[Federal Register Volume 81, Number 160 (Thursday, August 18, 2016)]
[Notices]
[Pages 55245-55247]
[FR Doc No: 2016-19689]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78567; File No. SR-NASDAQ-2016-115]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Nasdaq Rule 7018

August 12, 2016.
    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 August 10, 2016, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') a 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 the
Substance of the Proposed Rule Change

    Nasdaq is proposing to amend Nasdaq Rule 7018(a) to add a new
credit tier for a combination of accessing and providing liquidity in
securities of all three Tapes.\3\
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    \3\ There are three Tapes, which are based on the listing venue
of the security: Tape C securities are Nasdaq-listed; Tape A
securities are New York Stock Exchange (``NYSE'')-listed; and Tape B
securities are listed on exchanges other than Nasdaq and NYSE.
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    The text of the proposed rule change is available at
nasdaq.cchwallstreet.com, at Nasdaq's principal office, 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, Nasdaq 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 those 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 parts 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 add a new credit tier
for the use of the order execution and routing services of the Nasdaq
Market Center by members for all securities priced at $1 or more that
it trades. The Exchange proposes to amend Nasdaq Rule 7018(a)(1), (2),
and (3) to add a new credit tier for a combination of accessing and
providing liquidity in securities of all three Tapes. Specifically,
this new credit tier will be added to the Nasdaq rule book under each
of Nasdaq Rule 7018(a)(1), (2), and (3) in the part entitled ``Credit
to member for displayed quotes/orders (other than Supplemental Orders
or Designated Retail Orders) that provide liquidity''.
    The new credit tier will be for $0.0027 per share executed and will
be available for a member (i) with shares of liquidity accessed in all
securities through one or more of its Nasdaq Market Center market
participant identifiers (``MPIDs'') that represent more than 0.65% of
consolidated volume (``Consolidated Volume'') during the month, and
(ii) with shares of liquidity provided in all securities through one or
more of its Nasdaq Market Center MPIDs that represent more than 0.10%
of Consolidated Volume during the month.
    As a general principle, the Exchange chooses to offer credits to
members in return for market improving behavior. Under Rule 7018(a),
the various credits the Exchange provides for members require them to
significantly contribute to market quality by accessing and providing
liquidity at certain levels of Consolidated Volume through one or more
of its [sic] Nasdaq Market Center MPIDs.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\4\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\5\ 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
or system which the Exchange operates or controls, and is not designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    The credits Nasdaq provides are designed to improve market quality
for all market participants, and Nasdaq allocates its credits in a
manner that it believes are the most likely to achieve that result.
Specifically, the Exchange believes that the proposed rule change to
add a new credit tier of $0.0027 per share executed is reasonable
because it is consistent with other credits that the Exchange provides
to members that access and/or provide liquidity. As discussed
previously, as a general principle the Exchange chooses to offer
credits to members in return for market improving behavior. Under Rule
7018(a), the various credits the Exchange provides for members require
them to significantly contribute to market quality by accessing and/or
providing certain levels of Consolidated Volume through one or more of
its [sic] Nasdaq Market Center MPIDs, and volume.
    The proposed credit will be provided to members that not only
access liquidity in all securities through one or more of its [sic]
Nasdaq Market Center MPIDs of more than 0.65% of Consolidated Volume
during the month, but also that contribute to the Exchange by providing
liquidity in all securities through one or more of its [sic] Nasdaq
Market Center MPIDs of more than 0.10% of Consolidated Volume during
the month.
    The Exchange believes that the proposed $0.0027 per share executed
credit is an equitable allocation and is not unfairly discriminatory
because a member achieving this credit tier will be both accessing and
providing liquidity, which should be beneficial to other members as
this both encourages more liquidity on the Exchange, as well as
increasing the likelihood that members [sic] resting limit orders may
be accessed by members seeking to attain this credit tier. The Exchange
seeks to encourage such behavior.
    Additionally, the Exchange believes that the proposed new credit
tier is an equitable allocation and is not unfairly discriminatory
because the new credit tier is uniformly available to all members and
affects all members equally and in the same way. Additionally, the
proposed new credit tier will further encourage market participant
activity and will also support price discovery and liquidity provision.

