[Federal Register Volume 84, Number 123 (Wednesday, June 26, 2019)]
[Notices]
[Pages 30267-30282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13541]



[[Page 30267]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No 34-86173; File No. SR-CBOE-2019-027]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
and Move Certain Current Rules From the Exchange's Currently Effective 
Rulebook to the Shell Structure for the Exchange's Rulebook That Will 
Become Effective Upon the Migration of the Exchange's Trading Platform 
to the Same System Used by the Cboe Affiliated Exchanges

June 20, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on June 7, 2019, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe 
Options'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I 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) thereunder.\4\ The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \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

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend and move certain current Rules from the Exchange's currently 
effective Rulebook (``current Rulebook'') to the shell structure for 
the Exchange's Rulebook that will become effective upon the migration 
of the Exchange's trading platform to the same system used by the Cboe 
Affiliated Exchanges (as defined below) (``shell Rulebook''). The text 
of the proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    In 2016, the Exchange's parent company, Cboe Global Markets, Inc. 
(formerly named CBOE Holdings, Inc.) (``Cboe Global''), which is also 
the parent company of Cboe C2 Exchange, Inc. (``C2''), acquired Cboe 
EDGA Exchange, Inc. (``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX'' or 
``EDGX Options''), Cboe BZX Exchange, Inc. (``BZX'' or ``BZX 
Options''), and Cboe BYX Exchange, Inc. (``BYX'' and, together with 
Cboe Options, C2, EDGX, EDGA, and BZX, the ``Cboe Affiliated 
Exchanges''). The Cboe Affiliated Exchanges are working to align 
certain system functionality, retaining only intended differences 
between the Cboe Affiliated Exchanges, in the context of a technology 
migration. Cboe Options intends to migrate its trading platform to the 
same system used by the Cboe Affiliated Exchanges, which the Exchange 
expects to complete on October 7, 2019. Cboe Options believes offering 
similar functionality to the extent practicable will reduce potential 
confusion for market participants.
    In connection with this technology migration, the Exchange has a 
shell Rulebook that resides alongside its current Rulebook, which shell 
Rulebook will contain the Rules that will be in place upon completion 
of the Cboe Options technology migration.
Chapter 1
    The proposed rule change amends and moves the definitions of terms 
used throughout the Rules contained in current Rule 1.1 in the current 
Rulebook to proposed Rule 1.1 in the shell Rulebook. While there are no 
substantive changes to the majority of defined terms in Rule 1.1 being 
moved to the shell structure, the proposed rule change adds or amends 
the following definitions:

----------------------------------------------------------------------------------------------------------------
                                                                          Corresponding Cboe
          Defined  term                Provision         Current Cboe          affiliated       Description of
                                                         options rule        exchange rule          change
----------------------------------------------------------------------------------------------------------------
ABBO............................  best bid(s) or      N/A...............  C2 Rule 1.1 and     Added to Rule 1.1.
                                   offer(s)                                EDGX Rule
                                   disseminated by                         21.20(a)(1).
                                   other Eligible
                                   Exchanges \5\ and
                                   calculated by the
                                   Exchange based on
                                   market
                                   information the
                                   Exchange receives
                                   from OPRA.
All Sessions class..............  options class the   N/A...............  C2 Rule 1.1 and     Adds defined term
                                   Exchange lists                          EDGX Rule 16.1.     for classes the
                                   for trading                                                 Exchange lists
                                   during RTH and                                              for trading
                                   GTH.                                                        during GTH and
                                                                                               RTH.
Book or Simple Book.............  electronic book of  1.1...............  BZX Rule            Currently, there
                                   simple orders and                       16.1(a)(9), C2      is a separate
                                   quotes maintained                       Rule 1.1, and       book for each of
                                   by the System,                          EDGX Rule 16.1.     RTH and GTH, but
                                   which single book                                           following
                                   is used during                                              migration, there
                                   both the RTH and                                            will be a single
                                   GTH trading                                                 book used for
                                   sessions \6\.                                               both trading
                                                                                               sessions, as
                                                                                               discussed below;
                                                                                               rules of Cboe
                                                                                               Affiliated
                                                                                               Exchanges have no
                                                                                               reference to
                                                                                               separate trading
                                                                                               sessions, as
                                                                                               there are no GTH
                                                                                               on those
                                                                                               exchanges.

[[Page 30268]]

 
Capacity........................  capacity in which   N/A...............  C2 Rule 1.1.......  Cboe Options
                                   a User submits an                                           currently refers
                                   order, which the                                            to capacity as
                                   User specifies by                                           origin code;
                                   applying the                                                current Cboe
                                   corresponding                                               Options origin
                                   code to the                                                 codes are in
                                   order, and                                                  Regulatory
                                   includes B                                                  Circular RG13-
                                   (account of a                                               038, and are the
                                   broker or dealer,                                           same as the
                                   including a                                                 proposed
                                   Foreign Broker-                                             Capacities,
                                   Dealer), C                                                  except the
                                   (Public Customer                                            proposed rule
                                   account), F (OCC                                            changes W to U
                                   clearing firm                                               (see
                                   proprietary                                                 specifications
                                   account), J                                                 \7\); proposed
                                   (joint back                                                 rule change
                                   office account),                                            deletes Y (orders
                                   L (non-Trading                                              for the account
                                   Permit Holder                                               of a specialist
                                   affiliate                                                   registered in the
                                   account), M                                                 underlying stock
                                   (Market-Maker                                               at the primary
                                   account), N                                                 exchange for
                                   (market-maker or                                            trading the
                                   specialist on                                               stock), which
                                   another options                                             will not be
                                   exchange), U                                                available
                                   (Professional                                               following
                                   account).                                                   migration \8\.
Cboe Trading....................  Cboe Trading,       N/A...............  BZX Rule 2.11, C2   Added to Rule 1.1.
                                   Inc., broker-                           Rule 1.1, and
                                   dealer affiliated                       EDGX Rule 2.11.
                                   with C2 and will
                                   serve as inbound
                                   and outbound
                                   router for C2, as
                                   discussed below.
EFID............................  Executing Firm ID.  N/A...............  C2 Rule 1.1 and     Added to Rule 1.1;
                                                                           EDGX Rule 21.1(k).  similar to the
                                                                                               term acronym,
                                                                                               which is used in
                                                                                               current Cboe
                                                                                               Options Rules;
                                                                                               EFID is the term
                                                                                               used in the
                                                                                               technical
                                                                                               specifications
                                                                                               that will apply
                                                                                               post-migration,
                                                                                               and thus is more
                                                                                               appropriate for
                                                                                               the shell
                                                                                               Rulebook; a firm
                                                                                               may have multiple
                                                                                               EFIDs.
Global Trading Hours or GTH.....  trading session     1.1 and 6.1.01      N/A...............  Added language to
                                   consisting of the   (proposed Rule                          clarify that GTH
                                   hours outside of    5.1).                                   refers to hours
                                   Regular Trading                                             during which
                                   Hours (``RTH'')                                             trading on the
                                   during which                                                Exchange may
                                   transactions in                                             occur outside of
                                   options may be                                              RTH.
                                   effected on the
                                   Exchange and are
                                   set forth in
                                   proposed Rule 5.1.
Index-Linked Security or ETN....  share traded on a   5.3.13............  N/A...............  Added to Rule 1.1.
                                   national
                                   securities
                                   exchange that is
                                   an NMS stock and
                                   represents
                                   ownership of a
                                   security that
                                   provides for
                                   payment at
                                   maturity as set
                                   forth in proposed
                                   Rule 4.3 (current
                                   Rule 5.3).
Market Close....................  time the Exchange   N/A (market close   BZX Rule 16.1, C2   Added to Rule 1.1;
                                   specifies for the   time set forth in   Rule 1.1, and       same as Cboe
                                   end of a trading    current Rule 6.1    EDGX Rule 16.1.     Affiliated
                                   session on the      (proposed Rule                          Exchanges' Rules,
                                   Exchange on that    5.1)).                                  except proposed
                                   trading day.                                                rule references
                                                                                               the concept of a
                                                                                               trading session,
                                                                                               which does not
                                                                                               exist on Cboe
                                                                                               Affiliated
                                                                                               Exchanges, as
                                                                                               they do not have
                                                                                               GTH.
Market-Maker....................  TPH registered      8.1...............  BZX Rule            Added to Rule 1.1.
                                   with the Exchange                       16.1(a)(37), C2
                                   pursuant to                             Rule 1.1, and
                                   proposed Rule                           EDGX Rule 16.1.
                                   3.52 (current
                                   Rule 8.1) for the
                                   purpose of making
                                   markets in option
                                   contracts traded
                                   on the Exchange
                                   and that has the
                                   rights and
                                   responsibilities
                                   set forth in
                                   proposed Chapter
                                   5, Section D
                                   (current Chapter
                                   VIII) of the
                                   Rules.
Market Open.....................  time the Exchange   N/A (market open    BZX Rule            Added to Rule 1.1;
                                   specifies for the   time set forth in   16.1(a)(35), C2     same as Cboe
                                   start of a          current rule 6.1    Rule 1.1, and       Affiliated
                                   trading session     (proposed Rule      EDGX Rule 16.1.     Exchanges' Rules,
                                   on the Exchange     5.1)).                                  except proposed
                                   on that trading                                             rule references
                                   day.                                                        the concept of a
                                                                                               trading session,
                                                                                               which does not
                                                                                               exist on Cboe
                                                                                               Affiliated
                                                                                               Exchanges, as
                                                                                               they do not have
                                                                                               GTH.
Order Entry Firm/OEF............  Trading Permit      N/A...............  BZX Rule            Added to Rule 1.1.
                                   Holder registered                       16.1(a)(36), C2
                                   with the Exchange                       Rule 1.1, and
                                   pursuant to                             EDGX Rule 16.1.
                                   proposed Rule
                                   3.51 representing
                                   as agent Customer
                                   Orders on the
                                   Exchange and non-
                                   Market-Maker
                                   Trading Permit
                                   Holder conducting
                                   proprietary
                                   trading.
Protected Quotation.............  a Protected Bid or  6.80..............  BZX Rule            Added to Rule 1.1.
                                   Protected Offer,                        16.1(a)(47), C2
                                   as each of those                        Rule 1.1, and
                                   terms is defined                        EDGX Rule 16.1.
                                   in proposed Rule
                                   5.65 (current
                                   Rule 6.80).
Quote and Quotation.............  firm bid or offer   1.1...............  BZX Rule            Updated to reflect
                                   a Market-Maker                          16.1(a)(51), C2     the distinction
                                   (a) submits                             Rule 1.1, and       between
                                   electronically                          EDGX Rule 16.1.     electronic quotes
                                   (including to                                               and quotes in
                                   update any of its                                           open outcry
                                   previous quotes),                                           (consistent with
                                   which may be                                                current practice
                                   updated in block                                            and functionality
                                   quantities, or                                              on the Exchange).
                                   (b) represents
                                   for open outcry
                                   on the trading
                                   floor.
RTH Class.......................  options class the   N/A...............  C2 Rule 1.1, EDGX   ..................
                                   Exchange lists                          Rule 16.1.
                                   for trading
                                   during RTH only.
Size............................  number of           N/A...............  BZX Rule 21.1(e),   Added to Rule 1.1
                                   contracts up to                         C2 Rule 1.1, and    (consistent with
                                   999,999                                 EDGX Rule 21.1(e).  current Cboe
                                   associated with                                             Options system).
                                   an order or quote.

