Rule 8.85(a)(iii)
                                                                                which is redundant of
                                                                                Market-Maker
                                                                                obligations under
                                                                                proposed rule 5.52
                                                                                (current Rule 8.7, to
                                                                                which a DPM must
                                                                                already comply).
                                                                                Changes ``Exchange
                                                                                committee to
                                                                                ``Exchange'' as the
                                                                                Exchange, rather than
                                                                                a specific committee,
                                                                                requires DPM
                                                                                Designees. Renumbers
                                                                                provisions and
                                                                                updates cross-
                                                                                references and
                                                                                headings and language
                                                                                to read in plain
                                                                                English
Rule 8.95 (Allocation of         Rule 5.50 (Market- N/A..............  N................  Deletes Interpretation
 Securities and Location of       Maker                                                    and Policy .04 which
 Trading Crowds and DPMs).        Appointments).                                           would be redundant of
                                                                                Rule 8.84, also being
                                                                                consolidated into
                                                                                proposed Rule 5.50.
                                                                                Deletes current
                                                                                8.95(j) and
                                                                                Interpretation and
                                                                                Policy .03, which is
                                                                                obsolete as it refers
                                                                                to classes open for
                                                                                trading prior to
                                                                                1987. Renumbers
                                                                                provisions and
                                                                                updates headings and
                                                                                cross-references and
                                                                                language to read in
                                                                                plain English.
Rule 21.19 (Obligations of       N/A..............  C2 Rule 8.6, EDGX  N................  Deletes current rule
 Market-Makers (Treasury Bonds                       Options Rule                          (which covers bid/ask
 and Notes)).                                        22.6, BZX                             requirements for
                                                     Options Rule                          government
                                                     22.6.                                 securities) to align
                                                                                with proposed no bid/
                                                                                ask requirement,
                                                                                which is consistent
                                                                                with the Affiliated
                                                                                Options Exchanges. In
                                                                                addition, the
                                                                                Exchange delisted
                                                                                government securities
                                                                                in 2011, therefore,
                                                                                Market-Maker
                                                                                obligations in such
                                                                                classes are no longer
                                                                                relevant.
Rule 22.14 (Maximum Bid-Ask      N/A..............  N/A..............  N................  Deletes current rule
 Differentials; Market-Maker                                                               (which covers bid/ask
 Appointments & Obligations).                                                              requirements for
                                                                                binary options) to
                                                                                align with proposed
                                                                                no bid/ask
                                                                                requirement, which is
                                                                                consistent with the
                                                                                Affiliated Options
                                                                                Exchanges. In
                                                                                addition, the
                                                                                Exchange delisted
                                                                                binary options in
                                                                                2015, therefore,
                                                                                Market-Maker
                                                                                obligations in such
                                                                                classes are no longer
                                                                                relevant.
29.17 (Market-Maker              N/A..............  N/A..............  N................  Deletes current rule,
 Appointments & Obligations).                                                              which provides for
                                                                                certain Market-Making
                                                                                obligations in
                                                                                relation to Credit
                                                                                Option classes as the
                                                                                Exchange delisted
                                                                                Credit Options in
                                                                                2014, therefore, this
                                                                                provision is no
                                                                                longer relevant to
                                                                                the current or
                                                                                proposed Market-Maker
                                                                                program.

Rule 24A.9 (FLEX Market-Maker    Rule 5.57 (FLEX    N/A..............  N................  Moves current Rule
 Appointments and Obligations).   Market-Makers).                                          21A.9(d) and (e) to
                                                                                proposed rule.
                                                                                Removes current Rule
                                                                                21A.9(c) regarding
                                                                                FLEX Appointed Market-
                                                                                Maker obligations
                                                                                because the Exchange
                                                                                currently does not
                                                                                have any FLEX
                                                                                Appointed Market-
                                                                                Makers. To the extent
                                                                                the Exchange
                                                                                determines in the
                                                                                future to have FLEX
                                                                                Appointed Market-
                                                                                Makers in place, the
                                                                                Exchange will submit
                                                                                a separate rule
                                                                                filing. Updates cross-
                                                                                references, heading,
                                                                                and language to read
                                                                                in plain English.
----------------------------------------------------------------------------------------------------------------

    As indicated above, many of the proposed rules are virtually
identical (other than updating the rule text to plain English, updating
cross-references, revising headings renumbering provisions, and, where
applicable, deleting duplicative provisions as a result of
consolidation, and making other types of non-substantive changes
described above) and are merely moving from the current Rulebook to the
shell Rulebook.
Proposed Rule 5.50 (Market-Maker Appointments)
    Proposed Rule 5.50 consolidates rules under current Chapter 8 in
connection with class appointments, which includes appointment costs
and class appointments to DPMs and Trading Crowds. Below describes in
more detail the substantive changes proposed:
    Proposed Rule 5.50(a) provides that a registered Market-Maker may
select class appointments to make markets in those classes during all
trading sessions, i.e. Regular Trading Hours (``RTH'') \12\ and Global
Trading Hours (``GTH'') \13\. Particularly, this proposed change
removes current language, which provides that a Market-Maker may select
class appointments in one or more trading sessions in order to
harmonize its rules and processes with the Affiliate Options Exchanges,
which allow for a Market-Maker selected class appointment that apply to
classes during all trading sessions.\14\ In other words, if a Market-
Maker selects an appointment in Cboe Volatility Index (``VIX'')
options, which series are open for trading during GTH and RTH, that
appointment would apply during both trading sessions (and thus, the
Market-Maker would have an appointment to make markets in VIX during
both GTH and RTH). As a result, a Market-Maker continuous quoting
obligations set forth in proposed Rule 5.52(d) (current Rule 8.7(d))
would apply to the class for an entire trading day. A Market-Maker with
appointments in either GTH or RTH is required to provide continuous
quotes in at least 60% of the series \15\ for 90% of the time it is
quoting in those classes.\16\ The Exchange notes that a Market-Maker's
continuous obligations will continue to function in this manner,
therefore, the extension of obligations to appointed classes to trading
sessions will have a de minimis, if any, impact on a Market-Maker's
continuous quoting obligations, as they may continue to choose when to
actively quote and have their obligations to their appointed classes
apply.
---------------------------------------------------------------------------

    \12\ From 8.30 a.m. CT to 3:15 p.m. CT.
    \13\ From 2:00 a.m. CT to 8:15 a.m. CT.
    \14\ See C2 Rule 8.2; EDGX Options Rule 22.3; and BZX Options
Rule 22.3. The Exchange notes that GTH session on the Affiliated
Options Exchanges occurs from 7:30 a.m. CT to 8:15 a.m. CT.
    \15\ Proposed Rule 5.52(d) (current Rule 8.7(d).
    \16\ Proposed Rule 5.52(d) (current Rule 1.1).
---------------------------------------------------------------------------

    Proposed 5.50(b) states that a Market-Maker may enter an
appointment request via an Exchange-approved electronic interface with
the Exchange's systems by 2:30 a.m.\17\ for ``All Sessions'' \18\
classes, that is an option class the Exchange lists for trading during
both GTH and RTH., which appointment becomes effective on the open of
the Global Trading session, or by 9:00 a.m. for classes traded during
Regular Trading Hours, which appointment becomes effective on the open
of the Regular Trading session. Market-Makers already request
appointments via an Exchange-approved electronic interface, therefore
this proposed rule merely codifies the existing request process.\19\
This is consistent with the corresponding rules of the Affiliated
Options Exchanges,\20\ but is amended to provide Market-Makers with
flexibility regarding appointments between its two trading sessions,
which are different in scope than those of the Affiliate Options
Exchanges.
---------------------------------------------------------------------------

    \17\ All times are Eastern Time pursuant to Rule 1.6 in shell
Rulebook.
    \18\ See Rule 1.1 in the shell Rulebook.
    \19\ See Cboe Release No. C2019071600 (2019), available at
http://cdn.cboe.com/resources/release_notes/2019/Quarterly-Rebalance-of-Option-Class-Tiers-and-Online-Appointment-System-Q2-2019.pdf
    \20\ See C2 Rule 8.2; EDGX Options Rule 22.3; and BZX Options
Rule 22.3.
---------------------------------------------------------------------------

