[Federal Register Volume 88, Number 84 (Tuesday, May 2, 2023)]
[Proposed Rules]
[Pages 27421-27423]
[FR Doc No: 2023-09202]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 165

[Docket Number USCG-2023-0135]
RIN 1625-AA00

Safety Zone; Atlantic Ocean, Key West, FL

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Coast Guard is proposing to establish a safety zone to be
enforced in the event of hurricanes, tropical storms, and other
disasters in the Florida Keys. This action is necessary to ensure the
safety of the waters of the Key West Captain of the Port (COTP) zone
Key West, FL. This proposed rulemaking would establish actions to be
completed by industry and vessels in the COTP zone prior to landfall of
hurricanes, tropical storms, and other disasters threatening the
Florida Keys. We invite your comments on this proposed rulemaking.

DATES: Comments and related material must be received by the Coast
Guard on or before June 1, 2023.

ADDRESSES: You may submit comments identified by docket number USCG-
2023-0135 using the Federal eRulemaking Portal at https://www.regulations.gov. See the ``Public Participation and Request for
Comments'' portion of the SUPPLEMENTARY INFORMATION section for further
instructions on submitting comments.

FOR FURTHER INFORMATION CONTACT: If you have questions about this
proposed rulemaking, call or email LTJG Hailye Wilson, Sector Key West
Waterways Management Division, Coast Guard; telephone<PHONE_NUMBER>,
email [email protected].

SUPPLEMENTARY INFORMATION:

I. Table of Abbreviations

CFR Code of Federal Regulations
COTP Captain of the Port
NPRM Notice of proposed rulemaking
Sec.  Section
U.S.C. United States Code

II. Background, Purpose, and Legal Basis

    The Florida Keys has the potential to be affected by hurricanes,
tropical storms, and other disasters on a yearly basis, especially
between the months of June and November. The Captain of the Port (COTP)
Key West proposes establishing a safety zone to provide for the safety
of life during such storms and events.
    The purpose of this rulemaking is to protect mariners and port
infrastructure during extreme weather and other natural disasters. The
Coast Guard is proposing this rulemaking under authority in 46 U.S.C.
70034.

III. Discussion of Proposed Rule

    The COTP Key West is proposing to establish a safety zone to be
enforced in case of hurricanes, tropical storms, and other disasters in
Florida Keys. This action is necessary to ensure the safety of the
waters of the COTP Key West. This proposed rule would establish actions
to be completed by local industry and vessels in the COTP zone prior to
landfall of hurricanes, tropical storms, and other disasters
threatening the Florida Keys. The proposed safety zone would consist of
all waters of the territorial seas, in the Key West COTP zone, as
prescribed in 33 CFR 3.35-40. The regulatory text we are proposing
appears at the end of this document.

IV. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes
and Executive orders related to rulemaking. Below we summarize our
analyses based on a number of these statutes and Executive orders and
we discuss First Amendment rights of protestors.

A. Regulatory Planning and Review

    Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits. This NPRM has not been designated a ``significant
regulatory action,'' under Executive Order 12866. Accordingly, the NPRM
has not been reviewed by the Office of Management and Budget (OMB).
    This regulatory action determination is based on the necessity to
protect life and port infrastructure during hurricanes, tropical
storms, and other disasters. The absence of a safe harbor in the
Florida Keys precludes large vessels from accessing adequate facilities
to weather a substantial storm or natural disaster within the COTP
zone. Moreover, the Coast Guard would issue a Broadcast Notice to
Mariners via VHF-FM marine channel 16 about the safety zone, and the
rule would allow vessels to seek permission to remain in port.

B. Impact on Small Entities

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as
amended,

requires Federal agencies to consider the potential impact of
regulations on small entities during rulemaking. The term ``small
entities'' comprises small businesses, not-for-profit organizations
that are independently owned and operated and are not dominant in their
fields, and governmental jurisdictions with populations of less than
50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this
proposed rule would not have a significant economic impact on a
substantial number of small entities.
    While some owners or operators of vessels intending to transit the
regulated area may be small entities, for the reasons stated in section
IV.A above, this proposed rule would not have a significant economic
impact on any vessel owner or operator.
    If you think that your business, organization, or governmental
jurisdiction qualifies as a small entity and that this rule would have
a significant economic impact on it, please submit a comment (see
ADDRESSES) explaining why you think it qualifies and how and to what
degree this rule would economically affect it.
    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small
entities in understanding this proposed rule. If the rule would affect
your small business, organization, or governmental jurisdiction and you
have questions concerning its provisions or options for compliance,
please call or email the person listed in the FOR FURTHER INFORMATION
CONTACT section. The Coast Guard will not retaliate against small
entities that question or complain about this proposed rule or any
policy or action of the Coast Guard.

C. Collection of Information

    This proposed rule would not call for a new collection of
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520).

D. Federalism and Indian Tribal Governments

    A rule has implications for federalism under Executive Order 13132
(Federalism), if it has a substantial direct effect on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government. We have analyzed this proposed rule under that Order and
have determined that it is consistent with the fundamental federalism
principles and preemption requirements described in Executive Order
13132.
    Also, this proposed rule does not have tribal implications under
Executive Order 13175 (Consultation and Coordination with Indian Tribal
Governments) because it would not have a substantial direct effect on
one or more Indian tribes, on the relationship between the Federal
Government and Indian tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian tribes. If
you believe this proposed rule has implications for federalism or
Indian tribes, please call or email the person listed in the FOR
FURTHER INFORMATION CONTACT section.

E. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Though this proposed rule would not
result in such an expenditure, we do discuss the effects of this rule
elsewhere in this preamble.

F. Environment

    We have analyzed this proposed rule under Department of Homeland
Security Directive 023-01, Rev. 1, associated implementing
instructions, and Environmental Planning COMDTINST 5090.1 (series),
which guide the Coast Guard in complying with the National
Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made
a preliminary determination that this action is one of a category of
actions that do not individually or cumulatively have a significant
effect on the human environment. This proposed rule involves a safety
zone that would prohibit entry in certain waters of the Key West COTP
Zone for the duration needed to ensure safe transit of vessels and
industry post-hurricane, post-storm, and post-emergency. Normally such
actions are categorically excluded from further review under paragraph
L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01,
Rev. 1. A preliminary Record of Environmental Consideration supporting
this determination is available in the docket. For instructions on
locating the docket, see the ADDRESSES section of this preamble. We
seek any comments or information that may lead to the discovery of a
significant environmental impact from this proposed rule.

G. Protest Activities

    The Coast Guard respects the First Amendment rights of protesters.
Protesters are asked to contact the person listed in the FOR FURTHER
INFORMATION CONTACT section to coordinate protest activities so that
your message can be received without jeopardizing the safety or
security of people, places, or vessels.

