, although the proposed definition uses the full name
of the ``Selection Plan.''
(U) Listed Option or Option
    The CAT NMS Plan and proposed Section F applies to Eligible
Securities, which includes NMS Securities, which, in turn, includes
Listed Options. Certain requirements of proposed Section F apply
specifically to Listed Options. Accordingly, paragraph (u) of proposed
Rule 6.85 defines the term ``Listed Option'' or ``Option.''
Specifically, paragraph (u) of proposed Rule 6.85 states that the term
``Listed Option'' or ``Option'' has the meaning set forth in SEC Rule
600(b)(35) of Regulation NMS. SEC Rule 600(b)(35), in turn, defines a
listed option as ``any option traded on a registered national
securities exchange or automated facility of a national securities
association.'' CBOE notes that the proposed definition of ``Listed
Option'' is the same definition as the definition set forth in Section
1.1 of the CAT NMS Plan.
(V) Manual Order Event
(i) Manual Order Event Approach
    The CAT NMS Plan sets forth clock synchronization and timestamp
requirements for Industry Members, which reflect exemptions for Manual
Order Events granted by the Commission.\21\ Specifically, the Plan
requires Industry Members to record and report the time of each
Reportable Event using timestamps reflecting current industry standards
(which must be at least to the millisecond) or, if an Industry Member's
order handling and execution system uses timestamps in increments finer
than milliseconds, such finer increments, when reporting to the Central
Repository. For Manual Order Events, however, the Plan provides that
such events must be recorded in increments up to and including one
second, provided that Industry Members record and report the time the
event is captured electronically in an order handling and execution
system (i.e., electronic capture time) in milliseconds. In addition,
Industry Members are required to synchronize their respective Business
Clocks (other than such Business Clocks used solely for Manual Order
Events) at a minimum to within 50 milliseconds of the time maintained
by the National Institute of Standards and Technology (``NIST''), and
maintain such a synchronization. Each Industry Members is required to
synchronize their Business Clocks used solely for Manual Order Events,
however, at a minimum to within one second of the time maintained by
the NIST.
---------------------------------------------------------------------------

    \21\ Exemption Order.
---------------------------------------------------------------------------

(ii) Definition of Manual Order Event
    In order to clarify what a Manual Order Event is for clock
synchronization and time stamp purposes, CBOE proposes to define the
term ``Manual Order Event'' in proposed Rule 6.85. Specifically,
paragraph (v) of proposed Rule 6.85 defines the term ``Manual Order
Event'' to mean a non-electronic communication of order-related
information for which Industry Members must record and report the time
of the event. This is the same definition as set forth in Section 1.1
of the CAT NMS Plan.
(W) Material Terms of the Order
    Proposed Rule 6.87 requires Industry Members to record and report
to the Central Repository Material Terms of the Order with certain
Reportable Events (e.g., for the original receipt or origination of an
order, for the routing of an order). Accordingly, CBOE proposes to
define the term ``Material Terms of the Order'' in proposed Rule 6.85.
Specifically, paragraph (w) of proposed Rule 6.85 defines the term
``Material Terms of the Order'' to include: The NMS Security or OTC
Equity Security symbol; security type; price (if applicable); size
(displayed and non-displayed); side (buy/sell); order type; if a sell
order, whether the order is long, short, short exempt; \22\ open/close
indicator (except on transactions in equities); time in force (if
applicable); if the order is for a Listed Option, option type (put/
call), option symbol or root symbol, underlying symbol, strike price,
expiration date, and open/close (except on market maker quotations;
\23\) and any special handling instructions. This is the same
definition as set forth in Section 1.1 of the CAT NMS Plan.
---------------------------------------------------------------------------

    \22\ The Exchange notes identification of a sell order as long,
short, or short exempt does not apply to Option transactions. The
Exchange may work with the Operating Committee to seek an amendment
to the Plan to reflect this.
    \23\ The Exchange notes its rules do not require market-makers
to identify certain orders, in addition to quotations, as open/
close. See Rule 6.51(d). The Exchange may work with the Operating
Committee to seek an amendment to the Plan to reflect this.
---------------------------------------------------------------------------

(X) NMS Security
    NMS Securities are one of the types of Eligible Securities for the
CAT. Therefore, CBOE proposes to define the term ``NMS Security'' in
proposed Rule 6.85. Specifically, paragraph (x) of proposed Rule 6.85
defines the term ``NMS Security'' to mean any security or class of
securities for which transaction reports are collected, processed, and
made available pursuant to an effective transaction reporting plan, or
an effective national market system plan for reporting transactions in
Listed Options. This is the same definition as set forth in Section 1.1
of the CAT NMS Plan.
(Y) NMS Stock
    Under the CAT NMS Plan, the Operating Committee may establish
different Trading Days for NMS Stocks (as defined in SEC Rule
600(b)(47)), Listed Options, OTC Equity Securities, and any other
securities that are included as Eligible Securities from time to time.
Accordingly, CBOE proposes to define the term ``NMS Stock'' in
paragraph (y) of proposed Rule 6.85(y) to mean any NMS Security other
than an option. This is the same definition as set forth in SEC Rule
600(b)(47) of Regulation NMS.
(Z) Operating Committee
    Paragraph (z) of proposed Rule 6.85 defines the term ``Operating
Committee'' to mean the governing body of the CAT NMS, LLC designated
as such and described in Article IV of the CAT NMS Plan. This is the
same definition as set forth in Section 1.1 of the CAT NMS Plan, except
CBOE proposes to use the phrase ``CAT NMS LLC'' in place of the phrase
``the Company'' for clarity.
(AA) Options Market Maker
(i) Options Market Maker Quote Exemption
    SEC Rule 613(c)(7) provides that the CAT NMS Plan must require each
Industry Member to record and electronically report to the Central
Repository details for each order and each reportable event, including
the routing and modification or cancellation of an order. SEC Rule
613(j)(8) defines ``order'' to include ``any bid or offer.'' Therefore,
under SEC Rule 613, the details for each Options Market Maker quotation
must be reported to the

