
[Federal Register Volume 79, Number 173 (Monday, September 8, 2014)]
[Notices]
[Pages 53230-53234]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21250]



[[Page 53230]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72957; File No. SR-CBOE-2014-015]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of a Proposed Rule Change Relating to 
Complex Orders

September 2, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on August 19, 2014, Chicago Board Options Exchange, Incorporated 
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its rules related to complex orders. 
The text of the proposed rule change is available on the Exchange's Web 
site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at 
the Exchange's Office of the Secretary, and at the Commission's Public 
Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend its rules related to complex orders 
to: (i) Simplify the definitions of the complex order types that may be 
made available on a class-by-class basis and remove references to 
certain specific complex order types that will no longer be defined; 
(ii) with respect to complex orders in open outcry, set forth 
applicable ratios and order ticket requirements for an order to be 
eligible for complex order priority within applicable priority rules; 
and (iii) with respect to complex orders in open outcry, make explicit 
the priority applicable when there are other complex orders or quotes 
represented at the same net price, whether such other orders or quotes 
are in the complex order book (``COB'') or being represented in open 
outcry.
    First, with respect to definitions, the Exchange proposes to amend 
Rule 6.53 to remove the definitions of spread order, combination order, 
straddle order and ratio order and replace them with a more general 
definition of a complex order (which includes a stock-option order and 
a security future-option order) to simplify the descriptions of the 
complex order types that may be made available on a class-by-class 
basis. The proposed definition of a ``complex order'' is any order for 
the same account as defined below:
     A ``complex order'' is any order involving the execution 
of two or more different options series in the same underlying security 
occurring at or near the same time within an applicable ratio that may 
be determined by the Exchange and for the purpose of executing a 
particular investment strategy.
     A ``stock-option order'' is proposed to be defined as an 
order to buy or sell a stated number of units of an underlying stock or 
a security convertible into the underlying stock (``convertible 
security'') coupled with either (a) the purchase or sale of options 
contract(s) on the opposite side of the market representing either (i) 
the same number of units of the underlying stock or convertible 
security, or (ii) the number of units of the underlying stock necessary 
to create a delta neutral position, but in no case in a ratio greater 
than an applicable ratio that may be determined by the Exchange (where 
the ratio represents the total number of units of the underlying stock 
or convertible security in the option leg to the total number of units 
of the underlying stock or convertible security in the stock leg) or 
(b) the purchase or sale of an equal number of put and call option 
contracts, each having the same exercise price, expiration date and 
each representing the same number of units of stock as, and on the 
opposite side of the market from, the underlying stock or convertible 
security portion of the order.\3\
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    \3\ Rule 1.1(ii) currently defines a ``stock-option order'' as 
an order to buy or sell a stated number of units of an underlying or 
a related security coupled with either (i) the purchase or sale of 
option contract(s) on the opposite side of the market representing 
either the same number of units of the underlying or related 
security or the number of units of the underlying security necessary 
to create a delta neutral position or (ii) the purchase or sale of 
an equal number of put and call option contracts, each having the 
same exercise price, expiration date and each representing the same 
number of units of stock as, and on the opposite side of the market 
from, the underlying or related security portion of the order. The 
proposed rule change deletes this definition and references the 
proposed definition in Rule 6.53 to eliminate the confusion of 
having two separate definitions. The current definition and proposed 
definition are substantially similar. However, the Exchange believes 
the language in the proposed definition is more consistent with the 
language in other rules, including Rules 6.53C (related to 
electronic handling of complex orders) and 6.80 (related to order 
protection, which relates to the Options Order Protection and 
Locked/Crossed Markets Plan, also commonly referred to as the 
Options Distributive Linkage Plan).
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     The purposed rule change moves the definition of a 
``security future-option order'' from Rule 1.1(zz) to Rule 6.53 so that 
all definitions of the various types of complex orders are located in 
the same place within the rules.\4\
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    \4\ Rule 1.1(zz) defines a ``security future-option order,'' 
which is deemed a type of Inter-regulatory Spread Order as that term 
is defined in Rule 1.1(ll), as an order to buy or sell a stated 
number of units of a security future or a related security 
convertible into a security future (``convertible security future'') 
coupled with either (i) the purchase or sale of option contract(s) 
on the opposite side of the market representing either the same 
number of the underlying for the security future or convertible 
security future or the number of units of the underlying for the 
security future or convertible security future necessary to create a 
delta neutral position or (ii) the purchase or sale of an equal 
number of put and call option contracts, each having the same 
exercise price, expiration date and each representing the same 
number of the underlying for the security future or convertible 
security future, as and on the opposite side of the market from, the 
underlying for the security future or convertible security future 
portion of the order. Rule 1.1(ll) defines an ``Inter-regulatory 
Spread Order'' as an order involving the simultaneous purchase and/
or sale of at least one unit in contracts each of which is subject 
to different regulatory jurisdictions at stated limits, or at a 
stated differential, or at market prices on the floor of the 
Exchange. The proposed rule change deletes the definition in Rule 
1.1(zz) and references the definition in the proposed new location 
in Rule 6.53.

