[Federal Register Volume 84, Number 141 (Tuesday, July 23, 2019)]
[Notices]
[Pages 35438-35446]
From the Federal Register Online via the Government Publishing Office [http://www.gpo.gov/]
[FR Doc No: 2019-15561]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86400; File No. SR-CBOE-2019-035]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To Amend Rule 6.49A Concerning Off-
Floor Position Transfers Including RWA Transfers

July 17, 2019.
    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 July 3, 2019, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend Rule 6.49A. The text of the proposed rule change is provided
in Exhibit 5.
    The text of the proposed rule change is also available on the
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend Rule 6.49A to delete the provisions
related to amend the permissible reasons for and procedures related to
off-floor position transfers and make other nonsubstantive changes.
Rule 6.49A specifies the circumstances under which Trading Permit
Holders may effect transfers of positions off the trading floor,
notwithstanding the prohibition in Rule 6.49(a).\3\
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    \3\ Paragraph (a) of Rule 6.49 (Transactions Off the Exchange)
generally requires transactions of option contracts listed on the
Exchange for a premium in excess of $1.00 to be effected on the
floor of the Exchange or on another exchange.
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    Current Rule 6.49A(a) lists the circumstances in which Trading
Permit Holders may transfer their positions off the floor. The
circumstances currently listed include: (1) The dissolution of a joint
account in which the remaining Trading Permit Holder assumes the
positions of the joint account; (2) the dissolution of a corporation or
partnership in which a former nominee of the corporation or partnership
assumes the positions; (3) positions transferred as part of a Trading
Permit Holder's capital contribution to a new joint account,
partnership, or corporation; (4) the donation of positions to a not-
for-profit corporation; (5) the transfer of positions to a minor under
the Uniform Gifts to Minor law; and (6i) a merger or acquisition where
continuity of ownership or management results.\4\
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    \4\ The Exchange notes that other options exchanges have adopted
off-floor position transfer procedures based on, and substantially
similar to, the Exchange's procedure in Rule 6.49A(a)(1). See, e.g.,
Nasdaq OMX PHLX LLC (``Phlx'') Rule 1058; and NYSE Arca, Inc.
(``Arca'') Rule 6.78-O(d).
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    The Exchange proposes to add clarifying language to the first
sentence of Rule 6.49A(a) to state that existing positions in options
listed on the Exchange of a Trading Permit Holder or of a Non-Trading
Permit Holder that are to be transferred on, from, or to the books of a
Clearing Trading Permit Holder (``CTPH'') may be transferred off the
Exchange (an ``off-floor transfer'') if the off-floor transfer involves
one of the events listed in the Rule.\5\ The proposed rule change
clarifies that Rule 6.49A does not apply to products other than options
listed on the Exchange, consistent with the Exchange's other trading
rules.\6\ It also clarifies that a Trading Permit Holder or CTPH must
be on at least one side of the transfer. The proposed rule change also
clarifies that transferred positions must be on, from, or to the books
of a CTPH. This language is consistent with how off-floor transfers are
currently effected. The proposed rule change also clarifies that
existing positions of a Trading Permit Holder or a non-Trading Permit
Holder may be subject to an off-floor transfer, except under specified
circumstances in which a transfer may only be effected for positions of
a Trading Permit Holder may.\7\
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    \5\ It is possible for positions transfers to occur between two
Non-Trading Permit Holders. For example, one Non-Trading Permit
Holder may transfer positions on the books of a CTPH to another Non-
Trading Permit Holder pursuant to the proposed rule.
    \6\ Proposed paragraph (h) also clarifies that the off-floor
transfer procedure only applies to positions in options listed on
the Exchange, and that transfers of non-Exchange-listed options and
other financial instruments are not governed by Rule 6.49A.
    \7\ See proposed subparagraphs (a)(5) and (7).
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    The Exchange notes off-floor transfers of positions in Exchange-
listed options may also be subject to applicable laws, rules, and
regulations, including rules of other self-regulatory organizations.\8\
Except as explicitly provided in the proposed rule text, the proposed
rule change is not intended to exempt off-floor position transfers from
any other applicable rules or regulations, and proposed paragraph (h)
makes this clear in the rule.
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    \8\ See proposed paragraph (h).
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    The proposed rule change adds four events where an off-floor
transfer would be permitted to occur.
     Proposed subparagraph (a)(1) permits an off-floor transfer
to occur if it, pursuant to Rule 4.6 or 4.22, is an adjustment or
transfer in connection with the correction of a bona fide error in the
recording of a transaction or the transferring of a position to another
account, provided that the original trade documentation confirms the
error. This proposed rule change codifies previous, long-standing
Exchange guidance regarding what off-floor transfers are permissible
and will permit transactions to be properly recorded in the originally
intended accounts.\9\
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    \9\ See Cboe Options Regulatory Circular RG03-62 (July 24,
2003). Note Rule 4.22 was not referenced in that circular, as it did
not exist at that time. However, it contains similar language
regarding corrections of errors as Rule 4.6, and therefore the
Exchange believes it is appropriate to include in the proposed rule
change. The proposed rule change is also similar to Cboe Futures
Exchange, LLC (``CFE'') Rule 420(a)(i).
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     Proposed subparagraph (a)(2) permits an off-floor transfer
if it is a transfer of positions from one account to another account
where there is no change in ownership involved (i.e., the accounts are
for the same Person \10\), provided the accounts are not in separate
aggregation units or otherwise subject to information barrier or
account segregation requirements.\11\ The proposed rule change provides
market participants with flexibility to maintain positions in accounts
used for the same trading purpose in a manner consistent with their
businesses. Such transfers are not intended to be transactions among
different market participants, as there would be no change in ownership
permitted under the provision, and would also not permit transfers
among different trading units for which accounts are otherwise required
to be maintained separately.\12\
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    \10\ Rule 1.1 defines ``Person'' as an individual, partnership
(general or limited), joint stock company, corporation, limited
liability company, trust or unincorporated organization, or any
governmental entity or agency or political subdivision thereof.
    \11\ The proposed rule change is similar to CFE Rule 420(a)(ii).
    \12\ Various rules (for example, Regulation SHO in certain
circumstances) require accounts to be maintained separately, and the
proposed rule change is consistent with those rules.
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     Proposed subparagraph (a)(3) similarly permits an off-
floor transfer if it is a consolidation of accounts \13\ where no
change in ownership is involved. This proposed rule change is similar
to rules of other options exchanges.\14\
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    \13\ This refers to the consolidation of entire accounts (e.g.,
combining two separate accounts (including the positions in each
account into a single account)).
    \14\ See, e.g., Phlx Rule 1058(a)(7); and Arca Rule 6.78-
O(d)(1)(vii).
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     Proposed subparagraph (a)(10) permits an off-floor
transfer if it is a transfer of positions through operation of law from
death, bankruptcy, or otherwise.\15\ This provision is consistent with
applicable laws, rules, and regulations that legally require transfers
in certain circumstances. This proposed rule change is consistent with
the purposes of other circumstances in the current rule, such as the
transfer of positions to a minor or dissolution of a corporation.
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    \15\ The proposed rule change is similar to CFE Rule
420(a)(iii).
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    The Exchange believes these proposed events have similar purposes
as those in the current rule, which is to permit market participants to
move positions from one account to another and to permit transfers upon
the occurrence of significant, non-recurring events.\16\ As noted
above, the proposed rule change is consistent with current Exchange
guidance or rules of other self-regulatory organizations.
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    \16\ See proposed paragraph (g).
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    The proposed rule change renumbers current subparagraphs (a)(1)
through (5) to be proposed subparagraphs (a)(5) through (9) and moves
current subparagraph (a)(6) to proposed

