[Federal Register Volume 83, Number 30 (Tuesday, February 13, 2018)]
[Notices]
[Pages 6294-6299]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-02857]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82646; File No. SR-CBOE-2018-010]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Delete 
Obsolete Rules

February 7, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 25, 2018, Cboe Exchange, Inc. (``Exchange'' or ``Cboe 
Options'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
filed the proposal as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6)

[[Page 6295]]

thereunder.\4\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to delete Rules that no longer apply to the 
Exchange and make other nonsubstantive changes to the Rules.
    The text of the proposed rule change is also available on the 
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of this rule change is to delete Rules that no longer 
apply to the Exchange and to make other nonsubstantive changes to the 
Rules.\5\
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    \5\ The Exchange initially filed the proposed rule change on 
January 3, 2018 (SR-CBOE-2018-003). On January 25, 2018 the Exchange 
withdrew SR-CBOE-2018-003 and refiled as SR-CBOE-2018-009. On 
business date January 25, 2018, the Exchange subsequently withdrew 
SR-CBOE-108-009 [sic] and submitted this filing.
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Deletion of Rules
    The Exchange proposes to delete the following rules and chapters 
from its rulebook:
     Rule 2.40--Market-Maker Surcharge for Brokerage. Rule 2.40 
operated as a pilot program until March 30, 2000, at which time the 
program expired (and the Exchange did not request renewal). The 
Exchange does not impose a surcharge on Market-Maker transactions 
pursuant to this rule. Any fees and rebates applicable to any Market-
Maker transactions are included in the Cboe Options Fees Schedule.
     Rule 6.2--Trading Rotations. Rule 6.2 states the Exchange 
may use the procedures described in current Rules 6.2, 6.2A, or 6.2B to 
conduct trading rotations in all options listed on the Exchange. 
Currently, the Exchange only uses the procedures set forth in current 
Rule 6.2B (proposed Rule 6.2) to conduct trading rotations, and no 
longer conducts trading rotations pursuant to current Rule 6.2. 
Therefore, this provision no longer applies to trading on the 
Exchange.\6\
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    \6\ The proposed rule change makes corresponding changes to the 
following rules to delete references to trading rotations and the 
rule proposed to be deleted: Rules 6.6, 6.18, 6.25(b)(1), 6.73(c) 
(no longer applicable because trading rotations pursuant to current 
Rule 6.2B (proposed Rule 6.2) are fully electronic), 21.11, 22.11, 
and 24.13 and Interpretation and Policy .01 (the body of proposed 
Rule 24.13 states opening rotations will be conducted in accordance 
with Rule 24.13 or proposed Rule 6.2, so there is no need to include 
a statement in Rule 24.13, Interpretation and Policy .01 that states 
proposed Rule 6.2 describes procedures for a trading rotation, as it 
would be redundant).
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     Rule 6.2A--Rapid Opening System (``ROS''). The Exchange 
used ROS to open options prior to implementation of the Exchange's 
Hybrid Trading System, which includes the Hybrid 3.0 Platform. 
Currently, all options listed on the Exchange trade on its Exchange's 
Hybrid Trading System. As stated in Rule 6.2A, ROS does not apply to 
series trading on the Hybrid Trading System, which open on the Cboe 
Options Hybrid Opening System (``HOSS'') (pursuant to current Rule 6.2B 
(proposed Rule 6.2)). Therefore, Rule 6.2A no longer applies to any 
options listed for trading on the Exchange.\7\
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    \7\ The proposed rule change makes corresponding changes to the 
following rules to delete references to ROS and the rule proposed to 
be deleted: Rules 1.1(fff) and (ggg), 6.2, 6.6, 6.18, 6.25(b)(1), 
8.60(c)(11) and Interpretation and Policy .02, 22.11, and 24.13. 
Because the proposed rule change deletes both Rules 6.2 and 6.2A, 