This proposed complex order definition is in part modeled after the 
definition of a complex order (including a stock-option order) already 
contained in Rule 6.53C(a). The Exchange proposes conforming changes to 
Rules 6.9 (including Interpretation and Policy .03), 6.42, 
Interpretation and Policy .01, 6.45(e), 6.45A(b)(ii), 6.45B(b)(ii), 
6.48(b), 6.73(c), 6.74(d)(iii) and 8.51 to harmonize these rules with 
the proposed changes in Rule 6.53 to consistently reference the 
proposed new

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definition of a complex order.\5\ As a result of the proposed changes 
to Rule 6.53, the Exchange proposes to update related cross-references 
in Rules 6.53, 6.53C, Interpretation and Policy .08, 6.74(d)(iii), 
7.12(b)(i)(E), 24.A.5 and 24B.5.\6\ The Exchange notes that the 
``applicable ratios'' referenced above that may be determined by the 
Exchange are or are proposed to be further described in various other 
Exchange Rules (e.g., Rule 6.53C with respect to electronic trading and 
Rules 6.45, 6.45A and 6.45B with respect to open outcry trading 
(proposed changes discussed below)).
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    \5\ The proposed rule change also deletes the paragraph 
lettering from the order type definitions and puts the order types 
in alphabetical order, which the Exchange believes will allow 
investors to more easily locate the order type definitions within 
the rules. Other than proposed changes to the definition of complex 
orders as described above, the proposed rule change makes no 
substantive changes to the order type definitions.
    \6\ In addition, cross-references in Rules 6.45, 6.45A and 6.45B 
to ``[s]tock-option orders and security future-option orders, as 
defined in Rules 1.1(ii)(a) and Rule 1.1(zz)(a), respectively'' are 
proposed to be replaced with the phrase ``[s]tock-option orders and 
security future-option orders that include only one option series 
leg.''
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    Second, with respect to complex orders represented and executed in 
open outcry, the Exchange is proposing to amend Rules 6.45 (pertaining 
to the priority of bids and offers and allocation of trades in non-CBOE 
Hybrid System classes), 6.45A (pertaining to the priority of bids and 
offers and allocation of trades in equity options traded on the CBOE 
Hybrid System) and 6.45B (pertaining to the priority of bids and offers 
and allocation of trades in index and ETF options traded on the CBOE 
Hybrid System).\7\ The proposed changes set forth applicable ratios and 
order ticket requirements for complex orders to be eligible for complex 
order priority when represented and executed in open outcry.\8\ 
Currently, Exchange and/or TPH system limitations may prevent a multi-
part order with more than a certain number of legs from being entered 
on a single order ticket for representation and execution in open 
outcry as a complex order. For example, orders entered via the 
Exchange-sponsored PULSe workstation and Floor Broker Workstation 
(``FBW'') are currently limited to four legs. As a result, complex 
orders with more than the applicable leg limitation that are 
represented in open outcry must be split up and entered on multiple 
order tickets.
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    \7\ Under those rules, a complex order may be executed at a net 
debit or credit price with another TPH without giving priority to 
equivalent bids (offers) in the individual series legs that are 
represented in the trading crowd or in the public customer limit 
order book provided at least one leg of the order betters the 
corresponding bid (offer) in the public customer limit order book by 
at least one minimum trading increment as defined in Rule 6.42 
(i.e., $0.10, $0.05 or $0.01, as applicable) or $0.01, which 
increment is determined by the Exchange on a class-by-class basis. 
Stock-option orders and security future-option orders have priority 
over bids (offers) of the trading crowd but not over bids (offers) 
in the public customer limit order book.
    \8\ To be eligible for electronic processing via the CBOE Hybrid 
System's COB and complex order RFR auction (``COA''), the system 
already requires that a complex order be entered on a single order 
ticket to be electronically processed. Under existing Rule 
6.53C(a)(1) and (2), the Exchange may determine on a class-by-class 
basis the applicable number of legs of a complex order or stock-