subparagraph (a)(4), with nonsubstantive changes. These permissible
circumstances for off-floor transfers are consistent with the rules of
other options exchanges.\17\
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    \17\ See, e.g., Phlx Rule 1058(a)(1) through (6); and Arca Rule
6.78-O(d)(1)(i) through (vi).
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    Proposed paragraph (b) codifies Exchange guidance regarding certain
restrictions on permissible off-floor transfers related to netting of
open positions and to margin and haircut treatment. Proposed paragraph
(b) states, unless otherwise permitted by Rule 6.49A, when effecting an
off-floor transfer pursuant to paragraph (a), no position may net
against another position (``netting''), and no position transfer may
result in preferential margin or haircut treatment.\18\ Netting occurs
when long positions and short positions in the same series ``offset''
against each other, leaving no or a reduced position. For example, if a
Trading Permit Holder wanted to transfer 100 long calls to another
account that contained short calls of the same options series as well
as other positions, even if the transfer is permitted pursuant to one
of the 10 permissible events listed in the Rule, the Trading Permit
Holder could not transfer the offsetting series, as they would net
against each other and close the positions.
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    \18\ See Cboe Options Regulatory Circular RG03-62 (July 24,
2003). For example, positions may not transfer from a customer,
joint back office, or firm account to a Market-Maker account.
However, positions may transfer from a Market-Maker account to a
customer, joint back office, or firm account (assuming no netting of
positions occurs).
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    However, the Exchange notes that a Market Maker's utilization of a
Clearing Corporation Universal Market-Maker Subaccount would not be
viewed as netting. A ``Universal Market-Maker Subaccount'' is an
automated services provided by the Clearing Corporation whereby the
Clearing Corporation directs transactions into a ``universal'' market
maker subaccount for a designated market maker or designated group of
market makers that trade across multiple options exchanges. This
service was created by the Clearing Corporation to assist market making
firms that may have employees (or units) that trade across multiple
exchanges, with each exchange identifying such employees (or units)
with a different acronym(s). The Clearing Corporation's Universal
Market Maker Subaccount service ensures that all trades entered into by
a market-making firm are automatically directed to a specific
subaccount of its clearing firm at the Clearing Corporation for
position and margin processing purposes.\19\ Under this process,
positions cleared into a Universal Market Maker Subaccount would
automatically net against each other. Universal Market Maker
Subaccounts are generally used because options exchanges traditionally
utilized different naming conventions with respect to Market-Maker
account acronyms (for example, lettering versus numbering and number of
characters), which are used for accounts at the Clearing Corporation. A
Market-Maker may have a nominee with an appointment in class XYZ on
Cboe Options, and have another nominee with an appointment in class XYZ
on Phlx, but due to account acronym naming conventions, those nominees
may need to clear their transactions into separate accounts (one for
Cboe Options transactions and another for Phlx transactions) at the
Clearing Corporation if it did not utilize a Universal Market Maker
Subaccount (in which account the positions may net). The proposed rule
change would not view the use of a Universal Market Maker Subaccount in
this circumstance as netting that would not be permitted.\20\
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    \19\ See, e.g., Securities Exchange Act Release 73577 (November
12, 2014) (SR-OCC-2014-20); see also Cboe Options Regulatory
Circular RG03-62 (July 24, 2003) (which discusses the Clearing
Corporation's automated process prior to it being formally titled
the ``Universal Market Maker Subaccount'' program).
    \20\ Additionally, if a Market-Maker makes an internal book-
entry to reflect a ``transfer'' of positions within the same account
(for example, if a Market-Maker attributes positions within a single
account to specific individual traders for its own records, and
makes another internal book-entry to ``transfer'' the positions
attributed to one individual to another within the same account, but
does not transfer the positions out of the account), the Exchange
does not view this as a transfer prohibited by Rule 6.49 or Rule
6.49A. The Exchange notes that, with these book-entry transfers,
there can be no netting of positions within the same account.
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    Proposed paragraph (c) states the transfer price, to the extent it
is consistent with applicable laws, rules, and regulations, including
rules of other self-regulatory organizations, and tax and accounting
rules and regulations, at which an off-floor transfer is effected may
be:
    (1) The original trade prices of the positions that appear on the
books of the trading CTPH, in which case the records of the transfer
must indicate the original trade dates for the positions; \21\
provided, transfers to correct errors bona fide errors pursuant to
proposed subparagraph (a)(1) must be transferred at the correct
original trade prices;
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    \21\ Phlx Rule 1058(c) requires position transfers to occur at
the same prices that appear on the books of the transferring member.
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    (2) mark-to-market prices of the positions at the close of trading
on the transfer date;
    (3) mark-to-market prices of the positions at the close of trading
on the trade date prior to the transfer date; \22\ or
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    \22\ For example, for a transfer that occurs on a Tuesday, the
transfer price may be based on the closing market price on Monday.
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    (4) the then-current market price of the positions at the time the
off-floor transfer is effected.\23\
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    \23\ The proposed rule change is similar to CFE Rule 420(c).
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    This proposed rule change provides market participants that effect
off-floor transactions with flexibility to select a transfer price
based on the circumstances of the transfer and their business. However,
for corrections of bona fide errors, because those transfers are
necessary to correct processing errors that occurred at the time of
transaction, those transfers would occur at the original transaction
price, as the purpose of the transfer is to create the originally
intended result of the transaction.
    Proposed paragraph (d) requires a Trading Permit Holder and its
CTPH (to the extent that the Trading Permit Holder is not self-
clearing) to submit to the Exchange, in a manner determined by the
Exchange, written notice prior to effecting an off-floor transfer from
or to the account of a Trading Permit Holder(s).\24\ The notice must
indicate:
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    \24\ This notice provision applies only to transfers involving a
Trading Permit Holder's positions and not to positions of Non-
Trading Permit Holder parties, as they are not subject to the Rules.
In addition, no notice would be required to effect off-floor
transfers to correct bona fide errors pursuant to proposed
subparagraph (a)(1).
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     The Exchange-listed options positions to be transferred;
     the nature of the transaction;
     the enumerated provision(s) under proposed paragraph (a)
pursuant to which the positions are being transferred;
     the name of the counterparty(ies);
     the anticipated transfer date;
     the method for determined the transfer price; and
     any other information requested by the Exchange.
    The proposed notice will ensure the Exchange is aware of all off-
floor transfers so that it can monitor and review them (including the
records that must be retained pursuant to proposed paragraph (e)) to
determine whether they are effected in accordance with the Rules.
Additionally, requiring notice from the Trading Permit Holder(s) and
its CTPH(s) will ensure both parties are in agreement with respect to
the terms of the off-floor transfer. The proposed rule change is
similar to rules of other