the proposed rule change also renumbers Rule 6.2B to be Rule 6.2, 
and makes corresponding changes throughout the Rules, including 
Rules 6.1A, 6.3A, 6.12, 6.12A, 6.35 [sic] (b)(v)(B)(V), 8.15, 8.85, 
and 17.50.
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     Rules 6.8--RAES Operations and 6.8B--Automatic ORS Order 
Execution Against Booked Orders. The Exchange's Retail Automatic 
Execution System (``RAES'') was an automated execution system feature 
of the Exchange's Order Routing System (``ORS'') operated by the 
Exchange and that provided automated order execution and reporting 
services for options. RAES and ORS are no longer used, as all options 
trading on the Exchange currently occurs on the Hybrid Trading System, 
which includes Exchange's Order Handling System (``OHS''). Therefore, 
RAES and ORS no longer apply to any options listed for trading on the 
Exchange.\8\
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    \8\ The proposed rule change makes corresponding changes to the 
following rules to delete references to RAES and ORS, change 
references from ORS to OHS, and the rules proposed to be deleted: 
Rules 1.1(fff) and (ggg), 6.3, Interpretation and Policy .05, 6.6(b) 
and (e) and Interpretation and Policy .01, 6.7(b) (the Hybrid System 
includes OHS and the book), 6.8C (which the proposed rule change 
renumbers as 6.8), 6.13(a) and (c), 6.18, 8.7(b)(iii) and 
Interpretations and Policies .07 (which is being deleted in its 
entirety, as described below) .11(a) (the Exchange deleted the 
paragraph letter for current paragraph (b), as it will be the only 
paragraph in that Interpretation and Policy, as well as the 
introduction to that paragraph regarding its applicability to 
classes on the Hybrid System, because all classes are on the Hybrid 
System), 8.13, 8.16, 8.51(c)(1)(a)(iii), 8.60(c)(7) (the proposed 
rule change renumbers provisions (8) through (10) as (7) through 
(9)) and Interpretation and Policy .02, 8.85(a)(ix) (current 
paragraph (a)(ix) no longer applies, as there are no current 
Exchange sponsored automated programs that require a market 
participant's participation, and the proposed rule change renumbers 
subparagraphs (x) and (xi) as (ix) and x), and deletes from current 
subparagraph (x) (proposed subparagraph (xi) the introduction to 
that paragraph regarding its applicability to classes on the Hybrid 
System, because all classes are on the Hybrid System), 23.7, 24.15, 
24.17, 24.21(j)(1), and 24B.15.
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     Rule 6.10--LOU System Operations. The Large Order Utility 
(``LOU'') System was a facility of the Exchange that provided order 
routing, handling, and execution for eligible options orders routed 
electronically to the Exchange. The LOU System is no longer used, as 
all options trading on the Exchange trade on the Hybrid Trading System. 
Therefore, the LOU System no longer applies to any options listed for 
trading on the Exchange.
     Rule 6.13B--Penny Price Improvement. Pursuant to Rule 
6.13B, the Exchange may designate one or more options trading on the 
Hybrid Trading System in a Penny Price Improvement Program, which 
allows Trading Permit Holders to provide price improvement beyond the 
Exchange's disseminated quote for classes not already quoted in penny 
increments and for which the simple auction liaison system is not in 
effect. The Exchange currently has not designated, and has no intention 
to designate, any options for participation in this program. Therefore, 
this program no longer applies to any options listed for trading on the 
Exchange.\9\
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    \9\ The proposed rule change makes corresponding changes to the 
following rules to delete references to the Penny Price Improvement 
Program and the rules proposed to be deleted: Rules 1.1(fff) and 
(ggg), 6.45, Interpretations and Policies .01 and .02, Rule 6.47, 
Interpretation and Policy .02, and Rule 6.74, Interpretation and 
Policy .09.
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     Rule 6.54(a)--Accommodation Liquidation (Cabinet Trades) 
for Classes Not Trading on the Cboe Options Hybrid System. Rule 6.54 
describes cabinet trading permitted on the Exchange.