[[Page 30269]]

 
System..........................  the Exchange's      1.1...............  BZX Rule            Deleted reference
                                   hybrid trading                          16.1(a)(59), C2     from current
                                   platform that                           Rule 1.1, and       definition to
                                   integrates                              EDGX Rule 16.1.     Hybrid, as that
                                   electronic and                                              relates to the
                                   open outcry                                                 current
                                   trading of option                                           technology from
                                   contracts on the                                            which the Cboe
                                   Exchange, and                                               Options trading
                                   includes any                                                platform is being
                                   connectivity to                                             migrated.
                                   the foregoing
                                   trading platform
                                   that is
                                   administered by
                                   or on behalf of
                                   the Exchange,
                                   such as a
                                   communications
                                   hub \9\.
System Securities...............  options that        N/A...............  BZX Rule 21.1(b),   Added to Rule 1.1
                                   currently trade                         C2 Rule 1.1, and    (additional term
                                   on the Exchange                         EDGX Rule 21.1(b).  for options
                                   pursuant to                                                 listed for
                                   proposed Chapter                                            trading).
                                   4 (current
                                   Chapters 5 and
                                   24) in the shell
                                   Rulebook \10\.
Trade Desk......................  Exchange            N/A...............  N/A...............  Added to Rule 1.1;
                                   operations staff                                            Trade Desk is new
                                   authorized to                                               term for Help
                                   make certain                                                Desk at the
                                   trading                                                     Exchange (which
                                   determinations on                                           term will be
                                   behalf of the                                               deleted from the
                                   Exchange.                                                   Rules).
Trading Session.................  hours during which  1.1 and 6.1A(a)     C2 Rule 1.1 and     Moved provisions
                                   the Exchange is     and (h).            EDGX Rule 16.1.     from Rule 6.1A(a)
                                   open for trading                                            and (h) regarding
                                   for Regular                                                 applicability of
                                   Trading Hours or                                            Rules during GTH
                                   Global Trading                                              to definition.
                                   Hours (each of
                                   which may be
                                   referred to as a
                                   trading session),
                                   each as set forth
                                   in proposed Rule
                                   5.1. Unless
                                   otherwise
                                   specified in the
                                   Rules or the
                                   context otherwise
                                   indicates, all
                                   Rules apply in
                                   the same manner
                                   during each
                                   trading session.
Underlying index................  with respect to an  N/A...............  N/A...............  Added to Rule 1.1;
                                   index option,                                               consistent with
                                   means the index                                             index options
                                   that is the                                                 (based on OCC By-
                                   subject of an                                               Laws Article
                                   index option.                                               1(U)).
Underlying security.............  with respect to an  1.1 and 24.1(e)...  N/A...............  Added provision
                                   equity option,                                              from Rule 24.1(e)
                                   the security that                                           to 1.1.
                                   the Clearing
                                   Corporation must
                                   sell (in the case
                                   of a call option
                                   contract) or
                                   purchase (in the
                                   case of a put
                                   option contract)
                                   upon the valid
                                   exercise of the
                                   option contract,
                                   and, with respect
                                   to an index
                                   option any of the
                                   securities or
                                   mutual funds that
                                   are the basis for
                                   the calculation
                                   of the underlying
                                   index.
User............................  any TPH or          N/A...............  BZX Rule            Added to C2 Rule
                                   Sponsored User                          16.1(a)(63), C2     1.1 (common term
                                   who is authorized                       Rule 1.1, and       to apply to two
                                   to obtain access                        EDGX Rule 16.1.     types of market
                                   to the System                                               participants
                                   pursuant to                                                 defined in C2
                                   proposed Rule 5.5                                           Rules, which are
                                   (current Rule                                               the only two
                                   6.23A) \11\.                                                market
                                                                                               participants that
                                                                                               may access the
                                                                                               System under C2
                                                                                               Rules).
----------------------------------------------------------------------------------------------------------------

    The proposed rule change deletes current Rule 1.1 (and any other 
current Rule referenced in the table above) from the current Rulebook, 
as further discussed below.
---------------------------------------------------------------------------

    \5\ Eligible Exchange is defined in current Rule 6.80(7) and 
proposed Rule 5.65(g).
    \6\ The proposed rule change also deletes current Rule 6.1A(g), 
which describes the separate books currently used for the RTH and 
GTH sessions.
    \7\ BOE Specifications, available at http://cdn.batstrading.com/resources/membership/BATS_US_Options_BOE2_Specification.pdf, and FIX 
Specifications, available at http://cdn.batstrading.com/resources/membership/BATS_US_Options_BZX_FIX_Specification.pdf.
    \8\ Capacity codes applicable to trading of FLEX options will be 
addressed in a separate rule filing.
    \9\ Rules related to orders submitted for routing to PAR for 
open outcry trading will be addressed in a separate rule filing.
    \10\ The Exchange will move all Rules from the current Rulebook 
regarding options the Exchange is authorized to list for trading 
into Chapter 4 of the shell Rulebook in a separate rule filing.
    \11\ The Exchange will add provisions regarding System access 
from the current Rulebook to Rule 5.5 of the shell Rulebook in a 
separate rule filing.
---------------------------------------------------------------------------

    The proposed rule change deletes the term Voluntary Professional, 
as that Capacity designation will no longer be available on Cboe 
Options following the technology migration. It is currently unavailable 
on the Cboe Affiliated Exchanges. Within the definition of the term 
Professional, the proposed rule change deletes the list of rules 
pursuant to which a Professional would be treated as a broker-dealer, 
which in general relate to allocation priority, but adds that a 
Professional order will be handled the same as a broker-dealer order 
unless the Rules specify otherwise. The definition of a Priority 
Customer (which excludes Professionals) and this change to the 
definition of Professional accomplish the same result, as that 
definition within the applicable rules provide that Professionals will 
not be treated as customers, and instead as broker-dealers. The 
proposed rule change also deletes the term TPH Department, as that is 
not the current name of the Exchange department that handle s 
membership requirements. Additionally, the Exchange believes it is 
appropriate to refer to the Exchange rather than a specific department 
in the Rules, as is the case in the Cboe Affiliated Exchanges' rules. 
The Rules that use that term will be updated in a separate rule filing. 
Definitions for continuous electronic quotes, Exchange spread market, 
and national spread market will be added to different rules in a 
separate filing to conform to the location of those defined terms in 
the rules of the Cboe Affiliated Exchanges. The Exchange also deletes 
the definitions of Quarterly Options Series and Short Term Options 
Series from Rule 1.1, as those terms are defined and explained in the 
appropriate listing rules. There are other types of series the Exchange 
may list that are not defined in Rule 1.1. The proposed rule change 
also makes nonsubstantive changes to certain defined terms, including 
to make the rule provisions plain English, update defined terms, add 
cross-references to defined terms in other Rules, add clarifying 
language, and update rule cross-references (to

[[Page 30270]]

reference the expected Rule number for the cross-referenced Rule).
    Proposed Rule 1.5 (current Rule 1.2) states the Exchange announces 
to Trading Permit Holders all determinations it makes pursuant to the 
Rules via (a) specifications, Notices, or Regulatory Circulars with 
appropriate advanced notice, which will be posted on the Exchange's 
website, or as otherwise provided in the Rules, (b) electronic message, 
or (c) other communication method as provided in the Rules. Most 
current Rules indicate determinations will be made by Regulatory 
Circular, which current Rule 1.2 indicates may also be made by Exchange 
Notice. The Exchange will update references to Regulatory Circular 
throughout the Rules in separate rule filings. Proposed Rule 1.5(b) 
states to the extent the Rules allow the Exchange to make a 
determination, including on a class-by-class or series-by-series basis, 
the Exchange may make a determination for GTH that differs from the 
determination it makes for RTH. This is consistent with current Rule 
6.1A(i), which the proposed rule change deletes. This single rule 
simplifies the Rules by including all provisions related to 
determinations the Exchange may make within a single Rule. The Exchange 
will make conforming changes throughout the Rules in separate rule 
filings. The proposed rule change deletes current Rules 1.2 and 6.1A(i) 
from the current Rulebook, as further discussed below.
    Proposed Cboe Options Rule 1.6 of the shell Rulebook states unless 
otherwise specified, all times in the Rules are Eastern Time. Current 
Cboe Options Rules are generally in Chicago time. The Exchange will 
update times to Eastern Time in other Rules as necessary in separate 
rule filings.
    The proposed rule change moves current rules related to Exchange 
liability, including disclaimers and limitations, from the current 
Rulebook to Chapter 1, Section C of the shell Rulebook (to be named 
Exchange Liability and Disclaimers, as proposed) as follows:

------------------------------------------------------------------------
                                    Number in current      Rule in shell
              Rule                       Rulebook            Rulebook
------------------------------------------------------------------------
Exchange Liability Disclaimers   6.7, 20.5(a) (which                1.10
 and Limitations.                 states 6.7 applies to
                                  Range options, which
                                  are a type of Index
                                  option), 22.5(a)
                                  (which states 6.7
                                  applies to Binary
                                  options, which are a
                                  type of Index option).
Limitation on the Liability of   6.15...................            1.11
 Index Licensors for Options on
 Units.
Limitation on Liability of       20.5(b) (which states              1.12
 Reporting Authorities for        24.14 applies to Range
 Indexes Underlying Options.      options, which are a
                                  type of Index option),
                                  22.5(b) (which states
                                  24.14 applies to
                                  Binary options, which
                                  are a type of Index
                                  option), and 24.14.
Limitation of Liability of       23.14..................            1.13
 Reporting Authority for
 Interest Rate Options.
Limitation of Liability of       29.10..................            1.14
 Reporting Authority for Credit
 Options.
Legal Proceedings Against the    6.7A...................            1.15
 Exchange.
------------------------------------------------------------------------

    These rules are virtually identical (other than updating cross-
references and defined terms), and are merely moving locations. The 
proposed rule change deletes current Rules referenced in the table 
above from the current Rulebook, as further discussed below.
Chapter 2
    The proposed rule change moves current rules related to TPH Fees 
from Chapter 2 of the current Rulebook to Chapter 2 of the shell 
Rulebook as follows:

------------------------------------------------------------------------
                                             Number in
                  Rule                        current      Rule in shell
                                             Rulebook        Rulebook
------------------------------------------------------------------------
TPH Fees and Charges....................             2.1             2.1
Regulatory Revenues.....................             2.4             2.2
Integrated Billing System...............            3.23             2.3
Liability for Payment...................             2.2             2.4
Exchange's Cost of Defending Legal                   2.3             2.5
 Proceedings............................
------------------------------------------------------------------------

    These rules are virtually identical (other than updating cross-
references and defined terms), and are merely moving locations. The 
proposed rule change deletes current Rules referenced in the table 
above from the current Rulebook, as further discussed below.
Chapter 5
    The proposed rule change moves all rule provisions in the current 
Rulebook related to trading days and trading hours from the current 
Rulebook (specifically, Rules 6.1, 6.1A, 20.2, 21.10, 22.2, 23.6, 
24.6,\12\ 24A.2, 28.9, and 29.11) to proposed Rule 5.1(a) and (b) in 
the shell Rulebook.\13\ The proposed rule change adds Rule 5.1(a), 
which states the System will accept orders and quotes at times set 
forth in proposed Rule 5.7 (current Rule 6.2(a)). Proposed Rule 5.1(c) 
states the hours for GTH, the classes and series that may be listed 
during GTH, that trading during GTH is electronic only, as well as a

[[Page 30271]]

provision regarding the dissemination of index values during GTH (which 
provisions are unchanged and just moved from Rule 6.1(c) and (k), 
except as described below regarding FLEX options). Currently, the 
Exchange does not allow FLEX options to trade during GTH. The Exchange 
has authorized FLEX options classes with the same underlying index as 
options deemed eligible for trading during GTH (currently SPX, XSP, and 
VIX options) to be eligible for trading during GTH, and proposed 
paragraph (c)(1) includes that authorization. The Exchange believes 
there may be demand from investors for FLEX options with the same 
underlying indexes as the options that currently trade during GTH, and 
listing FLEX option classes \14\ with these underlying indexes will 
provide investors that participate in GTH with alternatives for hedging 
and other investment purposes. Proposed Rule 5.1 is substantially 
similar to C2 Rule 6.1 (except C2 has a shorter GTH trading session and 
different GTH-eligible products are different, and proposed Rule 5.1 
lists hours for additional products that are not expected to be listed 
on C2). Proposed Rule 5.1 is also consistent with EDGX Rule 21.2(a). No 
other substantive changes were made to these Rules. This single rule 
simplifies the Rules by including all provisions related to trading 
days and hours within a single Rule. The proposed rule change deletes 
current Rules referenced above regarding trading days and hours from 
the current Rulebook, as further discussed below.
---------------------------------------------------------------------------

    \12\ The Exchange proposes to delete all indexes listed in 
current Rule 24.6 other than ETF-Based Volatility Indexes and S&P 
Select Sector Indexes, as the Exchange does not currently list 
options on those other indexes and does not intend to in the future.
    \13\ Current Rule 24.6 includes conflicting language regarding 
the Regular Trading Hours for ETF-Based Volatility Index options, as 
paragraph (b) provides such options will trade from 8:30 a.m. until 
3:00 p.m., while Interpretation and Policy .02 states they will 
trade from 8:30 a.m. until 3:15 p.m., except if the closing time for 
the index components is earlier. The proposed rule change deletes 
ETF-Based Volatility Index options from the list of options that 
will trade until 3:00 p.m., and includes the language from 
Interpretation and Policy .02, as that language is accurate. Note 
these options are not currently listed for trading, and if the 
Exchange does list them in the future and determines they should 
close at 3:00 p.m., the Exchange will submit a rule filing to make 
such a change.
    \14\ Because SPX, XSP, and VIX options may only be listed Cboe 
and its affiliated exchanges, FLEX options on the same indexes may 
also only be listed on Cboe and its affiliated exchanges.
---------------------------------------------------------------------------

    Global Trading Hours will continue to be a separate trading session 
from Regular Trading Hours, and will continue to be electronic only 
trading.\15\ However, the Book used during Regular Trading Hours will 
be the same Book used during Global Trading Hours. This is different 
than the current trading sessions on Cboe Options, each of which use a 
separate Book.\16\ There is generally reduced liquidity, higher 
volatility, and wider markets during Global Trading Hours, and 
investors may not want their orders or quotes to execute during Global 
Trading Hours given those trading conditions. To provide investors with 
flexibility to have their orders and quotes execute only during RTH, or 
both RTH and GTH, the proposed rule change adds an All Sessions order 
and an RTH Only order. An ``All Sessions'' order is an order a User 
designates as eligible to trade during both GTH and RTH. An unexecuted 
All Sessions order on the GTH Book at the end of a GTH trading session 
enters the RTH Queuing Book and becomes eligible for execution during 
the RTH opening rotation and trading session on that same trading day, 
subject to a User's instructions.\17\ An ``RTH Only'' order is an order 
a User designates as eligible to trade only during RTH or not 
designated as All Sessions. An unexecuted RTH Only order with a Time-
in-Force of good-til-cancelled (``GTC'') or good-til-day (``GTD'') on 
the RTH Book at the end of an RTH trading session enters the RTH 
Queuing Book and becomes eligible for execution during the RTH opening 
rotation and trading session on the following trading day (but not 
during the GTH trading session on the following trading day), subject 
to a User's instructions.\18\
---------------------------------------------------------------------------

    \15\ See proposed Rule 5.1(c)(4) (current Rule 6.1A(b), which 
the proposed rule change deletes). The proposed rule change also 
deletes Rule 6.1A(j) regarding disclosures that must be made 
regarding GTH trading and moves it to proposed Rule 9.20. The 
proposed rule change makes no changes to this provision.
    \16\ See proposed Rule 1.1, which amends the definition of Book 
to mean the electronic book of simple orders and quotes maintained 
by the System on which orders and quotes may execute during the 
applicable trading session. The Book during GTH may be referred to 
as the ``GTH Book,'' and the Book during RTH may be referred to as 
the ``RTH Book.'' This is different than Cboe Options, which uses 
separate books for each trading session, which are not connected. 
See current Rule 6.1A(g) (which the proposed rule change deletes).
    \17\ See proposed Rule 5.6(c), proposed definition of All 
Sessions order. The Exchange notes the ``RTH Queuing Book'' means 
the book into which Users may submit orders and quotes (and onto 
which orders remaining on the Book from the previous trading session 
or trading day, as applicable, are entered) during the Queuing 
Period for participation in the applicable opening rotation. The 
Exchange will add a definition and additional descriptions regarding 
the Queuing Book to the Rules in a future rule filing. However, the 
Queuing Book is equivalent to the Book into which TPHs may submit 
quotes and orders during the order entry period prior to the opening 
process. See current Rule 6.2.
    \18\ See proposed Rule 5.6(c), proposed definition of RTH Only 
order.
---------------------------------------------------------------------------

    Because trading sessions are currently completely separate on Cboe 
Options, there are not distinct order types corresponding to the 
proposed RTH Only and All Sessions order instructions. An order or 
quote submitted to GTH on Cboe Options may only execute during GTH, and 
an order or quote submitted to RTH on Cboe Options may only execute 
during RTH. The proposed RTH Only order is equivalent to any order 
submitted to RTH on Cboe Options. While the Exchange is not proposing 
an equivalent to an order submitted to GTH on Cboe Options, and instead 
is proposing an All Sessions order, Users may still submit an 
equivalent to a ``GTH only'' order by submitting an All Sessions order 
with a good-til-date Time-in-Force, with a time to cancel before the 
RTH market open. Therefore, Users can submit orders to participate in 
either trading session, or both, and thus the proposed rule change 
provides Users with the same order entry ability as well as additional 
flexibility and control regarding in which trading sessions their 
orders and quotes may be eligible to trade.
    Generally, trading during the GTH trading session will occur in the 
same manner as it occurs during the RTH trading session. However, 
because the GTH market may have different characteristics than the RTH 
market (such as lower trading levels, reduced liquidity, and fewer 
participants), the Exchange may deem it appropriate to make different 
determinations for trading rules for each trading session. Proposed 
Rule 1.5(b) states to the extent the Rules allow the Exchange to make a 
determination, including on a class-by-class or series-by-series basis, 
the Exchange may make a determination for GTH that differs from the 
determination it makes for RTH.\19\ The Exchange maintains flexibility 
with respect to certain rules so that it may apply different settings 
and parameters to address the specific characteristics of that class 
and its market. For example, current Rule 6.45(a) allows the Exchange 
to determine electronic allocation algorithms on a class-by-class 
basis; \20\ and current Rule 6.53 (proposed Rule 5.6) allows the 
Exchange to make certain order types, Order Instructions, and Times-in-
Force not available for all Exchange systems or classes (and unless 
stated in the Rules or the context indicates otherwise, as 
proposed).\21\ Because trading characteristics during RTH may be 
different than those during GTH (such as lower trading levels,

[[Page 30272]]

reduced liquidity, and fewer participants), the Exchange believes it is 
appropriate to extend this flexibility to each trading session. The 
Exchange represents that it will continue to have appropriate personnel 
available during GTH to make any determinations that Rules provide the 
Exchange or Exchange personnel will make (such as trading halts, 
opening series, and obvious errors).
---------------------------------------------------------------------------

    \19\ See current Rule 6.1A(i) (which the proposed rule change 
proposes to delete).
    \20\ Therefore, the allocation algorithm that applies to a class 
during RTH may differ from the allocation algorithm that apply to 
that class during GTH.
    \21\ Proposed Rule 5.6(a) explicitly state that the Exchange may 
make these determinations on a trading session basis. It also states 
that all order types the Exchange makes available in an All Sessions 
class for RTH electronic trading are available in that class for GTH 
electronic trading, except as otherwise specified in the Rules. See 
current Rule 6.1A(f) (which the proposed rule change proposes to 
delete). The Exchange notes Rule 6.1A(f) currently provides GTC 
orders are not available during GTH. However, because the Exchange 
will use the same Book for GTH and RTH, the Exchange will make 
available the GTC time-in-force for GTH, as an order in an All 
Sessions class with that time-in-force can remain in the Book 
following the conclusion of the GTH trading session and be available 
for trading during the RTH trading session.
---------------------------------------------------------------------------