V. Public Participation and Request for Comments

    We view public participation as essential to effective rulemaking
and will consider all comments and material received during the comment
period. Your comment can help shape the outcome of this rulemaking. If
you submit a comment, please include the docket number for this
rulemaking, indicate the specific section of this document to which
each comment applies, and provide a reason for each suggestion or
recommendation.
    Submitting comments. We encourage you to submit comments through
the Federal Decision-Making Portal at https://www.regulations.gov. To
do so, go to https://www.regulations.gov, type USCG-2023-0135 in the
search box and click ``Search.'' Next, look for this document in the
Search Results column, and click on it. Then click on the Comment
option. If you cannot submit your material by using https://www.regulations.gov, call or email the person in the FOR FURTHER
INFORMATION CONTACT section of this proposed rule for alternate
instructions.
    Viewing material in docket. To view documents mentioned in this
proposed rule as being available in the docket, find the docket as
described in the previous paragraph, and then select ``Supporting &
Related Material'' in the Document Type column. Public comments will
also be placed in our online docket and can be viewed by following
instructions on the https://www.regulations.gov Frequently Asked
Questions web page. Also, if you click on the Dockets tab and then the
proposed rule, you should see a ``Subscribe'' option for email alerts.
The option will notify you when comments are posted, or a final rule is
published.
    We review all comments received, but we will only post comments
that address the topic of the proposed rule. We may choose not to post
off-topic, inappropriate, or duplicate comments that we receive.
    Personal information. We accept anonymous comments. Comments we
post to https://www.regulations.gov will include any personal
information you have provided. For more about privacy

and submissions to the docket in response to this document, see DHS's
eRulemaking System of Records notice (85 FR 14226, March 11, 2020).

List of Subjects in 33 CFR Part 165

    Harbors, Marine safety, Navigation (water), Reporting and
recordkeeping requirements, Security measures, Waterways.

    For the reasons discussed in the preamble, the Coast Guard proposes
to amend 33 CFR part 165 as follows:

PART 165--REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS

0
1. The authority citation for part 165 continues to read as follows:

    Authority: 46 U.S.C. 70034, 70051, 70124; 33 CFR 1.05-1, 6.04-1,
6.04-6, and 160.5; Department of Homeland Security Delegation No.
00170.1, Revision No. 01.3.

0
2. Add Sec.  165.T07-0135 to read as follows:

Sec.  165.T07-0135  Safety Zone; Hurricanes, Tropical Storms and Other
Disasters in Florida Keys.

    (a) Regulated Areas. All navigable waters within Sector Key West
COTP zone, Key West, Florida, as described in 33 CFR 3.35-40, during
specified conditions.
    (b) Definitions.
    (1) Designated Representative means Coast Guard Patrol Commanders,
including Coast Guard coxswains, petty officers, and other officers
operating Coast Guard vessels, and Federal, state, and local officers
designated by or assisting the COTP Key West, in the enforcement of the
regulated areas.
    (2) Port Condition WHISKEY means a condition set by the COTP when
weather advisories indicate sustained gale force winds (39-54 mph/34-47
knots) from a tropical or hurricane force storm are predicted to make
landfall at the port within 72 hours.
    (3) Port Condition X-RAY means a condition set by the COTP when
weather advisories indicate sustained gale force winds (39-54 mph/34-47
knots) from a tropical or hurricane force storm are predicted to make
landfall at the port within 48 hours.
    (4) Port Condition YANKEE means a condition set by the COTP when
weather advisories indicate that sustained gale force winds (39-54 mph/
34-47 knots) from a tropical or hurricane force storm are predicted to
make landfall at the port within 24 hours.
    (5) Port Condition ZULU means a condition set by the COTP when
weather advisories indicate that sustained gale force winds (39-54 mph/
34-47 knots) from a tropical or hurricane force storm are predicted to
make landfall at the port within 12 hours.
    (c) Regulations.
    (1) Port Condition WHISKEY. All vessel and port facilities must
exercise due diligence in preparation for potential storm impacts.
Ports and waterfront facilities must begin removing all debris and
securing potential flying hazards. Oceangoing vessels 300 gross tons
(GT) and above must make plans to depart no later than the setting of
Port Condition Yankee unless authorized by the COTP. Vessels wishing to
remain in port are required to submit an application to the COTP prior
to setting Port Condition X-Ray.
    (2) Port Condition X-RAY. All vessels and port facilities must
ensure that potential flying debris is removed or secured. Hazardous
materials/pollution hazards must be secured in a safe manner and away
from waterfront areas. Vessels over 300GT without an approval to remain
in port must depart prior to the setting of Port Condition YANKEE.
Vessels with the COTP's permission to remain in port must implement
their pre-approved mooring arrangement. Terminal operators must prepare
to terminate all cargo operations. The COTP may require additional
precautions to ensure the safety of the ports and waterways.
    (3) Port Condition YANKEE. Affected ports are closed to inbound
vessel traffic. All oceangoing vessels greater than 300 Gross Tons must
have departed designated ports within the Sector Key West COTP zone.
Terminal operators must terminate all cargo operations not associated
with storm preparations. Cargo operations associated with storm
preparations include moving cargo within or off the port for securing
purposes, port/facility equipment preparations, and similar activities,
but do not include moving cargo onto the port or vessel loading/
discharging operations unless specifically authorized by the COTP. All
facilities must continue to operate in accordance with approved
Facility Security Plans and comply with the requirements of the
Maritime Transportation Security Act (MTSA).
    (4) Port Condition ZULU. The port is closed to all vessel traffic
except unless specifically authorized by the COTP. Cargo operations are
suspended, including bunkering and lightering. Waivers may be granted
unless Cargo of Particular Hazard or Certain Dangerous Cargo is
involved.
    (5) Emergency Restrictions for Other Disasters. Any natural or
other disasters that are anticipated to affect the Sector Key West COTP
zone will result in the prohibition of facility operations and vessel
traffic transiting or remaining in the affected port.
    (6) Safety Zones Notice. Coast Guard Sector Key West will attempt
to notify the maritime community of periods during which these safety
zones will be in effect via Broadcast Notice to Mariners or by on-scene
designated representatives.
    (7) Regulated Area Notice. The Coast Guard will provide notice of
the regulated area via Broadcast Notice to Mariners or by on-scene
designated representatives.
    (8) Exception. This regulation does not apply to authorized law
enforcement agencies operating within the regulated area.

    Dated: April 18, 2023.
Jason D. Ingram,
Captain, U.S. Coast Guard, Captain of the Port Key West.
[FR Doc. 2023-09202 Filed 5-1-23; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register Volume 87, Number 33 (Thursday, February 17, 2022)]
[Notices]
[Pages 9096-9099]
[FR Doc No: 2022-03391]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94226; File No. SR-NASDAQ-2022-012]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Equity 7, Section 115 of the Fee Schedule

February 11, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 31, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III, below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's pricing schedule at
Equity 7, Section 115, as described further below.
    The text of the proposed rule change is detailed below: proposed
new language is italicized and proposed deletions are in brackets.