Central Repository by both the Options Market Maker and the options
exchange to which it routes its quote.
    The SROs, however, requested and received exemptive relief from SEC
Rule 613 so that the CAT NMS Plan may permit Options Market Maker
quotes to be reported to the Central Repository by the relevant options
exchange in lieu of requiring that such reporting be done by both the
options exchange and the Options Market Maker, as is required by SEC
Rule 613.\24\ In accordance with the exemptive relief, Options Market
Makers would be required to report to the options exchange the time at
which a quote in a Listed Option is sent to the options exchange. Such
time information also will be reported to the Central Repository by the
options exchange in lieu of reporting by the Options Market Maker
---------------------------------------------------------------------------

    \24\ See Exemptive Request Letter at 2, and Exemption Order.
---------------------------------------------------------------------------

(ii) Definition of Options Market Maker
    To implement the requirements related to Option Market Maker
quotes, CBOE proposes to define the term ``Options Market Maker'' in
proposed Rule 6.85. Specifically, paragraph (aa) of proposed Rule 6.85
defines the term ``Options Market Makers'' to mean a broker-dealer
registered with an exchange for the purpose of making markets in
options contracts traded on the exchange. This is the same definition
as set forth in Section 1.1 of the CAT NMS Plan.
(BB) Order
    Section F requires each Industry Member to record and
electronically report to the Central Repository certain details for
each order. Accordingly, CBOE proposes to define the term ``Order'' in
proposed Rule 6.85. Specifically, paragraph (bb) of proposed Rule 6.85
defines the term ``Order,'' with respect to Eligible Securities, to
include: (i) Any order received by an Industry Member from any person;
(ii) any order originated by an Industry Member; or (iii) any bid or
offer. This is the same definition as set forth in SEC Rule 613(j)(8),
except CBOE proposes to replace the phrase ``member of a national
securities exchange or national securities association'' with the term
``Industry Member.'' CBOE notes that Section 1.1 of the CAT NMS Plan
defines ``Order'' by reference to SEC Rule 613(j)(8).
(CC) OTC Equity Security
    OTC Equity Securities are one of the types of Eligible Securities
for the CAT. Therefore, CBOE proposes to define the term ``OTC Equity
Security'' in proposed Rule 6.85. Specifically, paragraph (cc) of
proposed Rule 6.85 defines the term ``OTC Equity Security'' to mean any
equity security, other than an NMS Security, subject to prompt last
sale reporting rules of a registered national securities association
and reported to one of such association's equity trade reporting
facilities. This is the same definition as set forth in Section 1.1 of
the CAT NMS Plan.
(DD) Participant
    Paragraph (dd) of proposed Rule 6.85 defines the term
``Participant'' to mean each Person identified as such in Exhibit A of
the CAT NMS Plan, as amended, in such Person's capacity as a
Participant in CAT NMS, LLC. This is the same definition in substance
as set forth in Section 1.1 of the CAT NMS Plan.
(EE) Person
    Paragraph (ee) of proposed Rule 6.85 defines the term ``Person'' to
mean any individual, partnership, limited liability company,
corporation, joint venture, trust, business trust, cooperative or
association and any heirs, executors, administrators, legal
representatives, successors and assigns of such Person where the
context so permits. This is the same definition as set forth in Section
1.1 of the CAT NMS Plan.
(FF) Plan Processor
    Paragraph (ff) of proposed Rule 6.85 defines the term ``Plan
Processor'' to mean the Initial Plan Processor or any other Person
selected by the Operating Committee pursuant to SEC Rule 613 and
Sections 4.3(b)(i) and 6.1 of the CAT NMS Plan, and with regard to the
Initial Plan Processor, the National Market System Plan Governing the
Process for Selecting a Plan Processor and Developing a Plan for the
Consolidated Audit Trail, to perform the CAT processing functions
required by SEC Rule 613 and set forth in the CAT NMS Plan.
(GG) Received Industry Member Data
    Paragraph (gg) of proposed Rule 6.85 states that the term
``Received Industry Member Data'' has the meaning set forth in proposed
Rule 6.87(a)(ii). This definition has the same substantive meaning as
the definition set forth in Section 1.1 of the CAT NMS Plan. The
definition of ``Received Industry Member Data'' is discussed more fully
in the discussion below regarding proposed Rule 6.87(a)(ii).
(HH) Recorded Industry Member Data
    Paragraph (hh) of proposed Rule 6.85 states that the term
``Recorded Industry Member Data'' has the meaning set forth in proposed
Rule 6.87(a)(i). This definition has the same substantive meaning as
the definition set forth in Section 1.1 of the CAT NMS Plan. The
definition of ``Recorded Industry Member Data'' is discussed more fully
in the discussion below regarding proposed Rule 6.87(a)(i).
(II) Reportable Event
    Proposed Section F requires each Industry Member to record and
electronically report to the Central Repository certain details for
each Reportable Event. To clarify these requirements, CBOE proposes to
define the term ``Reportable Event'' in proposed Rule 6.85.
Specifically, paragraph (ii) of proposed Rule 6.85 states that the term
``Reportable Event'' includes, but is not limited to, the original
receipt or origination, modification, cancellation, routing, execution
(in whole or in part) and allocation of an order, and receipt of a
routed order. This is the same definition as set forth in Section 1.1
of the CAT NMS Plan.
(JJ) SRO
    Paragraph (jj) of proposed Rule 6.85 defines the term ``SRO'' to
mean any self-regulatory organization within the meaning of Section
3(a)(26) of the Exchange Act. This is the same definition as set forth
in Section 1.1 of the CAT NMS Plan.
(KK) SRO-Assigned Market Participant Identifier
(i) Existing Identifier Approach
    The SROs requested and received exemptive relief from SEC Rule 613
so that the CAT NMS Plan may permit the Existing Identifier Approach,
which would allow an Industry Member to report an existing SRO-Assigned
Market Participant Identifier in lieu of requiring the reporting of a
universal CAT-Reporter-ID (that is, a code that uniquely and
consistently identifies an Industry Member for purposes of providing
data to the Central Repository).\25\ The CAT NMS Plan reflects the
``Existing Identifier Approach'' for purposes of identifying each
Industry Member associated with an order or Reportable Event. Under the
Existing Identifier Approach, Industry Members are required to record
and report to the Central Repository an SRO-