[[Page 6296]]

Paragraph (a) describes cabinet trading for classes not trading on the 
Hybrid System, while paragraph (b) describes cabinet trading for 
classes trading on the Hybrid System. All options trading on the 
Exchange currently trade on the Hybrid Trading System, and thus Rule 
6.54(a) no longer applies to any options listed for trading on the 
Exchange.\10\
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    \10\ The proposed rule change makes a corresponding change to 
current paragraph (b), eliminates paragraph lettering for paragraph 
(b) (as that will be the only paragraph in the rule), and reletters 
subparagraphs (i) and (ii) as (a) and (b), consistent with paragraph 
lettering throughout the rules.
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     Chapter VII--Order Book Officials. Order Book Officials 
were Exchange employees responsible for maintaining the book with 
respect to classes assigned to them, effecting proper executions of 
orders placed with them, displaying bids and offers, and monitoring the 
market for classes assigned to them. The Exchange currently has no 
employees designated as, and does not intend to designate any employees 
as, Order Book Officials, as Order Book Official functions are 
generally obsolete now that most trading occurs electronically.
    The proposed rule change deletes Rules 7.1 through 7.3, 7.4 except 
for subparagraph (a)(1) (which is being moved to Rule 6.11, with some 
modifications described below), 7.5, 7.7 through 7.10, and Chapter VII, 
Section B, as they relate solely to responsibilities of Order Book 
Officials.
    Rule 7.4(a)(1) states public customer orders in Hybrid and Hybrid 
3.0 classes are eligible for entry into the electronic book, and the 
Exchange may determine on a class-by-class basis other orders that are 
eligible for entry into the electronic book. Currently, after a class 
is open for trading (see current Rule 6.2B (proposed Rule 6.2) for a 
description of orders the System accepts prior to opening), the System 
accepts for entry into the Book (1) quotes of all Market-Makers and 
orders of any origin code in Hybrid classes and (2) quotes of Lead 
Market-Makers (``LMMs'') and orders of priority customers in Hybrid 3.0 
classes, while the Exchange continues to have flexibility to permit 
orders of other origin codes be eligible for book entry. The Exchange 
proposes to codify this current book eligibility (which is consistent 
with the Exchange's authority in current Rule 7.4(a)(1)) in Rule 6.11. 
The proposed rule change also deletes the provision in current Rule 
7.4(a)(1) that states Trading Permit Holders submitting orders or 
quotes for entry in to the book must do so electronically and in the 
format announced by the Exchange. It is redundant to state orders and 
quotes for entry in the electronic book must be submitted 
electronically, and Rule 6.53A describes the types of order formats 
Trading Permit Holders must use.\11\
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    \11\ The proposed rule change makes corresponding changes to the 
following rules to change cross-references to Rule 7.4 to Rule 6.11: 
Rules 6.13(b)(i)(A)(2) and (iii), 23.3(b), and 24.11A (the proposed 
rule change also deletes the Interpretations and Policies section of 
this rule, as there are currently none).
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    Rule 7.5, Interpretation and Policy .03 states every Floor Broker 
who represents a Market-Maker with an order in any options class must, 
by public outcry at the post, indicate the identity of such Market-
Maker at the request of any Trading Permit Holder or Order Book 
Official. The proposed rule change moves this provision (with the 
reference to Order Book Official deleted) to Rule 6.73, which relates 
to responsibilities of Floor Brokers.
    Rule 7.6 regarding the requirement for PAR Official to report 
unusual activity is proposed to move to Rule 6.12B(b)(v).\12\ The 
proposed rule change moves currently applicable provisions in Rule 7.12 
(regarding PAR Officials) to Rule 6.12B (with some nonsubstantive 
changes).\13\ PAR Officials are Exchange employees or independent 
contractors whom the Exchange may designate as being responsible for 
operating a PAR workstation and effecting proper executions of orders 
placed with them. PAR Officials no longer maintain the book with 
respect to assigned classes, as the electronic book manages electronic 
orders and quotes. The proposed rule change deletes the provision in 
current Rule 7.12(b)(i) regarding the definition of customer limit 
orders, as customer orders are now defined in Rule 1.1(www) and (yyy) 
(which are proposed to be relettered as (yyy) and (zzz), as described 
below). The proposed rule change deletes current Rule 7.12(b)(i)(C), 
which applies to the Intermarket Options Linkage Plan that no longer 
exists.\14\ Pursuant to the current linkage plan, including the 
definition of an intermarket sweep order (``ISOs'') in Rule 6.53, ISOs 
may only be handled electronically (they may only be entered as 
immediate-or-cancel or for book entry if they do not execute), and thus 
would never be routed to a PAR workstation under the Rules. Therefore, 
PAR Officials no longer have responsibilities with respect to routed 
orders under the current linkage plan. The proposed rule change moves 
Rule 7.12(b)(i)(E), which relates to orders received during a trading 
rotation pursuant to current Rule 6.2 or HOSS pursuant to current Rule 
6.2B (proposed Rule 6.2), to proposed Rule 6.12B(b)(i)(D). The proposed 
rule change changes the term immediately to promptly, as under current 
Rule 7.12 and proposed Rule 6.12(b), the term immediately means as soon 
as practicable but within 30 seconds. However, proposed Rule 
6.12B(b)(i)(D) exempts these orders from being displayed within 30 
seconds, so the term immediate did not seem appropriate. The term 
promptly still requires action as soon as practicable, but may be 
longer than 30 seconds. The proposed rule change moves current Rule 
7.12(b)(ii), (iv), and (v) to proposed Rule 6.12B(b)(ii), (iii), and 
(iv), respectively, and moves current Rule 7.12(c) and (d) to proposed 
Rule 6.12B(c) and (d), respectively. The proposed rule change deletes 
Rule