* * * * *

The Nasdaq Stock Market Rules

* * * * *

Equity Rules

* * * * *

Equity 7 Pricing Schedule

* * * * *

Section 115. Ports and Services[dagger]

    The charges under this section are assessed by Nasdaq for
connectivity to services and the following systems operated by
Nasdaq or FINRA: The Nasdaq Market Center, FINRA Trade Reporting and
Compliance Engine (TRACE), the FINRA/Nasdaq Trade Reporting
Facility, and the FINRA OTC Reporting Facility (ORF). The following
fees are not applicable to The Nasdaq Options Market LLC. For
related options fees for Ports and other Services refer to Options
7, Section 3 of the Options Rules.
    (a)-(d) No change.
    (e) Specialized Services Related to FINRA/Nasdaq Trade Reporting
Facility.

WebLink ACT or Nasdaq.............  $[5]625[.00]/month
Workstation Post Trade............  A subscription includes: The Trade
                                     Reporting File Upload service,
                                     which allows members to upload
                                     multiple trade reports in batches
                                     to ACT; and the ACT Reject Scan
                                     service, which provides a list of
                                     all of a member's rejected ACT
                                     trade entries and a copy of each
                                     rejected trade report form
                                     submitted to ACT.
                                    [$225 per month for the ACT Trade
                                     History service which provides
                                     searchable access to a member's
                                     trades that are older than six
                                     months dating back to 2009.]
ACT Workstation...................  $[5]625/logon/month
                                    [$225 per month for the ACT Trade
                                     History service which provides
                                     searchable access to a member's
                                     trades that are older than six
                                     months dating back to 2009.]
Nasdaq WorkX......................  $[5]625/logon/month
                                    [$225 per month for the ACT Trade
                                     History service which provides
                                     searchable access to a member's
                                     trades that are older than one year
                                     dating back five years.] For
                                     customers using both Act
                                     Workstation and Nasdaq WorkX, fees
                                     for Nasdaq WorkX will be waived for
                                     the first month of service.

    (f)-(j) No change.
    [dagger] Fees, other than the specialized service fees in
Section 115(e), are assessed in full month increments under this
section, and thus are not prorated.
* * * * *
    (b) Not applicable.
    (c) Not applicable.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend the Exchange's
schedule of fees, at Equity 7, Section 115(e). In April 2021, the
Exchange enhanced its connectivity, surveillance and risk management
services by launching three re-platformed products including Nasdaq
WorkX\TM\ (``WorkX'').\3\ These changes were filed by the Exchange on
April 20, 2021 and published in the Federal Register on May 7, 2021.\4\
The Exchange noted in the filing that as it rolled out the enhanced
products, the fees for the re-platformed products would be the same as
the fees for the corresponding non-re-platformed products. After the
first month of service on WorkX, a member firm is expected to fully
migrate to the new product and is charged for any fees incurred for
using the new products thereafter. To date, the Exchange continues to
assist its members in migrating from Workstation to WorkX.
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    \3\ WorkX is a re-platformed version of Workstation that
simplifies compliance with regulatory responsibilities and enhances
the user experience with improved workflow, system performance, and
data visualization. WorkX also upgrades trade reporting and
monitoring with a modern user interface using cloud-based
technology.
    \4\ See Securities Exchange Act Release No. 91744 (May 3, 2021),
86 FR 24685 (May 7, 2021) (NASDAQ-2021-025).
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    The Exchange proposes to increase its existing fees for ACT
Workstation (``Workstation''),\5\ WebLink ACT or Nasdaq Workstation
Post Trade (``WebLink''), \6\ and WorkX from $525 to $625. These fees
solely apply to the FINRA/Nasdaq Trade Reporting Facility (TRF) related
services.
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    \5\ Workstation is a web-based application that electronically
facilitates trade reporting and clearing functions for trades
reported to the FINRA/Nasdaq TRF. Workstation services include trade
entry, trade scan, and uploads for bulk trade entry to support
FINRA/Nasdaq TRF participant trade reporting in accordance with
Financial Industry Regulatory Authority (``FINRA'') rules.
    \6\ Workstation and WebLink are identical applications that
perform the same functions. For historical reasons, they each have
separate entries on the Exchange's fee schedule. WebLink, the same
as Workstation, is a web-based application that electronically
facilitates trade reporting and clearing functions for trades
reported to the FINRA/Nasdaq TRF.
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    The Exchange also proposes to eliminate the ACT Trade History
service fee of $225 for each of these existing products. The ACT Trade
History service provides searchable access to a member's trades.\7\ The
Exchange believes it is important for users to freely perform unlimited
scans and queries of their trade history to effectively perform their
regulatory responsibilities without being hampered by the separate ACT
Trade History charge.\8\
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    \7\ WebLink and Workstation provide searchable access to a
member's trades that are older than six months dating back to 2009.
WorkX provides searchable access to a member's trades that are older
than one year dating back five years.
    \8\ In its capacity as a Business Member of the FINRA/Nasdaq
TRF, Nasdaq also plans to separately eliminate the $0.50 per query
fee that is charged for querying reported transactions in the FINRA/
Nasdaq TRF using Workstation, WebLink and WorkX. The change was
proposed in FINRA-2022-002, which was filed on January 31, 2022.
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    Additionally, the Exchange proposes to prorate the cost of the
first and last month of a user's subscription to the WebLink,
Workstation and WorkX products.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\9\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\10\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility, and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange's proposal is reasonable in several respects. As a
threshold matter, the FINRA/Nasdaq TRF and its related front-end
products are subjected to significant competitive forces in the market
for trade reporting and regulatory compliance services that constrain
the Exchange's pricing determinations for Workstation, WebLinks and
WorkX. The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets.
    The competitive nature of this market is evidenced by the FINRA/
NYSE TRF, to which firms may report their trade instead of the FINRA/
Nasdaq TRF, and which offers a similar front-end trade reporting and
regulatory compliance service to trade report, clear and monitor
compliance for activity on its facility. Firms may choose to trade
report with the FINRA/NYSE TRF based on the features and functionality
of the TRF or based on the features and functionality of the regulatory
reporting and compliance front-end services