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 not necessary or appropriate in
furtherance of the purposes of the Act. In terms of inter-market
competition, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive, or rebate opportunities available at other venues to be more
favorable. In such an environment, the Exchange must continually adjust
its fees to remain competitive with other exchanges and with
alternative trading systems that have been exempted from compliance
with the statutory standards applicable to exchanges. Because
competitors are free to modify their own fees in response, and because
market participants may readily adjust their order routing practices,
the Exchange believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited.
    In this instance, the changes to the credits provided for the use
of the order execution and routing services of the Nasdaq Market Center
by members for all securities priced at $1 or more that it trades are
reflective of the intense competition among trading venues in capturing
order flow. Moreover, the proposed rule change does not impose a burden
on competition because Exchange membership is optional and is also the
subject of competition from other trading venues. For these reasons,
the Exchange does not believe that any of the proposed changes will
impair the ability of members or competing order execution venues to
maintain their competitive standing in the financial markets. Moreover,
because there are numerous competitive alternatives to the use of the
Exchange, it is likely that the Exchange will lose market share as a
result of the changes if they are unattractive to market participants.

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

    Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
    The foregoing change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\6\ At any time within 60 days of the filing
of the proposed rule change, the Commission summarily may temporarily
suspend such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-NASDAQ-2016-115 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-2016-115. 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 such 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-NASDAQ-2016-115, and should
be submitted on or before September 8, 2016.
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    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19689 Filed 8-17-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 86, Number 52 (Friday, March 19, 2021)]
[Notices]
[Page 14901]
[FR Doc No: 2021-05725]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER21-1377-000]

Diamond Energy NYISO, LLC; Supplemental Notice That Initial
Market-Based Rate Filing Includes Request for Blanket Section 204
Authorization

    This is a supplemental notice in the above-referenced Diamond
Energy NYISO, LLC's application for market-based rate authority, with
an accompanying rate tariff, noting that such application includes a
request for blanket authorization, under 18 CFR part 34, of future
issuances of securities and assumptions of liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR part 34, of future issuances of securities and assumptions of
liability, is April 5, 2021.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically may mail similar pleadings to
the Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426. Hand delivered submissions in docketed
proceedings should be delivered to Health and Human Services, 12225
Wilkins Avenue, Rockville, Maryland 20852.
    In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (http://www.ferc.gov) using
the ``eLibrary'' link. Enter the docket number excluding the last three
digits in the docket number field to access the document. At this time,
the Commission has suspended access to the Commission's Public
Reference Room, due to the proclamation declaring a National Emergency
concerning the Novel Coronavirus Disease (COVID-19), issued by the
President on March 13, 2020. For assistance, contact the Federal Energy
Regulatory Commission at<EMAIL_ADDRESS>or call toll-free,
(886) 208-3676 or TYY,<PHONE_NUMBER>.

    Dated: March 15, 2021.
Kimberly D. Bose,
Secretary.
[FR Doc. 2021-05725 Filed 3-18-21; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 82, Number 192 (Thursday, October 5, 2017)]
[Notices]
[Pages 46554-46558]
[FR Doc No: 2017-21405]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81768; File No. SR-C2-2017-025]

Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend Rule 6.45 Relating to Disaster Recovery

September 29, 2017.
    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 September 20, 2017, C2 Options Exchange, Incorporated (``Exchange''
or ``C2'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III, below, which Items have been prepared by the Exchange. The
Exchange filed the proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule
19b-4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 Rule 6.45 relating to disaster
recovery. The text of the proposed rule change is also available on the
Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for

