[Federal Register: June 1, 2006 (Volume 71, Number 105)]
[Proposed Rules]
[Page 31125]
[DOCID:fr01jn06-22]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 366, 367, 368, 369 and 375

[Docket No. RM06-11-000]

Financial Accounting, Reporting and Records Retention
Requirements Under the Public Utility Holding Company Act of 2005

May 19, 2006.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of Proposed Rulemaking: Notice of Change in Date for
Technical Conference.

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SUMMARY: On April 21, 2006, the Commission issued Notice of Proposed
Rulemaking in the above-docketed proceeding concerning Financial
Accounting, Reporting and Records Retention Requirements Under the
Public Utility Holding Company Act of 2005. (71 FR 28464 (2006). The
Commission is rescheduling the date of the technical conference which
is being held pursuant to the directives of the April 24, 2006, Notice
of Proposed Rulemaking.

DATES: The conference previously scheduled for June 21, 2006 is
rescheduled for July 11, 2006.

FOR FURTHER INFORMATION CONTACT: Julia A. Lake, Office of the General
Counsel--Energy Markets and Reliability, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426. (202) 502-
8370<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:
    On April 21, 2006, the Federal Energy Regulatory Commission
(Commission) announced a staff technical conference in the above-
referenced proceeding to be held at the Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426 in the
Commission Meeting Room on June 21, 2006, from 9 a.m. until 4:30 p.m.
EDT. This conference has now been rescheduled for July 11, 2006. All
interested persons are invited to attend. There is no registration fee
to attend.
    The purpose of the conference remains the same. It is to identify
the issues associated with the proposed Uniform System of Accounts for
Centralized Service Companies, the proposed records retention
requirements for holding companies and service companies, and the
revised Form No. 60. The technical conference will develop information
for use by Commission staff in preparing a final rule in this
proceeding.
    Interested persons wishing to participate in the technical
conference are asked to notify Commission staff electronically at
https://www.ferc.gov/whats-new/registration/usoa-06-21-speaker-form.asp

by June 15, 2006.
    Prospective attendees and participants are urged to watch for
further notices; a detailed agenda will be issued in advance of the
conference.
    FERC conferences and meetings are accessible under section 508 of
the Rehabilitation Act of 1973. For accessibility accommodations please
send an e-mail to<EMAIL_ADDRESS>or call toll free (866) 208-
3372 (voice) or<PHONE_NUMBER> (TTY), or send a fax to<PHONE_NUMBER>
with the required accommodations.
    Questions about the conference should be directed to: Julia A.
Lake, Office of the General Counsel--Energy Markets and Reliability,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426.<PHONE_NUMBER><EMAIL_ADDRESS>
Magalie R. Salas,
Secretary.
[FR Doc. 06-4999 Filed 5-31-06; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register Volume 80, Number 39 (Friday, February 27, 2015)]
[Notices]
[Pages 10738-10743]
[FR Doc No: 2015-04067]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74351; File No. SR-CBOE-2015-021]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to Chicago Board Options Exchange,
Incorporated's Order Handling System and Order Management Terminal