[[Page 6297]]

7.12(b)(iii), as PAR Officials no longer maintain the book (as 
described above) and do not have the ability to remove orders from the 
book. The proposed rule change replaces the term ``senior Trading 
Operations official'' with ``senior Help Desk personnel'' in current 
Rule 7.12(b)(iv) (proposed Rule 6.12(b)(iii)), which term is used 
throughout the rules. The proposed rule change deletes Rule 7.12, 
Interpretation and Policy .01, as it relates to the Exchange's 
responsibility to appoint PAR Officials to trading stations prior to 
March 24, 2006. The Exchange currently has PAR Officials appointed to 
all trading stations on the trading floor.
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    \12\ The proposed rule change makes corresponding changes to the 
following rules to delete references to Order Book Officials and the 
rules proposed to be deleted: Rules 6.3, Interpretations and 
Policies .01 and .02, including the related footnote (these 
interpretations also delete references to post directors, which are 
no longer used at the Exchange, and only relate to prior 
circumstances under which Post Directors or Order Book Officials 
would suspend trading; those functions no longer exist on the 
Exchange, and the Exchange currently only halts trading in 
accordance with the remaining provisions of Rule 6.3 and other rules 
related to trading halts), 6.6(b) and (e) (which also deletes 
references to post directors, which are no longer used at the 
Exchange), 6.12A, 6.20(a) and Interpretations and Policies .02 
(currently, there are only four PAR Officials on the trading floor, 
who all float to all trading crowds as necessary and are thus no 
longer assigned to classes) and .04(ii), 6.43(a), 6.54, 
Interpretations and Policies .01 and .02 (the proposed rule change 
replaces references to Order Book Officials to PAR Officials, 
consistent with Interpretation and Policy .02, which indicates PAR 
Officials may perform the functions of Order Book Officials for 
purposes of that rule), 6.73, Interpretation and Policy .01 (which 
only relates to comparing execution prices to those in displayed by 
an Order Book Official (pursuant to Rules 6.45(b) and 6.73, Floor 
Brokers must use due diligence to execute orders at the best price 
and provide first priority based on price); additionally, bids and 
offers are made in response to requests from Floor Brokers that 
represent orders in open outcry (see Rule 6.4(b) [sic] and Rule 6.73 
contains other provisions that require a Floor Broker to make sure 
all persons in the crowd are aware of requests for quotes and use 
due diligence when handling and executing orders, making 
Interpretation and Policy .01 redundant and unnecessary), 8.7(c) 
(the Exchange notes Market-Makers not permitted to enter a trading 
station in a floor brokerage capacity, as set forth in Rule 8.8) and 
Interpretation and Policy .09 (changes cross-reference to Rule 7.5 
to Rule 8.7(d)(iv), which describes current Market-Maker 
obligations, including the obligation of Market-Maker to provide a 
quote upon Exchange request), and 24.13 and Interpretation and 
Policy .03 (which the proposed rule change renumbers to .02).
    \13\ The proposed rule change makes corresponding changes to the 
following rules to change cross-references to Rule 7.12 to Rule 
6.12B: Rules 6.12A, 6.18(d)(i), and 6.20(a).
    \14\ Chapter VI, Section E describes Exchange responsibilities 
pursuant to the current linkage plan, the Options Order Protection 
and Locked/Crossed Market Plan.
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     Autoquote. Autoquote was an Exchange electronic quotation 
system that automatically monitored and updated market quotes using a 
mathematical formula measuring certain characteristics of the option 
and underlying interest. Rules related to LMMs and DPMs require them to 