    The proposed rule change (proposed Rule 5.50(g)(1)) also deletes
language in current Rule 8.3(c)(iv) that allows for only 1.0
appointment cost and one tier appointment per Trading Permit, as well
as rule language relevant to this limitation. In anticipation of
migration, the Exchange intends to update and simplify its fee
schedule, and a Market-Maker firm will need only one Market-Making
Trading Permit, regardless of the number of classes in which it chooses
to have appointments.\21\ Upon migration, a Market-Maker firm will only
be required to have one permit and will be charged for one or more
``Appointment Units'' (which will scale from 1 ``unit'' to more than 5
``units''), depending on which classes they elect appointments.
Appointment Units will replace the standard 1.0 appointment cost, but
function in the same manner. Appointment weights (which, in the
proposed rule, replaces the term ``appointment costs'', but these terms
are equivalent) for each appointed class will be summed for each
Market-Maker in order to determine the total appointment units, to
which fees will be assessed. This is the current manner in which the
tier costs per class appointment are summed to meet the 1.0 appointment
cost, the only difference will be that if a Market-Maker exceeds this
``unit'' then their fees will be assessed under the ``unit'' that
corresponds to the total of their appointment weights, as opposed to
holding another Trading Permit because it exceeded the 1.0 ``unit''.
The proposed rule also updates some of the appointment costs (and
updates this term to reflect ``appointment weights'' in line with the
fees schedule for migration) in order to align with the rebalanced
Appointment Units upon migration. The proposed change is intended to
provide for a more straightforward and efficient administration of the
appointment unit process as it will remove the more burdensome process
in obtaining Trading Permits and replace it with a simple, scaled
appointment unit regime (which is reflective of the same scaled regimes
Market-Makers are accustomed to within the Exchange's fees schedule).
The Exchange believes that by making the appointment unit process less
burdensome for Market-Makers, the proposed rule may potentially
incentivize more market-making across classes.
---------------------------------------------------------------------------

    \21\ See Exchange Notice C2019081900 (August 19, 2019). Also,
the Exchange intends to propose this change to the Fees Schedule in
a separate rule filing.
---------------------------------------------------------------------------

    The proposed rule change removes the condition in current Rule
8.14(b) that the Exchange may only designate classes to not have a DPM
or LMM if

there are at least four Market-Makers quoting in the class that are
subject to the continuous quoting obligations. When the Exchange
implemented this condition, there were a limited number of classes
trading on the Hybrid System and this condition was designed, at that
time, to enhance the Exchange's Market-Making program in the select
classes trading on Hybrid, which was relatively new to the Exchange. As
discussed above, all classes now trade on the System (i.e. Hybrid), and
Market-Makers select their own appointments which adequately cover all
classes of options necessitating market-making liquidity. In addition
to this, proposed Rule 5.52(g) (current Rule 8.7(d)(iv)) allows for the
Exchange to call on a Market-Maker to submit a single quote or maintain
continuous quotes in one or more series of a Market-Maker's appointed
class whenever, in the judgment of the Exchange, it is necessary to do
so in the interest of maintaining a fair and orderly market. The
Exchange believes these rules provide for sufficient liquidity in
classes trading on the Exchange. Also, the proposed change is
consistent with the rules of EDGX Options, which currently has a DPM
program and lists many of the same classes. Pursuant to EDGX Options
rules, it may choose to appoint one DPM per class, yet its rules do not
obligate it to do so, nor do they require for a requisite number of
Market-Makers when EDGX does not choose to appoint a DPM to a
class.\22\
---------------------------------------------------------------------------

    \22\ See EDGX Options Rule 22.2(c).
---------------------------------------------------------------------------

Proposed Rules Regarding Market-Maker Obligations
    The Exchange notes that the proposed rules in connection with
Market-Marker obligations (presented in the table above) largely make
non-substantive changes to update and simplify the rules by
reorganizing and consolidating provisions, simplifying language,
updating language to plain English and removing redundancies. For
example, and as indicated in the table above, proposed Rule 5.51 only
makes non-substantive changes to the rule governing a Market-Maker's
general obligations (current Rule 8.7, in part), most of which remove
redundant provisions that are already covered under the umbrella of a
Market-Maker's obligation to engage in dealing to maintain fair and
orderly markets. The proposed rules make only a few substantive changes
to Market-Maker's obligations. The following provides an overview of
the proposed substantive changes being made to the obligations for
Market-Maker and Market-Maker types (which are described in further
detail in the sections below):
     Adds exceptions under proposed Rule 5.52(a) to the current
requirement (under current Rule 8.51) \23\ that a Market-Maker's quotes
must be firm. These are consistent with the exceptions to the firm
quote requirement for Market-Makers on the Affiliated Options
Exchanges.
---------------------------------------------------------------------------

    \23\ The Exchange notes that current Rule 8.51, which governs
Firm Disseminated Market Quotes will be maintained as is, and
continue to apply to Market-Makers, but will be moved to the shell
Rulebook at a later date.
---------------------------------------------------------------------------

     Amends language throughout proposed Rule 5.52 to reflect
that a Market-Maker's current continuous quoting requirements (i.e.,
90% of the time a Market-Maker is quoting in its appointed classes) in
60% of the series of the Market-Maker's appointed classes will now
apply to all trading sessions (GTH and RTH). As indicated in the table
above, the 90% continuous quoting requirement in 60% of appointed
classes is currently the quoting requirement for Market-Makers. The
proposed rule change does not alter this continuous electronic quoting
obligation but merely incorporates the definition of continuous
electronic quotes into this proposed rule, as opposed to having this
term defined elsewhere in the Rules, as it is currently. The Exchange
notes that DPMs, PMMs, and LMMs will also continue to have the same
electronic quoting requirements which will continue to apply only
during RTH, as they currently do.
     Updates the series excluded from a Market-Maker's
continuous quoting obligations under proposed 5.52(d)(2), including:
Amending the exclusion of ``9-month'' series to ``270-day series'' (and
makes this proposed change where applicable throughout the rules); and
adding that any intra-day add-on series on the day during which such
series are added for trading and any Quarterly Options series are
excluded from the continuous quoting obligation. The Exchange notes
that it does not propose to add these series to be excluded from PMM,
DPM, and LMM obligations.
     Removes the quote width requirements (current Rule
8.7(d)(i)(A) and (ii)(A), Rule 21.19, and Rule 22.14). This is
consistent with the Market-Maker quoting requirements on the Affiliated
Options Exchanges.
     Adds proposed Rule 5.53 which governs good standing for
Market-Makers and is consistent with rules of the Affiliated Options
Exchanges.
     Removes the requirement under proposed Rule 5.54 that DPMs
must segregate in a manner prescribed by the Exchange (i.e. segregated
accounts) transaction made in a DPM capacity from other transactions/
activity.
Proposed Rule 5.52 (Market-Maker Quotes)
    Proposed Rule 5.52 consolidates overall the Market-Maker quoting
obligations and amends obligations to 1) include quoting obligations
under the Affiliated Options Exchanges' rules, and 2) update current
quoting obligations to be consistent, the extent possible to maintain
Exchange specific requirements, with the quoting obligations of the
Affiliated Options Exchanges. The Exchange notes that, as proposed, a
Market-Maker's obligations will be substantially similar to its current
obligations.
    Proposed Rule 5.52(a) provides for the firm quote obligation for
Market-Makers pursuant to Rule 602 of Regulation NMS, to which Market-
Makers must already comply pursuant to current Rule 8.51 (Firm
Disseminated Market Quotes).\24\ Proposed Rule 5.52(a) mirrors the firm
quoting provision for Market-Makers under the rules of the Affiliated
Options Exchanges, and adds exceptions to firm quotes that are the same
as the exceptions under corresponding rules of the Affiliated Options
Exchanges.\25\ These proposed exceptions to a Market Maker's firm quote
include system malfunction, unusual market conditions, and quotes
during the pre-open.
---------------------------------------------------------------------------

    \24\ See supra note 25.
    \25\ See C2 Rule 8.6; EDGX Options Rule 22.6; BZX Options Rule
22.6.
---------------------------------------------------------------------------