February 23, 2015.
    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 February 19, 2015, Chicago Board Options Exchange,
Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities
and Exchange Commission (the ``Commission'') the proposed rule change
as described in Items I, II, and III below, which Items have been
prepared by the Exchange. 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 is proposing to adopt a rule that further describes
its existing order handling system (also referred to below as ``OHS'')
and order management terminal (also referred to below as ``OMT'')
operations, and to make corresponding amendments to its opening,
automatic execution and complex order processing rules. The text of the
proposed rule change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's
Office of the Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange is proposing to adopt new Rule 6.12 to further
describe its existing OHS and OMT operations, and to make corresponding
amendments to its opening, automatic execution and complex order
processing rules (Rules 6.2B, 6.13, and 6.53C, respectively). The
Exchange notes that these OHS and OMT operations are currently in use
and referenced in the Exchange Rules. The purpose of this rule change
is simply to codify further details of the existing operations within
the Exchange Rules.
Background
    The CBOE Hybrid System \5\ is a trading platform that allows
automatic executions to occur electronically and open outcry trades to
occur on the floor of the Exchange. To operate in this ``hybrid''
environment, the Exchange has made available to Trading Permit Holders
(``TPHs'') a dynamic order handling system, also referred herein as
OHS, that has the capability to route orders to the Hybrid System for
automatic execution and book entry, to PAR workstations located in the
trading crowds for open outcry and other manual handling by TPHs and
Exchange PAR Officials, and/or to other order management terminals
generally located in booths on the trading floor for manual handling.
Where an order is routed for processing by the Exchange order handling
system depends on various parameters configured by the Exchange and the
order entry firm itself. Thus, the OHS provides TPHs with some
flexibility to determine how to process their orders in the CBOE Hybrid
System.
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    \5\ The CBOE ``Hybrid System'' or ``Hybrid Trading System''
refers to the Exchange's trading platform that allows Market-Makers
to submit electronic quotes in their appointed classes. The ``Hybrid
3.0 Platform'' is an electronic trading platform on the Hybrid
Trading System that allows one or more quoters to submit electronic
quotes which represent the aggregate Market-Maker quoting interest
in a series for the trading crowd. Classes authorized by the
Exchange for trading on the Hybrid Trading System shall be referred
to as Hybrid classes. Classes authorized by the Exchange for trading
on the Hybrid 3.0 Platform shall be referred to as Hybrid 3.0
classes. References to ``Hybrid,'' ``Hybrid System,'' or ``Hybrid
Trading System'' in the Exchange's Rules shall include all platforms
unless otherwise provided by rule. See, e.g., Rule 1.1(aaa).
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    The Exchange believes these routing parameters assist with the
maintenance of a fair and orderly market and help to mitigate potential
risks associated with orders executing at potentially erroneous prices
or inconsistent with a particular investment strategy by routing
certain orders to a PAR workstation or a booth order management
terminal for manual handling based on parameters determined by the
Exchange under Rule 6.2B, 6.13 or 6.53C, by routing certain orders to
an order management terminal based on parameters prescribed by the
Exchange, by routing certain orders to an order management terminal or
a PAR workstation or for electronic process, based on parameters
prescribed by the order entry firm itself, and by routing certain
orders to an order management terminal in the event of certain Exchange
system disruptions or malfunctions. The order handling system also
permits orders to be routed from a PAR workstation to an order
management terminal (and vice versa) and from a PAR workstation or an
order management terminal to the Hybrid System for automatic execution
or book entry. The Exchange also views the order handling system as an
important tool to assist order entry firms in their ability to
efficiently manage, process and execute orders in a ``hybrid'' trading
environment. The Exchange believes this, again, promotes fair and
orderly markets, as well as assists the Exchange in its ability to
effectively attract order flow and liquidity to its market, and
ultimately benefits all CBOE TPHs and all investors.
    Regarding booth routing parameters in particular, an order may
route to an order management terminal generally located in a booth
depending on various circumstances. One such set of circumstances
pertains to automatic execution/book ``kick-outs.'' In that regard, the
electronic processes under Rules 6.2B (pertaining to opening
transactions), 6.13 (pertaining to simple orders) and 6.53C (pertaining
to complex orders), provide that an order that is not eligible for
automatic

execution or book entry due to certain Exchange-defined parameters may
route to PAR or, at the order entry firm's discretion, to the order
entry firm's booth.\6\ In the event an order is not eligible to route
to PAR, the order would be cancelled.\7\ Once routed to a PAR
workstation or a booth, an order can be manually addressed (e.g., an
individual might determine to resubmit the order to the Hybrid System
for automatic execution, route the order from a booth to a PAR
workstation, represent the order in open outcry, cancel the order,
etc.). Thus, as part of establishing their connectivity for routing
orders to the Exchange, order entry firms designate PAR workstations
and/or booth order management terminals as the destination for their
automatic execution/book kick-outs.
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    \6\ For example, under Rule 6.13(b)(v), a marketable order may
not be eligible for automatic execution because the execution would
follow an initial partial execution on the Exchange and would be at
a subsequent execution price that is not within an acceptable tick
distance from the initial execution (the ``acceptable tick
distance'' is determined by the Exchange on a series-by-series and
premium basis and may not be less than 2 minimum increment ticks).
Under this ``drill through'' provision, for example, if the
acceptable tick distance in a series quoted in $0.01 increments is
set at 3 ($0.03), then a marketable buy order that received an
initial partial execution at $1.20 would not automatically execute
at a subsequent price of $1.25 (which is $0.02 beyond the acceptable
tick distance). In such a circumstance, the execution of the order
would be suspended and any remaining portion would be exposed for
price improvement pursuant to the HAL process in Rule 6.14A, Hybrid
Agency Liaison, using the acceptable tick distance as the exposure
price. If a quantity remains at the conclusion of the HAL process,
the remaining quantity will route to PAR or, at the order entry
firm's discretion, to the order entry firm's booth, so that the
order can be manually addressed. (In the event an order is not
eligible to route to PAR, the order will be cancelled).
    \7\ For example, assume an order entry firm has chosen to route
its orders that are not eligible for automatic execution to a PAR
workstation (and the order entry firm has also not specified that
its orders can route to a booth order management terminal if PAR is
unavailable). With this configuration, if an order is routed by that
firm to the CBOE Hybrid System but the order is not eligible for
automatic execution or book entry (e.g., because an incoming order
is marketable and would execute at a price outside an acceptable
price range under Rule 6.13(b)(v)), then: (i) The order would route
to a PAR workstation so the order can be manually addressed, or (ii)
if it is not eligible to route to PAR (e.g., because the particular
order type is not eligible for PAR and the order entry firm has not
specified that its orders can route to a booth if PAR is
unavailable), then the remaining balance of the order will be
cancelled.
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    Apart from the foregoing processes for automatic execution/book
kick-outs, orders may be routed through the order handling system to an
order management terminal under various other circumstances. For
instance, orders may route to an order management terminal from a PAR
workstation. In addition, certain orders may route directly from an
order entry firm to an order management terminal for manual handling
based on certain limit order price parameter settings established by
the Exchange \8\ or based on certain other parameters established by
the order entry firm itself.\9\ Orders may also route to a booth order
management terminal in the event of certain system disruptions or
malfunctions (e.g., if the Exchange's experiences a system outage that
prevents orders from routing to a particular PAR workstation, the order
will route to the firm's next available alternate destination listed in
the order handling system, which is usually defined as an order
management