options exchanges.\25\ As noted in proposed subparagraph (d)(2),
receipt of notice of an off-floor transfer does not constitute a
determination by the Exchange that the off-floor transfer was effected
or reported in conformity with the requirements of Rule 6.49A.
Notwithstanding submission of written notice to the Exchange, Trading
Permit Holders and CTPHs that effect off-floor transfers that do not
conform to the requirements of Rule 6.49A will be subject to
appropriate disciplinary action in accordance with the Rules.
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    \25\ See, e.g., Phlx Rule 1058(b) and (c); and Arca Rule 6.78-
O(d)(2).
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    Similarly, proposed paragraph (e) requires each Trading Permit
Holder and each CTPH that is a party to an off-floor transfer must make
and retain records of the information provided in the written notice to
the Exchange pursuant to proposed subparagraph (d)(1), as well as
information on the actual Exchange-listed options that are ultimately
transferred, the actual transfer date, and the actual transfer price
(and the original trade dates, if applicable), and any other
information the Exchange may request the Trading Permit Holder or CTPH
provide. The proposed rule change is similar to rules of other options
exchanges.\26\
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    \26\ See, e.g., Phlx Rule 1058(c); and Arca Rule 6.78-O(c).
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    The proposed rule change moves current paragraph (d) regarding
other exemptions to proposed paragraph (f). The exemptions permitted by
this paragraph are those approved by the Exchange's president or a
designee. The proposed rule change changes the term Transferor to
Trading Permit Holder or CTPH, as a Trading Permit Holder's or CTPH's
positions will be involved in any off-floor transfer (as set forth in
proposed paragraph (a)).
    Proposed paragraph (i) is intended to facilitate the reduction of
risk-weighted assets attributable to open options positions and make
other conforming changes. SEC Rule 15c3-1 (Net Capital Requirements for
Brokers or Dealers) (``Net Capital Rules'') requires registered broker-
dealers, unless otherwise excepted, to maintain certain specified
minimum levels of capital.\27\ The Net Capital Rules are designed to
protect securities customers, counterparties, and creditors by
requiring that broker-dealers have sufficient liquid resources on hand,
at all times, to meet their financial obligations. Notably, hedged
positions, including offsetting futures and options contract positions,
result in certain net capital requirement reductions under the Net
Capital Rules.\28\
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    \27\ 17 CFR 240.15c3-1.
    \28\ In addition, the Net Capital Rules permit various offsets
under which a percentage of an option position's gain at any one
valuation point is allowed to offset another position's loss at the
same valuation point (e.g., vertical spreads).
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    Subject to certain exceptions, CTPHs \29\ are subject to the Net
Capital Rules.\30\ However, a subset of CTPHs are subsidiaries of U.S.
bank holding companies, which, due to their affiliations with their
parent U.S.-bank holding companies, must comply with additional bank
regulatory capital requirements pursuant to rulemaking required under
the Dodd-Frank Wall Street Reform and Consumer Protection Act.\31\
Pursuant to this mandate, the Board of Governors of the Federal Reserve
System, the Office of the Comptroller of the Currency, and the Federal
Deposit Insurance Corporation have approved a regulatory capital
framework for subsidiaries of U.S. bank holding company clearing
firms.\32\ Generally, these rules, among other things, impose higher
minimum capital and higher asset risk weights than were previously
mandated for CTPHs that are subsidiaries of U.S. bank holding companies
under the Net Capital Rules. Furthermore, the new rules do not fully
permit deductions for hedged securities or offsetting options
positions.\33\ Rather, capital charges under these standards are, in
large part, based on the aggregate notional value of short positions
regardless of offsets. As a result, in general, CTPHs that are
subsidiaries of U.S. bank holding companies must hold substantially
more bank regulatory capital than would otherwise be required under the
Net Capital Rules.
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    \29\ All CTPHs must also be clearing members of The Options
Clearing Corporation (``OCC'').
    \30\ Assuming the Commission approves the proposed rule change,
in the event federal regulators modify bank capital requirements in
the future, the Exchange will reevaluate the proposed rule change at
that time to determine whether any corresponding changes to the
proposed rule are appropriate.
    \31\ H.R. 4173 (amending section 3(a) of the Securities Exchange
Act of 1934 (the ``Act'') (15 U.S.C. 78c(a))).
    \32\ 12 CFR 50; 79 FR 61440 (Liquidity Coverage Ratio: Liquidity
Risk Measurement Standards).
    \33\ Many options strategies, including relatively simple
strategies often used by retail customers and more sophisticated
strategies used by broker-dealers, are risk-limited strategies or
options spread strategies that employ offsets or hedges to achieve
certain investment outcomes. Such strategies typically involve the
purchase and sale of multiple options (and may be coupled with
purchases or sales of the underlying securities), executed
simultaneously as part of the same strategy. In many cases, the
potential market exposure of these strategies is limited and
defined. While regulatory capital requirements have historically
reflected the risk-limited nature of carrying offsetting positions,
these positions may now be subject to higher regulatory capital
requirements.
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    The Exchange believes these higher regulatory capital requirements
may impact liquidity in the listed options market by limiting the
amount of capital CTPHs can allocate to their clients' transactions.
Specifically, the rules may cause CTPHs to impose stricter position
limits on their client clearing members. These stricter position limits
may impact the liquidity market participants may provide, including
liquidity Market-Makers may provide in their appointed classes. This
impact may be compounded when a CTPH has multiple client accounts, each
having largely risk-neutral portfolio holdings.\34\ The Exchange
believes that permitting market participants to efficiently transfer
existing options positions through an off-floor transfer process may
assist CTPHs and TPHs to address bank regulatory capital requirements
and would likely have a beneficial effect on continued liquidity in the
options market without adversely affecting market quality.
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    \34\ A number of TPHs, including Market-Makers, have informed
the Exchange that the heightened bank regulatory requirements could
impact their ability to provide consistent liquidity in the market
unless they are able to efficiently transfer their open positions
out of clearing accounts of U.S.-bank affiliated clearing firms.
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    Liquidity in the listed options market is critically important.
However, bank capital regulations that govern bank-affiliated clearing
firms are negatively impacting the ability of Trading Permit Holders,
including Market-Makers, that clear options transactions through bank-
affiliated clearing firms to provide liquidity. In order to mitigate
the potential negative effects of these additional bank regulatory
capital requirements, the proposed rule change provides market
participants with an efficient mechanism to transfer their open options
positions from one clearing account to another clearing account. The
Exchange believes the proposed rule change will increase liquidity in
the listed options market and promote more efficient capital deployment
in light of bank regulatory capital requirements.
    The Exchange has previously adopted Rules 6.56 and 6.57 to provide
Trading Permit Holders with tools to reduce risk-weighted assets
attributable to their open positions in S&P 500 options (``SPX
options''). However, the procedures in those rules involve transactions
that must occur on the Exchange's trading floor to close open
positions. Therefore, a market participant must find a counterparty and
be willing to close positions to use