    The proposed rule change also moves Rule 6.40 regarding the unit of 
trading for option series from the current Rulebook to Rule 5.2 of the 
shell Rulebook, and deletes current Rule 6.40 from the current 
Rulebook, as discussed below. The proposed rule change makes no 
substantive changes to this Rule. The proposed rule change moves all 
provisions regarding the meaning of bids and offers from the current 
Rulebook (including Rules 6.41 and 6.44 (including Interpretations and 
Policies .01 [sic], .02 [sic], .04 and .05) \22\ as well as Rules 
20.10(a), 21.13, 22.13(a), 23.9, 24.8, 28.11, and 29.14(a) and (c) 
related to the meaning of bids and offers for Range options, Government 
Security options, Binary options, Corporate Debt Security options, 
Interest Rate options, and Credit options, respectively) to proposed 
Rule 5.3 in the shell Rulebook. The proposed rule change makes no 
substantive changes to those Rules. This single rule simplifies the 
Rules by including all provisions related to the meaning of bids and 
offers within a single Rule. The proposed rule change deletes current 
Rules referenced above regarding the meaning of bids and offers from 
the current Rulebook, as further discussed below. The proposed rule 
change deletes current Rules referenced in the table above from the 
current Rulebook, as further discussed below. The proposed rule change 
also moves all provisions regarding the minimum increments for bids and 
offers (including Rule 6.42 as well as provisions in Rules 20.10(b), 
21.13, 22.13(b), 23.9, 28.11, and 29.14(b) related to minimum 
increments for Range options, Government Security options, Binary 
options, Interest Rate options, Corporate Debt Security options, and 
Credit options, respectively) to proposed Rule 5.4 in the shell 
Rulebook. This single rule simplifies the Rules by including all 
provisions related to minimum increments of options trading on the 
Exchange within a single Rule. No substantive changes were made to 
these Rules. The proposed rule change deletes current Rules referenced 
above regarding minimum increments from the current Rulebook, as 
further discussed below.
---------------------------------------------------------------------------

    \22\ The Exchange will move provisions in Rules 6.41.01 and 
24.8.01 related to orders with cash prices to the shell Rulebook in 
separate rule filings.
---------------------------------------------------------------------------

    The proposed rule change moves the order types currently available 
on the Exchange from Rule 6.53 in the current Rulebook to proposed Rule 
5.6 in the shell Rulebook. The proposed rule change makes certain 
changes to conform some of the definitions to those used in the Cboe 
Affiliated Exchanges' Rules, and also adds certain Order Instructions 
and Times-in-Force, as described below. The introduction to proposed 
Rule 5.6 states unless otherwise specified in the Rules or the context 
indicates otherwise, the Exchange determines which of the following 
order types, Order Instructions, and Times-in-Force are available on a 
class, system, or trading session basis.\23\ The introduction also 
states other Rules will list which order types, Order Instructions, and 
Times-in-Force the Exchange may make available for electronic and PAR 
routing (for open outcry trading), during RTH, during GTH, and for 
complex orders.\24\ This is consistent with the introductory language 
in current Rule 6.53(a), as well as current Rule 6.1A(i), which permits 
the Exchange to make separate determinations for GTH and RTH.
---------------------------------------------------------------------------

    \23\ As noted above, the introduction also states all order 
types the Exchange makes available in an All Sessions class for RTH 
electronic trading will be available in that class for GTH 
electronic trading, except as otherwise specified in the Rules.
    \24\ The Exchange will add Rules regarding which order types, 
Order Instructions, and Times-in-Force will be available 
specifically for electronic trading and PAR routing (and open outcry 
trading), for GTH, and for complex orders in separate rule filings.

----------------------------------------------------------------------------------------------------------------
                                                                              Corresponding
          Defined term                  Provision           Current Cboe     Cboe affiliated     Description of
                                                            options rule      exchange rule          change
----------------------------------------------------------------------------------------------------------------
Order Type.....................  orders may be market    6.53.............  C2 Rule 6.10(b)..  Moved to proposed
                                  or limit orders.                                              Rule 5.6(b).
Limit Order....................  order to buy or sell a  6.53.............  BZX Rule           Moved to proposed
                                  stated number of                           21.1(d)(2), C2     Rule 5.6(b);
                                  option contracts at a                      Rule 6.10(b),      clarified that
                                  specified price or                         and EDGX Rule      the order price
                                  better; a limit order                      21.1(d)(2).        compared to then-
                                  to buy (sell) is                                              current bid or
                                  marketable when, at                                           offer determines
                                  the time it enters                                            whether the
                                  the System, the order                                         limit order is
                                  price is equal to or                                          marketable.
                                  higher (lower) than
                                  the then-current
                                  offer (bid).
Market Order...................  order to buy or sell a  6.1A(f) and 6.53.  BZX Rule           Moved to proposed
                                  stated number of                           21.1(d)(5), C2     Rule 5.6(b).
                                  option contracts at                        Rule 6.10(b),
                                  the best price                             and EDGX Rule
                                  available at the time                      21.1(d)(5).
                                  of execution; Users
                                  may not designate a
                                  market order as All
                                  Sessions.
Order Instruction..............  processing instruction  6.53.............  BZX Rule 21.1(d),  Added to Rule
                                  a User may apply to                        C2 Rule 6.10(c),   5.6(c) (rules
                                  an order (multiple                         and EDGX Rule      currently permit
                                  instructions may                           21.1(d).           various
                                  apply to a single                                             instructions).
                                  order) when entering
                                  it into the System
                                  for electronic or
                                  open outcry
                                  processing, subject
                                  to any restrictions
                                  set forth in the
                                  Rules.

[[Page 30273]]

 
All-or-None....................  order a User            6.1A(f), 6.53,     EDGX Rule          Moved to Rule
                                  designates to be        and 6.44.03.       21.1(d)(4).        5.6(c).
                                  executed in whole or
                                  not at all; an AON
                                  order may be a market
                                  or limit order; Users
                                  may not designate an
                                  AON order as All
                                  Sessions; the
                                  Exchange does not
                                  disseminate bids or
                                  offers of AON orders
                                  to OPRA; a User may
                                  not designate an AON
                                  order as Post Only;
                                  an AON limit order is
                                  always subject to the
                                  Price Adjust process
                                  as set forth in
                                  proposed Rule 5.32; a
                                  User may apply MCN
                                  (as defined below),
                                  but no other MTP
                                  Modifier (if a User
                                  applies any other MTP
                                  Modifier to an AON
                                  order, the System
                                  handles it as an
                                  MCN), to an AON
                                  order; the Exchange
                                  may restrict the
                                  entry of AON orders
                                  in a series or class
                                  if the Exchange deems
                                  it necessary or
                                  appropriate to
                                  maintain a fair and
                                  orderly market \25\.
Attributable...................  order a User            6.53.............  BZX Rule           Moved to Rule
                                  designates for                             21.1(c)(1), C2     5.6(c).
                                  display (price and                         Rule 6.10(c),
                                  size) that includes                        and EDGX Rule
                                  the User's EFID or                         21.1(c)(1).
                                  other unique
                                  identifier.
Book Only......................  order the System ranks  6.53.............  BZX Rule           Moved to Rule
                                  and executes pursuant                      21.1(d)(7), C2     5.6(c);
                                  to current Rule 6.45,                      Rule 6.10(c),      currently
                                  subjects to the to be                      and EDGX Rule      referred to as
                                  proposed Price Adjust                      21.1(d)(7).        Cboe Options
                                  process, or cancels,                                          Only in Rule
                                  as applicable (in                                             6.53.
                                  accordance with User
                                  instructions),
                                  without routing away
                                  to another exchange.
Cancel Back....................  order a User            N/A..............  C2 Rule 6.10(c)    Added to Rule
                                  designates to not be                       and EDGX Rule      5.6(c)
                                  subject to the to be                       11.6(b).           (consistent with
                                  proposed Price Adjust                                         current Rule
                                  process that the                                              6.82) and
                                  System cancels or                                             substantively
                                  rejects (immediately                                          similar Cboe
                                  at the time the                                               Affiliated
                                  System receives the                                           Exchanges Rules
                                  order or upon return                                          (further
                                  to the System after                                           discussed
                                  being routed away) if                                         below).
                                  displaying the order
                                  on the Book would
                                  create a violation
                                  current Rule
                                  6.82,\26\ or if the
                                  order cannot
                                  otherwise be executed
                                  or displayed in the
                                  Book at its limit
                                  price; the System
                                  executes a Book Only--
                                  Cancel Back order
                                  against resting
                                  orders, and cancels
                                  or rejects a Post
                                  Only--Cancel Back
                                  order, that locks or
                                  crosses the opposite
                                  side of the BBO.
Combination Order..............  an order involving a    6.53.............  N/A..............  Moved to Rule
                                  number of call option                                         5.6(c);
                                  contracts and the                                             clarified that
                                  same number of put                                            the legs need
                                  option contracts in                                           not consist of
                                  the same underlying                                           the same number
                                  security; in the case                                         of contracts if
                                  of an adjusted option                                         the contracts
                                  contract, a                                                   represent the
                                  combination order                                             same number of
                                  need not consist of                                           shares of the
                                  the same number of                                            underlying
                                  put and call                                                  (currently says
                                  contracts if such                                             ``shares at
                                  contracts both                                                option'').
                                  represent the same
                                  number of shares of
                                  the underlying.
Electronic Only................  order a User            6.53.............  N/A..............  Moved to Rule
                                  designates for                                                5.6(c).
                                  electronic execution
                                  (in whole or in part)
                                  on the Exchange only,
                                  and does not route to
                                  PAR for execution in
                                  open outcry; the
                                  System cancels an
                                  Electronic Only order
                                  that would otherwise
                                  route to PAR pursuant
                                  to the Rules.