provide continuous electronic quotes in appointed classes using 
Autoquote or a proprietary automated quotation updating system. 
Currently, all Market-Makers that submit electronic quotes use a 
proprietary system, and Autoquote is no longer used. The proposed rule 
change deletes Rule 8.7, Interpretation and Policy .07, which describes 
Autoquote, as well as the requirement of LMMs and DPMs to provide 
electronic quotes, which requirement is included in Rules 8.15 and 
8.85, respectively.\15\
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    \15\ The proposed rule change also deletes references to 
Autoquote in Rules 6.43(b), 8.15(c), 8.51(c)(1)(a)(iii), 8.60 
Interpretation and Policy .02. Rules 8.7, Interpretation and Policy 
.07, 8.15(c), and 8.85(a)(x) provide components of a formula used 
for automated quoting by Market-Makers using proprietary automated 
quoting systems will be disclosed unless the Exchange exempts them 
from disclosing this information. For competitive reasons, the 
Exchange exempts all Market-Makers from disclosing this information, 
so the proposed rule change deletes those provisions, as it does not 
intend to require Market-Makers from disclosing proprietary 
information going forward.
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     S&P 100 Modified Opening Rotation. Rule 24.13, 
Interpretation and Policy .02 provides a modified opening rotation that 
the Exchange may use for S&P 100 options, but the rule also provides 
the Exchange with the authority to open this class using HOSS pursuant 
to current Rule 6.2B (proposed Rule 6.2). The Exchange currently uses 
HOSS to open S&P 100 options, and does not intend to use the modified 
opening in the future. Therefore, this provision no longer applies to 
the opening of S&P 100 options.\16\
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    \16\ The proposed rule change also renumbers current 
Interpretation and Policy .03 to .02.
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     Rule 8.7(c)--Market-Maker Entry into Trading Station in 
Unappointed Class other than As Floor Broker. Rule 8.7(c) states 
whenever a Market-Maker enters the trading station for a class of 
options contracts in a class in which it is not appointed, in other 
than a floor brokerage capacity, the Market-Maker must fulfill 
obligations established in Rule 8.7(b) and, for the rest of the trading 
day, as well as undertake certain additional obligations. This rule 
text essentially requires a Market-Maker to act like a Market-Maker 
when it enters a trading station in the capacity of a Market-Maker in 
an unappointed class. However, pursuant to Rule 8.3, on the trading 
floor, Market-Makers have an appointment to trade in all hybrid 
classes, so if it goes to any trading station on the floor as a Market-
Maker, it has an appointment for the classes at that station and is 
subject to Market-maker obligations. That provision, in conjunction 
with the restriction on acting as a Market-Maker and Floor Broker on 
the same day, make the provision in Rule 8.7(c) unnecessary and 
duplicative. Therefore, the proposed rule change deletes this 
provision.
     Market-Maker Exemption from Rule 8.7(b)(iv) Obligations. 
Rule 8.7, Interpretation and Policy .13 provided Market-Makers with a 
temporary exemption from requirements set forth in Rule 8.7(d)(iv) on a 
pilot basis until February 17, 2007. That pilot has expired, and the 
Exchange did not renew it. Therefore, the proposed rule change deletes 
Rule 8.7, Interpretation and Policy .03, as it no longer applies to 
trading on the Exchange.
     Chapter XXIVA--Flexible Exchange Options (``FLEX 
Options''). When the Exchange began offering FLEX Options for trading, 
FLEX Options traded pursuant to Rule XXIVA on the trading floor. The 