Assigned Market Participant Identifier for orders and certain
Reportable Events to be used by the Central Repository to assign a
unique CAT-Reporter-ID to identify Industry Members.
---------------------------------------------------------------------------

    \25\ See Exemptive Request Letter at 19, and Exemption Order.
---------------------------------------------------------------------------

    For the Central Repository to link the SRO-Assigned Market
Participant Identifier to the CAT-Reporter-ID, each SRO will submit to
the Central Repository, on a daily basis, all SRO-Assigned Market
Participant Identifiers used by its Industry Members, as well as
information to identify each such Industry Member, including CRD number
and LEI, if the SRO has collected such LEI of the Industry Member.
Additionally, each Industry Member is required to submit to the Central
Repository the CRD number of the Industry Member as well as the LEI of
the Industry Member (if the Industry Member has an LEI). The Plan
Processor will use this information to assign a CAT-Reporter-ID to each
Industry Member for internal use within the Central Repository.
(ii) Definition of SRO-Assigned Market Participant Identifier
    To implement the Existing Identifier Approach, CBOE proposes to
define the term ``SRO-Assigned Market Participant Identifier'' in
proposed Rule 6.85. Specifically, paragraph (kk) of proposed Rule 6.85
defines the term ``SRO-Assigned Market Participant Identifier'' to mean
an identifier assigned to an Industry Member by an SRO or an identifier
used by a Participant. This is the same definition as set forth in
Section 1.1 of the CAT NMS Plan. For example, an Industry Member would
be permitted to use any existing SRO-Assigned Market Participant
Identifier (e.g., FINRA MPID, NASDAQ MPID, NYSE Mnemonic, CBOE User
Acronym and CHX Acronym) when reporting order information to the
Central Repository.
(LL) Small Industry Member
    The requirements of proposed Section F differ to some extent for
Small Industry Members versus Industry Members other than Small
Industry Members. For example, the compliance dates for reporting data
to the CAT are different for Small Industry Members versus other
Industry Members. Accordingly, to clarify the requirements that apply
to which Industry Members, CBOE proposes to define the term ``Small
Industry Member'' in proposed Rule 6.85. Specifically, paragraph (ll)
of proposed Rule 6.85 defines the term ``Small Industry Member'' to
mean an Industry Member that qualifies as a small broker-dealer as
defined in Rule 0-10(c) under the Act. This is the same in substance as
the definition of ``Small Industry Member'' as set forth in Section 1.1
of the CAT NMS Plan. Specifically, Section 1.1 of the CAT NMS Plan
defines a ``Small Industry Member'' as ``an Industry Member that
qualifies as a small broker-dealer as defined in SEC Rule 613.'' The
definition of a small broker-dealer under SEC Rule 613, in turn, is a
small broker-dealer as defined in SEC Rule 0-10(c).
(MM) Trading Day
    Proposed Rule 6.87(b) establishes the deadlines for reporting
certain data to the Central Repository using the term ``Trading Day.''
Accordingly, CBOE proposes to define the term ``Trading Day'' in
proposed Rule 6.85. Specifically, paragraph (mm) of proposed Rule 6.85
states that the term ``Trading Day'' shall have the meaning as is
determined by the Operating Committee. For the avoidance of doubt, the
Operating Committee may establish different Trading Days for NMS Stocks
(as defined in SEC Rule 600(b)(47), Listed Options, OTC Equity
Securities, and any other securities that are included as Eligible
Securities from time to time.
(2) Clock Synchronization
    SEC Rule 613(d)(1) under Regulation NMS requires Industry Members
to synchronize their Business Clocks to the time maintained by the
National Institute of Standards and Technology (``NIST''), consistent
with industry standards. To comply with this provision, Section 6.8 of
the Plan sets forth the clock synchronization requirements for Industry
Members.\26\ To implement these provisions with regard to its Industry
Members, CBOE proposes Rule 6.86 (Clock Synchronization) to require its
Industry Members to comply with the clock synchronization requirements
of the Plan.
---------------------------------------------------------------------------

    \26\ In addition, Section 6.7(a)(ii) of the Plan sets forth the
timeline for CAT Reporters to comply with the clock synchronization
requirements.
---------------------------------------------------------------------------

    Paragraph (a) of proposed Rule 6.86 sets forth the manner in which
Industry Members must synchronize their Business Clocks. Paragraph
(a)(i) of proposed Rule 6.86 requires each Industry Member to
synchronize its Business Clocks, other than such Business Clocks used
solely for Manual Order Events or used solely for the time of
allocation on Allocation Reports, at a minimum to within a fifty (50)
millisecond tolerance of the time maintained by the NIST atomic clock,
and maintain such synchronization. This is the same requirement as set
forth in Section 6.8(a)(ii)(A) of the CAT NMS Plan.
    Paragraph (a)(ii) of proposed Rule 6.86 requires each Industry
Member to synchronize (A) its Business Clocks used solely for Manual
Order Events and (B) its Business Clocks used solely for the time of
allocation on Allocation Reports at a minimum to within a one second
tolerance of the time maintained by the NIST atomic clock, and maintain
such synchronization. This is the same requirement as set forth in
Section 6.8(a)(iii) and (iv) of the CAT NMS Plan.
    Paragraph (a)(iii) of proposed Rule 6.86 clarifies that the
tolerance described in paragraphs (a)(i) and (ii) of the proposed Rule
6.86 includes all of the following: (A) The time difference between the
NIST atomic clock and the Industry Member's Business Clock; (B) the
transmission delay from the source; and (C) the amount of drift of the
Industry Member's Business Clock. This description of the clock
synchronization tolerance is the same as set forth in paragraph (b) of
FINRA Rule 4590 (Synchronization of Member Business Clocks).
    Paragraph (a)(iv) of proposed Rule 6.86 requires Industry Members
to synchronize their Business Clocks every business day before market
open \27\ to ensure that timestamps for Reportable Events are accurate.
In addition, to maintain clock synchronization, Business Clocks must be
checked against the NIST atomic clock and re-synchronized, as
necessary, throughout the day. This description of the required
frequency of clock synchronization is the same as set forth in
paragraph (c) of FINRA Rule 4590 (Synchronization of Member Business
Clocks).
---------------------------------------------------------------------------