[[Page 30274]]

 
Intermarket Sweep Order/ISO....  order that has the      6.53.............  BZX Rule           Moved to Rule
                                  meaning provided in                        21.1(d)(10), C2    5.6(c).
                                  current Section E of                       Rule 6.10(c),
                                  Chapter 6, which may                       and EDGX Rule
                                  be executed at one or                      21.1(d)(9).
                                  multiple price levels
                                  in the System without
                                  regard to Protected
                                  Quotations at other
                                  options exchanges;
                                  the Exchange relies
                                  on the marking of an
                                  order by a User as an
                                  ISO order when
                                  handling such order,
                                  and thus, it is the
                                  entering Trading
                                  Permit Holder's
                                  responsibility, not
                                  the Exchange's
                                  responsibility, to
                                  comply with the
                                  requirements relating
                                  to ISOs.
Match Trade Prevention/MTP       order that does not     6.53.............  BZX Rule 21.1(g),  Moved to Rule
 Modifier.                        execute against a                          C2 Rule 6.10(c),   5.6(c) and
                                  resting opposite side                      and EDGX Rule      conformed to
                                  order also marked                          21.1(g).           Cboe Affiliated
                                  with an MTP modifier                                          Exchanges' rules
                                  and originating from                                          (further
                                  the same EFID,                                                discussed
                                  Trading Permit Holder                                         below).
                                  identifier, trading
                                  group identifier, or
                                  Sponsored User
                                  identifier (``Unique
                                  Identifier''), with
                                  five types of
                                  modifiers available.
Minimum Quantity...............  order that requires a   6.53 and 6.44.05.  BZX Rule           Moved to Rule
                                  specified minimum                          21.1(d)(3), C2     5.6(c) and
                                  quantity of contracts                      Rule 6.10(c),      renamed as
                                  be executed or is                          and EDGX Rule      minimum quantity
                                  cancelled; Minimum                         21.1(d)(3).        from minimum
                                  Quantity orders will                                          volume; may be
                                  only execute against                                          eligible for
                                  multiple, aggregated                                          electronic
                                  orders if such                                                trading, in
                                  executions would                                              addition to open
                                  occur simultaneously,                                         outcry trading
                                  and only a Book Only                                          (currently
                                  order with TIF                                                minimum volume
                                  designation of IOC                                            orders are only
                                  may have a Minimum                                            eligible for
                                  Quantity instruction                                          open outcry
                                  (the System                                                   trading).
                                  disregards a Minimum
                                  Quantity instruction
                                  on any other order)
                                  \27\.
Non-Attributable...............  order a User            N/A..............  BZX Rule           Added to Rule
                                  designates for                             21.1(c)(2), C2     5.6(c); orders
                                  display (price and                         Rule 6.10(c),      currently not
                                  size) on an anonymous                      and EDGX Rule      marked
                                  basis or not                               21.1(c)(2).        Attributable on
                                  designated as an                                              Cboe Options are
                                  Attributable Order.                                           non-
                                                                                                attributable;
                                                                                                proposed rule
                                                                                                change merely
                                                                                                permits Users to
                                                                                                affirmatively
                                                                                                designate orders
                                                                                                as non-
                                                                                                attributable,
                                                                                                and specify the
                                                                                                Exchange will by
                                                                                                default treat
                                                                                                orders as Non-
                                                                                                Attributable
                                                                                                unless the User
                                                                                                designates it as
                                                                                                Attributable.
Not Held.......................  order marked ``not      6.53.............  N/A..............  Moved to Rule
                                  held'', ``take time''                                         5.6(c).
                                  or which bears any
                                  qualifying notation
                                  giving discretion as
                                  to the price or time
                                  at which such order
                                  is to be executed. An
                                  order entrusted to a
                                  Floor Broker will be
                                  considered a not held
                                  order, unless
                                  otherwise specified
                                  by a Floor Broker's
                                  client or the order
                                  was received by the
                                  Exchange
                                  electronically and
                                  subsequently routed
                                  to a Floor Broker or
                                  PAR Official pursuant
                                  to the User's
                                  instructions. Not
                                  held orders and/or
                                  ``held'' orders must
                                  be marked in a manner
                                  and form prescribed
                                  by the Exchange.

[[Page 30275]]

 
Post Only......................  order the System ranks  N/A..............  BZX Rule           Added to Rule
                                  and executes pursuant                      21.1(d)(8), C2     5.6(c) (further
                                  to current Rule                            Rule 6.10(c),      discussed
                                  6.45,\28\ subjects to                      and EDGX Rule      below).
                                  the to be proposed                         21.1(d)(8).
                                  Price Adjust process,
                                  or cancels or rejects
                                  (including if it is
                                  not subject to the
                                  Price Adjust process
                                  and locks or crosses
                                  a Protected Quotation
                                  of another exchange),
                                  as applicable (in
                                  accordance with a
                                  User's instructions),
                                  except the order may
                                  not remove liquidity
                                  from the Book or
                                  route away to another
                                  Exchange.
Price Adjust...................  order a User            N/A..............  BZX Rule 21.1(j),  Added to Rule
                                  designates to be                           C2 Rule 6.10(c),   5.6(c) (further
                                  subject to the to be                       and EDGX Rule      discussed
                                  proposed Price Adjust                      21.1(i).           below).
                                  process, or an order
                                  a User does not
                                  designate as Cancel
                                  Back \29\.
QCC Order......................  initiating order to     6.53.............  EDGX Rule 21.1(d)  Moved to Rule
                                  buy (sell) at least                                           5.6(c).
                                  1,000 standard option
                                  contracts or 10,000
                                  mini-option contracts
                                  that is identified as
                                  being part of a
                                  qualified contingent
                                  trade coupled with a
                                  contra-side order or
                                  orders totaling an
                                  equal number of
                                  contracts. QCC orders
                                  with one option leg
                                  may only be entered
                                  in the standard
                                  increments applicable
                                  to simple orders in
                                  the options class
                                  under Rule 5.4. QCC
                                  orders with more than
                                  one option leg may be
                                  entered in the
                                  increments specified
                                  for complex orders
                                  under Rule 5.4; QCC
                                  orders may execute
                                  without exposure
                                  subject to certain
                                  requirements.
Ratio Order....................  a spread, straddle, or  6.53.............  N/A..............  Moved to Rule
                                  combination order in                                          5.6(c).
                                  which the stated
                                  number of option
                                  contracts to buy
                                  (sell) is not equal
                                  to the stated number
                                  of option contracts
                                  to sell (buy),
                                  provided that the
                                  number of contracts
                                  differ by a
                                  permissible ratio;
                                  for purposes of the
                                  Rules, a permissible
                                  ratio is 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 example, a one-to-
                                  two (.5) ratio, a two-
                                  to-three (.667)
                                  ratio, or a two-to-
                                  one (2.00) ratio is
                                  permissible, whereas
                                  a one-to-four (.25)
                                  ratio or a four-to-
                                  one (4.0) ratio is
                                  not.
Reserve Order..................  limit order with both   6.53.............  BZX Rule           Moved to Rule
                                  a portion of the                           21.1(d)(1), C2     5.6(c) and
                                  quantity displayed                         Rule 6.10(c),      conformed to
                                  (``Display                                 and EDGX Rule      Cboe Affiliated
                                  Quantity'') and a                          21.1(d)(1).        Exchanges rules
                                  reserve portion of                                            (further
                                  the quantity                                                  discussed
                                  (``Reserve                                                    below).
                                  Quantity'') not
                                  displayed; both
                                  display quantity and
                                  reserve quantity are
                                  available for
                                  potential execution
                                  against incoming
                                  orders, with Max
                                  Floor and
                                  replenishment
                                  instructions
                                  available \30\.
Spread.........................  order to buy a stated   6.53.............  N/A..............  Moved to Rule
                                  number of option                                              5.6(c);
                                  contracts and to sell                                         clarified that
                                  the same number of                                            the contracts
                                  option contracts, or                                          may represent
                                  contracts                                                     the same number
                                  representing the same                                         of shares of the
                                  number of shares as                                           underlying
                                  the underlying, of                                            (currently says
                                  the same class of                                             ``shares at
                                  options.                                                      option'').
Stop (Stop-Loss) Order.........  order to buy (sell)     6.1A(f) and        BZX Rule           Moved to Rule
                                  that becomes a market   6.10(c)(3).        21.1(d)(11), C2    5.6(c); modified
                                  order when the                             Rule 6.10(c),      to compare stop
                                  consolidated last                          and EDGX Rule      prices to
                                  sale price (excluding                      21.1(d)(11).       national prices
                                  prices from complex                                           rather than
                                  order trades if                                               Exchange prices
                                  outside the NBBO) or                                          (BZX, EDGX, and
                                  NBB (NBO) for a                                               C2 similarly use
                                  particular option                                             the NBBO), which
                                  contract is equal to                                          reflect prices
                                  or above (below) the                                          from the entire
                                  stop price specified                                          market.
                                  by the User; Users
                                  may not designate a
                                  Stop Order as All
                                  Sessions.

[[Page 30276]]

 
Stop-Limit Order...............  order to buy (sell)     6.1A(f) and 6.53.  BZX Rule           Moved to Rule
                                  that becomes a limit                       21.1(d)(12), C2    5.6(c); modified
                                  order when the                             Rule 6.10(c),      to compare stop
                                  consolidated last                          and EDGX Rule      prices to
                                  sale price (excluding                      21.1(d)(12).       national prices
                                  prices from complex                                           rather than
                                  order trades if                                               Exchange prices
                                  outside the NBBO) or                                          (BZX, C2, and
                                  NBB (NBO) for a                                               EDGX similarly
                                  particular option                                             use the NBBO),
                                  contract is equal to                                          which reflect
                                  or above (below) the                                          prices from the
                                  stop price specified                                          entire market.
                                  by the User; Users
                                  may not designate a
                                  Stop-Limit Order as
                                  All Sessions.
Straddle.......................  order to buy a number   6.53.............  N/A..............  Moved to Rule
                                  of call option                                                5.6(c);
                                  contracts and the                                             clarified that
                                  same number of put                                            the contracts
                                  option contracts on                                           may represent
                                  the same underlying                                           the same number
                                  security which                                                of shares of the
                                  contracts have the                                            underlying
                                  same exercise price                                           (currently says
                                  and expiration date;                                          ``shares at
                                  or an order to sell a                                         option'').
                                  number of call option
                                  contracts and the
                                  same number of put
                                  option contracts on
                                  the same underlying
                                  security which
                                  contracts have the
                                  same exercise price
                                  and expiration date
                                  (e.g., an order to
                                  buy two XYZ July 50
                                  calls and to buy two
                                  July 50 XYZ puts is a
                                  straddle order) In
                                  the case of adjusted
                                  option contracts, a
                                  straddle order need
                                  not consist of the
                                  same number of put
                                  and call contracts if
                                  such contracts both
                                  represent the same
                                  number of shares of
                                  the underlying.
Time-in-Force..................  period of time the      6.53(d)..........  BZX Rule 21.1(f),  Moved to Rule
                                  System will hold an                        C2 Rule 6.10(d),   5.6(d).
                                  order for potential                        and EDGX Rule
                                  execution; or quote                        21.1(f).
                                  for potential
                                  execution; unless
                                  otherwise specified
                                  in the Rules or the
                                  context indicates
                                  otherwise, the
                                  Exchange determines
                                  which of the
                                  following Times-in-
                                  Force are available
                                  on a class, system,
                                  or trading session
                                  basis; current Rule
                                  6.53C (which the
                                  Exchange intends to
                                  update and move to
                                  Rule 5.33 in the
                                  shell Rulebook) will
                                  set forth the Times-
                                  in-Force the Exchange
                                  may make available
                                  for complex orders.
Day............................  time-in-force that      6.53(d)..........  BZX Rule           Moved to Rule
                                  means an order to buy                      21.1(f)(3), C2     5.6(d).
                                  or sell that, if not                       Rule 6.10(d),
                                  executed, expires at                       and EDGX Rule
                                  the RTH market close.                      21.1(f)(3).
Fill-or-Kill/FOK...............  time-in-force that      6.53(d) and        BZX Rule           Moved to Rule
                                  means an order that     6.44.04.           21.1(f)(5), C2     5.6(d).
                                  is to be executed in                       Rule 6.10(d),
                                  its entirety as soon                       and EDGX Rule
                                  as the System                              21.1(f)(5).
                                  receives it and, if
                                  not so executed,
                                  cancelled; the System
                                  considers an FOK
                                  order to be an AON
                                  order.
Good-til-Cancelled/GTC.........  time-in-force that      6.53(d)..........  BZX Rule           Moved to Rule
                                  means, if after entry                      21.1(f)(4), C2     5.6(d).
                                  into the System, the                       Rule 6.10(d),
                                  order is not fully                         and EDGX Rule
                                  executed, the order                        21.1(f)(4).
                                  (or unexecuted
                                  portion) remains
                                  available for
                                  potential display or
                                  execution (with the
                                  same timestamp)
                                  unless cancelled by
                                  the entering User, or
                                  until the option
                                  expires, whichever
                                  comes first.
Good-til-Date/GTD..............  time-in-force that      N/A..............  BZX Rule           Added to Rule
                                  means, if after entry                      21.1(f)(1, C2      5.6(d); similar
                                  into the System, the                       Rule 6.10(d),      to GTC orders,
                                  order is not fully                         and EDGX Rule      except it
                                  executed, the order                        21.1(f)(1).        provides Users
                                  (or unexecuted                                                with additional
                                  portion) remains                                              flexibility to
                                  available for                                                 have an order
                                  potential display or                                          automatically
                                  execution (with the                                           cancel at a
                                  same timestamp) until                                         specific time on
                                  a date and time                                               a specific date,
                                  specified by the                                              rather than
                                  entering User unless                                          manually cancel
                                  cancelled by the                                              a GTC order at
                                  entering User.                                                that time
                                                                                                (similar to Cboe
                                                                                                Affiliated
                                                                                                Exchanges'
                                                                                                rules).