Exchange then developed the FLEX Hybrid Trading System on which FLEX 
Options could trade both on the trading floor and electronically. 
Chapter XXIVB describes FLEX Options trading on this system, and 
provides the Exchange with ability to permit FLEX trading pursuant to 
Chapter XXIVA or XXIVB. The open outcry rules in Chapter XXIVA are 
substantially similar to those in Chapter XXIVB. The Exchange has 
determined all FLEX trading must occur on the FLEX Hybrid Trading 
System pursuant to Chapter XXIVB. Therefore, Chapter XXIVA no longer 
applies to the trading of any FLEX Options.\17\ The proposed rule 
change renumbers Chapter XXIVB and the rules in that chapter to Chapter 
XXIVA, and updates cross-references throughout the rules.
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    \17\ The proposed rule change also deletes references to Chapter 
XXIVA in the following rules: Rules 3.2(b), 5.9, 6.1A(c), 6.24, 
Interpretation and Policy .05, 6.49A(c)(6), Introduction to Chapter 
XX, 20.12, Introduction to Chapter XXII, 22.16, Introduction to 
current Chapter XXIVB, 28.17, 29.18, and Introduction to Chapter 
XXIX.
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     Chapter XXVI--Market Baskets. Chapter XXVI describes rules 
applicable to market basket contracts, which are contracts obligating 
the seller to sell and the purchaser to purchase a designated number of 
shares of each of the stocks comprising the index on which the market 
basket is based. The Exchange currently does not list, and does not 
intend to list in the future, market basket contracts for trading. 
Therefore, Chapter XXVI no longer applies to any options trading on the 
Exchange.\18\
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    \18\ The proposed rule change also deletes references to market 
baskets and the rules proposed to be deleted in: Rules 8.8, 
Interpretation and Policy .02 and 24B.10 (which is proposed to be 
renumbered as 24A.10).
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     Chapter XXVII--Buy-Write Option Unitary Derivatives 
(``BOUNDS''). Chapter XXVIII describes rules applicable to BOUNDS, 
which are securities issued, or subject to issuance, by the Options 
Clearing Corporation pursuant to its rules, which gives holders and 
writers thereof such rights and obligations as may be provided in its 
rules. The Exchange currently does not list, and does not intend to 
list in the future, BOUNDS for trading. Therefore, Chapter XXVII no 
longer applies to any options trading on the Exchange.
     Chapter XXXI--Approval of Securities for Original Listing. 
Chapter XXXI describes rules pursuant to which the Exchange may list 
equity securities for listing on the Exchange. The Exchange currently 
does not list any equity securities on the Exchange. Therefore, Chapter 
XXXI currently applies to no securities listed on the Exchange.\19\
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    \19\ Options may be listed for trading on the Exchange pursuant 
to Chapter V and XXIV. The proposed rule change leaves a placeholder 
in Chapters XXX and XXXI for rules related to listing and trading of 
equity securities. The Exchange would file a proposed rule change to 
adopt new rules if it determines to list and trade equity securities 
in the future.
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    Pursuant to Section 957 of the Dodd-Frank Act, Section 6(b)(10) of 
the Act \20\ requires the rules of each national securities exchange to 
prohibit any member that is not the beneficial owner of a security 
registered under Section 12 of the Act \21\ from granting a proxy to 
vote the security in connection with certain shareholder votes, unless 
the beneficial owner of the security has instructed the member to vote 
the proxy in accordance with the voting instructions of the beneficial 
owner. The