    \27\ CBOE has two separate trading sessions: Regular Trading
Hours and Extended Trading Hours. The proposed rule change states
this requirement applies before the open of each trading session.
---------------------------------------------------------------------------

    Paragraph (b) of proposed Rule 6.86 sets forth documentation
requirements with regard to clock synchronization. Specifically,
paragraph (b) requires Industry Members to document and maintain their
synchronization procedures for their Business Clocks. The proposed Rule
requires Industry Members to keep a log of the times when they
synchronize their Business Clocks and the results of the
synchronization process. This log is required to include notice of any
time a Business Clock drifts more than the applicable tolerance
specified in paragraph (a) of the proposed Rule. Such logs must include
results for a period of not less than five years ending on the then
current date, or for the entire period for which the Industry

Member has been required to comply with this Rule if less than five
years. These documentation requirements are the same as those set forth
in the ``Sequencing Orders and Clock Synchronization'' section of
Appendix C of the CAT NMS Plan. Moreover, these documentation
requirements regarding clock synchronization are comparable to those
set forth in Supplementary Material .01 of FINRA Rule 4590
(Synchronization of Member Business Clocks).
    Paragraph (c) of proposed Rule 6.86 sets forth certification
requirements with regard to clock synchronization. Specifically,
paragraph (c) of proposed Rule 6.86 requires each Industry Member to
certify to CBOE that its Business Clocks satisfy the synchronization
requirements set forth in paragraph (a) of proposed Rule 6.86
periodically in accordance with the certification schedule established
by the Operating Committee pursuant to the CAT NMS Plan. This
requirement is the same requirement as set forth in Section
6.8(a)(ii)(B), (iii) and (iv) of the CAT NMS Plan. CBOE intends to
announce to its Industry Members the certification schedule established
by the Operating Committee via Regulatory Circular.
    Paragraph (d) of proposed Rule 6.86 establishes reporting
requirements with regard to clock synchronization. Paragraph (d) of
proposed Rule 6.86 requires Industry Members to report to the Plan
Processor and CBOE violations of paragraph (a) of this proposed Rule
pursuant to the thresholds set by the Operating Committee pursuant to
the CAT NMS Plan. This requirement is the same requirement as set forth
in Section 6.8(a)(ii)(C), (iii) and (iv) of the CAT NMS Plan. CBOE
intends to announce to its Industry Members the relevant thresholds
established by the Operating Committee via Regulatory Circular.
(3) Industry Member Data Reporting
    SEC Rule 613(c) under Regulation NMS requires the CAT NMS Plan to
set forth certain provisions requiring Industry Members to record and
report data to the CAT. To comply with this provision, Section 6.4 of
the CAT NMS Plan sets forth the data reporting requirements for
Industry Members. To implement these provisions with regard to its
Industry Members, CBOE proposes Rule 6.87 (Industry Member Data
Reporting) to require its Industry Members to comply with the Industry
Member Data reporting requirements of the Plan. Proposed Rule 6.87 has
five sections covering: (a) Recording and reporting Industry Member
Data, (b) timing of the recording and reporting, (c) the applicable
securities covered by the recording and reporting requirements, (d) the
security symbology to be used in the recording and reporting, and (e)
error correction requirements, each of which is described below.
(A) Recording and Reporting Industry Member Data
    Paragraph (a) of proposed Rule 6.87 describes the recording and
reporting of Industry Member Data to the Central Repository. Paragraph
(a) consists of paragraphs (a)(i) through (a)(iii), which cover
Recorded Industry Member Data, Received Industry Member Data and
Options Market Maker data, respectively. Paragraphs (a)(i) through
(a)(iii) of proposed Rule 6.87 set forth the recording and reporting
requirements required in Section 6.4(d)(i) through (iii) of the CAT NMS
Plan, respectively.
    Paragraph (a)(i) requires, subject to paragraph (a)(iii) regarding
Options Market Makers, each Industry Member to record and
electronically report to the Central Repository the following details
for each order and each Reportable Event, as applicable (``Recorded
Industry Member Data'') in the manner prescribed by the Operating
Committee pursuant to the CAT NMS Plan:
    (A) For original receipt or origination of an order: (1) Firm
Designated ID(s) for each Customer; (2) CAT-Order-ID; (3) SRO-Assigned
Market Participant Identifier of the Industry Member receiving or
originating the order; (4) date of order receipt or origination; (5)
time of order receipt or origination (using time stamps pursuant to
proposed Rule 6.90); and (6) Material Terms of the Order;
    (B) for the routing of an order: (1) CAT-Order-ID; (2) date on
which the order is routed; (3) time at which the order is routed (using
time stamps pursuant to proposed Rule 6.90); (4) SRO-Assigned Market
Participant Identifier of the Industry Member routing the order; (5)
SRO-Assigned Market Participant Identifier of the Industry Member or
Participant to which the order is being routed; (6) if routed
internally at the Industry Member, the identity and nature of the
department or desk to which the order is routed; and (7) Material Terms
of the Order;
    (C) for the receipt of an order that has been routed, the following
information: (1) CAT-Order-ID; (2) date on which the order is received;
(3) time at which the order is received (using time stamps pursuant to
proposed Rule 6.90); (4) SRO-Assigned Market Participant Identifier of
the Industry Member receiving the order; (5) SRO-Assigned Market
Participant Identifier of the Industry Member or Participant routing
the order; and (6) Material Terms of the Order;
    (D) if the order is modified or cancelled: (1) CAT-Order-ID; (2)
date the modification or cancellation is received or originated; (3)
time at which the modification or cancellation is received or
originated (using time stamps pursuant to proposed Rule 6.90); (4)
price and remaining size of the order, if modified; (5) other changes
in the Material Terms of the Order, if modified; and (6) whether the
modification or cancellation instruction was given by the Customer or
was initiated by the Industry Member;
    (E) if the order is executed, in whole or in part: (1) CAT-Order-
ID; (2) date of execution; (3) time of execution (using time stamps
pursuant to proposed Rule 6.90; (4) execution capacity (principal,
agency or riskless principal); (5) execution price and size; (6) SRO-
Assigned Market Participant Identifier of the Industry Member executing
the order; and (7) whether the execution was reported pursuant to an
effective transaction reporting plan or OPRA; and
    (F) other information or additional events as may be prescribed
pursuant to the CAT NMS Plan.
    Paragraph (a)(ii) of proposed Rule 6.87 requires, subject to
paragraph (a)(iii) regarding Options Market Makers, each Industry
Member to record and report to the Central Repository the following, as
applicable (``Received Industry Member Data'' and collectively with the
information referred to in proposed Rule 6.87(a)(i) ``Industry Member
Data'') in the manner prescribed by the Operating Committee pursuant to
the CAT NMS Plan:
    (A) If the order is executed, in whole or in part: (1) Allocation
Report; (2) SRO-Assigned Market Participant Identifier of the clearing
broker or prime broker, if applicable; and (3) CAT-Order-ID of any
contra-side order(s);
    (B) if the trade is cancelled, a cancelled trade indicator; and
    (C) for original receipt or origination of an order, the Firm
Designated ID for the relevant Customer, and in accordance with
Proposed Rule 6.88, Customer Account Information and Customer
Identifying Information for the relevant Customer.
    Paragraph (a)(iii) of proposed Rule 6.87 states that each Industry
Member that is an Options Market Maker is not required to report to the
Central Repository the Industry Member Data regarding the routing,
modification or cancellation of its quotes in Listed Options. Each
Industry Member that is an Options Market Maker, however, is