    Proposed Rule 5.52(d)(2), regarding continuous electronic quoting
requirements incorporates obligations to appointed classes to the
entire trading day (i.e., GTH and RTH, which is described in detail
above) by removing or updating language that refers to ``Regular
Trading Hours'' and ``per trading session'' and its amends its list of
series of excluded from a Market-Maker's continuous quoting obligation
to incorporates the exclusion of any intra-day add-on series on the day
during which such series are added for trading and any Quarterly
Options series. This exclusion is consistent with corresponding rules
of the Affiliated Options Exchanges.\26\ As stated above,

proposed Rule 5.52(d)(2) also amends the current quoting exclusion of
any series with an expiration of nine months or greater to an
expiration of greater than 270 days, which is consistent with the time-
to-expiration language for the same exclusion under the Affiliated
Options Exchanges' rules. The Exchange notes that Market Makers
generally already monitor expirations by a defined count of 270 days,
as opposed to a nine month count in which the number of days
continuously varies. Therefore, this proposed change aligns the
Exchange's rules with current industry practice already in place on the
Affiliated Options Exchanges. The Exchange also applied this change in
the PMM obligation rule (the only other location in the Market-Maker
rules which refers to 9-month series), proposed Rule 5.56.
---------------------------------------------------------------------------

    \26\ Id; see also Securities Exchange Act Release No. 71129
(December 18, 2013), 78 FR 77736 (December 18, 2013) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Modify BATS Options Market Maker Continuous Quoting Obligation
Rules) (SR-BATS-2013-062), which adopted exclusions, including
Quarterly Options series, to Market Maker's quoting obligations and
noted that such exclusions were ``consistent with the rules of
several other options exchanges'' and ``did not diminish the quoting
obligation''. The Exchange also notes that these exclusions were
adopted on EDGX Options when that exchange was established.
---------------------------------------------------------------------------

    The proposed rule change also removes the quote width requirements
under current Rule 8.7(d)(i)(A) and (d)(ii)(A)), as well as reference
to such determined quote widths throughout the proposed rules,
including those for SPX, Interpretation and Policy .08 regarding bid/
ask determinations for indexes, and current Rule 24A.9(e). This is
consistent with the corresponding rules of the Affiliated Options
Exchanges \27\ and the manner in which Market-Makers on those exchanges
are required to quote many of the same classes as Market-Makers on the
Exchange. The Exchange notes that currently the quote width requirement
for generally all classes is $10, however, Market-Makers consistently
maintain two-sided quotes that are much tighter than the required
width. Indeed, even if markets are experiencing period of stress or
volatility, pursuant to proposed Rule 5.51 (current Rule 8.7), Market-
Makers remain obligated to maintain two sided markets and engage in a
course of dealings that must be reasonable calculated to contribute to
the maintenance of a fair and orderly market, which includes refraining
from making bids or offers that are inconsistent with such course of
dealings and updating quotations in response to changed market
conditions. The Exchange may take disciplinary action against any
substantial or continued failure of these obligations. Therefore, the
Exchange does not believe that the continuing to provide for a quote
width requirement is necessary nor will it impact the maintenance of
fair and orderly markets because Market-Makers already quote at a bid/
ask spread much narrower than the requirements and are required to
continuously fulfill their obligations to engage in a course of
dealings reasonably calculated to contribute to the maintenance of a
fair and orderly market. The Exchange also notes that under proposed
Rule 5.51 (current Rule 8.7), in connection with a Market-Maker's
obligations to maintain fair and orderly markets, it may not make bids
or offers inconsistent with this requirement, and, if the Exchange
finds any substantial or continued failure by a Market-Maker regarding
this requirement, the Market-Maker will be subject to disciplinary
action or suspension or revocation of its registration or
appointment(s). As such, Market-Makers must continue to submit quotes
in accordance with this standard.
---------------------------------------------------------------------------

    \27\ See supra note 27.
---------------------------------------------------------------------------

    The Exchange also notes a proposed non-substantive change (not
presented in the table above) to delete the language under current
8.7(d) which provides that Market-Makers remain subject to all
obligations imposed by current Rule 8.7, and, to the extent another
obligation contained elsewhere in current Rule 8.7 is inconsistent with
an obligation contained in current paragraph (d) of Rule 8.7 (i.e.,
continuous quoting obligations) with respect to a class, current
paragraph (d) shall govern. The Affiliated Options Exchanges'
corresponding rules do not provide for the same, as a Market-Maker is
expected to uphold all obligations under the rules and in no
circumstance circumvent its other, equally important obligations (e.g.,
constituting a course of dealings reasonably calculated to contribute
to the maintenance of a fair and orderly market) in order to
continuously quote. Therefore, this proposed change will not impact a
Market-Maker's obligations under any of the rules, but instead is
designed to ensure that a Market-Maker upholds each of its obligations.
The proposed change conforms the Exchange's rules to the Affiliated
Options Exchanges' rules. Similarly, the proposed rule change removes
Interpretation and Policy .02, which states that the obligations of a
Market-Maker with respect to those classes of option contracts to which
the Market-Maker holds an Appointment shall take precedence over his
other Market-Maker obligations. The Exchange notes that a Market-
Maker's obligations only pertain to its appointed classes, which
renders this provision unnecessary. This is also consistent with the
quoting obligation provisions of the Affiliated Options Exchanges.
Proposed Rule 5.53 (Good Standing for Market-Makers)
    Proposed Rule 5.53, which covers good standing for Market-Makers,
is identical to the corresponding rules of the Affiliated Options
Exchange.\28\ The Exchange currently does not have a similar,
consolidated rule that covers good standing for Market-Makers. This
change is designed to harmonize Market-Maker requirements across the
Exchange and the Affiliated Options Exchanges which provide clear
requirements for Market-Makers to maintain good standing as a Market-
Maker. The proposed rule states that for a Market-Maker to remain in
good standing, a Market-Maker must: (1) Continue to meet the
requirements established in Exchange Act Rule 15c3-1(a)(6)(i), the
general requirements for Trading Permit Holders set forth in Chapter 3
of the Rules (as proposed), and the Market-Maker requirements set forth
in Chapter 5 of the Rules (as proposed); (2) comply with the Rules as
well as the Rules of the Clearing Corporation and the Federal Reserve
Board; and (3) pay on a timely basis such participation, transaction,
and other fees as the Exchange prescribes. The rule also provides that
the Exchange may suspend or terminate a Trading Permit Holder's
registration as a Market-Maker or a Market-Maker's appointment to a
class, or otherwise withdraw the good standing of a Market-Maker as
provided in the Rules, if the Market-Maker ceases to maintain any of
these conditions for approval or violates any of its agreements with
the Exchange or any of the provisions of the Rules. The proposed rule
does not impose any new obligations or requirements for Market-Makers
but are merely provides for the standards, currently in place under
other rules or regulations, for which the Exchange may measure a
Market-Maker's good standing.
---------------------------------------------------------------------------

    \28\ See C2 Rule 8.4; EDGX Options Rule 22.4; and BZX Options
Rule 22.4.
---------------------------------------------------------------------------

Proposed Rule 5.54 (DPMs)
    The proposed rule deletes current Rule 8.85(a)(vi), which states
that a DPM must segregate in a manner prescribed by the Exchange all
transactions consummated by the DPM in securities allocated to the DPM
and any other transactions consummated by or on behalf of the DPM that
are related to the DPM's DPM business, and current Rule 8.85(c)(v),
which states the DPM shall segregate in a manner prescribed by the
Exchange the DPM's business and activities as a DPM from the DPM's
other businesses and activities (i.e. segregated accounts for DPM-
related

transactions from the firm's general Market-Maker accounts or accounts
in relation to other trading activities or capacities). This is
consistent with EDGX Options Rules (which, of the Affiliated Options
Exchanges, also has DPMs), which do not require DPMs to maintain
segregated accounts for that of their general Market Maker or other
trading activities. These provisions were implemented in the past to
ensure the financial stability of, then, newly formed small DPM firms.
Today, DPMs now need larger financial infrastructure to trade as a DPM
and the Exchange determines if firms are appropriately situated act as
a DPM pursuant to proposed Rule 3.53 (current Rule 8.83) by
considering, among other things, the firms' adequacy of capital and
operational capacity. This reduces the risk that a DPM's financial
integrity would be adversely impacted by financial losses that may be
incurred by the DPM in connection with its other businesses and
activities.\29\ Finally, the proposed rule change removes current
paragraph (e) regarding Trading Permits per appointment costs, in line
with the changes made to the overall Market-Maker appointment costs and
assignments under proposed Rule 5.50 (described in detail above).
---------------------------------------------------------------------------

    \29\ The Exchange also already surveils for a firm's DPM
requirements by DPM-specific acronyms and firm IDs.
---------------------------------------------------------------------------