terminal).\10\ Thus, as part of establishing their connectivity for
routing orders to the Exchange, order entry firms designate booth order
management terminals as a destination for routes from PAR, direct
routes from an order entry firm due to Exchange settings and/or
optional order entry firm settings, and routes due to Exchange system
disruption or malfunction.
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    \8\ Currently the Exchange has determined for all classes where
the limit order price parameters are activated, except those noted
below, that the limit order price parameters would be applied for
the series within each class such that the Exchange would not accept
the following simple limit orders for execution: (i) If the market
quote is less than or equal to $3, limit orders to buy priced more
than $0.50 above the offer and limit orders to sell priced more than
$0.50 below the bid; (ii) if the market quote is greater than $3 and
less than or equal to $10, limit orders to buy priced more than
$1.00 above the offer and limit orders to sell priced more than
$1.00 below the bid; (iii) if the market quote is greater than $10
and less than or equal to $30, limit orders to buy priced more than
$1.50 above the offer and limit orders to sell priced more than
$1.50 below the bid; (iv) if the market quote is greater than $30
and less than or equal to $50, limit orders to buy priced more than
$2.00 above the offer and limit orders to sell priced more than
$2.00 below the bid; or (v) if the market quote is equal to or
greater than $50, limit orders to buy priced more than $3.00 above
the offer and limit order to sell priced more than $3.00 below the
bid. For the same classes, the Exchange has determined that limit
orders received before a series is opened (including before a series
is opened following a halt) will be checked against the previous
trading day's closing price using the same parameters noted above.
Exchange Market Maker and away Market Maker orders received pre-open
are excluded from this pre-opening aspect of the limit order price
parameters. The foregoing limit order price parameters, which are
referred to as the ``Price Check Level A'' or ``Level A'' settings,
are in effect in all classes except option classes AAPL, DJX, NDX,
OEX, RUT, SPX (which includes symbols SPX, SPXW and SPXQ), SPXpm,
SPY andSPY7. There is no limit order price parameter currently
activated for option class AAPL. (According to the Exchange, volume
for options class AAPL is higher and trading is more volatile, while
the price of the underlying stock is higher (e.g., Apple Inc. closed
at $94.72 on July 22, 2014). The Exchange believes that application
of the limit order price parameter in these circumstances may serve
as more of a hindrance to the orderly processing orders (e.g.,
application of the parameter may result in an inordinate number of
orders being excepted from automated process and instead routing for
manual handling) and, as a result, has determined to not apply the
parameter to option class AAPL for the time being.) However, the
Exchange may evaluate whether to apply the parameter to the option
class and any determination to do so would be announced via
Regulatory Circular.
    For the remaining seven classes, the limit order price parameter
levels for the premium ranges noted above are $1.00, $2.00, $3.00,
$4.00 and $6.00, respectively. These limit order price parameters
are referred to as the ``Price Check Level B'' or ``Level B''
settings. The Exchange has determined to apply the settings to
immediate-or-cancel orders in option classes SPX (which includes
symbols SPX, SPXW and SPXQ), SPXpm and SRO. For all other classes
where the limit order price parameter is activated, it is not
applied to immediate-or-cancel orders. For complex limit orders, the
limit order price parameters are the same as the parameters for
simple orders, but the complex order parameter levels are based on
the derived net market (as opposed to an individual bid or offer).
    See CBOE Regulatory Circular RG13-145, which is available at
http://www.cboe.com/publish/RegCir/RG13-145.pdf.
    The senior official in the Help Desk or two Floor Officials
might also widen or inactivate one or more of these price check
parameters for simple and/or complex orders on an intra-day basis in
the interest of a fair and orderly market. For example, if an
underlying stock is high priced or volatile and is experiencing
significant price movement and the existing parameters would result
in an inordinate number of limit orders not being accepted, the
senior official in the Help Desk may determine to widen the
parameters on an intra-day basis in the overlying or related options
series. As another example, if the overall market is experiencing
significant volatility, the senior official in the Help Desk or two
Floor Officials may determine to widen the parameters for a group of
series or classes. In that regard, the Exchange has determined that
on any trading day where the front-month E-mini S&P 500 Futures
(symbol ES/1) are trading more than 20 points above or below the
previous day's closing values by 8:00 a.m. (all times noted are
Central Time), the Exchange will widen the Price Check Level A
settings to the Price Check Level B settings for the trading day for
all classes where the limit order price check is activated at the
Level A setting (referred to herein as the ``Standing Intraday
Relief Condition''). See CBOE Regulatory Circular RG13-145. The next
trading day, the parameter levels for those classes would revert
back to the normal Level A setting, unless the E-mini S&P 500 Future
is more than 20 points above or below the previous day's closing
values by 8:00 a.m.
    Example of Standing Intraday Relief Condition: If on Monday the
E-mini S&P 500 Futures close at 1700 and by 8:00 a.m. on Tuesday the
E-mini S&P 500 Future is trading at 1730 (30 points above the prior
day's close of 1700), then the Exchange would adjust the limit order
price parameter settings from Level A to Level B in all classes
where Level A is the normal setting). If the E-mini S&P 500 Futures
close on Tuesday at 1725 and by 8:00 a.m. on Wednesday are trading
at 1720 (only 5 points below the prior day's close of 1725), then
the limit order price parameter settings would revert back to the
Level A settings that were in place on Monday. However, if by 8:00
a.m. on Wednesday the E-mini S&P 500 Futures are trading at 1700 (25
points below the prior day's close of 1725), then the limit order
price parameter settings would remain at the Level B settings that
were in place on Tuesday.)
    The Exchange notes that these examples are non-exhaustive and
for illustrative purposes only. (For example, see also CBOE