required to report to the Exchange the time at which its quote in a
Listed Option is sent to the Exchange (and, if applicable, any
subsequent quote modification time and/or cancellation time when such
modification or cancellation is originated by the Options Market
Maker). This paragraph implements the Options Market Maker Quote
Exemption, as discussed above.
(B) Timing of Recording and Reporting
    Paragraph (b) of proposed Rule 6.87 describes the requirements
related to the timing of recording and reporting of Industry Member
Data. Paragraphs (b)(i) through (b)(iii) of proposed Rule 6.87 set
forth the requirements related to the timing of the recording and
reporting requirements required in Section 6.4(b)(i) through (ii) of
the CAT NMS Plan.
    Paragraph (b)(i) of proposed Rule 6.87 requires each Industry
Member to record Recorded Industry Member Data contemporaneously with
the applicable Reportable Event. Paragraph (b)(ii) of proposed Rule
6.87 requires each Industry Member to report: (A) Recorded Industry
Member Data to the Central Repository by 8:00 a.m. Eastern time on the
Trading Day following the day the Industry Member records such Recorded
Industry Member Data; and (B) Received Industry Member Data to the
Central Repository by 8:00 a.m. Eastern time on the Trading Day
following the day the Industry Member receives such Received Industry
Member Data. Paragraph (b)(iii) states that Industry Members may, but
are not required to, voluntarily report Industry Member Data prior to
the applicable 8:00 a.m. Eastern time deadline.
(C) Applicable Securities
    Paragraph (c) of proposed Rule 6.87 describes the securities to
which the recording and reporting requirements of proposed Rule 6.87
apply. Paragraphs (c)(i) and (c)(ii) of proposed Rule 6.87 set forth
the description of applicable securities as set forth in Section
6.4(c)(i) and (ii) of the CAT NMS Plan, respectively. Paragraph (c)(i)
of proposed Rule 6.87 requires each Industry Member to record and
report to the Central Repository the Industry Member Data as set forth
in paragraph (a) of proposed Rule 6.87 for each NMS Security registered
or listed for trading on an exchange or admitted to unlisted trading
privileges on an exchange. Paragraph (c)(ii) of proposed Rule 6.87
requires each Industry Member to record and report to the Central
Repository the Industry Member Data as set forth in paragraph (a) of
proposed Rule 6.87 for each Eligible Security for which transaction
reports are required to be submitted to a national securities
association.
(D) Security Symbology
    Paragraph (d) of proposed Rule 6.87 describes the security
symbology that Industry Members are required to use when reporting
Industry Member Data to the Central Repository. Paragraph (d)(i) of
proposed Rule 6.87 requires, for each exchange-listed Eligible
Security, each Industry Member to report Industry Member Data to the
Central Repository using the symbology format of the exchange listing
the security. This requirement implements the requirement set forth in
Section 2 of Appendix D of the CAT NMS Plan to use the listing exchange
symbology when reporting data to the Central Repository for exchange-
listed Eligible Securities.
    For each Eligible Security that is not exchange-listed, however,
there is no listing exchange to provide the symbology format. Moreover,
to date, the requisite symbology format has not been determined.
Therefore, paragraph (d)(ii) of proposed Rule 6.87 requires, for each
Eligible Security that is not exchange-listed, each Industry Member to
report Industry Member Data to the Central Repository using such
symbology format as approved by the Operating Committee pursuant to the
CAT NMS Plan. CBOE intends to announce to its Industry Members the
relevant symbology formats established by the Operating Committee via
Regulatory Circular.
(E) Error Correction
    To ensure that the CAT contains accurate data, the CAT NMS Plan
requires Industry Members to correct erroneous data submitted to the
Central Repository. Therefore, CBOE proposes to adopt paragraph (e) of
proposed Rule 6.87, which addresses the correction of erroneous data
reported to the Central Repository. Paragraph (e) of proposed Rule 6.87
requires, for each Industry Member for which errors in Industry Member
Data submitted to the Central Repository have been identified by the
Plan Processor or otherwise, that such Industry Member submit corrected
Industry Member Data to the Central Repository by 8:00 a.m. Eastern
time on T+3. This requirement implements the error correction
requirement set forth in Section 6 of Appendix D of the CAT NMS Plan.
(4) Customer Information Reporting
    Section 6.4(d)(iv) of the CAT NMS Plan requires Industry Members to
submit to the Central Repository certain information related to their
Customers in accordance with the Customer Information Approach
discussed above. CBOE proposes Rule 6.88 (Customer Information
Reporting) to implement this provision of the CAT NMS Plan with regard
to its Industry Members. Specifically, paragraph (a) of proposed Rule
6.88 requires each Industry Member to submit to the Central Repository
the Firm Designated ID, Customer Account Information and Customer
Identifying Information for each of its Customers with an Active
Account prior to such Industry Member's commencement of reporting to
the Central Repository and in accordance with the deadlines set forth
in Rule 6.93.
    Paragraph (b) of proposed Rule 6.88 requires each Industry Member
to submit to the Central Repository any updates, additions or other
changes to the Firm Designated ID, Customer Account Information and
Customer Identifying Information for each of its Customers with an
Active Account on a daily basis.
    Paragraph (c) of proposed Rule 6.88 requires each Industry Member,
on a periodic basis as designated by the Plan Processor and approved by
the Operating Committee, to submit to the Central Repository a complete
set of Firm Designated IDs, Customer Account Information and Customer
Identifying Information for each of its Customers with an Active
Account. This periodic refresh is intended to ensure that the Central
Repository has the most current information identifying a Customer.
CBOE intends to announce to its Industry Members when such a periodic
refresh is required by the Plan Processor and the Operating Committee
via Regulatory Circular.
    Finally, paragraph (d) of proposed Rule 6.88 addresses the
correction of erroneous Customer data reported to the Central
Repository to ensure an accurate audit trail. Paragraph (d) requires,
for each Industry Member for which errors in Firm Designated ID,
Customer Account Information and Customer Identifying Information for
each of its Customers with an Active Account submitted to the Central
Repository have been identified by the Plan Processor or otherwise,
such Member to submit corrected data to the Central Repository by 5:00
p.m. Eastern time on T+3. This requirement implements the error
correction requirement set forth in Appendix C of the CAT NMS Plan.
(5) Industry Member Information Reporting
    Section 6.4(d)(vi) of the CAT NMS Plan requires Industry Members to