Miscellaneous Market-Maker Rules

----------------------------------------------------------------------------------------------------------------
                                                         Corresponding
          Current rule               Proposed rule      other exchange    Substantive change    Description of
                                                             rule                                   change
----------------------------------------------------------------------------------------------------------------
Rule 8.8 (Restriction on Acting   Rule 8.25           N/A...............  N.................  None (aside from
 as Market-Maker and Floor         (Restriction on                                             updating cross-
 Broker).                          Acting as Market-                                           references).
                                   Maker and Floor
                                   Broker).
Rule 8.9 (Securities Accounts     Rule 7.6            C2 Rule 8.7, EDGX   N.................  Conforms to
 and Orders of Market-Makers).     (Securities         Options Rule                            corresponding
                                   Accounts and        22.7, BZX Options                       rules of the
                                   Orders of Market-   Rule 22.7.                              Affiliated
                                   Makers).                                                    Options Exchanges
                                                                                (including
                                                                                Interpretation
                                                                                and Policy .01 to
                                                                                BZX/EDGX Rule
                                                                                22.7). Maintains
                                                                                provisions
                                                                                specific to Cboe
                                                                                Options rules.
                                                                                Deletes
                                                                                redundancies,
                                                                                including those
                                                                                provisions
                                                                                already covered
                                                                                under other Rules
                                                                                (e.g. Rule
                                                                                6.55.03), updates
                                                                                language to read
                                                                                in plain English
Rule 8.10 (Financial              Rule 11.6(b)        N/A...............  N.................  None.
 Arrangements of Market-Makers).   (Market-Maker
                                   Financial
                                   Requirements).
Rule 8.17 (Stopping of Option     Rule 5.58           N/A...............  N.................  None.
 Order).                           (Stopping of
                                   Option Orders) of
                                   Section D (Market-
                                   Maker
                                   Appointments and
                                   Obligations).
Rule 8.60 (Evaluation of Trading  N/A...............  N/A...............  N: however, see     Removes current
 Crowd Performance).                                                       below for further   rule which is no
                                                                           details.            longer in
                                                                                practice by the
                                                                                Exchange and
                                                                                unnecessary given
                                                                                the authority of
                                                                                the Exchange to
                                                                                evaluate and
                                                                                determine
                                                                                satisfactory
                                                                                Market-Maker
                                                                                performance and
                                                                                fulfillment of
                                                                                obligations, as
                                                                                well as authority
                                                                                to take
                                                                                disciplinary
                                                                                action for
                                                                                failure to
                                                                                satisfy Market-
                                                                                Maker
                                                                                requirements
                                                                                through various
                                                                                other Exchange
                                                                                rules.
Rule 8.80 (DPM Defined).........  Rule 1.1..........  N/A...............  N.................  Replaces reference
                                                                                to Rule 8.1 in
                                                                                current Rule 1.1
                                                                                with current Rule
                                                                                8.1 language
                                                                                which defines a
                                                                                DPM.
Rule 8.86 (DPM Financial          Rule 11.6           C2 Rule 8.8.......  Y: see below for    Moves to proposed
 Requirements).                    (Financial                              further details.    Rule 11.6(a) and
                                   Arrangements of                                             removes the
                                   Market-Makers).                                             $100,000 net
                                                                                liquidating
                                                                                equity
                                                                                requirement as it
                                                                                is no longer
                                                                                applicable to the
                                                                                current DPM and
                                                                                marketplace
                                                                                structures.
                                                                                Conforms Rule
                                                                                11.6(a) to
                                                                                corresponding C2
                                                                                rule. The Market-
                                                                                Maker language
                                                                                covers all Maker-
                                                                                Maker types, thus
                                                                                DPMs.
----------------------------------------------------------------------------------------------------------------

Proposed Deletion of Current Rule 8.60
    The proposed rule change deletes current Rule 8.60 which provides
for the Exchange evaluation of trading crowd performance. The current
rule provides that the Exchange periodically evaluate the performance
of DPMs, Market-Makers, and other Trading Permit Holders both
individually and collectively as trading crowds in order to determine
whether they are satisfactorily meeting their market responsibilities.
The Exchange may do so by means of a survey, and, if the Exchange finds
that such participant has failed to satisfy its Market-Making
requirements then the Exchange may, among other things, suspend,
terminate or restrict registration or appointment to a class or
classes, reallocate (i.e. reappoint, as proposed) class(es) or restrict
allocation of classes, and so on, and give notice and an opportunity
for a market participant to have a formal hearing or informal hearing,
depending on the action under consideration. The proposed rule change
deletes current Rule 8.60 as it is no longer implemented by the
Exchange. The Exchange does not take such surveys or make
determinations pursuant to Rule 8.60 because the Exchange exercises its
authority under other rules to ensure that Market-Makers (and Market-
Maker types) fulfil their Market-Making requirements, and to take
appropriate disciplinary actions for a participant's failure to do so.
The Exchange may make the same determinations and take action against a
participant for failing to meet their respective Market-Maker
obligations under the current rules (moved to proposed Rules 3.53,
5.50, 5.51, 5.52, 5.53, 5.54, 5.55, and 5.56). Moreover, the Exchange
must follow the notice provision to terminate or condition a
participant's approval to act as a DPM under proposed Rule 3.53, as
well as the notice and proceeding requirements for disciplinary actions
under Chapter 17. Because the Exchange does not take surveys or make
determinations under Rule 8.60, and instead, currently ensures that
participants fulfill their respective Market-Making requirements
pursuant to multiple other rules, the proposed rule change does not
alter the manner in which the Exchange determines whether Market-Making
requirements are met nor the actions and procedures necessary to
discipline a participant for failure of such obligations. The proposed
rule change merely removes a rule that is not essential to the function
and continuity of the Exchange and its Market-Maker program.
Proposed Rule 11.6
    The proposed rule change moves current Rule 8.86 to proposed Rule
11.6(a) and removes the $100,000 net liquidating equity requirement as
it is no longer applicable to current DPM structures. This is
consistent with corresponding C2 Rule 8.8. Current Rule 8.86 was
enacted (almost 20 years ago) to ensure the financial stability of
newly formed, small DPM firms who were not previously net capital
computing firms, as a number of small firms were not net capital
computing based on an exemption (i.e., the ``(b)(1) exemption'') in
Exchange Act Rule 15c3-1. However, due to changes in the market and, as
stated above, the large infrastructure

now needed to trade as a DPM, in which the Exchange determines if
appropriately situated to act as a DPM pursuant to proposed Rule 3.53
(current Rule 8.83), the number of firms who can be a DPM has decreased
significantly and the size of DPM firms, including their adequacy of
capital and operational capacity, has increased significantly. As a
result, current DPMs have capital well beyond the $100,000 net
liquidating requirement, which eliminates the need for the Exchange to
surveil for compliance with this requirement and will enable the
Exchange to better allocate its surveillance resources, focusing on
enhanced surveillance in connection with Exchange rules permitting,
requiring, or prohibiting liquidation and rules requiring liquidation
in a reasonable and orderly fashion.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\30\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \31\ 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) \32\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78f(b).
    \31\ 15 U.S.C. 78f(b)(5).
    \32\ Id.
---------------------------------------------------------------------------

    In particular, the proposed rule changes are generally intended to
add or align certain system functionality currently offered by the
Exchange and the Cboe Affiliated Exchanges (specifically, the
Affiliated Options Exchanges) in order to provide a consistent
technology offering for the Cboe Affiliated Exchanges. A consistent
technology offering, in turn, will simplify the technology
implementation, changes and maintenance by Exchange participants that
are also participants on the Affiliated Options Exchanges. The proposed
rule change does not propose to implement new or unique functionality
that has not been previously filed with the Commission or is not
available on the Affiliated Options Exchanges. The Exchange notes that
many of the proposed changes are generally based on rules of the
Affiliated Options Exchanges and differ only to the extent necessary to
conform to the Exchange's current rules, retain intended differences
unique to Cboe Options market-model, functionality and/or rule text and
not applicable to the Affiliated Options Exchanges. Where
applicable,\33\ the Exchange has substantively mirrored the Affiliated
Options Exchange rules or certain Market-Maker requirement language
within the Affiliated Options Exchange rules, because consistent rules
will simplify the regulatory requirements and increase the
understanding of the Exchange's operations for TPHs that are also
participants on the Cboe Affiliated Options Exchanges. The Exchange
notes that the proposed changes to make its rules consistent with the
Affiliated Options Exchange's rule do not impose new or novel
obligations for Market-Makers or does not differ from the Exchange's
current authority over Market-Makers; the proposed rules based on the
Affiliated Options Exchanges' rules are substantially similar to the
current rules. The proposed rule change would provide greater
harmonization between the rules of the Cboe Affiliated Exchanges,
resulting in greater uniformity, bolstered collective understanding of
the Exchange's rules and the Affiliated Options Exchanges for
participants, and less burdensome and more efficient regulatory
compliance. As such, the proposed rule change would foster cooperation
and coordination with persons engaged in facilitating transactions in
securities and would remove impediments to and perfect the mechanism of
a free and open market and a national market system.
---------------------------------------------------------------------------