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

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

1. Purpose
Background
    C2 adopted Rule 6.45 in 2012 for the limited purpose of providing
alternative means of operation in the event C2's trading system became
inoperable or otherwise unavailable for use due to a disaster or other
unusual circumstance. In particular, Rule 6.45, as originally adopted,
was intended to allow C2 to operate a ``Disaster Recovery Facility''
(``DRF'') to continue to trade exclusively listed option classes until
C2's main trading system was again available.\5\ C2 utilizes hardware
located in the Chicago Board Options Exchange, Incorporated (``CBOE'')
building in Chicago, IL, for the purposes of operating the DRF. C2's
main trading engine is located on the East coast.
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    \5\ See Securities Exchange Act Release No. 67357 (July 5,
2012), 77 FR 40928 (July 11, 2012) (Order Granting Approval of
Proposed Rule Change to Implement a Disaster Recovery Facility) (SR-
C2-2012-011). C2 notes it no longer has any exclusively listed
option products.
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    In 2015, Rule 6.45 was amended to add greater detail to C2's
disaster recovery rules and harmonize the disaster recovery rules with
newly implemented disaster recovery-related regulatory imperatives of
Regulation Systems Compliance and Integrity (``Regulation SCI''), which
superseded and replaced the SEC's voluntary Automation Review
Policy.\6\ In doing so, C2 made certain changes to Rule 6.45 to provide
additional details regarding the Exchange's back-up trading systems,
business continuity and disaster recovery plans, and testing and update
its disaster recovery rules to ensure consistency with Regulation SCI.
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    \6\ See Securities Exchange Act Release No. 76300 (October 4,
2015), 80 FR 68343 (October 28, 2015) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change Amending Rule 6.45
Relating to Disaster Recovery) (SR-C2-2015-030); see also Securities
Exchange Act Release Nos. 73639 (November 19, 2014), 79 FR at 72252
(December 5, 2014) (Regulation Systems Compliance and Integrity)
(File No. S7-01-13); 27445 (November 16, 1989), 54 FR 48703
(November 24, 1989) (Automated Systems of Self-Regulatory
Organizations) (File No. S7-29-89); 29185 (May 9, 1991), 56 FR 22490
(May 15, 1991) (Automated Systems of Self-Regulatory Organizations)
(File No. S7-12-91).
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    C2 now proposes to make additional changes to its disaster recovery
rules to provide C2 the authority to take additional steps necessary to
preserve the C2's ability to conduct business in the event that C2's
primary and/or back-up data center(s) become inoperable or otherwise
unavailable for use due to a significant systems failure, disaster or
other unusual circumstances and make clear in the Rules the
intermediary steps that C2 may take to disable certain systems and
users' connectivity while continuing to operate its primary data
center. C2 believes this authority serves the interests of all
investors and the general public, because it helps C2 ensure its
continuous operation and ability to maintain fair and orderly markets
in the event of a significant systems failure or other unusual
circumstance.
Proposal
    C2 proposes to amend Rule 6.45 relating to disaster recovery.
Specifically, the Exchange proposes to make changes to Rule 6.45 to:
(1) Allow C2 to establish certain additional temporary requirements
applicable to particular Designated BCP/DR Participants \7\ during use
of the back-up data center; (2) permit C2 to deactivate certain
nonessential systems and systems functionalities in response to limited
systems disruptions or malfunctions, security intrusions, systems
compliance issues, or other unusual circumstances; and (3) permit C2 to
restrict access of a Permit Holder or associated person to the System
if such access poses a significant threat to C2's ability to operate
systems essential to maintain a fair and orderly market.
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    \7\ Under Rule 6.45(b)(iv)(A), C2 shall designate those Permit
Holders that C2 reasonably determines are, taken as a whole, the
minimum necessary for the maintenance of fair and orderly markets in
the event of the activation of C2's business continuity and disaster
recovery plans (``Designated BCP/DR Participants''). Designated BCP/
DR Participants will include all C2 Market-Makers and all C2 Permit
Holders connected to the C2 primary data center and transacting non-
Participant customer business, unless a C2 Permit Holder, other than
a C2 Market-Maker, can demonstrate ready access to the back-up data
center through another C2 Permit Holder that is a designated
participant. As further discussed below, temporary requirements may
be imposed on C2 Market-Makers during use of the back-up data
center.
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    C2 proposes to add new Rule 6.45(b)(iv)(B) (Alternative BCP/DR
Participant Obligations), which would provide that during the use of
the back-up data center, C2 may, if necessary for the maintenance of
fair and orderly markets, establish heightened quoting obligations for
Designated BCP/DR Participants in a class in which the Designated BCP/
DR Participant is already an appointed Market-Maker up to the standards
specified for Designated Primary Market-Makers (``DPMs'') in Rule
8.17(a) \8\ and/or disallow the ability to deselect an appointment
intraday in a class in which the Designated BCP/DR Participant is
already an appointed Market-Maker.\9\ Proposed Rule 6.45(b)(iv)(B)
would also provide that C2 would notify market participants of any such
additional temporary requirements prior to implementation in a
reasonable manner as determined by