either of these tools. As a result, these procedures are less
efficient, less flexible, and more burdensome means to reduce risk-
weighted assets attributable to open options positions than an off-
floor transfer of such positions. Additionally, these tools are
currently limited to SPX options, due to the large notional size of
those options, which compounds the negative impact of bank capital
requirements, and Rule 6.57 is limited to Market-Makers (Rule 6.56 is
available to all Trading Permit Holders). However, bank capital
requirements apply to positions in all listed options, and may impact
all client clearing members of clearing firms affiliated with U.S.-bank
holding companies, and clearing firms may request that Market-Makers
and non-Market-Makers reduce positions in listed options in addition to
SPX. There is currently no mechanism firms may use to transfer
positions between clearing accounts without having to effect a
transaction with another party and close a position.
    Rule 6.49A(a), currently and as proposed, permits positions to be
transferred off the floor of the Exchange in specified limited
circumstances, including a transfer of positions from one account to
another account where no change in ownership is involved, provided the
accounts are not in separate aggregation units or otherwise subject to
information barrier or account segregation requirements.\35\ If a
Trading Permit Holder wanted to transfer open positions from a clearing
account it has with one a bank-affiliated clearing firm to a clearing
account it has with a non-bank-affiliated clearing firm, for example,
such a transfer would result in no change in ownership. However,
paragraph (g) restricts transfers pursuant to that provision to non-
routine, non-recurring movements of positions, and does not permit use
of the off-floor transfer procedure to be used repeatedly or routinely
in circumvention of the normal auction market process. To comply with
clearing firms' position limits they may impose on market participants'
because they need to limit capital they may allocate for those market
participants' transactions, market participants may need to regularly
reduce open positions or limit additional positions in their accounts
with such clearing firms' to accommodate bank capital requirements.
Rule 6.49A does not permit regular transfers of positions between
accounts at different clearing firms.
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    \35\ Rule 6.49A(a)(2).
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    Proposed Rule 6.49A(i) is intended to provide market participants
with an additional tool they may use to address the issues raised by
bank capital requirements for positions in all listed options in an
efficient manner that provides market participants with flexibility to
do so in accordance with their businesses and risk management
practices. Proposed paragraph (i) provides that notwithstanding
paragraphs (a), (b) (which prohibits off-floor position transfers to
result in netting), and (g) (which prohibits recurring, regular
transfers), existing positions in options listed on the Exchange of a
Trading Permit Holder or non-Trading Permit Holder (including an
affiliate of a Trading Permit Holder) may be transferred on, from, or
to the books of a CTPH off the Exchange if the transfer establishes a
net reduction of risk-weighted assets attributable to those options
positions (an ``RWA Transfer'').\36\ The proposed rule adds examples of
two transfers that would be deemed to establish a net reduction of
risk-weighted assets, and thus qualify as a permissible RWA Transfer:
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    \36\ The proposed rule change makes conforming changes to
paragraph (g).
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     A transfer of options positions from Clearing Corporation
member A to Clearing Corporation member B that net (offset) with
positions held at Clearing Corporation member B, and thus closes all or
part of those positions (as demonstrated in the example below); \37\
and
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    \37\ This transfer would establish a net reduction of risk-
weighted assets attributable to the transferring Person, because
there would be fewer open positions and thus fewer assets subject to
Net Capital Rules.
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     A transfer of options positions from a bank-affiliated
Clearing Corporation member to a non-bank-affiliated Clearing
Corporation member.\38\
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    \38\ This transfer would establish a net reduction of risk-
weighted assets attributable to the transferring Person, because the
non-bank-affiliated Clearing Corporation member would not be subject
to Net Capital Rules, as described above.
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    These transfers will not result in a change in ownership, as they
must occur between accounts of the same Person.\39\ Rule 1.1 defines
``Person'' as an individual, partnership (general or limited), joint
stock company, corporation, limited liability company, trust or
unincorporated organization, or any governmental entity or agency or
political subdivision thereof. In other words, RWA transfers may only
occur between the same individual or legal entity. These are merely
transfers from one clearing account to another, both of which are
attributable to the same individual or legal entity. A market
participant effecting an RWA Transfer is analogous to an individual
transferring funds from a checking account to a savings account, or
from an account at one bank to an account at another bank--the money
still belongs to the same person, who is just holding it in a different
account for personal financial reasons.
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    \39\ See proposed Rule 6.49A(b)(3)(D).
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    For example, Market-Maker A clears transactions on the Exchange
into an account it has with CTPH X, which is affiliated with a U.S-bank
holding company. Market-Maker A opens a clearing account with CTPH Y,
which is not affiliated with a U.S.-bank holding company. CTPH X has
informed Market-Maker A that its open positions may not exceed a
certain amount at the end of a calendar month, or it will be subject to
restrictions on new positions it may open the following month. On
August 28, Market-Maker A reviews the open positions in its CTPH X
clearing account and determines it must reduce its open positions to
satisfy CTPH X's requirements by the end of August. It determines that
transferring out 1000 short calls in class ABC will sufficiently reduce
the risk-weighted asset capital requirements in the account with CTPH X
to avoid additional position limits in September. Market-Maker A wants
to retain the positions in accordance with its risk profile. Pursuant
to the proposed rule change, on August 31, Market-Maker A transfers
1000 short calls in class ABC to its clearing account with CTPH Y. As a
result, Market-Maker A can continue to provide the same level of
liquidity in class ABC during September as it did in previous months.
    A Trading Permit Holder must give up a CTPH for each transaction it
effects on the Exchange, which identifies the CTPH through which the
transaction will clear.\40\ A Trading Permit Holder may change the give
up for a transaction within a specified period of time.\41\
Additionally, a Trading Permit Holder may also change the CMTA \42\ for
a specific transaction.\43\ The transfer of positions from an account
with one clearing firm to the account of another clearing firm pursuant
to the proposed rule change has a similar result as changing a give up
or CMTA, as it results in a position that resulted from a transaction
moving from the account of one clearing firm to another, just at

a different time and in a different manner.\44\ In the above example,
if Market-Maker A had initially given up CTPH Y rather than CTPH X on
the transactions that resulted in the 1000 long calls in class ABC, or
had changed the give-up or CMTA to CTPH Y pursuant to Rules 6.21 or
6.67, the ultimate result would have been the same. There are a variety
of reasons why firms give up or CMTA transactions to certain clearing
firms (and not to non-bank affiliate clearing firms) at the time of a
transaction, and the proposed rule change provides firms with a
mechanism to achieve the same result at a later time.
---------------------------------------------------------------------------

    \40\ See Rule 6.21.
    \41\ See Rule 6.21(f).
    \42\ The Clearing Member Trade Assignment (``CMTA'') process at
the Options Clearing Corporation (``OCC'') facilitates the transfer
of option trades/positions from one OCC clearing member to another
in an automated fashion. Changing a CMTA for a specific transaction
would allocate the trade to a different OCC clearing member than the
one initially identified on the trade.
    \43\ See Rule 6.67(a).
    \44\ The transferred positions will continue to be subject to
OCC rules, as they will continue to be held in an account of an OCC
member.
---------------------------------------------------------------------------