[[Page 30277]]

 
Immediate-or-Cancel/IOC........  time-in-force for a     6.53(d)..........  BZX Rule           Moved to Rule
                                  limit order that is                        21.1(f)(2), C2     5.6(d).
                                  to be executed in                          Rule 6.10(d),
                                  whole or in part as                        and EDGX Rule
                                  soon as the System                         21.1(f)(2).
                                  receives it; the
                                  System cancels and
                                  does not post to the
                                  Book any portion of
                                  an IOC order (or
                                  unexecuted portion)
                                  not executed
                                  immediately on the
                                  Exchange or another
                                  options exchange.
Limit-on-Close/LOC.............  a limit order that may  6.1A(f) and        .................  Moved to Rule
                                  not execute on the      6.53(d).                              5.6(d) and
                                  Exchange until three                                          separated from
                                  minutes prior to RTH                                          MOC definition;
                                  market close; at that                                         updated (as
                                  time, the System                                              discussed
                                  enters LOC orders                                             below).
                                  into the Book in time
                                  sequence (based on
                                  the times at which
                                  the System initially
                                  received them), where
                                  they may be processed
                                  in accordance with
                                  current Rule 6.45 (to
                                  be moved to Rule 5.32
                                  in the shell
                                  Rulebook); the System
                                  cancels an LOC order
                                  (or unexecuted
                                  portion) that does
                                  not execute by the
                                  RTH market close;
                                  Users may not
                                  designate an LOC
                                  order as All Sessions.
Market on Close/MOC............  a market order that     6.1A(f) and        .................  Moved to Rule
                                  may not execute on      6.53(d).                              5.6(d) and
                                  the Exchange until                                            separated from
                                  three minutes prior                                           LOC definition;
                                  to RTH market close;                                          updated (as
                                  at that time, the                                             discussed
                                  System enters MOC                                             below).
                                  orders into the Book
                                  in time sequence
                                  (based on the times
                                  at which the System
                                  initially received
                                  them), where they may
                                  be processed in
                                  accordance with
                                  current Rule 6.45 (to
                                  be moved to Rule 5.32
                                  in the shell
                                  Rulebook); the System
                                  cancels an MOC order
                                  (or unexecuted
                                  portion) that does
                                  not execute by the
                                  RTH market close;
                                  Users may not
                                  designate an MOC
                                  order as All Sessions.
At the Open/OPG................  time-in-force means an  6.53(d)..........  BXZ Rule           Moved to Rule
                                  order that may only                        21.1(f)(6), C2     5.6(d).
                                  participate in the                         Rule 6.10(d),
                                  Opening Process on                         and EDGX Rule
                                  the Exchange; the                          21.1(f)(6).
                                  System cancels an OPG
                                  order (or unexecuted
                                  portion) that does
                                  not execute during
                                  the Opening Process.
----------------------------------------------------------------------------------------------------------------


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

    \25\ In addition to determining the availability of AONs on a 
class basis, the Exchange may restrict the entry of AONs on a series 
basis when it deems necessary to maintain a fair and orderly market. 
This is consistent with current Rules 6.44.03 and 6.53, which the 
proposed rule change deletes from the current Rulebook. The Exchange 
will describe the proposed price adjust process in a future rule 
filing, but it will be equivalent to the price adjust process 
described in EDGX Rule 21.1(i).
    \26\ The Exchange intends to move Rule 6.82 from the current 
Rulebook to Rule 5.67 in the shell Rulebook in a separate rule 
filing. The substance of the rule will not change.
    \27\ The proposed rule change deletes Rule 6.44, Interpretation 
and Policy .05. As noted above, the Exchange will make Minimum 
Quantity orders available for electronic trading (currently, the 
Exchange only makes these orders available for open outcry trading). 
Additionally, because Minimum Quantity orders will be IOC (and thus 
not rest in the Book), there is no need to address the priority of 
Minimum Quantity orders.
    \28\ The Exchange intends to move Rule 6.45 from the current 
Rulebook to Rule 5.32 in the shell Rulebook in a separate rule 
filing. The rule will remain substantively the same.
    \29\ See BZX Rule 21.1(i), C2 Rule 6.12(b), and EDGX Rule 
21.1(i) for a description of the Price Adjust process, which the 
Exchange will propose to add to the shell Rulebook in a separate 
filing.
    \30\ The Exchange will move provisions related to the priority 
of Reserve Orders in a separate filing.
---------------------------------------------------------------------------

    The proposed rule change also makes nonsubstantive changes to the 
definitions of certain order types, Order Instructions, and Times-in-
Force, including to make the rule provisions plain English, update 
defined terms, and add clarifying language. The Exchange will also add 
appropriate cross-references in the definitions of order types, Order 
Instructions, and Times-in-Force as the applicable cross-referenced 
Rules are moved from the current Rulebook to the shell Rulebook. The 
proposed rule change deletes current Rules in the above table from the 
current Rulebook, as further discussed below.
    As noted above, the proposed rule change adds the following Order 
Instructions to proposed Rule 5.6(c), which are currently available on 
the Cboe Affiliated Exchanges, as indicated above.
     AON: The Exchange currently permits AON orders.\31\ The 
proposed rule change does not permit a User to designate an AON order 
as Post Only.\32\ An AON order's size contingency, and the fact that 
AON orders have last priority while resting in the Book,\33\ will 
provide AON orders resting on the Book with few opportunities for AON 
orders to receive an execution. Additionally, Post Only orders are 
intended to add displayed liquidity to the Book; because AON orders are 
not displayed, the purpose of a Post Only instruction conflicts with 
AON functionality. For these reasons, the Exchange believes there will 
be minimal investor demand for Post Only AON orders.\34\ The

[[Page 30278]]

Exchange believes it is appropriate to not restrict the opportunities 
for execution of an AON order to the minimal execution opportunities 
that would exist for an AON order while resting on the Book. This 
ensures that an AON order may execute upon entry if there is sufficient 
size resting on the Book, as well as have an opportunity for execution 
if it cannot so execute.
---------------------------------------------------------------------------

    \31\ See Rule 6.53.
    \32\ As discussed below, a Post Only order may not, among other 
things, remove liquidity from the Book.
    \33\ See Rule 6.45.
    \34\ Cboe Options does not currently offer a Post Only 
instruction. Additionally, other exchanges, such as ISE and NOM, 
only permit AON orders to be entered as IOC, and thus AON orders at 
those options exchanges would only execute upon entry and never rest 
on the book (and thus Post Only, if available on those exchanges, 
would not be permitted).
---------------------------------------------------------------------------

    Additionally, the proposed rule change only permits Users to apply 
MCN (MTP cancel newest), but no other MTP Modifiers, to an AON 
order.\35\ Proposed Rule 5.6(c) provides that an incoming order marked 
with the MCN Modifier will not execute against opposite side resting 
interest market with any MTP modifier originating from the same Unique 
Identifier. The incoming order marked with the MCN modifier will be 
cancelled back to the originating User(s). The resting order marked 
with an MTP modifier will remain on the Book. The Exchange believes 
there will be little demand for the use of any MTP Modifiers on AON 
orders given that primarily retail investors submit AONs, and retail 
investors are unlikely to have interest on both sides of the market. 
Therefore, orders of different retail investors would have the 
opportunity to execute against each other, unlike a broker who may have 
orders resting on both sides of the market and may want to avoid those 
orders executing against each other. Therefore, the Exchange believes 
offering one MTP Modifier for AON orders is sufficient. The Exchange 
believes MCN is the most appropriate MTP modifier for AON orders, 
because it is the simplest modifier to implement from a System 
perspective and an offering of other MTP modifier for investors would 
present significant technical complexities given the size contingency 
of AON orders.\36\ Additionally, the Exchange has determined to handle 
an AON order with any other MTP Modifier as an MCN rather than cancel 
the AON, because the proposed rules provide investors with sufficient 
transparency regarding how the System will handle AON orders with MTP 
Modifiers, and Users may achieve other results manually if so desired. 
For example, if User were to prefer to have a resting order with an MTP 
Modifier cancel and let the newer AON order rest, it could manually 
cancel the resting order and then resubmit the AON order.
---------------------------------------------------------------------------

    \35\ If a User applies any other MTP Modifier to an AON order, 
the System will handle it as an MCN).
    \36\ Additionally, the Decrement and Cancel MTP Modifier is 
inconsistent with an AON order, because it may result in partial 
execution of an order.
---------------------------------------------------------------------------