C2.\10\ C2 believes this extended authority would afford C2 with
necessary flexibility to address unexpected contingencies that may
arise if a disaster or other unusual circumstances occur, causing C2 to
use the back-up data center and help ensure that C2 operates a fair and
orderly market in the event of a market emergency. C2 also proposes
non-substantive changes to the lettering in paragraph (b)(iv) to
accommodate the addition of new Rule 6.45(b)(iv)(B). Accordingly,
current Rule 6.45(b)(iv)(B) would become Rule 6.45(b)(iv)(C), and
current Rule 6.45(b)(iv)(C) would become Rule 6.45(b)(iv)(D).
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    \8\ Currently, under Rule 8.17(a)(i), for example, DPMs must
provide continuous quotes in at least the lesser of 99% of the non-
adjusted option series (as defined in Rule 8.5(a)(1)) or 100% of the
non-adjusted option series minus one call-put pair with the term
``call-put pair'' referring to one call and one put that cover the
same underlying instrument and have the same expiration date and
exercise price, and assure that its disseminated market quotations
are accurate. This obligation does not apply to intra-day add-on
series on the day during which such series are added for trading.
For purposes of Rule 8.17(a)(1), ``continuous'' means 90% of the
time. If a technical failure or limitation of the System prevents a
DPM from maintaining, or from communicating to C2, timely and
accurate quotes in a series, the duration of such failure shall not
be considered in determining whether that DPM has satisfied the 90%
quoting standard with respect to the series. C2 may consider other
exceptions to this obligation based on demonstrated legal or
regulatory requirements or other mitigating circumstances.
Compliance with this quoting obligation applies to all of a DPM's
allocated classes collectively. C2 will determine compliance by a
DPM with this quoting obligation on a monthly basis. However,
determining compliance with this obligation on a monthly basis does
not relieve a DPM from meeting this obligation on a daily basis, nor
does it prohibit C2 from taking disciplinary action against DPM for
failing to meet this obligation each trading day. See Rule
8.17(a)(1). Accordingly, under proposed Rule 6.45(b)(iv)(B), during
use of the back-up data center, C2 could require that Market-Makers
in AAPL provide continuous electronic quotes in up to 99% of the
non-adjusted option series or 100% of the non-adjusted option
serious minus one call-put pair.
    \9\ In accordance with Rule 1001(a)(2)(v) of Regulation SCI, C2
maintains written policies and procedures reasonably designed to
ensure that its trading systems (including with respect to both C2's
primary and back-up data center trading systems), have levels of
capacity, integrity, resiliency, availability, and security adequate
to maintain C2's operational capability and promote the maintenance
of fair and orderly markets, including, but not limited to business
continuity and disaster recovery plans that are reasonably designed
to achieve next two-hour resumption of its critical SCI systems, as
defined in Rule 1000 of Regulation SCI. See Securities Exchange Act
Release No. 73639 (November 19, 2014), 79 FR 72252 (December 5,
2014) (Regulation Systems Compliance and Integrity) (File No. S7-01-
13). Notably, C2 employs business continuity and disaster recovery
standards reasonably designed to achieve two-hour resumption of all
trading systems that are essential to conducting business on C2 and
which C2 believes are reasonably designed to support resumption in a
significantly shorter amount of time, including, but not limited to
with respect to those systems that are essential to the trading of
proprietary products and products exclusively licensed for trading
on the Exchange.
    \10\ C2 would make these notifications on the Systems
Notification page on C2's Web site, via an Exchange-used messaging
service, and/or other reasonable notification mechanisms.
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    C2 also proposes to add Rule 6.45(c) (Deactivation of Certain
Systems), which would provide that in the event of a systems disruption
or malfunction, security intrusion, systems compliance issue, or other
unusual circumstances, C2 may, in accordance with the Rules or if
necessary to maintain fair and orderly markets or to protect investors,
temporarily deactivate certain systems or systems functionalities that
are not essential to conducting business on C2. Many of the systems and
systems functionalities described in the Rules are provided optionally
by C2 to enhance participants' trading experience, but are not required
to be active under the Rules and are not necessary for C2 to conduct
business.\11\ As is described in the Rules, many of the C2's systems
functionalities may be made available (or unavailable) by C2 on a
class-by-class basis. Such systems and systems functionalities that are
non-essential to conducting business on C2 include, but are not limited
to, the Automated Improvement Mechanism (AIM) \12\ and the Solicitation
Auction Mechanism (SAM).\13\
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    \11\ See, e.g., Rules 6.10, 6.11, 6.13, 6.14, 6.17, 6.18, 6.51,
and 6.52.
    \12\ See generally Rule 6.51.
    \13\ See generally Rule 6.52.
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    In addition, the activation of other functionalities may not be
described by the Rule, but could be suspended temporarily (e.g., until