Regulatory Circular RG14-019, which is available at http://www.cboe.com/publish/RegCir/RG14-019.pdf and which sets forth limit
order price parameters settings for certain option classes on
volatility index product settlement days.) The Exchange also notes
that it may determine for the parameters to differ among classes and
between pre-open and intra-day.
    \9\ For example, a firm might establish routing parameters so
that all its orders, or a subset of orders that exceed certain size,
price or other parameters, submitted to the Exchange order handling
system route directly to a booth OMT (while other orders might route
directly to a PAR workstation or for electronic processing).
    \10\ The Exchange notes that CBOE also utilizes the OMT
technology as a back-up in the event of a system failure,
malfunction or other issue where an order does not route to an OMT.
In these circumstances where an order(s) fails to route to an OMT,
the order would route to an Exchange Help Desk OMT. Once on the
Exchange Help Desk terminal, orders with an immediate-or-cancel
(``IOC'') contingency are manually cancelled and all other orders
are manually routed by the Help Desk to the respective firm's OMT.
To be clear, the use of the Help Desk terminal is a back-up, safety
feature that is designed to assist the Exchange in maintaining an
orderly market. The back-up terminal is used by the Exchange for all
order entry firms' and Trading Permit Holders' orders.
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    When it comes to selecting an order management terminal, some order
entry firms elect to route orders to terminals located in their own
booths on the floor, others elect to route orders to terminals located
in another TPH's booth, and still others a combination of the
foregoing. For example, a firm that only trades remotely and does not
maintain a physical presence on the Exchange trading floor may elect to
route its orders to one or more TPHs' booth order management terminals,
or a firm might elect to have all equity option orders route to its own
booth order management terminal and all index option trades route to
another TPH's booth order management terminal because the firm does not
wish to maintain a physical presence on the floor for index trades. A
firm may also elect to route orders to another TPH's booth order
management terminal because the firm may have a large number of orders
to address or is experiencing system issues and has designated the
other TPH's booth as a back-up.
Proposal
    While there are various references to the Exchange's order routing
system and order management terminal functions throughout the Exchange
Rules (see, e.g., Rules 6.2B, 6.8B, 6.13, 6.53C), the Exchange believes
it would be useful to have a more detailed description of the
functionality within the rule text. Therefore, the Exchange is
proposing to adopt new Rule 6.12 and amend existing Rules 6.2B, 6.13
and 6.53C to include additional information about the foregoing OHS and
OMT functionality. These changes are intended to more fully describe
the existing operation of the routing parameters and conditions
necessary for an order entry firm to elect to route orders to an order
management terminal.
    Proposed Rule 6.12 will include an introductory paragraph
indicating that the rule describes the process for routing orders
through the Exchange's OHS, which is available for classes designated
for trading on the CBOE Hybrid System. The introduction will also
indicate that the OHS is a feature within the Hybrid System to route
orders for automatic execution, book entry, open outcry, or further
handling by a broker, agent, or PAR Official, in a manner consistent
with Exchange Rules and Section 6(b) of the Act.\11\
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    \11\ 15 U.S.C. 78f(b).
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    Paragraph (a) of proposed Rule 6.12 includes a general description
of the OHS's existing parameters for routing orders to OMTs. The
proposed text provides that orders may route through the OHS to an OMT
designated by an order entry firm in any of the circumstances described
below. (The particular routing designations may be established based on
various parameters established by the Exchange or order entry firm, as
applicable.)
     AutoEx and Book Kick-Outs: Under Rules 6.3B, 6.13 and
6.53C, orders or the remaining balance of orders initially routed from
an order entry firm for electronic processing that are not eligible for
automatic execution or book entry will by default route to a PAR
workstation designated by the order entry firm. If an order entry firm
has not designated a PAR workstation or if a PAR workstation is
unavailable, the remaining balance will route to an OMT designated by
the firm. If it is not eligible to route, the remaining balance of the
order will be returned to the order entry firm.
     OMT/PAR Workstation Routing: Orders may be routed back and
forth between an OMT and a PAR workstation by TPHs. Orders may also be
routed from a PAR workstation to an order management terminal by a PAR
Official based on instructions from the TPH or if the PAR Official is
unable to book or execute the order from, or maintain the order on, the
PAR workstation.
     Limit Order Price Parameter for Simple Orders: Limit
orders will route directly from an order entry firm to an OMT
designated by the order entry firm when initially routed to the
Exchange if: (i) Prior to the opening (including before a series is
opened following a halt),\12\ the order is to buy at more than an
acceptable tick distance above the Exchange's previous day's close or
the order is to sell at more than an acceptable tick distance below the
Exchange's previous day's close (not applicable to Exchange Market-
Makers or away Market-Makers),\13\ or (ii) once a series has opened,
the order is to buy at more than an acceptable tick distance above the
disseminated Exchange offer or the order is to sell at more than an
acceptable tick distances below the disseminated Exchange bid. For
purposes of this provision, an acceptable tick distance or ``ATD'' will
be determined by the Exchange on a series by series and premium basis
and announced to TPHs via Regulatory Circular, and shall be no less
than 5 minimum increment ticks. The Exchange may also determine on a
class by class basis and announce via Regulatory Circular whether to
apply the parameters in (i) and/or (ii) above to immediate-or-cancel
orders.\14\ In addition, the senior official on the Exchange Help Desk
\15\ or two Floor Officials may widen or inactivate one or more of the
applicable ATD parameter settings on an intra-day basis in the interest
of a fair and orderly market.\16\