    The Exchange currently only offers match trade prevention only for 
market-makers, and thus the current rules regarding AON orders contains 
no restrictions on the use of match trade prevention instructions, as 
it would only be available to market-makers that submit AON orders. 
Because the Exchange will have match-trade prevention functionality 
available for all Users (as proposed) and not just Market-Makers, the 
Exchange believes it is appropriate to provide this functionality to 
all Users that submit AON orders and want match trade prevention 
functionality. The rules of other exchanges are also silent on whether 
any match trade prevention instructions are available for AON orders.
     Cancel Back: A Book Only or Post Only order a User 
designates to not be subject to the Price Adjust Process (which the 
Exchange will add to the shell Rulebook in a separate filing), which 
the System cancels or rejects if it locks or crosses the opposite side 
of the ABBO. The System executes a Book Only--Cancel Back order against 
resting orders, and cancels or rejects a Post Only--Cancel Back order, 
that locks or crosses the opposite side of the BBO. The proposed 
functionality is partially included in the definition of Post Only in 
the BZX and EDGX rules,\37\ and substantially similar to C2 Rule 
6.10(c). The proposed rule change is also consistent with linkage 
rules. Book Only orders and Post Only orders do not route by 
definition, and the Cancel Back instruction provides an option for 
Users to determine how these non-routable orders will be handled within 
the System, consistent with their definitions.\38\
---------------------------------------------------------------------------

    \37\ See BZX Rule 21.6(d)(8); and EDGX Rule 21.6(d)(8).
    \38\ C2 Rule 6.10(c) contains a substantively similar Cancel 
Back instruction. EDGX Rule 11.6(b) (which relates to the EDGX 
Equities market) contains a similar Cancel Back instruction.
---------------------------------------------------------------------------

     Match Trade Prevention (MTP) Modifiers: Current Rule 
6.53(c) defines a Market-Maker Trade Prevention Order as an IOC order 
market with the Market-Maker Trade Prevention designation. A Market-
Maker Trade Prevention Order that would trade against a resting quote 
or order for the same Market-Maker will be cancelled, as will the 
resting quote or order (unless the Market-Maker Trade Prevention Order 
is received while an order for the same Market-Maker is subject to an 
auction, in which case only the Market-Maker Trade Prevention Order 
will be cancelled). The Exchange proposes to adopt MTP modifiers 
substantively the same as those available on the Cboe Affiliated 
Exchanges.\39\ The proposed MTP modifiers expand this functionality to 
all Users, rather than just Market-Makers, and provide Users with 
multiple options regarding how the System handles orders with the same 
Unique Identifiers. Pursuant to the proposed rule change, an order 
designated with any MTP modifier is not executed against a resting 
opposite side order also designated with an MTP modifier and 
originating from the same Unique Identifier. Except for the MDC 
modifier described below, the MTP modifier on the incoming order 
controls the interaction between two orders marked with MTP modifiers:
---------------------------------------------------------------------------

    \39\ See BZX Rule 21.1(g), C2 Rule 6.10(c), and EDGX Rule 
21.1(g).
---------------------------------------------------------------------------

    [cir] MTP Cancel Newest (``MCN''): An incoming order marked with 
the ``MCN'' modifier does not execute against a resting order marked 
with any MTP modifier originating from the same Unique Identifier. The 
System cancels or rejects the incoming order, and the resting order 
remains in the Book.
    [cir] MTP Cancel Oldest (``MCO''): An incoming order marked with 
the ``MCO'' modifier does not execute against a resting order marked 
with any MTP modifier originating from the same Unique Identifier. The 
System cancels or rejects the resting order, and processes the incoming 
order in accordance with current Rule 6.45 (which the Exchange will 
move to the shell Rulebook in a separate filing).
    [cir] MTP Decrement and Cancel (``MDC''): An incoming order marked 
with the ``MDC'' modifier does not execute against a resting order 
marked with any MTP modifier originating from the same Unique 
Identifier. If both orders are equivalent in size, the System cancels 
or rejects both orders. If the orders are not equivalent in size, the 
System cancels or rejects the smaller of the two orders and decrements 
the size of the larger order by the size of the smaller order, which 
remaining balance remains on or processes in accordance with the 
equivalent of current Rule 6.45 (which the Exchange will move to the 
shell Rulebook in a separate filing), as applicable. Notwithstanding 
the foregoing, unless a User instructs the Exchange not to do so, the 
System cancels or rejects both orders if the resting order is marked 
with any MTP modifier other than MDC and the incoming order is smaller 
in size than the resting order.
    [cir] MTP Cancel Both (``MCB''): An incoming order marked with the 
``MCB'' modifier does not execute against a

[[Page 30279]]

resting order marked with any MTP modifier originating from the same 
Unique Identifier. The System cancels or rejects both orders.
    [cir] MTP Cancel Smallest (``MCS''): An incoming order marked with 
the ``MCS'' modifier does not execute against a resting order marked 
with any MTP modifier originating from the same Unique Identifier. If 
both orders are equivalent in size, the System cancels or rejects both 
orders. If the orders are not equivalent in size, the System cancels or 
rejects the smaller of the two orders, and the larger order remains on 
the Book or processes in accordance with the equivalent of current Rule 
6.45 (which the Exchange will move to the shell Rulebook in a separate 
filing), as applicable.
    The proposed MTP functionality is designed to prevent market 
participants from unintentionally causing a proprietary self-trade. The 
Exchange believes these modifiers will allow firms to better manage 
order flow and prevent undesirable executions with themselves. Trading 
Permit Holders may have multiple connections into the Exchange 
consistent with their business needs and function. As a result, orders 
routed by the same firm via different connections may, in certain 
circumstances, trade against each other. The proposed modifiers provide 
Trading Permit Holders with functionality (in addition to what is 
available on Cboe Options today) with the opportunity to prevent these 
potentially undesirable trades. The Exchange notes that offering the 
MTP modifiers may streamline certain regulatory functions by reducing 
false positive results that may occur on Exchange generated wash 
trading surveillance reports when orders are executed under the same 
Unique Identifier. For these reasons, the Exchange believes the MTP 
modifiers offer users enhanced order processing functionality that may 
prevent potentially undesirable executions without negatively impacting 
broker-dealer best execution obligations.
     Post Only Order: An order the System ranks and executes 
pursuant to current Rule 6.45 (which the Exchange will move to the 
shell Rulebook in a separate filing), subjects to the Price Adjust 
process, or cancels (including if it is not subject to the Price Adjust 
process and it would lock or cross a Protected Quotation on another 
exchange), as applicable (in accordance with User instructions), except 
the order may not remove liquidity from the Book or route away to 
another Exchange. This proposed instructions is nearly identical to the 
Cboe Options Only order instruction (the Book Only order instruction as 
proposed), except it will also not remove liquidity from the Book. This 
proposed instruction provides Users with flexibility to submit an order 
to add liquidity to the Book without interacting with then-currently 
resting interest and incurring applicable taker fees.
     Reserve Order: A limit order with both a portion of the 
quantity displayed (``Display Quantity'') and a reserve portion of the 
quantity (``Reserve Quantity'') not displayed. Both the Display 
Quantity and Reserve Quantity of the Reserve Order are available for 
potential execution against incoming orders. When entering a Reserve 
Order, a User must instruct the Exchange as to the quantity of the 
order to be initially displayed by the System (``Max Floor''). If the 
Display Quantity of a Reserve Order is fully executed, the System will, 
in accordance with the User's instruction, replenish the Display 
Quantity from the Reserve Quantity using one of the below replenishment 
instructions. If the remainder of an order is less than the 
replenishment amount, the System will display the entire remainder of 
the order. The System creates a new timestamp for both the Display 
Quantity and Reserve Quantity of the order each time it is replenished 
from reserve.
    [cir] Random Replenishment: An instruction that a User may attach 
to an order with Reserve Quantity where the System randomly replenishes 
the Display Quantity for the order with a number of contracts not 
outside a replenishment range, which equals the Max Floor plus and 
minus a replenishment value established by the User when entering a 
Reserve Order with a Random Replenishment instruction.
    [cir] Fixed Replenishment: For any order for that a User does not 
select Random Replenishment, the System will replenish the Display 
Quantity of an order with the number of contracts equal to the Max 
Floor.
    Current Rule 6.53(c) describes current reserve order functionality 
available on the Exchange. The proposed functionality is generally the 
same as the current functionality but enhances the use of reserve 
orders by providing flexibility for Users to determine whether the 
reserve replenishment amount is fixed or random. This proposed 
functionality is substantively the same as that available on the Cboe 
Affiliated Exchanges.\40\
---------------------------------------------------------------------------

    \40\ See BZX Rule 21.1(d)(1), C2 Rule 6.10(c), and EDGX Rule 
21.1(d)(1).
---------------------------------------------------------------------------

    The proposed rule change also modifies and adds detail to the 
definitions of MOC and LOC orders. Currently, an MOC order is a market 
or limit order to be executed as close as possible to the close of the 
market near to or at the closing price for the particular option 
series. The proposed rule change specifies that an MOC or LOC may not 
execute on the Exchange until three minutes prior to RTH market 
close.\41\ The System enters LOC and MOC orders into the Book in time 
sequence (based on the times at which the Exchange initially received 
them), where they may be processed in accordance with current Rule 6.45 
(which the Exchange intends to move to Rule 5.32 in the shell 
Rulebook).\42\ The Exchange notes that it does not have a closing 
auction in which market participants may participate in an auction 
rotation that determines the closing price for a series, like that of 
the equities space, but that the proposed MOC and LOC orders merely 
become executable three minutes prior to the close of RTH. The Exchange 
queues LOC and MOC orders in the System until three minutes before the 
RTH market close. At that time, the System handles a LOC or MOC order 
as a limit order or market order, as applicable, and processes them in 
accordance with Rule 6.45. The Exchange believes that three minutes 
prior to the RTH market close is a reasonable time prior to the market 
close to trigger MOC and LOC orders, as it provides those orders with 
sufficient time to interact with contra-side interest and potentially 
execute at a time close to the RTH market close. The proposed LOC and 
MOC order definitions also provide that the System cancels an LOC order 
or an MOC order (or an unexecuted portion of an LOC or MOC order) that 
does not execute by the RTH market close. This is consistent with 
current functionality and the purpose of these orders, which is to 
execute near the RTH market close on the day they were submitted to the 
Exchange. As the execution of MOC and LOC orders is linked to the RTH 
market close, such orders will be valid only during RTH; however, the 
System will accept such orders during any trading session.\43\ A User 
may not designate an MOC or LOC order as ``All Sessions''; any MOC or 
LOC order designated as All Sessions will be rejected.
---------------------------------------------------------------------------