option order that is eligible for processing via COB and COA. Under 
the same provisions, the Exchange may determine on a class-by-class 
basis within certain parameters the applicable ratio of a complex 
order or stock-option order that is eligible for processing via COB 
and COA . Currently, the Exchange has limited COB and COA to orders 
of no more than four (4) legs and ratios equal to or greater than 
one-to-three (.333) and less than or equal to three-to-one (3.00) 
(and, for stock-option orders, ratios no greater than eight-to-one 
(8.00)). Under this current structure, orders with more than four 
(4) legs or that do not satisfy the ratio requirements are not 
eligible for electronic processing via COB or COA, but would instead 
be routed for handling in open outcry. The proposed rule change adds 
language to the introductory paragraph of Rule 6.53C(a) to 
explicitly state that the definitions of complex orders contained in 
that rule apply only for purposes of the electronic handling of 
complex orders pursuant to that rule, notwithstanding the proposed 
broader definition of complex order contained in Rule 6.53. Because 
there are two separate definitions of complex orders, the Exchange 
believes this additional language will bring clarity to the rules 
about when the definition of complex orders in Rule 6.53C(a) 
applies, which is in the context of electronic trading.
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    For consistency in processing and in order to enhance the 
Exchange's audit trail, the Exchange proposes to amend Rules 6.45(e), 
6.45A(b)(ii) and 6.45B(b)(ii) to require that, to be eligible for open 
outcry complex order priority, a complex order (as proposed to be 
defined in Rule 6.53 and as discussed above) must be within the 
applicable ratio (discussed below) and must be for either:
     Twelve (12) legs or less (one leg of which may be for an 
underlying security or security future, as applicable) and entered on a 
single order ticket at time of systemization; or
     more than twelve (12) legs (one leg of which may be for an 
underlying security or security future, as applicable) and split across 
multiple order tickets \9\ if the Trading Permit Holder (``TPH'') 
representing the complex order identifies for the Exchange the order 
tickets that are part of the same complex order (in a form and manner 
prescribed by the Exchange). The Exchange will announce by Regulatory 
Circular whether it permits complex orders with more than 12 legs and, 
if so permitted, the form and manner in which the TPH must link the 
multiple order tickets.
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    \9\ The Exchange notes that it is not imposing requirements on 
how a complex order with more than 12 legs should be split across 
multiple tickets, other than the requirement discussed above that 
each ticket identify the other applicable tickets.
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    As discussed above, complex orders represented in open outcry must 
be within an applicable ratio to be eligible for complex order 
priority. The proposed rule change amends Rules 6.45(e), 6.45A(b)(ii) 
and 6.45B(b)(ii) to set forth this applicable ratio. The Exchange 
proposes that the applicable ratio be as follows:
     For a complex order involving two or more different 
options series, any ratio that is equal to or greater than one-to-three 
(.333) and less than or equal to three-to-one (3.00);
     for a stock-option order, the options leg(s) must (i) 
represent the same number of units of the underlying stock or 
convertible security in the stock leg, or (ii) represent the number of 
units of the underlying stock or convertible security necessary to 
create a delta neutral position, but in no case in a ratio greater than 
eight-to-one (8.00), where the ratio represents the total number of 
units of the underlying stock or convertible security in the options 
leg to the total number of units of stock or convertible security in 
the stock leg; and
     for a security futures-option order, the options leg(s) 
must (i) represent the same number of units of the underlying stock in 
the security future leg, or (ii) represent the number of units of the 
underlying stock necessary to create a delta neutral position, but in 
no case in a ratio greater than eight-to-one (8.00), where the ratio 
represents the total number of units of the underlying stock in the 
options leg to the total number of units of stock or convertible 
security in the security-futures leg.