If a limit order is routed to an OMT because the ATD has not been met,
the order can be manually addressed (e.g., an individual might
determine to route the order to the Hybrid System for automatic
execution or book entry (and the limit order price parameter would not
be applied for such routing), route the order from a booth to a PAR
workstation, represent the order in open outcry, cancel the order,
etc.).\17\
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    \12\ This includes halts that may occur at any time after the
opening of trading on a particular trading day. The Exchange notes
that this is the manner in which the limit order price parameter
functionality currently operates. The Exchange believes that this
functionality provides an additional safeguard to consider the
reasonableness of limit order pricing prior to a reopening following
a trading halt.
    \13\ This parameter for limit orders received prior to the
opening (including before a series is opened following a halt) is
not applicable to limit orders of Exchange Market-Makers and away
Market-Makers. The Exchange believes that Market-Makers actively
evaluate the pre-opening market and utilize their own risk
management parameters when entering, maintaining and cancelling
orders prior to the opening, minimizing the likelihood of a Market-
Maker order resulting from an error from being entered and
continuing to rest prior to the opening of trading. In that regard,
while the Exchange believes that the application of its limit order
price parameters serve to promote a fair and orderly market, the
parameters are not a substitute for a broker-dealer's compliance
with Rule 15c3-5 under the Act, 17 CFR 240.15c3-5 (commonly referred
to as the ``Market Access Rule'').
    \14\ See note 8, supra, for current parameter settings.
    \15\ The Help Desk is sometimes referred to elsewhere within the
Exchange Rules as the ``Control Room'' and these two terms are used
interchangeably. For consistency, the Exchange is proposing to
change a reference in Rule 6.13 from the ``Control Room'' to the
``Exchange Help Desk.''
    \16\ Under proposed Rule 6.12.01, (i) notification of such
intra-day relief will be announced as soon as reasonably practical
via verbal message to the trading floor, OMT message to TPH
organizations on the trading floor, and electronic message to TPHs
that request to receive such messages; (ii) such intra-day relief
will not extend beyond the trade day on which it is granted, unless
a determination to extend such relief is announced to TPHs via
Regulatory Circular; and (iii) the Exchange will make and keep
records to document all determinations to grant intra-day relief
under this Rule, and shall maintain those records in accordance with
Rule 17a-1 under the Exchange Act. The Exchange notes that
conditions when the Standing Intraday Relief will be instituted and
the particular form of relief have been announced via Regulatory
Circular. See note 8, supra. The announcement of the pre-established
conditions and relief is intended to serve the circular notification
requirement and, as such, a separate circular would not be issued if
this relief is instituted over multiple days. However, if the
Exchange would determine to modify the conditions for Standing
Intraday Relief, then the Exchange would announce those changes by
issuing another Regulatory Circular.
    The Exchange also notes that the OMT messaging is now used in
place of former printer messaging. Therefore, for consistency, the
Exchange is proposing to update a reference in Rule 6.13 from
``printer message'' to ``OMT message.'' The Exchange also notes that
the verbal messages to the trading crowds are announced over a
speaker system which can be heard in the particular trading crowd as
well as the trading floor. Therefore, for consistency, the Exchange
is proposing to update a reference in Rule 6.13 from ``trading
crowd'' to ``trading floor.''
    \17\ The limit order price parameter will take precedence over
another routing parameter to the extent that both are applicable to
an incoming limit order.
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     Limit Order Price Parameter for Complex Orders: Under this
parameter, which is comparable to the parameter applicable to simple
orders described above, incoming limit priced complex orders will route
directly from an order entry firm to an OMT designated by the order
entry firm if: (i) Prior to the opening (including before a series is
opened following a halt), the order is priced at a net debit that is
more than an acceptable tick distance above the derived net market
using the Exchange's previous day's close in the individual series legs
comprising the complex order or priced at a net credit that is more
than an acceptable tick distance below the derived net market using the
Exchange's previous day's close in the individual series legs
comprising the complex order (such ATD will be as determined by the
Exchange on a class by class and net premium basis and announced via
Regulatory Circular); \18\ or (ii) once a series has opened, the order
is priced at a net debit that is more than an acceptable tick distance
above the opposite side derived net market using the Exchange's best
bid or offer in the individual series legs comprising the complex order
or priced at a net credit that is more than an acceptable tick distance
below the opposite side derived net market using the Exchange's best
bid or offer in the individual series legs comprising the complex order