    \33\ Proposed Rules 3.52, 5.50, 5.51, 5.52, 5.53, 5.56, 7.6, and
11.6.
---------------------------------------------------------------------------

    The proposed change to harmonize the Exchange's rules and processes
with the Affiliate Options Exchanges by allowing a Market-Maker to
select class appointments that apply to classes during all trading
sessions, thus applying Market-Maker obligations across all trading
sessions, will remove impediments to and perfect the mechanism of a
free and open market and a national market system by harmonizing the
application of appointments with that of the Affiliated Options
Exchange rules. The application class appointments to all trading
sessions will not have an impact of the protection of investors or
cause any additional burden to Market-Maker's because a Market-Maker's
continuous obligations will continue to apply only when quoting in
their appointed classes, therefore, the proposed change will have
negligible, if any, impact on a Market-Maker's continuous quoting
obligations as they may continue to choose when to actively quote and
have their obligations to their appointed classes apply.
    The proposed changes to the appointment cost provisions (both in
connection with Market-Makers, generally, and DPMs) will remove
impediments to and perfect the mechanism of a free and open market and
national market system because it will provide rules for investor that
accurately reflect the structure of the Exchange's fees schedule upon
migration.\34\ Furthermore, the Exchange believes that the proposed
change will serve to incentivize more market-making across classes as
Market-Makers will no longer be limited to a 1.0 appointment cost or
having to acquire additional Trading Permits to select appointments in
more classes, thereby benefitting all market participants.
---------------------------------------------------------------------------

    \34\ See supra note 23.
---------------------------------------------------------------------------

    The proposed change to remove the condition that a requisite number
of Market-Makers where the Exchange determines to designate a class
without a DPM or LMM removes impediments to and perfects the mechanism
of a free and open market and national market system and, in general,
protects investors, because it is consistent with the rules of EDGX
Options (previously filed with the Commission) which also has a DPM
program and lists many of the same classes. The Exchange believes that
the current condition to this determination is no longer necessary
given that all classes now trade on the System (i.e. Hybrid) and its
Market-Maker program has grown to adequately cover the classes that
necessitate market-maker liquidity. In addition to this, the rules
allow for the Exchange to appropriately address the case where further
market-making in a class might be needed. Therefore, the Exchange
believes that the proposed change will not have any significant impact
on the trading of classes and functions of the Exchange.
    The Exchange also believes that by making Market-Maker obligations
consistent, to the extent possible while

maintaining Exchange specific rule text and obligations, with those of
the Affiliated Options Exchanges the proposed rule change fosters
cooperation and coordination with persons engaged in facilitating
transactions in securities, as well as removes impediments to and
perfects the mechanism of a free and open market and national market
system. The Exchange notes that the proposed changes to the Market-
Maker obligation provisions are substantially similar to the current
obligations, therefore will have de minimus impact on market
participants. The proposed changes do not alter the authority and/or
discretion of the Exchange in connection with Market-Makers,
significantly alter the obligations of Market-Makers, nor impose any
significant additional burden. Instead, the Exchange believes the
changes will result in greater uniformity for Market-Maker obligations
across the Exchange and its affiliates, thereby bolstering
participants' collective understanding of Market-Maker obligations
across the affiliated exchanges and resulting in less burdensome
regulatory compliance.
    In particular, the Exchange believes the proposed rule change to
amend certain provisions in connection with a Market Makers' quoting
obligations will remove impediments to and perfect the mechanism of a
free and open market and a national market system. By conforming the
quoting obligations, to the extent possible to maintain differences
unique to the Exchange, to that of the Affiliated Options Exchange
rules, the proposed change will remove impediments to and perfect the
mechanism of a free and open market and national market system. As
stated, the proposed rules in connection with Market-Marker obligations
largely make non-substantive changes to update and simplify the rules
by reorganizing and consolidating provisions, simplifying language,
updating language to plain English and removing redundancies. For
example, proposed Rule 5.51 makes only non-substantive changes to the
rule governing a Market-Maker's general obligations, most of which
remove redundant provisions that are already covered under the umbrella
of a Market-Maker's obligation to engage in dealing to maintain fair
and orderly markets. The proposed substantive changes that harmonize
Market-Maker obligations with those of the Affiliated Options Exchange
include adding exclusions to a Market-Maker's the firm quote
requirement, removing the quote width requirement, adding certain
series excluded from continuous quoting obligations, conforming the
series expiration of 9 months to the 270-day period, adding provision
governing good standing for Market-Makers, and removing the requirement
that DPMs maintain segregated accounts for DPM-related transactions
(addressed in the paragraph below). These proposed changes are
reasonable and do not affect investor protection because the proposed
changes do not present any novel or unique issues, as they have been
previously filed with the Commission. Market-Makers continue to comply
with the firm quote requirement under current Rule 8.51 and Rule 602 of
Regulation NMS and the proposed exceptions to a Market-Maker's firm
quote are consistent with the rules of the Affiliated Options Exchanges
and remove impediments to and perfect the mechanism of a free and open
market and national market system by providing exceptions to firm
quotes with malfunctions and unusual market conditions arise. The
proposed change from the 9 month expiration time to the 270 expiration
time is an industry practice currently in place, as Market-Makers
generally already monitor expirations by a defined count of 270 days,
as opposed to a nine month count in which the number of days
continuously varies. In addition, Market-Makers on the Affiliated
Options Exchanges quote in many of the same classes available on the
Exchange but do not have a bid/ask requirement when quoting on those
exchanges. The Exchange notes that removing this requirement will not
impact market participants because Market-Maker's already submit two-
sided quotes consistently at a much tighter spread than the Exchange-
determined quote widths and Market-Makers are obliged to continue to
engage in dealings that maintain a fair and orderly market. The
proposed rule providing for good standing requirements for Market-
Makers will serve to protect investors because it provides under a
single rule the requirements, which are already in place pursuant to
the rules and regulations, that the Exchange will refer to in order to
determine if a Market-Maker is fit to continue making markets on the
Exchange. This rule mirrors that of the Affiliated Options Exchanges'
corresponding rules.
    The Exchange believes that the proposed updates to certain
provisions of the DPM requirements, overall, serve to remove
impediments to and perfect the mechanism of a free and open national
market system. The proposed change to remove the requirement that each
DPM has at least two Designees who are nominees of the DPM removes an
unnecessary compliance burden for DPMs for which the cost of
maintaining two designees far outweighs the benefit, if any, of the
rule. Further, like all member organizations a DPM will continue to be
required to maintain at least one nominee and may choose to maintain
multiple nominees. The proposed removal of the net DPM liquidation
requirement and the requirement that a firm segregate accounts between
DPM-related transactions and that of its general Market-Maker account
or accounts related to other trading activities or capacities
requirement will also lift a compliance burden for DPMs as these
provisions are no longer necessary to ensure financial integrity or to
mitigate losses given the current financial status and infrastructure
of DPMs. As stated, the Exchange determines if a DPM has the adequacy
of capital and operational capacity necessary to perform and take on
the potential risks as a DPM.
    The Exchange believes that removing the designation of two Market-
Makers in FLEX classes and instead automatically appointing FLEX class
appointments when a Market-Maker (approved for FLEX) selects an
appointment in the same Non-FLEX class will not alter the obligations
of a FLEX Market-Maker, as they will continue to be required to
maintain an appointment in a Non-FLEX class, which will then
automatically appoint them the FLEX class. The proposed rule change
removes impediments to and perfects the mechanism of a free and open
market and national market system by simplifying the FLEX appointment
process through the automatic FLEX class appointments in connection
with a Market-Maker's selection of class appointments for its general
Market-Making requirements, and continuing to ensure that each FLEX
class will have appointed Market-Makers to provide liquidity in that
class, in addition to all other market participants.
    The proposed change to allow the Exchange the discretion to
terminate an On-Floor LMM (as opposed to automatic termination) when it
decides to terminate the Off-Floor DPM and/or Off-Floor LMM in that
class will serve to remove impediments to and perfect the mechanism of
a free and open market and national market system by allowing an On-
Floor LMM that may be high performing to continue its appointment in
that class instead of disrupting the On-Floor LMM's appointment and
obligations by automatic termination.
    The proposed removal of the rule relating to the Exchange's
evaluation of a trading crowd performance removes a