The proposed rule change also adds to the respective rules that, for 
the purpose of applying the aforementioned ratios to complex orders 
comprised of both mini-option contracts and standard option contracts, 
ten (10) mini-option contracts will represent one (1) standard option 
contract.
    The Exchange notes that TPHs may represent in open outcry a complex 
order with any number of legs and in any ratio. However, if a complex 
order does not satisfy the applicable number of legs, order ticket and 
ratio requirements as set forth above, then it will not be eligible for 
the complex order priority set forth in Rules 6.45(e), 6.45A(b)(ii) or 
6.45B(b)(ii).\10\ The

[[Page 53232]]

Exchange also notes that it does not propose to amend how complex 
orders are allocated or the priority afforded to complex orders in open 
outcry; it is merely modifying the requirements for a complex order to 
be eligible for the open outcry complex order priority.
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    \10\ Similarly, a complex order submitted for electronic 
handling must satisfy the ratio and leg requirements set forth in 
Rule 6.53C(a) to receive the complex order priority set forth in 
that rule (which requires at least one leg of the complex order to 
better the corresponding bid (offer) in the leg series by at least 
one minimum increment or $0.01, as applicable.
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    With respect to the order ticket requirements, the Exchange also 
proposes to add to Rule 24.20 (pertaining to SPX Combo Orders) 
Interpretation and Policy .01 to require that an SPX Combo Order \11\ 
for twelve (12) legs or less be entered on a single order ticket at 
time of systemization. An SPX Combo Order that contains more than 
twelve (12) legs may be represented and executed as a single SPX Combo 
Order in accordance with Rule 24.20 if it is split across multiple 
order tickets and the TPH representing the SPX Combo Order identifies 
for the Exchange the order tickets that are part of the same SPX Combo 
Order (in a manner and form prescribed by the Exchange). The Exchange 
will announce by Regulatory Circular whether it permits SPX Combo 
Orders with more than 12 legs and, if so permitted, the form and manner 
in which the TPH must link the multiple order tickets. The Exchanges 
notes that a TPH may submit an order that does not satisfy these ticket 
requirements, but such order may not be represented or executed as a 
single SPX Combo Order in accordance with Rule 24.20. The Exchange also 
notes that Rules 24.20 already specifies an applicable ratio (defined 
by the delta as noted above), and it is proposing no changes to the 
ratio through this rule filing.
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    \11\ An ``SPX Combo Order'' consists of an order to purchase or 
sell one or more SPX option series and the offsetting number of SPX 
combinations defined by the delta, where an ``SPX combination'' is a 
purchase (sale) of an SPX call and sale (purchase) of an SPX put 
having the same expiration date and strike price and a ``delta'' is 
the positive (negative) number of SPX combinations that must be sold 
(bought) to establish a market neutral hedge with one or more SPX 
option series.
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    Third, with respect to complex orders in classes where the COB is 
available, the Exchange also proposes to make explicit the open outcry 
priority applicable when there are other complex orders or quotes 
represented at the same net price, whether such other orders or quotes 
are in the COB or being represented in open outcry. Specifically, the 
Exchange proposes to amend Rules 6.45A and 6.45B \12\ to provide that 
if a complex order would trade in open outcry at the same net debit or 
credit price as another complex order, priority would go first to 
public customer orders in COB (with multiple public customer orders 
ranked based on time), then to complex order bids and offers 
represented in the trading crowd (with multiple bids and offers ranked 
in accordance with the allocation principles applicable to in-crowd 
market participants contained in Rule 6.45A(b)(i)(B) and (D), and Rule 
6.45B(b)(i)(B) and (D), respectively), and then to all other orders and 
quotes in the COB (with multiple bids and offers ranked in accordance 
with the allocation algorithm in effect pursuant to Rule 6.53C).\13\ 
This methodology for prioritizing multiple complex orders for open 
outcry trading is consistent with the methodology applicable for 
prioritizing multiple simple orders for open outcry trading and how the 