the earlier of the end of a trading session or until systems
disruptions could be remedied) if disruption or malfunction of that
functionality were to interfere with the C2's ability to conduct
business in a fair and orderly manner. For example, if a certain order
type were to cause a wider system malfunction or a certain complex
order product could not be created without triggering widespread
systems issues,\14\ C2 might announce, via its systems status page or
otherwise, the suspension of the availability of that order type or
complex product. If such an event impacts a non-essential system or
system functionality, C2 may deem it necessary to maintain fair and
orderly markets to deactivate that system or functionality until any
issues are resolved to prevent any potential harm to investors.
Proposed Rule 6.45(c) would also provide that C2 would notify market
participants of any such deactivation, and subsequent reactivation,
promptly and in a reasonable manner determined by the Exchange. C2 may
make these notifications on the Systems Notification page on C2's Web
site, via an Exchange-used messaging service such as SendWordNow,\15\
Regulatory Circular, and/or other reasonable notification mechanisms.
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    \14\ For example, if the creation of a certain complex order
product (e.g., the October/November calendar spread in class XYZ)
were to cause significant trading disruptions in an entire class
(e.g., trading in all of XYZ), C2 might determine to turn off
calendar spreads or complex orders in general in the class in order
to help ensure that regular trading (i.e., trading of simple orders)
in the class remained available.
    \15\ See C2 Regulatory Circular RG15-036 RG (Send Word Now Smart
Notification Services); see also C2 Regulatory Circular RG15-037.
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    Finally, C2 proposes Rule 6.45(d) (Connectivity Restriction), which
would permit C2 to temporarily restrict a Permit Holder's or associated
person's access to the trading system if it is determined by the
President (or senior-level designee) of C2, that because of a systems
issue, such access threatens C2's ability to operate systems essential
to the maintenance of fair and orderly markets.\16\ Such access would
remain restricted until the end of the trading session or an earlier
time if the President (or senior-level designee) of C2, in consultation
with the affected Permit Holder(s), determines that lifting the
restriction no longer poses a threat to C2's ability to operate systems
essential to conducting business or continuing to maintain a fair and
orderly market on C2 or to investors.\17\ In the current electronic
trading environment, if a Permit Holder's systems malfunctions or is
compromised, it could disrupt C2's systems or market or harm other
investors. For example, software malfunctions may pose a risk to C2's
systems, investors, and the general public without proper risk
controls. Proposed Rule 6.45(d) would simply give C2 the authority to
activate additional risk controls to stem the access of a Permit Holder
that has experienced a systems disruption or malfunction, which poses
undue risk to C2.
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    \16\ In such cases, C2 would make efforts to contact the
affected Permit Holder immediately before or contemporaneously with
the restriction of access to the system to the extent possible while
protecting C2's ability to operate systems essential to the
maintenance of fair and orderly markets.
    \17\ In determining whether a Permit Holder's access threatens
C2's ability to operate systems essential to the maintenance of fair
and orderly markets and/or determining that lifting the restriction
no longer poses a threat to C2's ability to operate systems
essential to conducting business or continuing to maintain a fair
and orderly market on the Exchange or to investors, a designee of
the President of C2 would only be charged with making such
determinations in the President of C2's absence. In such cases, the
designee would be a senior executive (i.e. Vice President or above)
of C2.
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2. Statutory Basis
    C2 believes the proposed rule change is consistent with the Act and
the rules and regulations thereunder applicable to C2 and, in
particular, the requirements of Section 6(b) of the Act.\18\
Specifically, C2 believes the proposed rule change is consistent with
the Section 6(b)(5) \19\ 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,
C2 believes the proposed rule change is consistent with the Section
6(b)(5) \20\ requirement that the rules of an exchange not be designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(5).
    \20\ Id.
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    The proposed rule change is designed to promote C2's ability to
ensure the continued operation of a fair and orderly market in the
event of a systems failure, disaster, or other unusual circumstances
that might threaten the ability to conduct business on C2. C2
recognizes that switching operations to the back-up data center may
occur in times of uncertainty or great volatility in the markets. It is
at these times that the investors may have the greatest need for
viable, trustworthy marketplaces. The proposed rule change seeks to
ensure that such a marketplace will exist when most needed, and thus,
C2 believes that the proposed rule protects investors in the most
fundamental sense.