offered for the FINRA/NYSE TRF. Within this competitive environment,
customers can freely select the FINRA/NYSE trade reporting facility and
its trade reporting and compliance front-end services in response to
changes in the Exchange's pricing schedule.
The Proposal Is Reasonable
    The Exchange believes that the proposal to raise fees for
Workstation, WebLinks and WorkX is reasonable because of the
competitive forces described above. Moreover, the Exchange has not
adjusted its fees for these products since 2016.
    Additionally, the Exchange believes that it is reasonable to remove
the ACT Trade History data charge from WebLink, Workstation and WorkX
because removal of this fee streamlines the cost to one base fee with
no add-on search charges and will allow users to freely perform
unlimited query searches of their trade history. As discussed above,
these searches assist users in performing their regulatory
responsibilities. Additionally, the proposed fee increase of $100 for
using Weblink, Workstation or WorkX is less than half of the current
ACT Trade History fee. Therefore, users who utilize the trade history
feature may incur decreased fees. For example, a user who is subscribed
to one log-on for WorkX and utilizes the ACT Trade History search
feature currently pays $750/month. Under the proposed fee changes, the
subscriber will pay $625/month. Although some users will incur a
decrease in fees as a result of the proposed changes, there are some
users whose fees may increase. For example, a user who is subscribed to
one log-on for WorkX and does not utilize the ACT Trade History search
feature currently pays $525/month. Under the proposed fee changes, the
subscriber will pay $625/month with no additional charge for the use of
the ACT Trade History. Because users who choose to utilize the optional
ACT Trade History function have historically incurred a higher fee than
those who have not utilized the function, the impact of the proposed
change will be different for those users. The Exchange believes that
the difference in impact resulting from the proposed changes is
reasonable and not unfairly discriminatory because all users will be
able to use ACT Trade History without a separate fee and those who have
not used ACT Trade History in the past may decide to start using the
service. Moreover, the Exchange notes that users who are dissatisfied
with the proposal (e.g., if they experience an overall increase) are
free to utilize the FINRA/NYSE TRF and its related front-end service.
    Additionally, the Exchange believes that it is reasonable to
prorate the fees for the first and last month of a user's subscription
to Workstation, Weblink and WorkX. For example, the Exchange believes
that it is reasonable to charge a user who unsubscribes to any of the
three products on December 2 or subscribes on December 30 only for the
days that they are actually subscribed to the products.
The Proposal Is an Equitable Allocation of Fees
    Nasdaq believes that the proposed rule change will allocate fees
fairly among the users of WebLink, Workstation and WorkX.
    The Exchange believes that it protects investors and is an
equitable allocation to eliminate its existing $225 ACT Trade History
fee. As discussed above, removal of the fee eliminates any impediment
for users to freely utilize the search functions to monitor and satisfy
their regulatory responsibilities. Moreover, the Exchange believes that
prorating the fees for the first and final month of a user's
subscription will ensure that the fees are equitable to a user's
utilization of the products.
    Lastly, although all users of Workstation, WebLink and WorkX
products will incur an increased monthly fee for use of the products,
some users who utilize the optional ACT Trade History function will
receive a decrease in their overall fees. The Exchange believes it is
equitable for some users to incur an increased fee and for other users
to receive a decrease because users who choose to utilize the ACT Trade
History function have historically incurred a higher fee than those who
have not utilized the function. Therefore, the impact of the proposed
change will affect users differently than users who have not
historically utilized the function. The Exchange believes that the
difference in impact resulting from the proposed changes is equitable
because all users will be able to use ACT Trade History without a
separate fee and those who have not used ACT Trade History in the past
may decide to start using the service. Moreover, the Exchange notes
that users who are dissatisfied with the proposal (e.g., if they
experience an overall increase) are free to utilize the FINRA/NYSE TRF
and its related front-end service.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly
discriminatory. All users of WebLink, Workstation and WorkX will be
required to pay the proposed increased subscription fee and the
proposed fees will apply to all users in the same manner. As discussed
above, although some users will incur a decrease in fees as a result of
the proposed changes, there are some users whose fees may increase.
Users who have historically chosen to not incur the additional cost of
the ACT Trade History will pay a modestly higher proportionate amount.
The Exchange does not believe that this disparity among users is
unfairly discriminatory because users who choose to utilize the
optional ACT Trade History function have historically incurred a higher
fee than those who have not utilized the function. Therefore, the
impact of the proposed change will be different for those users. The
Exchange believes that the difference in impact resulting from the
proposed changes is not unfairly discriminatory because all users will
be able to use ACT Trade History without a separate fee and those who
have not used ACT Trade History in the past may decide to start using
the service. Additionally, all users, to the extent that they already
subscribe to ACT Trade History will benefit from the proposed removal
of the ACT Trade History fee and all users will benefit from the
proration of the first and last month of their subscription.
    Moreover, the Exchange notes that users who are dissatisfied with
the proposal (e.g., if they experience an overall increase) are free to
utilize the FINRA/NYSE TRF and its related front-end service.

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

    The Exchange 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.
Intramarket Competition
    The Exchange does not believe that its proposals will place any
category of Exchange participant at a competitive disadvantage. All
users of WebLink, Workstation and WorkX will be required to pay the
proposed increase fee for a subscription to any of the three products
and will receive a proration for the first and last month of their
subscription. To the extent that members were not utilizing any of the
three products, the proposed fee change will not place them at a
competitive disadvantage. The Exchange notes that its members are not
required to subscribe to the products if they believe

that the cost of the subscriptions is not attractive.
    The proposed elimination of the ACT Trade History fee for WebLink,
Workstation and WorkX will have minimal competitive effect insofar as
some users that utilize the ACT Trade History service may receive a
decrease in their overall subscription to the products. As discussed
above, although some users will incur a decrease in fees and others
will incur a fee increase because of the proposed changes, the Exchange
does not believe that this difference will result in a competitive
disadvantage to any users because the proposed rule change will allow
all users of WebLink, Workstation and WorkX to freely use the tool at
no additional cost.
    Firms also have the option of reporting their trades on the FINRA/
NYSE TRF and utilizing its trade reporting and regulatory compliance
service products if they are dissatisfied with the Exchange's fee
proposal.
Intermarket Competition
    The Exchange believes that its proposed modifications to its fee
schedule will not impose any burden on competition because the
increased fees, proration and removal of ACT Trade History charges
simplifies the subscription rates for these products and ensures that
the Exchange is able to continue to provide the best products that
benefit member firms. The Exchange notes that it operates in a highly
competitive market in which market participants can readily favor the
FINRA/NYSE TRF if they are dissatisfied with the fee change or deem the
FINRA/NYSE TRF and its related front-end products to be more favorable.
The proposed fee changes to WebLink, Workstation and WorkX are
reflective of this competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\11\ the Exchange
has designated this proposal as establishing or changing a due, fee, or
other charge imposed by the self-regulatory organization on any person,
whether or not the person is a member of the self-regulatory
organization, which renders the proposed rule change effective upon
filing.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-NASDAQ-2022-012 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-NASDAQ-2022-012. 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 website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2022-012 and should be submitted
on or before March 10, 2022.
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-03391 Filed 2-16-22; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 118 (Thursday, June 18, 2020)]
[Notices]
[Pages 36923-36928]
[FR Doc No: 2020-13123]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89063; File No. SR-CBOE-2020-052]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing of a Proposed Rule Change Relating To Amend Rules 5.37, 5.38 and
Rule 5.73