(such ATD will be as determined by the Exchange on a class by class and
net premium basis and announced via Regulatory Circular). The Exchange
may determine on a class by class basis and announce via Regulatory
Circular whether to apply the parameters in (i) and/or (ii) above to
immediate-or-cancel complex orders (similar to the discussion above for
simple orders). The Exchange also notes that the limit order price
parameter is not applicable to stock-option orders.\19\ Similar to
simple orders, the ATD for the limit order price parameter will be no
less than 5 minimum net price increment ticks (where the ``minimum net
price increment'' is the minimum increment for net priced bids and
offers for the given complex order strategy). For example, if the
minimum net price increment for complex orders in a given series in a
class is $0.01, then the ATD would be no less than $0.05 (5 X $0.01).
If the minimum net price increment is $0.05, then the ATD would be no
less than $0.25 (5 X $0.05). Also similar to simple orders, the senior
official on the Exchange Help Desk or two Floor Officials may widen or
inactivate one or more of the applicable ATD parameter settings for
complex orders on an intra-day basis in the interest of a fair and
orderly market.\20\
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    \18\ Similar to simple orders, this parameter for limit priced
complex orders received prior to the opening is not applicable to
limit orders of Exchange Market-Makers and away Market-Makers. See,
e.g., note 13, supra.
    \19\ Stock-options orders are excluded from the calculation
because the individual component stock leg is not traded on the
Exchange and, as a result, calculation of a derived net market by
the Exchange's automated system would be a more complicated
function. If in the future the Exchange would decide to enhance the
limit order price parameter functionality to address stock-option
orders, the Exchange would file a rule change to address stock-
option orders.
    \20\ See also notes 8 and 16, supra. In addition, the limit
order price parameter takes precedence over other complex order
routing parameters to the extent that others are applicable to an
incoming limit order. Once routed to an OMT, an order can be
manually addressed (e.g., an individual might determine to resubmit
the order to the Hybrid System for automatic execution or book entry
(and the limit order price parameter would not be applied to such
routing), route the order from a booth to a PAR workstation,
represent the order in open outcry, cancel the order, etc.)
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     Direct Routing: Orders may route directly from an order
entry firm to an OMT (or to a PAR workstation or to the Hybrid System
for electronic processing) based on parameters prescribed by the order
entry firm itself.\21\
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    \21\ See note 9, supra.
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     System Disruptions or Malfunctions: Orders will route to
an OMT designated by the order entry firm or TPH, or a terminal
designated and maintained by the Exchange as a back-up to order entry
firms' and TPHs' designated order management terminals, in the event of
certain system disruptions or malfunctions that affect the ability of
orders to reach or be processed at their intended destination. For
example, if an order cannot route to a PAR workstation due to a
malfunction of the PAR workstation, the order will route to an OMT
either automatically or by Exchange personnel, as necessary.\22\
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    \22\ See pages 30-32, supra, and surrounding discussion.
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    Paragraph (b) of proposed Rule 6.12 would provide that each order
entry firm must designate an OMT(s) for receiving routed orders and
would reflect the Exchange's current practice that permits an order
entry firm to elect to have its orders routed to a booth OMT operated
by the order entry firm itself and/or a booth OMT operated by another
TPH.
    In conjunction with the foregoing, various corresponding changes to
Rules 6.2B, 6.13 and 6.53C are being proposed. In particular, existing
references in the rule text to routing orders to ``. . . PAR or, at the
order entry firm's discretion, to the order entry firm's booth [and,
if] an order is not eligible to route to PAR, then the remaining
balance will be cancelled'' (or substantially similar wording) will be
replaced with references to routing orders ``. . . via the order
handling system pursuant to Rule 6.12'' (or substantially similar
wording).) [sic] Given the above-described proposal to further describe
the routing process in proposed Rule 6.12 and to include cross-
references to proposed Rule 6.12 within Rules 6.2B, 6.13 and 6.53C, the
Exchange does not believe it is necessary to continue to include the
routing process descriptions within Rules 6.2B, 6.13 and 6.53C.
    The Exchange is proposing various miscellaneous changes to the
existing text of Rule 6.13. In particular, the Exchange is proposing to
include a title for each type of price check parameter within the
existing rule text (i.e., the existing market width and drill through
price parameters). The addition of these titles is non-substantive and
is intended for ease of reference only. In addition, the existing text
in Rule 6.13(b)(v)(A) provides that the ``acceptable price range'' or
``APR'' for the national best