    The proposed rule change states RWA Transfers may occur on a
routine, recurring basis.\45\ As noted in the example above, clearing
firms may impose restrictions on the amount of open positions.
Permitting transfers on a routine, recurring basis will provide market
participants with the flexibility to comply with these restrictions
when necessary to avoid position limits on future options activity.\46\
Additionally, the proposed rule change provides no prior written notice
pursuant to paragraph (d) is required for RWA Transfers. Because of the
potential routine basis on which RWA Transfers may occur, and because
of the need for flexibility to comply with the restrictions described
above, the Exchange believes it may interfere with the ability of
investors firms to comply with any CTPH restrictions describe above,
and may be burdensome to provide notice for these routine
transfers.\47\
---------------------------------------------------------------------------

    \45\ See proposed Rule 6.49A(b)(3)(A).
    \46\ The proposed rule change adds to proposed paragraph (g)
that proposed paragraph (i) is an exception to the prohibition on
regular, recurring off-floor transfers.
    \47\ The proposed rule change adds to proposed paragraph (d)
that proposed paragraph (i) is an exception to the requirement to
provide prior written notice.
---------------------------------------------------------------------------

    The proposed rule change states RWA Transfers may result in the
netting of positions.\48\ Netting is generally prohibited for off-floor
transfers.\49\ Netting occurs when long positions and short positions
in the same series ``offset'' against each other, leaving no or a
reduced position. For example, if there were 100 long calls in one
account, and 100 short calls of the same option series were added to
that account, the positions would offset, leaving no open positions. As
discussed above, the proposed rule change adds another exception to
this prohibition in Rule 6.49A, which permits off-floor transfers on
behalf of a Market-Maker account for transactions in multiply listed
options series on different exchanges, but only if the Market-Maker
nominees are trading for the same Trading Permit Holder organization,
and the options transactions on the different options exchanges clear
into separate exchange-specific accounts because they cannot easily
clear into the same Market-Maker account at OCC. In such instances, all
Market-Maker positions in the exchange-specific accounts for the
multiply listed class would be automatically transferred on their trade
date into one central Market-Maker account (commonly referred to as a
``universal account'') at the Clearing Corporation.\50\ Positions
cleared into a universal account would automatically net against each
other.
---------------------------------------------------------------------------

    \48\ See proposed Rule 6.49A(b)(3)(B).
    \49\ See proposed Rule 6.49A(b)(1).
    \50\ Id.
---------------------------------------------------------------------------

    While RWA Transfers are not occurring because of limitations
related to trading on different exchanges, similar reasoning for the
above exception applies to why netting should be permissible for the
limited purpose of reducing risk-weighted assets. Firms may maintain
different clearing accounts for a variety of reasons, such as the
structure of their businesses, the manner in which they trade, their
risk management procedures, and for capital purposes. If a Market-Maker
clears all transactions into a universal account, offsetting positions
would automatically net. However, if a Market-Maker has multiple
accounts into which its transactions cleared, they would not
automatically net. While there are times when a firm may not want to
close out open positions to reduce risk-weighted assets, there are
other times when a firm may determine it is appropriate to close out
positions to accomplish a reduction in risk-weighted assets.
    In the example above, suppose after making the RWA Transfer
described above, Market-Maker A effects a transaction on September 25
that results in 1000 long calls in class ABC, which clears into its
account with CTPH X. If Market-Maker A had not effected its RWA
Transfer in August, the 1000 long calls would have offset against the
1000 short calls, eliminating both positions and thus any risk-weighted
asset capital requirements associated with them. At the end of August,
Market-Maker A did not want to close out the 1000 short calls when it
made its RWA Transfer. However, given changed circumstances in
September, Market-Maker A has determined it no longer wants to hold
those positions. The proposed rule change would permit Market-Maker A
to effect an RWA Transfer of the 1000 short calls from its account with
CTPH Y to its account with CTPH X (or vice versa), which results in
elimination of those positions (and a reduction in risk-weighted assets
associated with them). As noted above, such netting would have occurred
if Market-Maker A cleared the September transaction directly into its
account with CTPH Y, or had not effected an RWA Transfer in August.
Netting provides market participants with appropriate flexibility to
conduct their businesses as they see fit while having the ability to
reduce risk-weighted asset capital requirements when necessary.\51\
---------------------------------------------------------------------------

    \51\ The proposed rule change adds to paragraph (b) that
proposed (i) is an exception to the prohibition on netting. Proposed
(i) makes clear that RWA Transfers, like all other permissible off-
floor position transfers, may not result in preferential margin or
haircut treatment.
---------------------------------------------------------------------------

    As is true for all other off-floor transfers that are or will be
permitted under proposed Rule 6.49A, RWA Transfers may not result in
preferential margin or haircut treatment.\52\ Additionally, RWA
Transfers may only be effected for options listed on the Exchange and
will be subject to applicable laws, rules, and regulations, including
rules of other self-regulatory organizations (including OCC).\53\ RWA
Transfers will also be subject to the other requirements in Rule 6.49A,
including the permitted transfer prices in proposed paragraph (c), and
the notice and record requirements in proposed paragraphs (d) and (e).
---------------------------------------------------------------------------

    \52\ See proposed Rule 6.49A(i)(C) and current Rule 6.49A(b)(1).
For example, positions may not transfer from a customer, joint back
office, or firm account to a Market-Maker account. However,
positions may transfer from a Market-Maker account to a customer,
joint back office, or firm account.
    \53\ See Rule 6.49A(h). Transfers of non-Exchange listed options
and other financial instruments are not governed by Rule 6.49A
currently or as proposed to be amended.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\54\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \55\ requirements that the rules
of an exchange be designed to prevent fraudulent and manipulative acts
and practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to,

and facilitating transactions in securities, to remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest. Additionally, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \56\ requirement that the rules
of an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \54\ 15 U.S.C. 78f(b).
    \55\ 15 U.S.C. 78f(b)(5).
    \56\ Id.
---------------------------------------------------------------------------