    In particular, C2 believes that proposed Rule 6.45(b)(iv)(B)
allowing C2, during the use of the back-up data center to (1) establish
heightened quoting obligations for Designated BCP/DR Participants in a
class in which the Designated BCP/DR Participant is already an
appointed Market-Maker up to the standards specified for DPMs specified
in Rule 8.17(a) and/or (2) disallow the ability to deselect an
appointment intraday in a class in which the Designated BCP/DR
Participant is already an appointed Market-Maker would help ensure the
maintenance of a fair and orderly market in the event of a disaster,
which is in the interests of all market participants, investors, and
the general public. C2 believes that adopting rules that help ensure
that markets are open and available during times of turmoil and
emergency is an important goal consistent with the Act. C2 also
believes that deactivation of certain systems in proposed Rule 6.45(c),
whether by rule or otherwise, in order to ensure that C2 is able to
provide a fair and orderly market in the face of systems disruptions
and malfunction is in the best interests of market participants,
investors, and the general public.
    Similarly, C2 believes that the proposed connectivity restriction
in proposed Rule 6.45(d) would help ensure that C2 remains open and
available to all market participants. C2 notes that other connectivity
restrictions are already in place on the Exchange.\21\ Furthermore, C2
believes that proposed Rule 6.45(d) is consistent with Section 6(b)(7)
\22\ of the Act, which requires C2 to adopt rules that provide a fair
procedure for the disciplining of members and persons associated with
members, the denial of membership to any person seeking membership
therein, the barring of any person from becoming associated with a
member thereof, and the prohibition or limitation by the exchange of
any person with respect to access to services offered by the exchange
or a member thereof. C2 notes that proposed Rule 6.45(d) is not aimed
at denying access to a particular Permit Holder, but rather making sure
that C2 remains accessible to all other Permit Holders that do not
threaten C2's ability to conduct normal business operations. C2 notes
that as soon as the President of C2 (or designee), working with the
Permit Holder organization that poses a threat to C2, were able to
confirm that the Permit Holder organization no longer posed such a
threat, access to C2 would be restored to that Permit Holder. C2
believes that this is a fair result and is in the best interests of all
market participants, investors, and the general public.
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    \21\ See, e.g., Rules 6.34 (Participant Electronic Connectivity)
and 6.48 (Technical Disconnect). Under Rule 6.34(b), C2 may limit
the number of messages sent by Participants accessing C2
electronically in order to protect the integrity of the System. In
addition, C2 may impose restrictions on the use of a computer
connected through an application programming interface (``API'') if
it believes such restrictions are necessary to ensure the proper
performance of the system. Any such restrictions shall be
objectively determined and submitted to the Commission for approval
pursuant to a rule change filing under Section 19(b) of the Exchange
Act. Under Rule 6.48(a), when a CBOE Application Server (``CAS'')
loses communication with a Client Application such that a CAS does