rule that is no longer in practice by the Exchange as the Exchange's
evaluation, determinations, and ability to sanction Market-Makers and
Market-Maker types are currently implemented under various other
Market-Maker related rules.
    The Exchange believes the proposed reorganization of Rules to move
all Rules that relate to Market-Makers and Market-Maker types,
including: (1) Related to registration (as well as approvals,
eligibility, termination, etc.) and general Market-Maker functions; (2)
Market-Maker appointments; (3) Market-Maker obligations and
entitlements; and 4) other rules in connection with Market-Makers under
the same chapters, will also benefit investors and remove impediments
to and perfect the mechanism of a free and open market and a national
market system. The majority of the changes in the proposed rule change
move rules from the current Rulebook to the shell Rulebook with no
substantive changes. Indeed, many of the proposed non-substantive
changes removes impediments to and perfects the mechanism of a free and
open market and national market system by providing up-to-date rules
that accurately reflect the manner in which the Exchange, its Market-
Maker program, and its market participants currently function by
removing provisions that are not invoked by the Exchange or currently
in practice by its participants and are not necessary to, nor impact,
the Exchange's Market-Maker program, which protects investors by
providing accurate and up-to-date rules. The proposed non-substantive
changes to the Rules also provide additional detail in the rule
regarding current functionality, make the Rules more plain English,
update cross-references and paragraph lettering and numbering, delete
duplicative or unnecessary language and language that is no longer
applicable to the current functions of the Exchange, simplify and
streamline rule language, and update terms to provide consistency
throughout the proposed Market-Maker rules, all of which benefits
investors. The Exchange believes these changes and transparency the
proposed changes provide will protect investors, as they provide more
clarity and reduce complexity within the Rules, making the rule easier
to understand and comply with.

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 they will apply to all potential Market-Makers and
Market-Maker types (i.e. applicants), and all Market-Makers and Market-
Maker types in the same manner. The Exchange reiterates that a majority
of the proposed rule change is intended to harmonize the Exchange rules
with that of the Affiliated Options Exchanges' rules. Thus, the
Exchange believes this proposed rule change will reduce the burden on
Exchange participants by providing consistent rules among the
affiliated exchanges upon migration. Such proposed rule changes in this
filing conform to the approved rules of the Affiliated Options
Exchanges, which have already been filed with the Commission. In
addition to this, the Exchange does not believes that the other
proposed changes will impose any burden on intramarket competition
because such changes serve to update and remove provisions or
requirements that are no longer necessary in the function and
maintenance of the Exchange and its Market-Maker program, or are
already ensured and/or implemented via other rules of the Exchange. As
such, these proposed changes will not impose any burden on intramarket
competition, but rather, will serve to relieve certain compliance
burdens for Market-Makers or surveillance burdens for the Exchange,
which will make available more market-making resources to allocate
toward classes that may need and consume more liquidity, or more
enhanced surveillance resources to monitor for Market-Maker compliance,
including general obligations, quoting obligations, and account
maintenance.
    The Exchange does not believe the proposed rule change will impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act, because majority
of the proposed change to the Market-Maker rules (i.e., registration,
appointments, good standing, general obligations, and quoting
obligations) is based on the rules of the Affiliated Options Exchange,
previously filed with the Commission. The Exchange also notes that to
the degree that other exchanges have varying obligations for Market-
Makers, market participants on other exchanges are welcome to become
Market-Makers on the Exchange if they determine that this proposed rule
change has made market making on Cboe Options more attractive or
favorable. The proposed changes to the rules that reflect functionality
that will be in place come October 7, 2019, will not impose any burden
on intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act but rather provide clear,
accurate rules for market participants surrounding the completion of
migration.
    The proposed non-substantive changes are not intended to have any
impact on competition, as they do not impact trading on Cboe Options.

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

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

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

    Because the foregoing rule 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, provided that the self-regulatory organization
has given the Commission written notice of its intent to file 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,\35\ the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \36\ and Rule 19b-4(f)(6)
thereunder.\37\
---------------------------------------------------------------------------

    \35\ The Exchange has fulfilled this requirement.
    \36\ 15 U.S.C. 78s(b)(3)(A).
    \37\ 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-2019-059 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-2019-059. 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-2019-059 and should be submitted on
or before October 16, 2019.
---------------------------------------------------------------------------

    \38\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-20698 Filed 9-24-19; 8:45 am]
 BILLING CODE 8011-01-P


SF 83 SUPPORTING STATEMENT ENVIRONMENTAL PROTECTION AGENCY NSPS SUBPARTS KKK AND LLL STANDARDS OF PERFORMANCE FOR ONSHORE NATURAL GAS PROCESSING PLANTS 1. Identification of the Information Collection 1( a) Title of the Information Collection ICR for NSPS Subpart KKK Standards of Performance for Equipment Leaks of VOC from Onshore Natural Gas Processing Plants, and NSPS Subpart LLL Standards of Performance for Onshore Natural Gas Processing: SO2 Emissions.

1( b) Short Characterization/ Abstract Subpart KKK The New Source Performance Standards ( NSPS) for Equipment Leaks of VOC from Onshore Natural Gas Processing Plants were proposed on January 20, 1984 and promulgated on June 24, 1985. These standards apply to the following facilities in natural gas processing plants:

a compressor in VOC service or in wet gas service; the group of all equipment except compressors within a process unit, which commenced construction, modification or reconstruction after the date of proposal. A compressor station, dehydration unit, underground storage tank, field gas gathering system, or liquefied natural gas unit is regulated by this subpart if it is located at an onshore natural gas processing unit. This information is being collected to assure compliance with 40 CFR Part 60, Subpart KKK. This type of collection will be recordkeeping and periodic reports. EPA Regional offices or delegated states will be doing the collecting. Recordkeeping requirements follows a general leak detection program regimen. Applicable pumps, pressure relief valves, sampling connections,

and compressors will be inspected and information regarding any repairs made will be recorded.

In general, gas leaks are monitored for monthly and a visual inspection for liquid leaks is performed weekly. EPA and states will use the data to determine compliance with the New Source Performance Standards. These data will be sent to delegated states or EPA regional offices and entered into the AIRS computer database. The information collection for NSPS Subpart KKK will involve 558 respondents at $ 6,169,322.

Owners or operators of the affected facilities described must make one time only notifications. Owners or operators are also required to maintain records of the occurrence and duration of any startup, shutdown, or malfunction in the operation of an affected facility, or any period during which the monitoring system is inoperative. Monitoring requirements specific to NSPS Subpart KKK provide information on the efficacy of the leak detection and repair program implemented by the facility. Semiannual reports of excess emissions are required. These notifications, reports, and records are essential in determining compliance; and are required, in general, of all sources subject to NSPS. Any owner or operator subject to the provisions of this part shall maintain a file of these measurements, and retain the file for at least two years following the date of such measurements.

Based on information received from the DOE, the Oil and Gas Journal's Penwell Surveys and trade associations approximately 558 sources are currently subject to NSPS KKK, and it is estimated that no additional sources will become subject to the standard in the next three years. It is further assumed that there is an average of one affected facility per plant ( respondent). The cost of the ICR for NSPS KKK will be 6,169,322 dollars. All reports are sent to the delegated State or Local authority. In the event that there is no such delegated authority, the reports are sent directly to the EPA Regional Office.

Subpart LLL The New Source Performance Standards ( NSPS) for Onshore Natural Gas Processing:

SO2 Emissions were proposed on January 20, 1984 and promulgated on October 1, 1985. These standards apply to the following facilities in natural gas processing plants: each sweetening unit,

and each sweetening unit followed by a sulfur recovery unit, which commenced construction,

modification or reconstruction after the date of proposal. This information is being collected to assure compliance with 40 CFR Part 60, Subpart LLL.