June 12, 2020.
    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 June 3, 2020, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend Rules 5.37, 5.38 and Rule 5.73. The text of the proposed rule
change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 5.38 and Rule 5.73 regarding
the minimum increment for Complex Automated Improvement Mechanism (``C-
AIM'') and FLEX AIM Auction responses, respectively, in connection with
SPX Combo Orders, as well as Rule 5.37, Rule 5.38, and Rule 5.73 in
connection with dissemination of the stop price in auction notification
messages for auctions in SPX.
    By way of background, the Exchange recently activated the Automated
Improvement Mechanism (``AIM'') and C-AIM Auctions in S&P 500 Index
(``SPX'') options.\3\ When submitting an Agency Order into a C-AIM
Auction, the Initiating Member must also submit a contra-side second
order for the same size as the Agency Order. This second order
guarantees that the Agency Order will receive an execution (i.e., it
acts as a stop). Upon commencement of a C-AIM Auction, market
participants submit responses to trade against the Agency Order. At the
end of an auction, depending on the contra-side interest available, the
contra order may be allocated a certain percentage of the Agency
Order.\4\
---------------------------------------------------------------------------

    \3\ The Exchange notes FLEX AIM in SPX had been activated prior
to March 16, 2020.
    \4\ See generally Rule 5.38(e). The Exchange notes, too, that
the same process applies to the FLEX AIM Auction pursuant to the
FLEX Rules. See generally Rule 5.73(e).
---------------------------------------------------------------------------

    When the Exchange is operating in its normal trading environment,
the Exchange has not activated C-AIM (or AIM) in SPX,\5\ thus all non-
FLEX crossing transactions in SPX were previously only able to occur on
the trading floor. Therefore, Trading Permit Holders may cross orders
only in open outcry on the trading floor. Pursuant to Rule 5.87(f), a
floor broker holding an order for the eligible order size is entitled
to cross a certain percentage \6\ of the order with facilitated (and
solicited orders, if designated by the Exchange for a class) after
satisfying public customer orders \7\ if the order trades at or between
the best bid or offer given by the crowd in response to the floor
broker's initial request for a market. Specifically, a floor broker
representing an order of the eligible order size or greater that he
wishes to cross (and the percentage of which he is entitled to cross)
must request bids and offers for such option series and make all
persons in the trading crowd, including the PAR Official, aware of his
request. In this way, the crossing mechanism on the trading floor
allows for the trading crowd to control the price of a crossing order
and indicates to responding TPHs and the crossing floor broker a
reasonable range at which the market is willing to buy (sell) at that
point in time. This provision is subject to the crossing rules in Rule
5.86 (subject to certain exceptions), which require disclosure of all
terms and conditions to the crowd (including the price) prior to
executing a cross.\8\
---------------------------------------------------------------------------

    \5\ The Exchange had activated C-AIM and AIM in SPX for the
first time as a result of the March 16, 2020 trading floor
suspension to help prevent the spread of COVID-19 and operated in an
all-electronic configuration beginning March 16, 2020. Currently,
the trading floor is scheduled to reopen June 15, 2020. The Exchange
intends to activate AIM and C-AIM in SPX as electronic crossing
mechanisms available for Users while the trading floor is open,
subject to approval of this proposed rule change and separate
proposed rule changes regarding AIM and C-AIM.
    \6\ Currently, the Exchange has set the percentage as 40% (the
same crossing entitlement percentage as on AIM, C-AIM, and FLEX
AIM). See CBOE Regulatory Circular RG16-179, Participation
Entitlement Applicable to Crossing Orders in Open Outcry (November
18, 2016) available at https://www.cboe.com/publish/RegCir/RG16-179.pdf.
    \7\ Similarly, the AIM and C-AIM percentage applies after public
customer orders are satisfied. See Rules 5.37(e) and 5.38(e).
    \8\ See Rule 5.87, Interpretation and Policy .05.
---------------------------------------------------------------------------

    Moreover, orders in SPX generally take on greater risk than in
other option classes. SPX options tend to have a higher notional value
than options in other classes (e.g., they are ten times the notional
size of SPY options), trade much larger size than in other options
classes (indeed, even smaller sized orders in SPX would be considered
fairly large size in other classes), and effect increasingly more
complex strategies than executed in other classes (e.g., SPX Combo
orders) or executed electronically (e.g., in open outcry complex orders
trade with larger ratios that may be negotiated by the trading crowd).
Given these factors, SPX Market-Makers on the floor generally have more
confidence in the pricing of their responses as the crosses start with
a request for market and the trading crowd then provides a ``ballpark''
of the prices at which they are willing to trade and a Market-Maker may
thus more confidently base response on the market of other members of
the trading crowd.
    Pursuant to Rules 5.4(b) and 5.33(f)(1)(A), the minimum increment
for bids and offers on complex orders in options on SPX \9\ is $0.05 or
greater, or in any increment determined by the Exchange. When seeking
to cross SPX

complex orders on the trading floor, a floor broker generally
identifies the legs of the complex order and their relative sizes to
each other with a net package price. The Exchange understands the
trading crowd then generally provides a market based on the strategy's
theoretical value in an increment of $0.05 rather than the value of the
net package (which equals the strategy times the ratio), which is
particularly true when the complex order represented is a delta neutral
order that includes a combo. The Exchange has observed that SPX Combos
comprise a significant portion of crosses in SPX.\10\ For example,
assume a floor broker represents a $4.00 option tied to a combo, with a
ratio of 8-to-1 combo (i.e. 12.5 delta), and further assume the combo
portion is priced as a package at even,\11\ which strategy has a
theoretical value of $4.00, which is applied to each of the 8 options
in the order. Members of the trading crowd then generally respond with
markets based on a $0.05 increment above or below the theoretical value
of $4.00 rather than the net package price of $32.00 (8 x $4.00). If
the execution price occurred at $4.50, the net cash price would be
$36.00, providing for $4.00 price improvement (i.e., $0.50 x 8 options)
over the theoretical value of the strategy. However, if this order is
submitted via C-AIM, responses are generally based on a $0.05 increment
above or below $32.00. If the execution price was $32.50, the price
improvement above the theoretical price for the strategy would be
approximately $0.06 ($0.50/8).
---------------------------------------------------------------------------

    \9\ Except for box/roll spreads.
    \10\ In April 2020, SPX Combos comprised 60.5% of crossed volume
executed in SPX via AIM while the trading floor was inoperable.
    \11\ The Exchange also notes that it intends to implement Index
Combo Orders when it reopens its trading floor. See Rule 5.33(b).
---------------------------------------------------------------------------

    Since the Exchange activated C-AIM for SPX options, a significant
amount of SPX volume has executed through C-AIM. As noted above, the
Exchange has also observed that a majority of the complex strategies
submitted for execution in SPX options are ``delta neutral,'' often
hedged with a ``combo'' of other SPX options, as is the case with
complex orders crossed on the trading floor. An SPX Combo Order is a
complex order that includes one or more SPX legs, hedged by an SPX
combo, or synthetic future, defined by the delta. Specifically, an
``SPX combination'' is a purchase (sale) of an SPX call and a sale
(purchase) of an SPX put with the same expiration date and strike
price, and ``delta'' is the positive (negative) number of SPX
combinations that must be sold (bought) to establish a market neutral
hedge with one or more SPX option series.\12\
---------------------------------------------------------------------------

    \12\ See Rule 5.6(b).
---------------------------------------------------------------------------