[[Page 6298]]

shareholder votes covered by Section 957 include any vote with respect 
to (1) the election of a member of the board of directors of an issuer 
(except for a vote with respect to the uncontested election of a member 
of the board of directors of any investment company registered under 
the Investment Company Act of 1940 (the ``Investment Company Act''), 
(2) executive compensation, or (3) any other significant matter, as 
determined by the Commission, by rule.\22\
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    \20\ 15 U.S.C. 78f(b)(10).
    \21\ 15 U.S.C. 78l.
    \22\ 15 U.S.C. 78f(b)(10)(B).
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    Rules 31.82 through 31.88 currently include provisions that cover 
these proxy voting requirements with respect to Trading Permit Holders. 
However, because this proposed rule change deletes Chapter XXXI, the 
proposed rule change adds Rule 4.25 to retain the provisions required 
by Section 957. Proposed Rule 4.25 is substantially similar to rules of 
other options exchanges.\23\
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    \23\ See, e.g., C2 Supplemental Rules to C2 Chapter 4 and Nasdaq 
ISE Rule 421.
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     Chapters XL through XLIX--Screen-Based Trading. Chapters 
XL through XLIX describe trading on the Exchange's screen-based trading 
system. The screen-based trading system is no longer used, as all 
options trading on the Exchange trade on the Hybrid Trading System. 
Therefore, the screen-based trading rules no longer apply to any 
options listed for trading on the Exchange.\24\
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    \24\ The proposed rule change makes corresponding changes to the 
following rules to delete references to screen-based trading and the 
rules proposed to be deleted: Rules 1.1(fff) and (ggg), 3.2(b), and 
3.3.
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     Chapters L through LIV--CBOE Stock Exchange (``CBSX''). 
Chapters L through LIV describe trading on CBSX, which is the 
Exchange's facility for trading stocks, warrants, IPRs, IPSs, and Trust 
Issued Receipts (non-options securities). CBSX ceased market operations 
on April 30, 2014. Therefore, the CBSX rules no longer apply to any 
trading on the Exchange.\25\ The Exchange would file a proposed rule 
change to adopt new rules if it determines to list and trade non-
options securities in the future.
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    \25\ The proposed rule change makes corresponding changes to the 
following rules to delete references to CBSX and the rules proposed 
to be deleted: Rules 3.1A, 3.2(b), 3.3, and 6.20A, Interpretation 
and Policy .01.
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Additional Nonsubstantive Changes
    In addition to nonsubstantive changes described above, the proposed 
rule change makes the following nonsubstantive changes:
     The proposed rule change moves Interpretation and Policy 
.01 to the definition of Professional in Rule 1.1(ggg) to 
Interpretation and Policy .06 to Rule 1.1, so that all Interpretations 
and Policies to Rule 1.1 are in the same place.
     Currently, there are two paragraphs erroneously lettered 
as Rule 1.1(mmm) and (ppp). The proposed rule change corrects this 
lettering and updates the paragraph lettering to reflect these 
corrections.
     The proposed rule change makes updates throughout the 
rules to conform paragraph lettering and numbering to other rules, as 
well as to reflect deleted rule provisions.
     Rule 6.2, Interpretation and Policy .01(b) and (c) 
erroneously refer to LMMs as LLMs. The proposed rule change corrects 
[sic] those erroneous references.
    The proposed rule change amends Rule 6.43(b) to indicate it only 
applies to Hybrid 3.0 classes, which is consistent with the current 
rule text and current trading practices.
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.\26\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \27\ 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) \28\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(5).
    \28\ Id.
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    In particular, by deleting rules that no longer apply to Cboe 
Options trading (which rules have generally not been applicable in 
years), and making other nonsubstantive changes to better organize and 
more consistently number and letter rules, the rules will more clearly 
identify currently applicable rules, which the Exchange believes 
removes impediments to and perfects the mechanism of a free and open 
market. The Exchange believes the proposed rule change will eliminate 
confusion regarding which rules apply to current trading, which 
ultimately protects investors and the public interest. The proposed 
rule change has no impact on current trading on Cboe Options.
    The proposed rule change regarding proxy voting is substantially 
similar to C2 Supplemental Rules to C2 Chapter 4 and Nasdaq ISE Rule 
421 and consistent with Section 957 of the Dodd-Frank Act.

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

    Cboe Options 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 proposed rule change 
deletes rules that no longer apply to Cboe Options trading and makes 
other nonsubstantive changes, and thus has no impact on current trading 
on Cboe Options. Therefore, the proposed rule change has no impact on 
competition. The proposed rule change eliminates confusion with respect 
to rules applicable to current trading on Cboe Options.
    The proposed rule change regarding proxy voting is substantially 
similar to C2 Supplemental Rules to C2 Chapter 4 and Nasdaq ISE Rule 
421 and consistent with Section 957 of the Dodd-Frank Act.

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 proposed rule change does not:
    A. Significantly affect the protection of investors or the public 
interest;
    B. impose any significant burden on competition; and
    C. become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \29\ and 
Rule 19b-4(f)(6) \30\ thereunder.\31\
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    \29\ 15 U.S.C. 78s(b)(3)(A).
    \30\ 17 CFR 240.19b-4(f)(6).
    \31\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and the text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has satisfied this requirement.

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[[Page 6299]]

    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) \32\ permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange requests that the 
Commission waive the 30-day operative delay. According to the Exchange, 
the proposed rule change is consistent with the protection of investors 
and the public interest because it eliminates confusion as to the rules 
that currently apply to trading on Cboe Options. The Commission 
believes that deleting obsolete rules will add clarity and transparency 
to the Exchange's rules. Therefore, the Commission finds that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Accordingly, the Commission waives 
the 30-day operative delay and designates the proposed rule change 
operative upon filing.\33\
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    \32\ 17 CFR 240.19b-4(f)(6)(iii).
    \33\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. 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 protected]. Please include 
File Number SR-CBOE-2018-010 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-2018-010. 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-2018-010 and should be submitted on 
or before March 6, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\34\
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    \34\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-02857 Filed 2-12-18; 8:45 am]
 BILLING CODE 8011-01-P