submit to the Central Repository information sufficient to identify
such Industry Member, including CRD number and LEI, if such LEI has
been obtained, in accordance with the Existing Identifier Approach
discussed above. CBOE proposes Rule 6.89 (Industry Member Information
Reporting) to implement this provision of the CAT NMS Plan with regard
to its Industry Members. Specifically, proposed Rule 6.89 requires each
Industry Member to submit to the Central Repository information
sufficient to identify such Industry Member, including CRD number and
LEI, if such LEI has been obtained, prior to such Industry Member's
commencement of reporting to the Central Repository and in accordance
with the deadlines set forth in Rule 6.93, and keep such information up
to date as necessary.
(6) Time Stamps
    SEC Rule 613(d)(3) under Regulation NMS sets forth requirements for
time stamps used by CAT Reporters in recording and reporting data to
the CAT.\28\ To comply with this provision, Section 6.8(b) of the Plan
sets forth time stamp requirements for Industry Members. To implement
this provision with regard to its Industry Members, CBOE proposes Rule
6.90 (Time Stamps) to require its Industry Members to comply with the
time stamp requirements of the Plan.
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    \28\ 17 CFR 242.613(d)(3).
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    Paragraph (a) of proposed Rule 6.90 sets forth the time stamp
increments to be used by Industry Members in their CAT reporting.
Paragraph (a)(1) of proposed Rule 6.90 requires each Industry Member to
record and report Industry Member Data to the Central Repository with
time stamps in milliseconds, subject to paragraphs (a)(ii) and (b) of
proposed Rule 6.90. To the extent that any Industry Member's order
handling or execution systems utilize time stamps in increments finer
than milliseconds, paragraph (a)(ii) of proposed Rule 6.90 requires
such Industry Member to record and report Industry Member Data to the
Central Repository with time stamps in such finer increment, subject to
paragraph (b) of proposed Rule 6.90 regarding Manual Order Events and
Allocation Reports.
    Paragraph (b) of proposed Rule 6.90 sets forth the permissible time
stamp increments for Manual Order Events and Allocation Reports.
Specifically, paragraph (b)(i) of proposed Rule 6.90 permits each
Industry Member to record and report Manual Order Events to the Central
Repository in increments up to and including one second, provided that
each Industry Member is required to record and report the time when a
Manual Order Event has been captured electronically in an order
handling and execution system of such Member (i.e., electronic capture
time) in milliseconds. In addition, paragraph (b)(ii) of proposed Rule
6.90 permits each Industry Member to record and report the time of
Allocation Reports in increments up to and including one second.
(7) Clock Synchronization Rule Violations
    Proposed Rule 6.91 (Clock Synchronization Rule Violations)
describes potential violations of the clock synchronization time period
requirements set forth in proposed Section F. Proposed Rule 6.91 states
that an Industry Member that engages in a pattern or practice of
reporting Reportable Events outside of the required clock
synchronization time period as set forth in this Rule Series without
reasonable justification or exceptional circumstances may be considered
in violation of this Rule. This provision implements the requirements
of Section 6.8 of the CAT NMS Plan which requires the Compliance Rule
to provide that a pattern or practice of reporting events outside of
the required clock synchronization time period without reasonable
justification or exceptional circumstances may be considered a
violation of SEC Rule 613 or the CAT NMS Plan.
(8) Connectivity and Data Transmission
    Proposed Rule 6.92 (Connectivity and Data Transmission) addresses
connectivity and data transmission requirements related to the CAT.
Paragraph (a) of proposed Rule 6.92 describes the format(s) for
reporting Industry Member Data to the Central Repository, thereby
implementing the formatting requirements as set forth in Section 6.4(a)
of the CAT NMS Plan. Specifically, paragraph (a) of proposed Rule 6.92
requires each Industry Member to transmit data as required under the
CAT NMS Plan to the Central Repository utilizing such format(s) as may
be provided by the Plan Processor and approved by the Operating
Committee.
    Paragraph (b) of proposed Rule 6.92 addresses connectivity
requirements related to the CAT. Paragraph (b) of proposed Rule 6.92
requires each Industry Member to connect to the Central Repository
using a secure method(s), including, but not limited to, private
line(s) and virtual private network connection(s). This provision
implements the connectivity requirements set forth in Section 4 of
Appendix D to the CAT NMS Plan.
    Paragraph (c) permits Industry Members to use CAT Reporting Agents
to fulfill their data reporting obligations related to the CAT.
Paragraph (c) is based on FINRA Rule 7450(c), which permits OATS
Reporting Members to enter into agreements with Reporting Agents to
fulfill the OATS obligations of the OATS Reporting Member.
Specifically, paragraph (c)(1) of proposed Rule 6.92 states that any
Industry Member may enter into an agreement with a CAT Reporting Agent
pursuant to which the CAT Reporting Agent agrees to fulfill the
obligations of such Industry Member under proposed Section F. Any such
agreement must be evidenced in writing, which specifies the respective
functions and responsibilities of each party to the agreement that are
required to effect full compliance with the requirements of proposed
Section F. CBOE notes that, currently, no standardized form agreement
for CAT Reporting Agent arrangements has been adopted. Paragraph
(c)(ii) of proposed Rule 6.92 requires that all written documents
evidencing an agreement with a CAT Reporting Agent be maintained by
each party to the agreement. Paragraph (c)(iii) of proposed Rule 6.92
states that each Industry Member remains primarily responsible for
compliance with the requirements of proposed Section F, notwithstanding
the existence of an agreement described in paragraph (c) of proposed
Rule 6.92.
(9) Development and Testing
    CBOE proposes Rule 6.93 (Development and Testing) to address
requirements for Industry Members related to CAT development and
testing. Paragraph (a) of proposed Rule 6.93 sets forth the testing
requirements and deadlines for Industry Members to develop and commence
reporting to the Central Repository. These requirements are set forth
in Appendix C to the CAT NMS Plan.
    Paragraph (a)(i) sets forth the deadlines related to connectivity
and acceptance testing. Industry Members (other than Small Industry
Members) are required to begin connectivity and acceptance testing with
the Central Repository no later than August 15, 2018, and Small
Industry Members are required to begin connectivity and acceptance
testing with the Central Repository no later than August 15, 2019.
    Paragraph (a)(ii) sets forth the deadlines related to reporting
Customer