    Currently, Rule 5.38(c)(5)(A) and Rule 5.38(a)(4) provide that the
minimum price increment for C-AIM responses and Agency and Initiating
Orders, respectively, must be in an increment the Exchange determines
on a class basis--which, as described above, is $0.05 in SPX
options.\13\ The Exchange notes that the corresponding FLEX AIM Rules
5.73(c)(5)(A) and 5.73(a)(4) provide the same for FLEX AIM Auctions.
However, unlike on the trading floor, market participant responses
using this increment have generally improved the net package price
(based on then-current leg markets) by the minimum increment of $0.05.
While members of the trading crowd on the trading floor are permitted
to improve the net package price (based on then-current leg markets) by
the minimum increment of $0.05 under the Rules, that is not the common
practice, as noted above. The Exchange believes this is because the
parties to an electronic complex order trade may compete only with
respect to the net price and are not able to negotiate the leg prices.
---------------------------------------------------------------------------

    \13\ The System rejects a C-AIM response or Agency or Initiating
Order that is not in the applicable minimum increment.
---------------------------------------------------------------------------

    For example, consider an SPX complex strategy to buy 8 of the June
2600/2550 SPX put spreads tied to one June 2660 Combo, using a delta of
5. Consider that the desired starting price of the put spread is $15.50
by 8 with the combo trading at even (i.e., zero). If the strategy was
executed on the trading floor, the broker would first ask for a market
for the June 2600/2550 put spread tied to the 2660 combo, and the
trading crowd might, for example, price the 2600 leg at 16-17, the 2550
leg at 1-3, and the combo at 20-22 and 20-22 (or, even). Based off the
market provided, an in-crowd Market-Maker could then respond to the
package at 13-16, which equates to buying the 2660 leg at 16 and
selling the 2550 leg at 3 and then selling the 2600 leg at 17 and
buying the 2550 leg at a dollar. The trading crowd's responses would
not include the combo, instead, the combo at even is ``tied up'' to, or
in addition to, the package price. The broker would then be able to
indicate their size and direction for the put spread (i.e., their
contra) based off the market given by the trading crowd; in this
example, that they would pay 15.50 for 8. Open outcry auction responses
would then be priced in $0.05 increments below $15.50, per spread.
However, the same strategy submitted into a C-AIM Auction must
currently be entered as one package, inclusive of the combo, for a net
price of $124.00 ($15.50 x 8). In this example, the broker would submit
the Agency Order and contra-side order(s) simultaneously to commence
the Auction. C-AIM Auction responses would then join the $124.00
package price or occur in $0.05 below the $124.00 package price, thus
price improved by $123.95, an improvement of only a quarter penny per
spread (i.e., $0.05/8).
    In addition to this, current Rules 5.37(c)(2), 5.38(c)(2), and
5.73(c)(2) provide that the System initiates the AIM, C-AIM, and FLEX
AIM Auction processes, respectively, by sending an auction notification
message detailing the side, size, Auction ID, options series
(additionally, in the case of C-AIM Auctions, complex strategy, and in
the case of FLEX AIM Auctions, length of the auction period and complex
strategy, as applicable) of the Agency Order to all Users that elect to
receive AIM, C-AIM, or FLEX AIM Auction notification messages. AIM, C-
AIM, and FLEX AIM Auction notification messages are not included in the
disseminated BBO (in connection with AIM Auctions) or OPRA. As such,
the stop price of an Agency Order is not currently included in auction
notification messages. The Exchange believes that lack of an indication
of where an auction is set to begin, like the ballpark figure provided
by the trading crowd when crossing on the trading floor, may cause
apprehension in pricing competitive responses during the electronic
auctions in SPX, which may reduce liquidity and price improvement
during such auctions.
    The Exchange is considering activating AIM and C-AIM in SPX when it
reopens the trading floor. To better align the C-AIM process for SPX
complex strategies with the open outcry crossing process for those
strategies, the Exchange proposes to amend Rule 5.38(c)(5)(A) to
provide that the minimum price increment for a C-AIM response in which
the Agency Order complex strategy is comprised of an SPX Combo Order
(as defined in Rule 1.1) will be the ratio of the non-combo portion of
the strategy to the number of combos, multiplied by the minimum price
increment the Exchange determines for options on SPX Agency Orders
pursuant to Rule 5.38(a)(4). Also, to better align the AIM and C-AIM
pricing process generally for responses with the open outcry process,
the Exchange proposes to amend Rules 5.37(c)(2) and 5.38(c)(2) to
provide that the Exchange may also determine to

include the stope price in AIM and C-AIM Auction notification messages,
respectively, in SPX. Like all other information disseminated in an AIM
and C-AIM Auction notification message, the stop price will be
available to all Users that elect to receive auction notification
messages. The Exchange notes that the FLEX AIM Rules in connection with
the auction process for FLEX complex orders are substantially similar
to the AIM and C-AIM Rules. Therefore, to maintain consistency within
the Rules between the FLEX and non-FLEX auctions, the Exchange also
proposes to amend the FLEX AIM process for SPX complex strategies
(i.e., for FLEX C-AIM) and for FLEX AIM Auction notification messages
in the same manner.\14\
---------------------------------------------------------------------------