bid and national best offer width price check parameter (for market
orders and/or marketable limit orders) shall be determined by the
Exchange on a class by class basis, and also indicates elsewhere in the
existing rule text that the parameters for each class are applied on a
series by series basis. The Exchange is proposing to replace this class
by class reference in Rule 6.13(b)(v)(A) with series by series for
consistency. The existing rule text also provides that, as soon as
reasonably practicable, the senior official in the Help Desk or two
Floor Officials may grant intra-day relief by widening the APR and ATD
parameter settings for one or more option series and that notification
of intraday relief will be announced via verbal message to the trading
crowd, printer message to TPH organizations on the trading floor, and
electronic message to TPHs that request to receive such messages. The
Exchange is proposing to amend this provision to replace references
from ``trading crowd'' to ``trading floor'' and from ``printer
message'' to ``OMT message.'' \23\ The Exchange is also proposing to
make clear that the relief can be granted intra-day by widening or
inactivating the applicable APR and/or ATD setting in the interest of a
fair and orderly market. The Exchange believes including the reference
to inactivating the applicable settings is not substantive because an
applicable APR or ATD parameter could be widened to such a level that
it would be in effect inactive. Similar to proposed Rule 6.12.01, the
Exchange is also proposing to provide within the text of Rule
6.13(b)(v) that the intra-day relief granted in the interest of a fair
and orderly market by the senior official in the Help Desk or two Floor
Officials will not extend beyond the trade day on which it is granted,
unless a determination to extend such relief is announced to TPHs via
Regulatory Circular. The Exchange is also proposing to provide within
the rule text that the Exchange will make and keep records to document
all determinations to grant intra-day relief under Rule 6.13(b)(v), and
shall maintain those records in accordance with Rule 17a-1 under the
Act.\24\ The rule text will also provide that the Exchange will
periodically review determinations to grant intra-day relief for
consistency with the interest of a fair and orderly market. The
Exchange is also proposing to make clear that, for purposes of the
drill through price parameters, if an order has already been subject to
the HAL process or if the order is not eligible for HAL, then the
remaining quantity of the order will route via the OHS pursuant to
proposed Rule 6.12.
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    \23\ See note 16, supra.
    \24\ 17 CFR 240.17a-1. The Exchange notes that determinations to
grant intra-day relief under Rule 6.13(b)(v) will be made in
compliance with the provisions of the Act and the rules thereunder,
including, but not limited to, the requirements in Section 6(b)(5)
of the Act, 15 U.S.C. 78f(b), that the rules of a national
securities exchange not be designed to permit unfair discrimination
between customers, issuers, brokers, or dealers.
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    Finally, the Exchange is proposing a miscellaneous change to Rule
6.53C.08 (pertaining to complex order price check parameters) to
specifically identify the price check parameters that are not
applicable to stock-option orders in the introductory text to this
provision. The particular parameters to which stock-option orders may
be subjected are already identified within the rule text. This proposed
change is simply to include a list of those parameters which are not
applicable to stock-option orders in the introductory paragraph for
ease of reference.\25\
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    \25\ Specifically, paragraphs (b) (credit-to-debit parameters),
(c) (same expiration strategy parameters), and (e) (percentage
distance parameters) of Rule 6.53C.08 are not applicable to stock-
option orders.
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 2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act
\26\ in general and furthers the objectives of Section 6(b)(5) of the
Act \27\ in particular in that it should promote just and equitable
principles of trade, serve to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and
protect investors and the public interest, and it is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange views these routing parameters as important tools that
assist order entry firms in their ability to efficiently manage,
process and execute orders in a ``hybrid'' trading environment. In
addition, the Exchange believes these routing parameters assist with
the maintenance of fair and orderly markets and help to mitigate
potential risks associated with orders executing at potentially
erroneous prices or inconsistent with a particular investment strategy
by routing certain orders to PAR or an OMT for manual handling based on
parameters determined by the Exchange under Rule 6.2B, 6.13 or 6.53C,
by routing certain orders directly from an order entry firm to an order
management terminal based on parameters prescribed by the Exchange (and
announced via regulatory circular) or to an order management terminal
or PAR workstation or for electronic processing based on parameters