and Industry Member information. Paragraph (a)(ii)(A) requires Industry
Members (other than Small Industry Members) to begin reporting Customer
and Industry Member information, as required by proposed Rules 6.88(a)
and 6.89, respectively, to the Central Repository for processing no
later than October 15, 2018. Paragraph (a)(ii)(B) requires Small
Industry Members to begin reporting Customer and Industry Member
information, as required by proposed Rules 6.88(a) and 6.89,
respectively, to the Central Repository for processing no later than
October 15, 2019.
    Paragraph (a)(iii) sets forth the deadlines related to the
submission of order data. Under paragraph (a)(iii)(A), Industry Members
(other than Small Industry Members) are permitted, but not required, to
submit order data for testing purposes beginning no later than May 15,
2018. In addition, Industry Members (other than Small Industry Members)
are required to participate in the coordinated and structured testing
of order submission, which will begin no later than August 15, 2018.
Under paragraph (a)(iii)(B), Small Industry Members are permitted, but
not required, to submit order data for testing purposes beginning no
later than May 15, 2019. In addition, Small Industry Members are
required to participate in the coordinated and structured testing of
order submission, which will begin no later than August 15, 2019.
    Paragraph (a)(iv) states that Industry Members are permitted, but
not required to, submit Quote Sent Times on Options Market Maker
quotes, beginning no later than October 15, 2018.
    Paragraph (b) of proposed Rule 6.93 implements the requirement
under the CAT NMS Plan that Industry Members participate in required
industry testing with the Central Repository.\29\ Specifically,
proposed Rule 6.93 requires that each Industry Member participate in
testing related to the Central Repository, including any industry-wide
disaster recovery testing, pursuant to the schedule established
pursuant to the CAT NMS Plan. CBOE intends to announce to its Industry
Members the schedule established pursuant to the CAT NMS Plan via
Regulatory Circular.
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    \29\ Adopting Release at 84725.
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(10) Recordkeeping
    Proposed Rule 6.94 (Recordkeeping) sets forth the recordkeeping
obligations related to the CAT for Industry Members. Proposed Rule 6.94
requires each Industry Member to maintain and preserve records of the
information required to be recorded under proposed Section F for the
period of time and accessibility specified in SEC Rule 17a-4(b). The
records required to be maintained and preserved under proposed Section
F may be immediately produced or reproduced on ``micrographic media''
as defined in SEC Rule 17a-4(f)(1)(i) or by means of ``electronic
storage media'' as defined in SEC Rule 17a-4(f)(1)(ii) that meet the
conditions set forth in SEC Rule 17a-4(f) and be maintained and
preserved for the required time in that form. Proposed Rule 6.94 is
based on FINRA Rule 7440(a)(5), which sets forth the recordkeeping
requirements related to OATS.
(11) Timely, Accurate and Complete Data
    SEC Rule 613 and the CAT NMS Plan emphasize the importance of the
timeliness, accuracy, completeness and integrity of the data submitted
to the CAT.\30\ Accordingly, proposed Rule 6.95 (Timely, Accurate and
Complete Data) implements this requirement with regard to Industry
Members. Paragraph (a) of proposed Rule 6.95 requires that Industry
Members record and report data to the Central Repository as required by
proposed Section F in a manner that ensures the timeliness, accuracy,
integrity and completeness of such data.
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    \30\ See SEC Rule 613(e)(4)(i)(D)(ii); and Section 6.5(d) of the
CAT NMS Plan.
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    In addition, without limiting the general requirement as set forth
in paragraph (a), paragraph (b) of proposed Rule 6.95 requires Industry
Members to accurately provide the LEIs in their records as required by
proposed Section F and states that Industry Members may not knowingly
submit inaccurate LEIs to the Central Repository. Paragraph (b) notes,
however, that this requirement does not impose any additional due
diligence obligations on Industry Members with regard to LEIs for CAT
purposes. Accordingly, this provision does not impose any due diligence
obligations beyond those that may exist today with respect to
information associated with an LEI. Although Industry Members will not
be required to perform additional due diligence with regard to the LEIs
for CAT purposes, Industry Members will be required to accurately
provide the LEIs in their records and may not knowingly submit
inaccurate LEIs to the CAT. Paragraph (b) is consistent with the SEC's
statements in the Approval Order for the CAT NMS Plan regarding an
Industry Member's obligations regarding LEIs.\31\
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    \31\ Approval Order at 84745.
---------------------------------------------------------------------------