    The Exchange believes that permitting the off-floor transfers in
very limited circumstances such as where there is no change in
beneficial ownership, to contribute to a non-profit corporation, to
transfer to a minor or a transfer by operation of law is reasonable to
allow a TPH to accomplish certain goals efficiently. The rule permits
off-floor transfers in situations involving dissolutions of entities or
accounts, for purposes of donations, mergers or by operation of law.
For example, a TPH that is undergoing a structural change and a one-
time movement of positions may require a transfer of positions or a TPH
that is leaving a firm that will no longer be in business may require a
transfer of positions to another firm. Also, a TPH may require a
transfer of positions to make a capital contribution. The above-
referenced circumstances are non-recurring situations where the
transferor continues to maintain some ownership interest or manage the
positions transferred. By contrast, repeated or routine off-floor
transfers between entities or accounts--even if there is no change in
beneficial ownership as a result of the transfer--is inconsistent with
the purposes for which Rule 6.49A was adopted. Accordingly, the
Exchange believes that such activity should not be permitted under the
rules and thus, seeks to adopt language in proposed paragraph (e) to
Rule 6.49A that the transfer of positions procedures set forth in Rule
6.49A are intended to facilitate non-recurring movements of positions.
    The Exchange believes the proposed rule change to permit RWA
Transfers will remove impediments to and perfect the mechanism of a
free and open market and a national market system by potentially
mitigating the effects bank capital requirements may have on liquidity
in the listed options market. As described above, bank capital
requirements may impact capital available for options market liquidity
providers, for example due to CTPHs' imposition of stricter position
limits on firms that clear options transactions with them. The Exchange
believes providing market participants with an efficient process to
reduce risk-weighted asset capital requirements attributable to open
positions in clearing accounts with U.S. bank-affiliated clearing firms
may contribute to additional liquidity in the listed options market,
which, in general, protects investors and the public interest.
    The proposed rule change, in particular the proposed changes to
permit RWA transfers to occur on a routine, recurring basis and result
in netting, also provides market participants with sufficient
flexibility to reduce risk-weighted asset capital requirements at times
necessary to comply with requirements imposed on them by clearing
firms. This will permit market participants respond to then-current
market conditions, including volatility and increased volume, by
reducing the risk-weighted asset capital requirements associated with
any new positions they may open while those conditions exist. Given the
additional capital that may become available to market participants as
a result of the RWA Transfers, market participants will be able to
continue to provide liquidity to the market, even during periods of
increased volume and volatility, which liquidity ultimately benefits
investors. It is not possible for market participants to predict what
market conditions will exist at a specific time, and when volatility
will occur. The proposed rule change to permit routine, recurring RWA
Transfers (and to not provide prior written notice) will provide market
participants with the ability to respond to these conditions whenever
they occur. Additionally, since firms may be subject to restrictions on
positions imposed by their clearing firms, permitting transfers on a
routine, recurring basis will provide market participants with the
flexibility to comply with these restrictions when necessary to avoid
position limits on future options activity. In addition, with respect
to netting, as discussed above, firms may maintain different clearing
accounts for a variety of reasons, such as the structure of their
businesses, the manner in which they trade, their risk management
procedures, and for capital purposes. Netting may otherwise occur with
respect to a firm's positions if it structured its clearing accounts
differently, such as by using a universal account. Therefore, the
proposed rule change will permit netting while allowing firms to
continue to maintain different clearing accounts in a manner consistent
with their businesses.
    The Exchange recognizes the numerous benefits of executing options
transactions occur on an exchanges, including price transparency,
potential price improvement, and a clearing guarantee. However, the
Exchange believes it is appropriate to permit RWA Transfers to occur
off the exchange, as these benefits are inapplicable to RWA Transfers.
RWA Transfers have a narrow scope and are intended to achieve a
limited, benefit purpose. RWA Transfers are not intended to be a
competitive trading tool. There is no need for price discovery or
improvement, as the purpose of the transfer is to reduce risk-weighted
asset capital requirements attributable to a market participants'
positions. Unlike trades on an exchange, the price at which an RWA
Transfers occurs is immaterial--the resulting reduction in risk-
weighted assets is the critical part of the transfer. RWA Transfers
will result in no change in ownership, and thus they do not constitute
trades with a counterparty (and thus eliminating the need for a
counterparty guarantee). The transactions that resulted in the open
positions to be transferred as an RWA Transfer were already guaranteed
by an OCC clearing member, and the positions will continue to be
subject to OCC rules, as they will continue to be held in an account
with an OCC clearing member. The narrow scope of the proposed rule
change and the limited, beneficial purpose of RWA Transfers make
allowing RWA Transfers to occur off the floor appropriate and important
to support the provision of liquidity in the listed options market.
    The proposed rule change does not unfairly discriminate against
market participants, as all Trading Permit Holders and non-Trading
Permit Holders with open positions in options listed on the Exchange
may use the proposed off-floor transfer process to reduce the risk-
weighted asset capital requirements of CTPHs.
    The Exchange believes the proposed rule change benefits investors,
as it adds transparency to the Rules by codifying certain long-standing
guidance regarding what types of off-floor transfers are permissible.
The purpose of the additional circumstances in which market
participants may conduct off-floor transfers is consistent with the
purpose of the circumstances currently permitted in Rule 6.49A.
Therefore, the proposed rule change will provide market participants
that experience these limited, non-recurring events with an efficient
and effective means to transfer positions in these situations. It also
permits presidential exemptions when they are necessary or appropriate
for the maintenance of a fair and orderly market and the protection of
investors and are in the public interest. The

Exchange believes the proposed rule change regarding permissible
transfer prices provides market participants with flexibility to
determine the price appropriate for their business, which maintain cost
bases in accordance with normal accounting practices and removes
impediments to a free and open market.
    The proposed rule change requiring notice and maintenance of
records will ensure the Exchange is able to review off-floor transfers
for compliance with the Rules, which prevents fraudulent and
manipulative acts and practices. The requirement to retain records is
consistent with the requirements of Rule 17a-3 and 17a-4 under the Act.
    As discussed above, the proposed rule change is similar to rules of
other options exchanges, and thus further removes impediments to and
perfects the mechanism of a free and open market.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe the proposed rule change will impose any burden on intramarket
competition, as the amended off-floor transfer procedure will apply to
all Trading Permit Holders in the same manner. Use of the off-floor
transfer procedure is voluntary, and all Trading Permit Holders may use
the procedure to transfer position off the floor as long as the
criteria in the proposed rule are satisfied. Market participants will
still be able to effect transactions on the Exchange pursuant to the
normal auction process if an off-floor transfer is not permissible.
    The proposed rule change also provides market participants that
experience the limited permissible, non-recurring events with an
efficient and effective means to transfer positions in these
situations. The Exchange believes the proposed rule change regarding
permissible transfer prices provides market participants with
flexibility to determine the price appropriate for their business,
which determine prices in accordance with normal accounting practices
and removes impediments to a free and open market. The Exchange does
not believe the proposed notice and record requirements are unduly
burdensome to market participants, as they are similar to requirements
in the rules of other options exchanges, as discussed above. The
Exchange believes these are reasonable requirements that will ensure
the Exchange is aware of all off-floor transfers so that it can monitor
and review them to determine whether they are effected in accordance
with the Rules.
    The Exchange does not believe the proposed rule change will impose
any burden on intermarket competition. The proposed off-floor position
transfer procedure is not intended to be a competitive trading tool.
The Exchange does not believe the proposed changes to the off-floor
position transfer procedure are material, as they codify certain
longstanding guidance and clarify the procedure. This procedure is of
limited application during unique circumstances. Additionally, as
discussed above, the proposed rule change in part is similar to rules
of other options exchanges. The Exchange believes having similar rules
related to off-floor transfer positions to those of other options
exchanges will reduce the administrative burden on market participants
of determining whether their off-floor transfers comply with multiple
sets of rules.
    The purpose of the proposed rule change to permit RWA Transfers is
to alleviate the negative impact of bank capital requirements on
options market liquidity providers. This process is not intended to be
a competitive trading tool. Use of the proposed process is voluntary,
and all Trading Permit Holders and non-Trading Permit Holders with open
positions in options listed on the Exchange may use the proposed off-
floor transfer process to reduce the risk-weighted asset capital
requirements attributable to those positions. RWA Transfers have a
limited purpose, which is to reduce risk-weighted assets attributable
to open positions in listed options in order to free up capital. Cboe
Options believes the proposed rule change may relieve the burden on
liquidity providers in the options market by reducing the risk-weighted
assets attributable to their open positions. As a result, market
participants may be able to increase liquidity they provide to the
market, which liquidity benefits all market participants.