This type of collection will be recordkeeping and periodic reports. EPA Regional offices or delegated states will be doing the collecting. Records must be kept on measurements and calculations used to determine initial and continuous SO2 emission reduction efficiency, and periods of excess emissions. EPA and states will use the data to determine compliance with the New Source Performance Standards. These data will be sent to delegated states or EPA regional offices and entered into the AIRS computer database. The information collection for NSPS Subpart LLL will involve 62 respondents at $ 95,815. The information collection for both subparts will involve 558 respondents at a total of $ 6,265,137.

Owners or operators of the affected facilities described must make one time only notifications. Owners or operators are also required to maintain records of the occurrence and duration of any startup, shutdown, or malfunction in the operation of an affected facility, or any period during which the monitoring system is inoperative. Facilities that are subject to Subpart LLL are divided into three categories. Facilities that have less than two long tons per day ( LT/ D) of H2S in acid gas expressed as sulfur shall keep an analysis at the plant showing the facility design capacity is less than two LT/ D of H2S and this shall be kept for the life of the facility.

Facilities that have two LT/ D or greater or less than 150 LT/ D of H2S expressed as sulfur shall reduce SO2 emissions by recovering sulfur and by achieving an SO2 reduction efficiency based on the sulfur feed rate in Tables 1 and 2 of the standards. Facilities that have 150 LT/ D or greater of H2S expressed as sulfur shall use continuous emissions monitoring ( CEM) to control SO2 emissions. Semiannual reports of excess emissions are required. These notifications, reports, and records are essential in determining compliance; and are required, in general, of all sources subject to NSPS. Any owner or operator subject to the provisions of this part shall maintain a file of these measurements, and retain the file for at least two years following the date of such measurements.

Based on information received from the DOE, the Oil and Gas Journal's Penwell Surveys and trade associations approximately 62 sources are currently subject to NSPS LLL, and it is estimated that no additional sources will become subject to the standard in the next three years. It is further assumed that there is an average of one affected facilities per plant ( respondent). The cost of the ICR for NSPS Subpart LLL will be 95,815 dollars. All reports are sent to the delegated State or Local authority. In the event that there is no such delegated authority, the reports are sent directly to the EPA Regional Office.

2. Need for and Use of the Collection 2( a) Need/ Authority for the Collection The EPA is charged under Section 111 of the Clean Air Act, as amended, to establish standards of performance for new stationary sources that reflect: . . . application of the best technological system of continuous emissions reduction which ( taking into consideration the cost of achieving such emissions reduction, or any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated [ Section 111( a)( l)].

The Agency refers to this charge as selecting the best demonstrated technology ( BDT). Section 111 also requires that the Administrator review and, if appropriate,

revise such standards every four years.

In addition, Section 114( a) States that:

. . . the Administrator may require any owner or operator subject to any requirement of this Act to ( A) establish and maintain such records, ( B) make such reports, ( C)

install, use, and maintain such monitoring equipment or methods ( in accordance with such methods at such locations, at such intervals, and in such manner as the Administrator shall prescribe), and ( D) sample such emissions, ( E) keep records on control equipment parameters, production variables or other indirect data when direct monitoring of emissions is impractical, ( F) submit compliance certifications, and ( G)

provide such other information as he may reasonably require.

In the Administrator's judgment, VOC and SO2 emissions from onshore natural gas processing plants cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. Therefore, NSPS were promulgated for this source category at 40 CFR Part 60 Subpart KKK and 40 CFR Part 60 Subpart LLL .

2( b) PRACTICAL UTILITY/ USERS OF THE DATA The control of emissions of VOC and SO2 from onshore natural gas processing plants requires not only the installation of properly designed equipment, but also the operation and maintenance of that equipment. Emissions of VOC and SO2 from onshore natural gas processing plants are the result of plant operation ( especially compressor units and sweetening units). These standards rely on the reduction of VOC and SO2 emissions by implementing a leak detection program and controlling the sulfur feed rate of the gas stream. The required notifications are used to inform the Agency or delegated authority when a source becomes subject to the standard.

The reviewing authority may then inspect the source to check if the leaks are being detected and repaired, the proper sulfur feed rate is maintained, and the standard is being met. Performance test reports are needed as these are the Agency's record of a source's initial capability to comply with the emission standard, and serve as a record of the operating conditions under which compliance was achieved. For VOC emissions control the plant must show they have the capability and proper technique to implement an effective leak detection program and for SO2 emissions control the plant must show that they can properly test for sulfur content in the gas stream to maintain the proper sulfur feed rate. The semiannual reports are used for problem identification, as a check on source operation and maintenance, and for compliance determinations. The information generated by the monitoring, recordkeeping and reporting requirements described in this ICR is used by the Agency to ensure that facilities affected by the NSPS continue to operate the control equipment and achieve compliance with the regulation.

Adequate monitoring, recordkeeping, and reporting is necessary to ensure compliance with these standards, as required by the Clean Air Act. The information collected from recordkeeping and reporting requirements is also used for targeting inspections, and is of sufficient quality to be used as evidence in court. 3. Nonduplication, Consultations, and Other Collection Criteria 3( a) Nonduplication The recordkeeping and reporting requested is required under 40 CFR Part 60 Subpart KKK and Subpart LLL. If the standard has not been delegated the information is sent to the appropriate EPA Regional Office. Otherwise, the information is sent directly to the delegated State or Local Agency. If a State or Local Agency has adopted their own similar regulation to implement the Federal Regulation, a copy of the report submitted to the State or Local agency can be sent to the Administrator in lieu of the report required by the Federal Standard. Therefore,

no duplication exists.

3( b) Public Notice Required Prior to ICR Submission to OMB An announcement of a public comment period for the renewal of this ICR was published in the Federal Register on August 16, 1999.

3( c) Consultations No comments were received on the burden published in the Federal Register.

3( d) Effects of Less Frequent Collection Less frequent information collection would decrease the margin of assurance that facilities are continuing to meet the required standards. Requirements for information gathering and recordkeeping are useful techniques to ensure that good operation and maintenance practices are applied and emission limitations are met. If the information required by these standards was collected less frequently, the likelihood of detecting poor operation and maintenance of control equipment and noncompliance would decrease. 3( e) General Guidelines None of the reporting or recordkeeping requirements contained in 40 CFR Part 60 Subpart KKK or Subpart LLL, or otherwise pertinent to this request violate any of the regulations established by OMB in 5 CFR 1320.6.

3( f) Confidentiality The required information consists of emissions data and other information that have been determined not to be private. However, any information submitted to the Agency for which a claim of confidentiality is made will be safeguarded according to the Agency policies set forth in Title 40, Chapter 1, Part 2, Subpart B  Confidentiality of Business Information ( see 40 CFR 2;

41 FR 36902, September 1, 1976; amended by 43 FR 40000, September 8, 1978; 43 FR 42251,

September 20, 1978; 44 FR 17674, March 23, 1979).

3( g) Sensitive Questions None of the reporting or recordkeeping requirements contained in 40 CFR Part 60 Subpart KKK or Subpart LLL, or otherwise pertinent to this request contain sensitive questions.

4. The Respondents and the Information Requested 4( a) Respondents/ SIC Codes The respondents of the recordkeeping and reporting requirements are onshore natural gas processing plants that engage in the extraction of natural gas liquids from field gas or fractionation of mixed natural gas liquids to natural gas products and in the case of Subpart LLL which require sulfur removal, that commenced construction, modification, or reconstruction after January 20, 1984. They are listed under SIC Codes 1311 and 1321. The government is in the process of transitioning to the new North American Industrial Classification System ( NAICS).

The NAICS codes for this industry are 211111 and 211112.

4( b) INFORMATION REQUESTED ( I) Data Items All data in this ICR that is recorded and/ or reported is required by 40 CFR Part 60 Subpart KKK Standards of Performance for Equipment Leaks of VOC from Onshore Natural Gas Plants and 40 CFR Part 60 Subpart LLL Standards of performance for Onshore Natural Gas Processing: SO2 Emissions.