Exchange has interpreted and applied complex order priority.\14\ The 
Exchange is merely proposing to reflect this existing interpretation 
within its rule text for added clarity. The Exchange is proposing no 
changes to the existing prioritization methodology.
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    \12\ The Exchange may determine to make the COB available on a 
class-by-class basis for products trading on the CBOE Hybrid System 
platform. Because the COB functionality is not available for non-
CBOE Hybrid System classes, corresponding changes are not necessary 
for Rule 6.45(e).
    \13\ The Exchange notes that, for purposes of this provision, 
Voluntary Professionals and Professionals, as defined in Rules 
1.1(fff) and (ggg), respectively, are treated in the same manner as 
a broker-dealer in classes where the Voluntary Professional and 
Professional designations are available.
    \14\ The Exchange notes that the provisions of Rule 
6.45A(b)(i)(D) and 6.45B(b)(i)(D), respectively, applicable to TPHs 
relying on Section 11(a)(1)(D) of the Securities Exchange Act of 
1934 (the ``Act'') and Rule 11a1-1(T) thereunder (commonly known as 
the ``G'' exemption rule'') would apply to complex orders in the 
same manner as it applies to simple orders. Those rules provisions 
provide that in open outcry, any TPH relying on the G exemption rule 
as an exemption must yield priority to any bid (offer) at the same 
price of public customer orders and broker-dealer orders resting in 
the electronic book, as well as any other bids and offers that have 
priority over such broker-dealer orders under those rules. Under 
these provisions, a TPH relying on the G exemption rule would yield 
priority to simple public customer orders and broker-dealer orders 
resting in the book and complex public customer orders and broker-
dealer orders resting in the COB, as well as any other simple and 
complex bids and offers that have priority over such broker-dealer 
orders under those rules.
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    Finally, the proposed rule change makes other non-substantive, 
technical changes to Rules 6.45A, 6.45B, 6.53, 6.53C, 24A.5 and 24B.5, 
including deleting extra spaces, adding spaces where necessary, 
correction of typos and revising rule headings to be consistent with 
other headings.
    The Exchange anticipates that TPHs may desire to make enhancements 
to their open outcry order management and execution systems to address 
the ticket requirements for a multi-legged order to be eligible for 
priority when represented and executed in open outcry.\15\ Therefore, 
upon approval of this rule change filing, the Exchange will announce 
the implementation date of the proposed rule change in a Regulatory 
Circular to be published no later than 90 days following the approval 
date. The implementation date will be no later than 180 days following 
the approval date.
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    \15\ The Exchange notes that it intends to enhance the Exchange-
sponsored PULSe workstation and FBW to support the entry of complex 
orders with up to twelve (12) legs on a single order ticket. The 
Exchange notes that TPHs will not be required to make changes to 
their own or third-party vendor's order entry and execution systems. 
However, to the extent a TPH wants to represent and execute a multi-
part order in open outcry as a complex order, the order must be 
entered on a single order ticket and cannot exceed twelve (12) legs 
(or, if the Exchange has determined to make it available, an order 
for more than twelve (12) legs that is entered on multiple order 
tickets, which tickets are linked in a form and manner prescribed by 
the Exchange). For example, if a TPH's order entry and execution 
system currently only supports the open outcry processing of a 
complex order with up to four (4) legs, the system would not need to 
be enhanced if the TPH does not intend to represent and execute 
complex orders with more than four (4) legs. If the TPH intends to 
represent and execute complex orders with more than four (4) legs 
(i.e., complex orders with five (5) to twelve (12) legs), then the 
TPH may need to enhance its existing system or utilize another order 
entry and execution system that supports the open outcry processing 
of such orders on a single order ticket.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\16\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \17\ 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) \18\ requirement that the rules of 
an exchange not be designed