not receive an appropriate response to a Heartbeat Request within
``x'' period of time, the Technical Disconnect Mechanism will
automatically logoff the Permit Holder's affected Client Application
and automatically cancel all the Permit Holder's Market-Maker
quotes, if applicable, and open orders with a time-in-force of
``day'' resting in the Book (``day orders''), if the Permit Holder
enables that optional service, posted through the affected Client
Application.
    \22\ 15 U.S.C. 78f(b)(7).
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    C2 also believes that the proposed rule change promotes just and
equitable principles of trade by adding detail and clarity to the
Rules. The proposed rule change seeks to provide additional clarity to
C2's disaster recovery rules, putting all market participants on notice
as to how C2 will function in case of significant systems disruption or
other disaster situation. C2 is continuously updating the Rules to
provide additional detail, clarity, and transparency regarding its
operations and trading systems and regulatory authority. C2 believes
that the adoption of detailed, clear, and transparent rules reduces
burdens on competition and promotes just and equitable principles of
trade. C2 also believes that adding greater detail to the Rules
regarding C2's ability to ensure the continuous operation of the market
and preserve the ability to conduct business on C2 will increase
confidence in the markets and encourage wider participation in the
markets and greater investment.

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

    C2 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. Rather, the proposed rule
change will help ensure that competitive markets remain operative in
the event of a systems failure or other disaster event. C2 notes that
the proposed rule change is designed to provide C2 with authority to
require market participants to participate in, and provide necessary
liquidity to, the market to ensure that C2 functions in a fair and
orderly manner in the event of a significant systems failure, disaster,
or other unusual circumstances. Accordingly, C2 believes that the
proposed rule change is designed to ensure fair and competitive markets
at time when they may be most needed.

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

    C2 neither solicited nor received written comments on the proposed
rule change.

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

    Because the foregoing proposed rule change does not:
    A. Significantly affect the protection of investors or the public
interest;
    B. impose any significant burden on competition; and
    C. become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \23\ and
Rule 19b-4(f)(6) \24\ thereunder. At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission will institute proceedings to determine whether the proposed
rule change should be approved or disapproved.
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    \23\ 15 U.S.C. 78s(b)(3)(A).
    \24\ 17 CFR 240.19b-4(f)(6).
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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-C2-2017-025 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-C2-2017-025. 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-C2-2017-025, and should be
submitted on or before October 26, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21405 Filed 10-4-17; 8:45 am]
 BILLING CODE 8011-01-P