A source must make the following reports Notification Reports Construction/ reconstruction 60.7( a)( 1)

Anticipated startup 60.7( a)( 2)

Actual startup 60.7( a)( 3)

Initial performance test 60.8( d)

Demonstration of continuous monitoring system 60.7( a)( 5)

Physical or operational change 60.7( a)( 4)

Reports Initial performance test results 60.8 ( a)

Semiannual report of pressure relief devices for which leaks are detected and not repaired. 60.636( a), 60.487( b)

Excess emission reports 60.7( c), 60.647( b) A source must keep the following records.

Recordkeeping Startups, shutdowns, malfunctions, periods where the continuous monitoring system is inoperative ( 60.7( b)

Continuous monitoring system and performance test ( 60.7( d), 60.13 Record pressure relief device leaks 60.635( a) and ( b)

Records are required to be retained for two of Years.

ii. Respondent Activities Respondent Activities Read instructions.

Install, calibrate, maintain, and operate CMS for opacity, or for pressure drop and liquid supply pressure for wet scrubber.

Perform initial performance test and repeat performance tests if necessary.

Write the notifications and reports listed above.

Enter information required to be recorded above.

Submit the required reports developing, acquiring, installing, and utilizing technology and systems for the purpose of collecting, validating, and verifying information.

Develop, acquire, install, and utilize technology and systems for the purpose of processing and maintaining information.

Develop, acquire, install, and utilize technology and systems for the purpose of disclosing and providing information.

Adjust the existing ways to comply with any previously applicable instructions and requirements.

Train personnel to be able to respond to a collection of information. Respondent Activities Transmit, or otherwise disclose the information.

5. The Information Collected  Agency Activities, Collection Methodology, and Information Management 5( a) Agency Activities EPA conducts the following activities in connection with the acquisition, analysis, storage,

and distribution of the information required under 40 CFR Subpart KKK and LLL:

Agency Activities Observe initial performance tests and repeat performance tests if necessary.

Review notifications and reports, including performance test reports, and excess emissions reports, required to be submitted by industry.

5( b) Collection Methodology and Management Following notification of startup for facilities subject to Subpart LLL, the reviewing authority might inspect the source to check if the pollution control devices are properly installed and operated. Performance test reports are used by the Agency to discern a source's initial capability to comply with the emission standard, and note the operating conditions under which compliance was achieved ( initial SO2 reduction efficiency is determined by considering sulfur feed rate and sulfur content of the natural gas). For facilities subject to either subparts KKK or LLL data obtained during periodic visits by Agency personnel from records maintained by the respondents are tabulated and published for internal Agency use in compliance and enforcement programs. The semiannual reports are used fro problem identification, as a check on source operation and maintenance, and for compliance determinations.

Information contained in the reports is entered into AIRS which is operated and maintained by EPA's Office of Air Quality Planning and Standards. AIRS is EPA's database for the collection, maintenance, and retrieval of compliance and annual emission inventory data for over 100,000 industrial and government owned facilities. EPA uses AIRS for tracking air pollution compliance and enforcement by Local and State regulatory agencies, and EPA Regional Offices and Headquarters. EPA and its delegated Authorities can edit, store, retrieve and analyze the data.

The records required by this regulation must be retained by the owner or operator for two years.

5( c) Small Entity Flexibility The recordkeeping and reporting requirements were selected within the context of this specific subpart and the specific process equipment and pollutants. The impact on small businesses was accounted for in regulation development. The requirements reflect the burden on small businesses. Even though, the recordkeeping and reporting requirements are the same for small and larger businesses. To the extent that larger businesses can use economies of scale to reduce their burden, the overall burden will be reduced. The Agency considers these requirements the minimum needed to ensure compliance and, therefore, cannot reduce them further for small businesses.

For Subpart LLL facilities that have a design capacity of less than two long tons per day of hydrogen sulfide in the acid gas are exempt from the requirements of this subpart except that they have to keep, for the life of the facility, an analysis demonstrating that the their design capacity is less than two long tons per day of hydrogen sulfide expressed as sulfur.

5( d) Collection Schedule The specific frequency for each information collection activity within this request is shown on Tables 2A and 2B.

6. Estimating the Burden and Cost of the Collection Table 2 documents the computation of individual burdens for each of the recordkeeping and reporting requirements applicable to the industry. The individual burdens are expressed under standardized headings believed to be consistent with the concept of burden under the Paperwork Reduction Act. Where appropriate, specific tasks and major assumptions have been identified. Responses to this information collection are mandatory ( 40 CFR Parts 60.1, 60.630 and 60.640) The Agency may not conduct or sponsor, and a person is not required to respond to,

a collection of information unless it displays a currently valid OMB control number.

6( a) Estimating Respondent Burden The average annual burden to industry over the next three years from these recordkeeping and reporting requirements is estimated at 114,036 person hours. These hours are based on Agency studies and background documents from the development of the standards or test methods, Agency knowledge and experience with the NSPS program, the previously approved ICR, and any comments received. 6( b) Estimating Respondent Costs ( i) Estimating Labor Costs This ICR uses labor rates of $ 54.94. These rates are from the United States Department of Commerce Bureau of Labor Statistics, March 1999, Table 10: Employment Costs for Private Industry by Occupational and Industry Group. The rates are from column 1: Total compensation.

The wage rates have been loaded by adding 110% overhead. Only the technical rate is used for this older NSPS standard. This is because this standard is less sophisticated than the newer standards and most of its requirements are initial only.

( ii) Estimating Capital and Operations and Maintenance Costs The type of industry costs associated with the information collection activity in the standards are labor and CEMs. The capital start up costs are one time costs when a facility becomes subject to the standard. There are no capital start up costs for this regulation. This is based on a projection of no new sources per year. The annual operations and maintenance costs are 74,100 dollars. This is based on one existing source multiplied by 74,100 dollars for upkeep of the monitoring device. The total respondent costs have been calculated on the addition of the capital start up costs and the annual operations and maintenance costs. The average annual burden for capital and operations and maintenance costs to industry over the next three years of the ICR is estimated to be 74,100 dollars.

( iii) Capital/ Start up vs. Operating and Maintenance ( O& M) Costs The standard for NSPS Subpart KKK does not use continuous monitoring but instead has a leak detection and repair program. The standard for NSPS Subpart LLL may use continuous monitoring of SO2 emissions. The following information applies to Subpart LLL. Monitoring device Start up cost ($) Annual O& M costs ($)

Continuous monitor for Zero dollars for 74,100 dollars for 1 unit control device: 1 unit, or NA SO2 emissions because no new sources 6( c) Estimating Agency Burden and Cost The only Federal costs are user costs associated with analysis of the reported information.

Publication and distribution of the information are part of the AIRS program. Examination of records to be maintained by the respondents will occur as part of the periodic inspection of sources, which is part of EPA's overall compliance and enforcement program.

The average annual Federal Government cost during the 3 years of the ICR is estimated to be $ 57,901. This cost is based on an average wage of a GS 10 step 1 employee rate ($ 16.52 hr +

110% overhead = $ 34.69) and travel associated with compliance activities. Details upon which this estimate is based appear in Table 1: Agency Burden.

6( d) Estimating the Respondent Universe and Total Burden and Costs The number of existing sources subject to 40 CFR 60.630 Subpart KKK and 40 CFR 60.640 Subpart LLL is 558. The number of new sources subject to 40 CFR 60.630 Subpart KKK and 40 CFR 60.640 Subpart LLL is zero. The number of total respondents is 558. This is the number of existing sources plus the number of sources anticipated in one year. The total annual responses is 1,116. This number is calculated from the number of new sources multiplied by the number of initial reports, plus the number of existing sources multiplied by the semiannual reports. The total annual labor costs are 114,036 and total annual capital and O& M costs to the regulated entity are 74,100 dollars. Details upon which this estimate is based appear in Table 2:

Industry Burden. 6( e) Bottom Line Burden Hours And Cost Tables See tables 1A, 1B, 2A, and 2B.

6( f) Reasons for Change in Burden The decrease in burden from the most recently approved ICR is due to an decrease in the number of sources.

. 6( g) Burden Statement Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations are listed in 40 CFR Part 9 and 48 CFR Chapter 15.

Send comments on the Agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden, including through the use of automated collection techniques to the Director, OP Regulatory Information Division, U. S. Environmental Protection Agency ( 2137), 401 M St., S. W., Washington, D. C.

20460; and to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW, Washington, DC 20503, Attention: Desk Officer for EPA. Include the EPA ICR number and OMB control number in any correspondence.

Part B of the Supporting Statement This part is not applicable because no statistical methods were used in collecting this information.