prescribed by the order entry firm itself, and by routing certain
orders to an OMT in the event of certain Exchange system disruptions or
malfunctions. The OHS also permits orders to be routed from a PAR to an
OMT (and vice versa) and from either PAR or an OMT to the Hybrid System
for automatic execution or book entry. In addition, the Exchange
believes that the routing parameters generally are not unfairly
discriminatory because they are made available to all order entry firms
on an equal basis. Further, as discussed above, they are intended to
assist order entry firms in their ability to efficiently manage,
process and execute orders in a ``hybrid'' trading environment, which
promotes fair and orderly markets, as well as assists the Exchange in
its ability to effectively attract order flow and liquidity to its
market, and ultimately benefits all CBOE TPHs and all investors.
    Furthermore, the Exchange believes the proposed rule change
furthers the objective of Section 6(b)(5) of the Act in that it permits
the Exchange to address the entry of simple and complex limit orders
that are priced significantly away from the market that may likely have
resulted from human or operational error. By being able to quickly and
efficiently address orders that likely resulted from such error, the
proposed use of the limit order price parameter checks would promote a
fair and orderly market. Additionally, by having the flexibility to
determine the series or classes where the limit order price parameter
checks would be applied (or not applied) and the levels at which the
ATD settings would be applied, and to grant relief on an intra-day
basis, the Exchange is able to effectively structure and efficiently
react to particular option characteristics and market conditions--
including (without limitation) price, volatility, and significant price
movements--which contributes to its ability to maintain a fair and
orderly market. Accordingly, the Exchange believes that this proposal
is designed to promote just and equity principles of trade, remove
impediments to, and perfect the mechanism of, a free and open
market.\28\
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    \28\ The Exchange notes that limit order price parameters are in
effect in all classes except options on Apple Inc. (AAPL). There is
no limit order price parameter currently activated for option class
AAPL. See CBOE Regulatory Circular RG13-145, which is available at
http://www.cboe.com/publish/RegCir/RG13-145.pdf. According to the
Exchange, volume for options class AAPL is higher and trading is
more volatile, while the price of the underlying stock is higher
(e.g., Apple Inc. closed at $128.715 on February 18, 2015). The
Exchange believes that application of the limit order price
parameters in these circumstances may serve as more of a hindrance
to the orderly processing orders (e.g., application of the
parameters may result in an inordinate number of orders being
excepted from automated process and instead routing for manual
handling) and, as a result, has determined to not apply the
parameter to option class AAPL for the time being. The Exchange
believes that because of these factors different treatment of the
AAPL class is warranted. However, the Exchange may evaluate whether
to apply the parameters to the option class and any determination to
do so would be announced via Regulatory Circular.

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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 believes that
the proposed rule change will promote competition in that the routing
parameters assist with the maintenance of a fair and orderly market and
help to mitigate potential risks associated with orders executing at
potentially erroneous prices or inconsistent with a particular
investment strategy by routing certain orders based on various
parameters prescribed by the Exchange or the order entry firm itself.
The Exchange also views these routing parameters as important tools to
assist order entry firms in their ability to efficiently manage,
process and execute orders in a ``hybrid'' trading environment. The
Exchange believes this, again, promotes fair and orderly markets, as
well as assists the Exchange in its ability to effectively attract
order flow and liquidity to its market, and ultimately benefits all
CBOE TPHs and all investors. Thus, the Exchange does not believe the
proposal creates any significant impact on competition.

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

    No written comments were solicited or received with respect to 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 \29\ and
Rule 19b-4(f)(6) \30\ thereunder.
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    \29\ 15 U.S.C. 78s(b)(3)(A).
    \30\ 17 CFR 240.19b-4(f)(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. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2015-021 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2015-021. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2015-021 and should be
submitted on or before March 20, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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    \31\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-04067 Filed 2-26-15; 8:45 am]
BILLING CODE 8011-01-P