    \14\ See proposed Rules 5.73(c)(2) and 5.73(c)(5)(A).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule changes will create
similar price competition for these orders in electronic and open
outcry trading. Particularly, the Exchange believes that the current
manner in which de minimis price improvement may occur via C-AIM, as
well as FLEX C-AIM, Auctions in connection with SPX Combo Orders (i.e.,
potentially only improved in sub-penny increments) may discourage
market participants from providing contra-side interest at the best
prices and liquidity providers from joining or improving at meaningful
increments. As such, the proposed rule change is intended to provide
for substantially the same price improvement opportunities at
meaningful increments on SPX complex strategies submitted to C-AIM and
FLEX C-AIM that occur for the same strategies on the trading floor. To
illustrate by using the same complex strategy example above, if a User
buys 8 of the June 2600/2550 SPX Put spreads tied to one June 2660
Combo, using a delta of 5, pursuant to the proposed rules, the System
would calculate the minimum increment by the ratio of the non-combo leg
(8) to the number of combos (1) by the minimum increment of $0.05.
Therefore, (8/1) x 0.05 = $0.40 as the starting point for price
improvement during the C-AIM or FLEX C-AIM Auction. In this way, by
tying the minimum increment to the legs of the order, as opposed to the
package price inclusive of the combos, the Exchange believes the
proposed rule would require market participants to respond to the C-AIM
or FLEX C-AIM Auctions for SPX complex strategies at prices more
aligned with the prices at which responses generally occur in open
outcry, i.e., prices in response to a broker's corresponding bids
(offers) based off of the market per leg at which the trading crowd
indicates it is willing to buy (sell). If market participants may
participate in C-AIM or FLEX C-AIM executions in connection with SPX
complex strategies by providing de minimis price improvement compared
to price improvement that may occur on the floor, the Exchange believes
there may be less interest by market participants to take on the risk
of participating as a contra and may negatively impact liquidity
available on the trading floor. As a result, the Exchange believes this
potentially reduces price improvement opportunities for customers.
Particularly, if the Exchange determines to activate C-AIM in SPX when
the trading floor re-opens, the Exchange believes the proposed rule
change may provide customers with additional opportunities for more
meaningful price improvement and may encourage market participants to
provide more liquidity for C-AIM transactions in SPX while also
mitigating any potential disincentive to provide liquidity on the
trading floor in SPX by better aligning electronic and open outcry
crossing of SPX complex orders that include a combo.
    The Exchange notes that the proposed rule change does not alter the
minimum increment as determined by the Exchange for SPX complex
strategies and is consistent with the ability of the Exchange to
determine the minimum increment for SPX (the proposed minimum increment
will be in multiples of $0.05) but instead provides that price
improvement opportunities for such orders submitted into C-AIM, as well
FLEX AIM, occur at the same meaningful increments that market
participants reasonably would expect to occur on such orders pursuant
to the current Rules and practice on the trading floor. The Exchange
believes this may encourage a potential increase in participation in
the C-AIM and FLEX AIM Auctions in SPX without a corresponding negative
impact on participation or liquidity in open outcry auctions once the
trading floor reopens.
    In the same way, the Exchange believes that the proposed rule
change to allow the System to disseminate the initial price of an SPX
AIM and C-AIM Auction, as well as FLEX AIM Auction, would more
generally align the trading of SPX options submitted for execution into
the electronic auctions with those crossed on the trading floor. The
Exchange believes that the proposed rule change would allow the
Exchange to address any uncertainties market participants may have when
pricing SPX responses, given the more complicated market models,
greater risk, higher notional value, larger sizes, and increasingly
more complex strategies in SPX, by including the Agency Order stop
price in the auction notification messages. This, in turn, may
facilitate market participants' confidence in pricing meaningful,
competitive responses during electronic auctions in SPX in a manner
substantially similar to which the trading crowd's market allows for
market participants to more confidently price their responses
accordingly. As a result, this proposed rule change is intended to
incentivize continued, competitive responses to SPX electronic auctions
in substantially the same manner in which responses may be priced on
the trading floor, thus, providing for potentially improved liquidity
and price improvement opportunities for orders being executed through
those auctions. The Exchange also notes that its affiliated options
exchange, Cboe EDGX Exchange, Inc. (``EDGX Options'') corresponding
rules \15\ governing the AIM and C-AIM auction notification messages on
EDGX Options provide that its system initiates the AIM or C-AIM auction
processes by sending an auction notification message detailing the
price, along with the same fields currently detailed pursuant to Cboe
Options Rules 5.37(c)(2) and 5.38(c)(2) as well as 5.73(c)(2). Also,
pursuant to Exchange Rule 5.33(d)(1), C2 Rule 6.13(d)(1), and EDGX
Options Rule 21.20(d)(1), the Exchange and its affiliated options
exchanges may currently determine to include in similar notification
messages the limit price of an order that initiates a Complex Order
Auction (``COA''), much like that of the stop price of an AIM, C-AIM,
or FLEX AIM Agency order that initiates these auctions. The Exchange
further notes that similar electronic auctions on other options
exchanges disseminate the price in their initial auction messages.\16\
---------------------------------------------------------------------------

    \15\ See EDGX Options Rules 21.19(c)(2) and 21.22(c)(2).
    \16\ See MIAX Options Rule 5.18(d)(2), which governs the
commencement of a Complex Auction on MIAX Options, and Rules
515A(a)(2)(i)(B) and 515A.12, which govern the request for response
message disseminated during MIAX Options' electronic crossing
auctions, PRIME and complex PRIME; substantially similar to AIM and
C-AIM; see also NYSE American Options Rule 903G(a)(2), which governs
the information required in FLEX Request for quotes.
---------------------------------------------------------------------------

    The Exchange believes that providing similar response and execution
opportunities across these trading facilities will serve to maintain
meaningful levels of liquidity, price competition, and price
improvement opportunities in SPX during both electronic and open outcry
auctions

upon the reopening of the trading floor if the Exchange determines to
activate AIM and C-AIM for SPX at that time. As a result, the proposed
rule change is designed to ensure that C-AIM for complex SPX strategies
remains a viable additional means of execution for SPX complex orders,
and that market participants maintain the same confidence in pricing
their responses to AIM and C-AIM Auctions in SPX as they have during
open outcry auctions, and thus, will continue to provide more execution
and price improvement opportunities for customers. Likewise, the
proposed rule change would align the FLEX AIM and C-AIM Auction process
with the non-FLEX AIM and C-AIM Auction process, potentially providing
the similar opportunities for execution and price improvement in
connection with the same complex strategies and similar meaningfully
price responses submitted into FLEX AIM and providing investors with
continued consistency in the Exchange's auction rules, thus, mitigating
any confusion for those participating in both non-FLEX and FLEX SPX
trading.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\17\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \18\ 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) \19\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ Id.
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    The Exchange believes the proposed rule change, overall, will
promote just and equitable principles of trade and remove impediments
to and perfect the mechanism of a free and open market and a national
market system by further aligning the AIM, C-AIM and FLEX AIM Auction
processes with the open outcry crossing process. The Exchange believes
the proposed rule change will permit market participants that respond
to C-AIM and FLEX AIM Auctions for orders tied to SPX Combos in a
similar manner as members of a trading crowd respond to request for
markets for those orders. Additionally, for those that respond to AIM,
C-AIM, and FLEX AIM auctions generally in SPX, the Exchange believes
the proposed rule change will facilitate more confidence of market
participants in pricing responses during auctions in a manner similar
to pricing process that takes place on the trading floor.
    In particular, the Exchange believes the proposed rule change
regarding minimum increments for responses to SPX Combo Orders will
remove impediments to and perfect the mechanism of a free and open
market and national market system and will protect investors by
encouraging market participants to continue to provide liquidity by
acting as contra in C-AIM Auctions for SPX orders, as well as possibly
providing more price improvement opportunities and more meaningful
price improvement if the Exchange determines to activate C-AIM in SPX
when the trading floor is reopened. The Exchange believes that
providing similar execution opportunities for SPX complex strategies
between C-AIM and open outcry will help to maintain meaningful levels
of liquidity and price improvement opportunities in SPX across both
facilities. Thus, the proposed rule change seeks to have C-AIM for
complex SPX strategies be an additional means of execution for SPX
complex orders, together with executions opportunities via open outcry,
in turn, providing additional execution and price improvement
opportunities overall for customers without a potential negative impact
on liquidity on the trading floor. The proposed rule change does not
alter the minimum increment as determined by the Exchange for SPX
complex strategies but rather increases the overall minimum increment
for responses (in other words, executions will continue to trade in an
increment of $0.05 per leg and per order), which will still be in a
multiple of $0.05. The Exchange believes this may result in responses
to customer orders submitted for execution in C-AIM and FLEX AIM at
prices market participants reasonably would expect to receive for such
orders on the trading floor.
    Additionally, the Exchange believes that proposal to permit the
Exchange to include the auction price in the auction notification
message, which, unlike open outcry, will be a net package price rather
than a per strategy price, may pose potential risk of market
participants submitting responses by de minimis amounts ($0.05 above or
below the auction price), which as described above, may discourage
market participants from taking on the risk to participate as contras,
which could reduce liquidity available in the electronic and open
outcry SPX market. The Exchange is concerned that potential
interruptions to the provision of liquidity in SPX and general
participation in the complex electronic auctions in SPX, as well as on
the trading floor, could result from the de minimis price increases
market participants may provide in responses to electronic auctions due
to the disparity between pricing in electronic auctions and pricing in
open outcry trading. As a result, the Exchange believes the proposed
rule change may encourage continued submission of SPX complex
strategies to the electronic auctions by modifying C-AIM and FLEX AIM
Auctions for SPX to more closely replicate the open outcry crossing
auction process for SPX (which constitutes the majority of SPX trading
when the Exchange trading floor is available and C-AIM is not
activated). The Exchange believes the proposed rule change would
generally enhance price improvement and execution opportunities in SPX
C-AIM Auctions, as well as FLEX AIM, thereby removing impediments to
and perfecting the mechanism of a free and open market and a national
market system, and, overall, benefitting the entire market and all
investors.
    Similarly, the Exchange believes that the proposed change to allow
the System to disseminate the price of an Agency Order in SPX options
submitted to AIM and C-AIM auctions will further enable all market
participants to respond to the auctions with competitive prices thereby
removing impediments to and perfecting the mechanism of a free and open
market and national market system. As described above, participants in
SPX are accustomed to receiving an approximate starting price range
during open outcry auctions, which provides them with confidence in
pricing their responses; this confidence is particularly important for
orders in SPX, which, as noted above, generally take on greater risk
and effect increasingly more complex strategies than in other option
classes.