    \41\ The Exchange currently triggers MOC and LOC orders three 
minutes prior to the RTH market close.
    \42\ Rule 6.45 describes how the System processes orders and 
quotes in the Book.
    \43\ The Exchange notes that an RTH Only MOC or LOC order 
submitted during GTH will remain on the book until the close of RTH.
---------------------------------------------------------------------------

    The proposed rule change deletes the definition of a market-if-
touched order and a facilitation order, as those order

[[Page 30280]]

types are not currently available on the Exchange and will not be 
available following the technology migration. The Exchange will move 
the definitions of an AIM Sweep order and Sweep and AIM order to the 
shell Rulebook in separate rule filings.
Deletion of Current Rules
    As noted above, to the extent the proposed rule change moves 
current Rules from the current Rulebook to the shell Rulebook, the 
proposed rule change also deletes those current Rules from the current 
Rulebook (as noted above, some rules will be moved to the shell 
Rulebook in future rule filings). However, these Rules will remain in 
effect and on the current Rulebook until completion of the technology 
migration, at which time the Rules in the shell Rulebook will take 
effect.
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.\44\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \45\ 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) \46\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \44\ 15 U.S.C. 78f(b).
    \45\ 15 U.S.C. 78f(b)(5).
    \46\ 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 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 Users of the Exchange that 
are also participants on Cboe Affiliated 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 Cboe Affiliated Exchanges. The Exchange notes that the proposed rule 
text is generally based on rules of Cboe Affiliated Exchanges and is 
different only to the extent necessary to conform to the Exchange's 
current rules, retain intended differences based on the Exchange's 
market model, or make other nonsubstantive changes to simplify, 
clarify, eliminate duplicative language, or make the rule provisions 
plain English.
    To the extent a proposed rule change is based on an existing Cboe 
Affiliated Exchange rule, the language of Exchange Rules and Cboe 
Affiliated Exchange rules may differ to extent necessary to conform 
with existing Exchange rule text or to account for details or 
descriptions included in the Exchange's Rules but not in the applicable 
Cboe Affiliated Exchange rule, such as references to trading sessions, 
which apply to the Exchange but not the Cboe Affiliated Exchanged, as 
they do not have Global Trading Hours. Where possible, the Exchange has 
substantively mirrored Cboe Affiliated Exchange rules, because 
consistent rules will simplify the regulatory requirements and increase 
the understanding of the Exchange's operations for Trading Permit 
Holders that are also participants on Cboe Affiliated Exchanges. The 
proposed rule change would provide greater harmonization between the 
rules of the Cboe Affiliated Exchanges, resulting in greater uniformity 
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. The Exchange also believes that 
the proposed amendments will contribute to the protection of investors 
and the public interest by making the Exchange's Rules easier to 
understand.
    The proposed rule change clearly identifies the ways in which 
trading during Regular Trading Hours will different from trading during 
Global Trading Hours (such as identifying order types and instructions 
that will not be available during Global Trading Hours). This ensures 
that investors will continue to be aware of any differences among 
trading sessions. The flexibility the Exchange maintains to make 
determinations for each trading session will allow the Exchange to 
apply settings and parameters to address the different market 
conditions that may be present during each trading session.
    The proposed All Sessions order and RTH Only order will protect 
investors by permitting investors who do not wish to trade during 
Global Trading Hours from having orders or quotes execute during those 
orders. Consistent with the goal of investor protection, the Exchange 
will not allow market orders during Global Trading Hours due to the 
expected increased volatility and decreased liquidity during these 
hours. The other proposed Order Instructions and Times-in-Force not 
currently available on the Exchange add functionality currently offered 
by Cboe Affiliated Exchanges in order to provide consistent order 
handling options across the Cboe Affiliated Exchanges. The proposed 
rule changes would also provide Users with access to optional 
functionality that may result in the efficient execution of such orders 
and will provide additional flexibility as well as increased 
functionality to the Exchange's System and its Users. As explained 
above, the proposed functionality is substantially similar to 
functionality on Cboe Affiliated Exchanges, and is optional for Users. 
The proposed rule change would provide greater harmonization between 
the order handling instructions available amongst the Cboe Affiliated 
Exchanges, resulting in greater uniformity and less burdensome and more 
efficient regulatory compliance. With respect to the proposed MTP 
modifier functionality, the Exchange believes the various proposed 
modifier options would allow firms to better manage order flow and 
prevent undesirable executions against themselves, and the proposed 
change described herein enhances the choices available to such firms in 
how they do so. The proposed rule change also is designed to support 
the principles of Section 11A(a)(1) of the Act \47\ in that it seeks to 
assure fair competition among brokers and dealers and among exchange 
markets. The proposed rule change would also provide Users with access 
to functionality that may result in the efficient execution of such 
orders and will provide additional flexibility as well as increased 
functionality to the Exchange's System and its Users.
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    \47\ 15 U.S.C. 78k-1(a)(1).
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    The Exchange believes not permitting Users to apply the Post Only 
instruction to AON orders will protect investors, because it will 
maximize execution opportunities for AON orders. An AON order's size 
contingency, and the fact

[[Page 30281]]

that AON orders will have last priority while resting in the Book, will 
provide AON orders resting on the Book with few opportunities for AON 
orders to receive an execution. Additionally, Post Only orders are 
intended to add displayed liquidity to the Book; because AON orders are 
not displayed, the purpose of a Post Only instruction conflicts with 
AON functionality. For these reasons, the Exchange believes there will 
be minimal investor demand for Post Only AON orders. This ensures that 
an AON order may execute upon entry if there is sufficient size resting 
on the Book. Additionally, as noted above, other exchanges do not 
permit AON orders to rest in the book at all (as they are required to 
be IOC).\48\ Unlike those exchanges, the Exchange will permit AON 
orders to rest in the Book, and will merely not permit AON orders to 
only rest in the book. Cboe Options does not currently offer a Post 
Only instruction, and therefore, an AON order submitted to Cboe Options 
pursuant to the proposed rule change will be handled in the same manner 
as it is handled today, as such an order would execute upon entry (if 
possible), route (if eligible), or enter the Book (subject to any User 
instructions).
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    \48\ See, e.g., ISE Rule 715(c); NOM Chapter VI, section 
1(e)(10); and Phlx Rule 1066(c)(4).
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    The Exchange believes the proposed rule change to offer use of the 
MCN Modifier (and not the other MTP Modifiers) for AON orders protects 
investors, because it provides all investors with the option to apply 
match-trade prevention functionality to AON orders. The Exchange 
believes there will be little demand for the use of any MTP Modifiers 
on AON orders given that primarily retail investors submit AONs, and 
retail investors are unlikely to have interest on both sides of the 
market. Therefore, orders of different retail investors would have the 
opportunity to execute against each other, unlike a broker who may have 
orders resting on both sides of the market and may want to avoid those 
orders executing against each other. Therefore, the Exchange believes 
offering one MTP Modifier for AON orders is sufficient. Given this 
expected minimal demand, the Exchange believes offering one MTP 
Modifier for AON orders is sufficient. Additionally, the Exchange 
believes that MCN is the most appropriate MTP modifier for AON orders 
because an offering of other MTP modifier for investors would present 
significant technical complexities given the size contingency of AON 
orders and that MCN is the simplest modifier to implement from a System 
perspective.\49\ The proposed rules provide investors with sufficient 
transparency regarding how the System will handle AON orders with MTP 
Modifiers, and Users may achieve other results manually if so desired. 
For example, if a User were to prefer to have a resting order with an 
MTP Modifier cancel and let the newer AON order rest, it could manually 
cancel the resting order and then resubmit the AON order. The Exchange 
has determined to handle an AON order with any other MTP Modifier as an 
MCN rather than cancel the AON, and the Exchange believes the proposed 
rules will protect investors because they provide investors with 
sufficient transparency regarding how the System will handle AON orders 
with MTP Modifiers. Additionally, Users may achieve other results 
manually if so desired.
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    \49\ Additionally, the Decrement and Cancel MTP Modifier is 
inconsistent with an AON order, because it may result in partial 
execution of an order.
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    The proposed changes to the definitions of MOC and LOC orders will 
benefit investors, as they provide additional transparency in the Rules 
regarding how the System handles these orders. The proposed changes are 
consistent with current functionality.
    The proposed rule change makes no substantive changes to the other 
current Rules being moved from the current Rulebook to the shell 
Rulebook. The proposed rule change makes various nonsubstantive changes 
throughout the Rules, which the Exchange believes will protect 
investors and benefit market participants, as these changes simplify or 
clarify rules, update defined terms, use plain English, and conform 
language to corresponding Cboe Affiliated Exchange rules as 
appropriate.
    As described above, the basis for the majority of the substantive 
proposed rule changes in this filing are the approved rules of Cboe 
Affiliated Exchanges, which have already been found to be consistent 
with the Act. For instance, the Exchange does not believe that any of 
the proposed Order Instructions or Times-in-Force raise any new or 
novel issues that have not previously been considered by the 
Commission.
    Thus, the Exchange further believes that the functionality that it 
proposes to offer is consistent with Section 6(b)(5) of the Act, 
because the System upon the technology migration is designed to 
continue to be efficient and its operation transparent, thereby 
facilitating transactions in securities, removing impediments to and 
perfecting the mechanism of a free and open market and a national 
market system.
    When Cboe Options migrates to the same technology as that of the 
Cboe Affiliated Exchanges, Users of the Exchange and other Cboe 
Affiliated Exchanges will have access to similar functionality on all 
Cboe Affiliated Exchanges and similar language can be incorporated into 
the rules of all Cboe Affiliated Exchanges. 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.

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 reiterates that 
the proposed rule change is being proposed in the context of the 
technology integration of the Cboe Affiliated Exchanges. Thus, the 
Exchange believes this proposed rule change is necessary to permit fair 
competition among national securities exchanges. In addition, the 
Exchange believes the proposed rule change will benefit Exchange 
participants in that it will provide a consistent technology offering 
for Users by the Cboe Affiliated Exchanges. Following the technology 
migration, the proposed Rules being added to the shell Rulebook will 
apply to all Users and orders submitted by Users in the same manner. As 
discussed above, the basis for most of the substantive proposed rule 
changes in this filing are the approved rules of Cboe Affiliated 
Exchanges, which have already been found to be consistent with the 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

[[Page 30282]]

shorter time as the Commission may designate, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act \50\ and Rule 19b-4(f)(6) 
\51\ thereunder.\52\
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    \50\ 15 U.S.C. 78s(b)(3)(A).
    \51\ 17 CFR 240.19b-4(f)(6).
    \52\ 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 text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. 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 rule-comments@sec.gov. Please include 
File Number SR-CBOE-2019-027 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-2019-027. 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-2019-027 and should be submitted on 
or before July 17, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\53\
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    \53\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019-13541 Filed 6-25-19; 8:45 am]
BILLING CODE 8011-01-P