[[Page 53233]]

to permit unfair discrimination between customers, issuers, brokers, or 
dealers.
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ Id.
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    In particular, the Exchange believes that (1) removing the 
definitions of spread order, combination order, straddle order and 
ratio order from Rule 6.53 and incorporating the more general 
definition of a complex order (including a stock-option order (and the 
elimination of a redundant definition of stock-option order) and a 
security future-option order) into the Rule and (2) harmonizing rules 
that reference such definitions simplifies and provides more clarity 
and uniformity to the rules, which ultimately benefits investors. The 
Exchange believes the proposed nonsubstantive changes to the rules, 
include the alphabetization of the order type definitions, further 
benefits investors, as they improve the readability of and further 
simplify the rules.
    Additionally, the Exchange believes the proposed rule change to 
limit the eligibility of orders represented and executed in open outcry 
for complex order priority to orders that satisfy the order ticket and 
applicable ratio requirements will enhance the Exchange's audit trail. 
An enhanced audit trail promotes transparency and aids in surveillance, 
thereby protecting investors. In addition, making explicit the open 
outcry priority applicable when there are other complex orders or 
quotes represented at the same net price, whether such other orders or 
quotes are in the COB or being represented in open outcry, provides 
added clarity to the rule text in a manner that is consistent with the 
existing methodology applicable for prioritizing multiple simple orders 
for open outcry trading and how the Exchange has interpreted and 
applied complex order priority.
    The Exchange notes that TPHs may continue to represent and execute 
in open outcry a complex order with any number of legs and in any 
ratio. However, if a complex order does not satisfy the applicable 
ratio and order ticket requirements as set forth above, then it will 
not be eligible for the complex order priority set forth in Rules 
6.45(e), 6.45A(b)(ii) or 6.45B(b)(ii) (as proposed). The Exchange also 
notes that it does not propose to amend how complex orders are 
allocated or the priority afforded to complex orders in open outcry; it 
is merely modifying the requirements for a complex order to be eligible 
for the existing open outcry complex order priority (which the Exchange 
is not proposing to change). The Exchange believes the proposed changes 
will increase opportunities for execution of complex orders and lead to 
tighter spreads on CBOE, which will benefit investors. The Exchange 
also believes that the proposed rule change is designed to not permit 
unfair discrimination among market participants, as all market 
participants may trade complex orders, and the priority eligibility 
requirements apply to complex orders of all market participants.
    In addition, the Exchange believes the proposed rule change is 
consistent with Section 6(b)(1) of the Act,\19\ which provides that the 
Exchange be organized and have the capacity to be able to carry out the 
purposes of the Act and to enforce compliance by the Exchange's TPHs 
(and persons associated with its TPHs) with the Act, the rules and 
regulations thereunder and the rules of the Exchange. Enhancing the 
audit trail with respect to open outcry complex order processing will 
further improve the Exchange's ability to better enforce compliance by 
the Exchange's TPHs (and persons associated with its TPHs) with the 
Act, the rules and regulations thereunder and the rules of the 
Exchange.
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    \19\ 15 U.S.C. 78f(b)(1).
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    The Exchange also believes the proposed rule change furthers the 
objectives of Section 6(c)(3) of the Act, which authorizes the Exchange 
to, among other things, prescribe standards of operational capability 
for its TPHs. The Exchange believes the provisions imposing order 
ticket requirements in order for a complex order to be eligible for 
complex order priority is reasonable and sets forth appropriate system 
requirements for supporting complex order processing for open outcry 
trades.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes that 
simplifying its rules related to complex orders promotes fair and 
orderly markets, as well as assists the Exchange in its ability to 
effectively attract order flow and liquidity to its market, and 
ultimately benefits all TPHs and all investors. Complex orders are 
available to all TPHs (and all non-TPH market participants through 
TPHs), and the proposed rule change, including the complex order 
priority eligibility requirements, apply to all complex orders in the 
same manner.

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

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

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

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2014-015 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-2014-015. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the

[[Page 53234]]

public in accordance with the provisions of 5 U.S.C. 552, will be 
available for Web site viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE., Washington, DC 20549 on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
the filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-CBOE-2014-015 and should be submitted on or before 
September 29, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-21250 Filed 9-5-14; 8:45 am]
BILLING CODE 8011-01-P