    Paragraph (c) states that, if an Industry Member reports data to
the Central Repository with errors such that its error percentage
exceeds the maximum Error Rate established by the Operating Committee
pursuant to the CAT NMS Plan, then such Industry Member would not be in
compliance with proposed Section F. As discussed above, the initial
maximum Error Rate is 5%, although the Error Rate is expected to be
reduced over time. CBOE intends to announce to its Industry Members
changes to the Error Rate established pursuant to the CAT NMS Plan via
Regulatory Circular.
    Furthermore, paragraph (d) of proposed Rule 6.95 addresses
Compliance Thresholds related to reporting data to the CAT. Proposed
Rule 6.95 states that each Industry Member is required to meet a
separate compliance threshold which will be an Industry Member-specific
rate that may be used as the basis for further review or investigation
into the Industry Member's performance with regard to the CAT (the
``Compliance Thresholds''). Compliance Thresholds will compare an
Industry Member's error rate to the aggregate Error Rate over a period
of time to be defined by the Operating Committee. Compliance Thresholds
will be set by the Operating Committee, and will be calculated at
intervals to be set by the Operating Committee.\32\ Compliance
Thresholds will include compliance with the data reporting and clock
synchronization requirements. Proposed Rule 6.95 states that an
Industry Member's performance with respect to its Compliance Threshold
will not signify, as a matter of law, that such Industry Member has
violated proposed Section F.
---------------------------------------------------------------------------

    \32\ Appendix C of the CAT NMS Plan.
---------------------------------------------------------------------------

(12) Compliance Dates
    Proposed Rule 6.96 (Compliance Dates) sets forth the compliance
dates for the various provisions of proposed Section F. Paragraph (a)
of proposed Rule 6.96 states that, except as set forth in paragraphs
(b) and (c) of proposed Rule 6.96 or otherwise set forth in proposed
Section F, the compliance date for proposed Section F is the approval
date of the filing.\33\
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    \33\ Proposed Section F, except for provisions otherwise stated
in the proposed rule change, will become effective upon approval of
this rule filing. As proposed Section F will not be inserted into
CBOE's Rules until that time, the proposed rule text states:
``Except as set forth in paragraphs (b) and (c) of this Rule or
otherwise set forth in this Section F, the Rules in this Section F
are effective.''

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

    Paragraph (b) of proposed Rule 6.96 establishes the compliance
dates for the clock synchronization requirements as set forth in
proposed Rule 6.96. Paragraph (b)(i) states that each Industry Member
shall comply with 6.86 with regard to Business Clocks that capture time
in milliseconds commencing on or before March 15, 2017. Paragraph
(b)(ii) states that each Industry Member shall comply with Rule 6.86
with regard to Business Clocks that do not capture time in milliseconds
commencing on or before February 19, 2018. The compliance date set
forth in paragraph (b)(i) reflects the exemptive relief the
Participants intend to request with regard to the clock synchronization
requirements related to Business Clocks that do not capture time in
milliseconds.
    Paragraph (c) of proposed Rule 6.96 establishes the compliance
dates for the data recording and reporting requirements for Industry
Members. Paragraph (c)(i) requires each Industry Member (other than
Small Industry Members) to record and report the Industry Member Data
to the Central Repository by November 15, 2018. Paragraph (c)(ii)
requires that each Industry Member that is a Small Industry Member to
record and report the Industry Member Data to the Central Repository by
November 15, 2019. Such compliance dates are consistent with the
compliance dates set forth in SEC Rule 613(a)(3)(v) and (vi), and
Section 6.7(a)(v) and (vi) of the CAT NMS Plan.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\34\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \35\ 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) \36\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers and the Section 6(b)(8) \37\
requirement that the rules of an exchange not impose any burden on
competition that is not necessary or appropriate.
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    \34\ 15 U.S.C. 78f(b).
    \35\ 15 U.S.C. 78f(b)(5).
    \36\ Id.
    \37\ 15 U.S.C. 78f(b)(8).
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    The Exchange believes that this proposal is consistent with the Act
because it implements, interprets or clarifies the provisions of the
Plan, and is designed to assist the Exchange and its Industry Members
in meeting regulatory obligations pursuant to the Plan. In approving
the Plan, the Commission noted the Plan ``is necessary and appropriate
in the public interest, for the protection of investors and the
maintenance of fair and orderly markets, to remove impediments to, and
perfect the mechanism of a national market system, or is otherwise in
furtherance of the purposes of the Act.'' \38\ To the extent that this
proposal implements, interprets or clarifies the Plan and applies
specific requirements to Industry Members, the Exchange believes that
this proposal furthers the objectives of the Plan, as identified by the
Commission, and is therefore consistent with the Act.
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    \38\ Approval Order at 84697.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. CBOE notes that the proposed
rule change implements provisions of the CAT NMS Plan, and is designed
to assist CBOE in meeting its regulatory obligations pursuant to the
Plan. CBOE also notes that proposed Section F implementing provisions
of the CAT NMS Plan will apply equally to all firms that trade NMS
Securities and OTC Equity Securities. In addition, all national
securities exchanges and FINRA are proposing rules virtually identical
to proposed Section F. Therefore, this is not a competitive rule
filing, and, therefore, it does not impose a burden on competition.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
    A. By order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule
change should be 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-2017-012 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-2017-012. 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-2017-012 and should be
submitted on or before March 1, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\39\
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    \39\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-02555 Filed 2-7-17; 8:45 am]
 BILLING CODE 8011-01-P