Thus, the proposed rule change is intended to better align the
dissemination of auction prices in SPX with the manner in which the
trading floor may give a ``ball park'' price in response to a request
for a market on the trading floor, thereby providing participants with
the same level of confidence in pricing their responses when responding
to both the electronic and open outcry auctions, and thus encouraging
market participants to continue to submit responses and participate in
the electronic auctions when the trading floor is again operable. This
proposed change, too, may increase price improvement and execution
opportunities in SPX during the AIM and C-AIM, as well as the FLEX AIM,
Auctions, thereby also facilitating the provision of an additional
viable avenue(s) of execution for SPX orders if AIM and C-AIM remain
activated in SPX once the trading floor reopens. In addition to this,
the proposed rule change is not new or unique, as the Exchange may
already determine to include the price for notification messages in
connection with the commencement of its COA pursuant to Rule
5.33(d)(1), the rules of EDGX Options currently provide that the price
of an Agency Order in its AIM and C-AIM auctions be disseminated via
its auction notification messages,\20\ and other options exchange rules
also permit for dissemination of the price of an electronic auction-
commencing order in auction messages.\21\ The Exchange notes that each
of the aforementioned rules has previously been filed with the
Commission.
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    \20\ See supra note 15.
    \21\ See supra note 16.
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    The Exchange believes that, together, both proposed changes would
provide benefits to investors participating in SPX. As discussed above,
the Exchange believes providing market participants with the auction
price for SPX AIM Auctions may increase participation in the AIM
Auctions, and thus increase execution and price improvement
opportunities for customer orders submitted into those auctions. The
Exchange believes this will benefit all market participants that trade
in the SPX market. In connection with this change, the Exchange
believes the proposed change to impose a larger minimum increment for
responses is necessary and appropriate offsets the potential risk that
the display of the auction price may lead to further de minimis price
improvement for those orders.
    Moreover, the Exchange believes the proposed rule changes will
likewise extend these additional execution and price improvement
opportunities to such orders submitted into FLEX AIM while also
maintaining consistent auction rules in connection with SPX auction
notification messages and SPX complex strategies in both non-FLEX and
FLEX. As a result, the Exchange believes this will benefit investors by
mitigating any potential confusion regarding the manner of SPX auction
message dissemination or SPX execution for complex strategies in SPX
into either auction.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe the proposed rule change in connection with minimum increments
for SPX complex strategies will impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because it will apply to all C-AIM and FLEX AIM
executions in connection with SPX Combo Orders for all market
participants. The Exchange believes it is reasonable to limit the
proposed rule change to SPX Combo Orders as the majority of index
strategies are structured as SPX combos. The Exchange also does not
believe that the proposed rule change in connection with the
dissemination of price in the SPX auction notification messages will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because it will
apply to all Agency Orders submitted into the AIM, C-AIM, and FLEX AIM
Auctions, as the Exchange determines, by all market participants.
Additionally, the dissemination of the price via the auction
notification message, when applicable, will continue to be made
available to all market participants that elect to receive auction
notification messages, as it currently is today. The Exchange further
notes that, as compared to other options classes, SPX exhibits
generally more complex trading characteristics and market models,
different investor basis, and a significant portion of larger orders
and more complex strategies that typically occur on the trading floor,
and thus, it is reasonable to limit the proposed rule change to SPX as
it is designed to facilitate confidence when pricing responses in light
of these factors.
    The Exchange does not believe the proposed rule change will impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as the proposed
rule change relates to an Exchange-specific auction mechanism in a
class of options only listed for trading on the Exchange. Other
exchanges with similar price improvement auctions may amend their rules
to propose different minimum increments for auction responses as they
deem appropriate. The Exchange notes the proposed rule change has no
impact on the allocation or priority of orders and responses at the
conclusion of the C-AIM and FLEX AIM Auctions. Also, as noted above,
pursuant to rules previously filed with the Commission, the Exchange
and its affiliated options exchanges may currently determine to include
price in its similar notification messages disseminated in connection
with the COA, EDGX Options currently disseminates the price of agency
orders in its auction notification messages for AIM and C-AIM
auctions,\22\ and the rules of other options exchanges governing
substantially similar electronic auctions disseminate the initiating
prices for such auctions.\23\
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    \22\ See supra note 15.
    \23\ See supra note 16.
---------------------------------------------------------------------------

    The Exchange believes the proposed rule change may promote
competition on the Exchange, as it will more closely align the
electronic crossing process with the open outcry crossing process, and
thus provide similar execution and price improvement opportunities to
customers whether their orders are submitted for electronic or open
outcry execution. In particular, the Exchange may activate AIM and C-
AIM for SPX when the trading floor is reopened, and the proposed rule
change would enable it to do so in a manner the Exchange believes will
encourage liquidity in both electronic and open outcry trading, and, as
a result, will provide an additional viable avenue of execution for SPX
orders, and thus more execution and price improvement opportunities
overall in SPX for customers.

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-2020-052 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-2020-052. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CBOE-2020-052 and should be submitted on
or before July 9, 2020.
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    \24\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-13123 Filed 6-17-20; 8:45 am]
BILLING CODE 8011-01-P