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

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

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

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-CBOE-2019-035 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-2019-035. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from

comment submissions. You should submit only information that you wish
to make available publicly. All submissions should refer to File Number
SR-CBOE-2019-035 and should be submitted on or before August 13, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\57\
---------------------------------------------------------------------------

    \57\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-15561 Filed 7-22-19; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 160 (Monday, August 19, 2013)]
[Notices]
[Pages 50476-50477]
[FR Doc No: 2013-20064]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70166; File No. SR-BATS-2013-035]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Designation of a Longer Period for Commission Action on Proposed Rule
Change, as Modified by Amendment No. 1 Thereto, To Amend the
Competitive Liquidity Provider Program

August 13, 2013.
    On June 17, 2013, BATS Exchange, Inc. (``Exchange'' or ``BATS'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to establish the Competitive Liquidity

Provider Program for Exchange Traded Products (``ETP CLP Program''),
and to amend its existing Competitive Liquidity Provider Program to
only apply to corporate issues, on a pilot basis. On June 24, 2013, the
Exchange submitted Amendment No. 1 to the proposed rule change.\3\ The
proposed rule change, as modified by Amendment No. 1, was published for
comment in the Federal Register on July 5, 2013.\4\ The Commission
received no comment letters on the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange made technical corrections
and clarifying amendments.
    \4\ Securities Exchange Act Release No. 69889 (June 28, 2013),
78 FR 40531 (``Notice'').
---------------------------------------------------------------------------

    Section 19(b)(2) of the Act \5\ provides that, within 45 days of
the publication of notice of the filing of a proposed rule change, or
within such longer period up to 90 days as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or as to which the self-regulatory organization
consents, the Commission shall either approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether the proposed rule change should be disapproved. The
Commission is extending this 45-day time period.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    The Commission finds that it is appropriate to designate a longer
period within which to take action on the proposed rule change so that
it has sufficient time to consider the proposed rule change. The
proposed rule change would, among other things, create a one-year pilot
program, the ETP CLP Program, for issuers of certain exchange-traded
products listed on the Exchange.
    Accordingly, the Commission, pursuant to Section 19(b)(2) of the
Act,\6\ designates October 3, 2013, as the date by which the Commission
should either approve or disapprove or institute proceedings to
determine whether to disapprove the proposed rule change (File Number
SR-BATS-2013-035).
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(31).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-20064 Filed 8-16-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 145 (Thursday, July 28, 2016)]
[Notices]
[Pages 49648-49649]
[FR Doc No: 2016-17834]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings #1

    Take notice that the Commission received the following electric
rate filings:
    Docket Numbers: ER10-2960-006; ER10-1618-006; ER10-1616-006; ER10-
1598-006; ER10-1595-006.
    Applicants: Astoria Generating Company, L.P., Crete Energy Venture,
LLC, Lincoln Generating Facility, LLC, New Covert Generating Company,
LLC, Rolling Hills Generating, L.L.C.
    Description: Supplement to May 31, 2016 Notice of Non-Material
Change in Status of Astoria Generating Company, L.P., et al.
    Filed Date: 7/20/16.
    Accession Number: 20160720-5162.
    Comments Due: 5 p.m. ET 8/10/16.

    Docket Numbers: ER16-1443-000.
    Applicants: NRG Power Midwest LP.
    Description: Report Filing: Refund Report--Informational Filing to
be effective N/A.
    Filed Date: 7/20/16.
    Accession Number: 20160720-5062.
    Comments Due: 5 p.m. ET 8/10/16.

    Docket Numbers: ER16-1638-001.
    Applicants: 4C Acquisition, LLC.
    Description: Tariff Amendment: Response to Request for Additional
Information of 4CA to be effective 8/4/2016.
    Filed Date: 7/20/16.
    Accession Number: 20160720-5131.
    Comments Due: 5 p.m. ET 8/10/16.

    Docket Numbers: ER16-2252-000.
    Applicants: Antelope DSR 1, LLC.
    Description: Baseline eTariff Filing: Antelope DSR 1, LLC Co-
Tenancy Agreement to be effective 8/1/2016.
    Filed Date: 7/20/16.
    Accession Number: 20160720-5124.
    Comments Due: 5 p.m. ET 8/10/16.

    Docket Numbers: ER16-2253-000.
    Applicants: Antelope DSR 2, LLC.
    Description: Baseline eTariff Filing: Antelope DSR 2, LLC Co-
Tenancy Agreement to be effective 8/1/2016.
    Filed Date: 7/20/16.
    Accession Number: 20160720-5126.
    Comments Due: 5 p.m. ET 8/10/16.

    Docket Numbers: ER16-2254-000.
    Applicants: Antelope DSR 3, LLC.
    Description: Baseline eTariff Filing: Antelope DSR 3, LLC Co-
Tenancy Agreement to be effective 8/1/2016.
    Filed Date: 7/20/16.
    Accession Number: 20160720-5127.
    Comments Due: 5 p.m. ET 8/10/16.

    Docket Numbers: ER16-2255-000.
    Applicants: Elevation Solar C LLC.
    Description: Baseline eTariff Filing: Elevation Solar C LLC Co-
Tenancy Agreement to be effective 8/1/2016.
    Filed Date: 7/20/16.
    Accession Number: 20160720-5128.
    Comments Due: 5 p.m. ET 8/10/16.

    Docket Numbers: ER16-2256-000.
    Applicants: Solverde 1, LLC.
    Description: Baseline eTariff Filing: Solverde 1, LLC Co-Tenancy
Agreement to be effective 8/1/2016.
    Filed Date: 7/20/16.
    Accession Number: 20160720-5129.
    Comments Due: 5 p.m. ET 8/10/16.

    Docket Numbers: ER16-2257-000.
    Applicants: Western Antelope Blue Sky Ranch B LLC.
    Description: Baseline eTariff Filing: Western Antelope Blue Sky
Ranch B LLC Co-Tenancy Agreement to be effective 8/1/2016.
    Filed Date: 7/20/16.
    Accession Number: 20160720-5130.
    Comments Due: 5 p.m. ET 8/10/16.

    Docket Numbers: ER16-2258-000.
    Applicants: Southwest Power Pool, Inc.
    Description: Section 205(d) Rate Filing: Gas-Electric Coordination
Provisions Clean-Up and Effective Date Change to be effective 9/30/
2016.
    Filed Date: 7/20/16.
    Accession Number: 20160720-5132.
    Comments Due: 5 p.m. ET 8/1/16.

    Docket Numbers: ER16-2259-000.
    Applicants: WSPP Inc.
    Description: Section 205(d) Rate Filing: Normal filing Schedule Q
2016 to be effective 8/3/2016.
    Filed Date: 7/21/16.
    Accession Number: 20160721-5015.
    Comments Due: 5 p.m. ET 8/11/16.

    Docket Numbers: ER16-2260-000.
    Applicants: PJM Interconnection, L.L.C., American Municipal Power,
Inc., Duke Energy Ohio, Inc.
    Description: Section 205(d) Rate Filing: Revised Service Agreement
No. 4264--NITSA between PJM and AMP to be effective 1/1/2016.
    Filed Date: 7/21/16.
    Accession Number: 20160721-5041.
    Comments Due: 5 p.m. ET 8/11/16.

    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: July 21, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2016-17834 Filed 7-27-16; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register: September 29, 2010 (Volume 75, Number 188)]
[Notices]
[Page 60155-60157]
[DOCID:fr29se10-114]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62987; File No. SR-NYSEAmex-2010-92]

Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NYSE Amex LLC Amending Rule
4560--NYSE Amex Equities To Correspond With a Rule Change Filed by the
Financial Industry Regulatory Authority, Inc.

September 24, 2010.
    Pursuant to Section 19(b)(1)\1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on September 13, 2010, NYSE Amex LLC (the ``Exchange'' or
``NYSE Amex'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend Rule 4560--NYSE Amex Equities to
correspond with a rule change filed by the Financial Industry
Regulatory Authority, Inc. (``FINRA'') and approved by the
Commission.\4\ The text of the proposed rule change is available at the
Exchange, www.nyse.com, the Commission's Public Reference Room, and on
the Commission's Web site at www.sec.gov.
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    \4\ See Securities Exchange Act Release No. 61979 (April 23,
2010), 75 FR 23316 (May 3, 2010) (order approving SR-FINRA-2010-
003).
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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 self-regulatory organization
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 amend Rule 4560--NYSE
Amex Equities (Short-Interest Reporting) to correspond with a rule
change filed by FINRA and approved by the Commission.
Background
    On July 30, 2007, FINRA's predecessor, the National Association of
Securities Dealers, Inc. (``NASD''), and NYSE Regulation, Inc.
(``NYSER'') consolidated their member firm regulation operations into a
combined organization, FINRA. Pursuant to Rule 17d-2 under the Act, the
New York Stock Exchange LLC (``NYSE''), NYSER and FINRA entered into an
agreement (the ``Agreement'') to reduce regulatory duplication for
their members by allocating to FINRA certain regulatory
responsibilities for certain NYSE rules and rule interpretations
(``FINRA Incorporated NYSE Rules''). The Exchange became a party to the
Agreement effective December 15, 2008.\5\
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    \5\ See Securities Exchange Act Release Nos. 56148 (July 26,
2007), 72 FR 42146 (August 1, 2007) (order approving the Agreement);
56147 (July 26, 2007), 72 FR 42166 (August 1, 2007) (SR-NASD-2007-
054) (order approving the incorporation of certain NYSE Rules as
``Common Rules''); and 60409 (July 30, 2009), 74 FR 39353 (August 6,
2009) (order approving the amended and restated Agreement, adding
NYSE Amex LLC as a party). Paragraph 2(b) of the Agreement sets
forth procedures regarding proposed changes by FINRA, NYSE or NYSE
Amex to the substance of any of the Common Rules.

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    As part of its effort to reduce regulatory duplication and relieve
firms that are members of FINRA, NYSE and NYSE Amex of conflicting or
unnecessary regulatory burdens, FINRA is now engaged in the process of
reviewing and amending the NASD and FINRA Incorporated NYSE Rules in
order to create a consolidated FINRA rulebook.\6\
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    \6\ FINRA's rulebook currently has three sets of rules: (1) NASD
Rules, (2) FINRA Incorporated NYSE Rules, and (3) consolidated FINRA
Rules. The FINRA Incorporated NYSE Rules apply only to those members
of FINRA that are also members of the NYSE, while the consolidated
FINRA Rules apply to all FINRA members. For more information about
the FINRA rulebook consolidation process, see FINRA Information
Notice, March 12, 2008.
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Current Rule 4560--NYSE Amex Equities
    The Exchange adopted Rule 4560--NYSE Amex Equities in May 2009.\7\
Rule 4560--NYSE Amex Equities requires each member organization to
maintain a record of the total short positions in its customer and
proprietary accounts in securities listed on a national securities
exchange and that such information must be reported to FINRA. Rule
4560--NYSE Amex Equities is based on, and is substantially the same as,
FINRA Rule 4560 (Short-Interest Reporting). The principal distinction
between the two rules is that, as adopted by the Exchange, Rule 4560--
NYSE Amex Equities does not apply to OTC Equity Securities (as defined
in FINRA Rule 6420) since the Exchange does not trade OTC Equity
Securities.
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    \7\ See Securities Exchange Act Release No. 59975 (May 26,
2009), 74 FR 26449 (June 2, 2009) (order approving NYSEAmex 2009-
26).
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Proposed Conforming Amendments to Rule 4560--NYSE Amex Equities
    In April 2010, FINRA amended FINRA Rule 4560 to provide, in part,
that it applies to all equity securities (other than Restricted Equity
Securities as defined in FINRA Rule 6420) and not just to OTC Equity
Securities or securities listed on a national securities exchange.\8\
The Exchange proposes to amend Rule 4560--NYSE Amex Equities, as
applicable, to conform with FINRA's amendments to FINRA Rule 4560 so
that Rule 4560--NYSE Amex Equities applies to all equity securities
(other than Restricted Equity Securities as defined in FINRA Rule
6420).
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    \8\ See Securities Exchange Act Release No. 61979 (April 23,
2010), 75 FR 23316 (May 3, 2010).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\10\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, 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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change supports the
objectives of the Act by providing greater harmonization between NYSE
Amex Equities Rules and FINRA Rules of similar purpose, resulting in
less burdensome and more efficient regulatory compliance for joint
members. To the extent the Exchange has proposed changes that differ
from the FINRA version of the Rule, such changes are technical in
nature and do not change the substance of the proposed NYSE Amex
Equities Rule.

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.

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:
    (i) Significantly affect the protection of investors or the public
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, if
consistent with the protection of investors and the public interest, it
has become effective pursuant to Section 19(b)(3)(A) of the Act \11\
and Rule 19b-4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the self-regulatory organization to submit to the
Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission. The Exchange has satisfied this requirement.
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    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.

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 e-mail to<EMAIL_ADDRESS>Please include
File Number SR-NYSEAmex-2010-92 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEAmex-2010-92. This
file number should be included on the subject line if e-mail 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 on
official business days between the hours of 10 a.m. and 3 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-NYSEAmex-2010-92 and should be submitted on or before
October 20, 2010.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-24448 Filed 9-28-10; 8:45 am]
BILLING CODE 8010-01-P