[Federal Register Volume 84, Number 170 (Tuesday, September 3, 2019)]
[Notices]
[Pages 46057-46061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-18873]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86776; File No. SR-CboeEDGX-2019-053]


Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Rules 21.20 and 21.22 in Connection With Stock-Options Orders

August 27, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 22, 2019, Cboe EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
filed the 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to 
amend Rules 21.20 and 21.22 in connection with stock-options orders. 
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://markets.cboe.com/us/options/regulation/rule_filings/edgx/), 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
    On April 26, 2019, the Exchange filed a rule filing, SR-CboeEDGX-
2019-028, which was approved by the Securities and Exchange Commission 
(the ``Commission'') on July 26, 2019, which permits use of it 
Automated Improvement Process (``AIM'') for complex orders.\5\ 
Specifically, the filing describes how complex orders may be submitted 
to and will be processed in an AIM Auction (``C-AIM'' or ``C-AIM 
Auction''). Also, on June 27, 2019, the Exchange filed SR-CboeEDGX-
2019-039, which adopts stock-option order functionality on the 
Exchange.\6\ The Exchange notes that it implemented the proposed 
changes under SR-CboeEDGX-2019-039 on August 16, 2019 as part of 
Feature Pack 9 \7\ in with the migration of Cboe Exchange, Inc. (``Cboe 
Options'') technology to the same trading platform used by the

[[Page 46058]]

Exchange, Cboe C2 Exchange, Inc. (``C2''), and Cboe BZX Exchange, Inc. 
(``BZX Options'') in the fourth quarter of 2019. The Exchange now 
proposes an additional amendment under the rules proposed by SR-
CboeEDGX-2019-028 and under the rules proposed by SR-CboeEDGX-2019-039. 
Specifically, the Exchange proposes to add an additional event under 
Rule 21.22(d)(1) (as proposed under SR-CboeEDGX-2019-028) that would 
cause a C-AIM Auction to conclude early. The Exchange also proposes to 
amend Rule 21.20(f)(2) (as proposed under SR-CboeEDGX-2019-039) to 
provide for how the Exchange will handle a stock-option order with one 
or multiple options legs when different minimum trading increments are 
allowed for the stock and options legs of such trades. The Exchange 
intends to implement these amendments to the proposed rules under SR-
CboeEDGX-2019-028 and SR-CboeEDGX-2019-039 to be effective on August 
22, 2019, or as close in time as possible to the Feature Pack 9 
implementation date of August 16, 2019, so that the proposed changes 
may seamlessly coincide with the implementation of the rule changes 
under the two rule filings.
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    \5\ See Securities Exchange Act Release No. 85831 (May 10, 
2019), 84 FR 22178 (May 16, 2019) (Notice of Filing of a Proposed 
Rule Change To Adopt Rule 21.22 (Complex Automated Improvement 
Mechanism)) (SR-CboeEDGX-2019-028); Securities Exchange Act Release 
No. 86493 (July 26, 2019) (Notice of Filing of Amendment No. 1 and 
Order Granting Accelerated Approval of a Proposed Rule Change, as 
Modified by Amendment No. 1, to Adopt Rule 21.22 (Complex Automated 
Improvement Mechanism)).
    \6\ See Securities Exchange Act Release No. 86353 (July 11, 
2019), 84 FR 34230 (July 17, 2019) (Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change To Add Stock-Option Order 
Functionality and Complex Qualified Contingent Cross (``QCC'') Order 
With Stock Functionality, and To Make Other Changes to its Rules) 
(SR-CboeEDGX-2019-039).
    \7\ The Exchange notes that implementation of these changes as a 
part of Feature Pack 9 was recently postponed via Exchange notice 
from a roll-out of August 5, 2019 to August 16, 2019. See Exchange 
Notice No. C2019080200 (Updated August 02, 2019). The changes under 
SR-CboeEDGX-2019-028 have been postponed and are planned to be 
implemented soon after August 16, 2019.
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    Currently, under Rule 21.22(d)(1) C-AIM Auction concludes at the 
earliest to occur of the following times:
    (a) The end of the C-AIM Auction period;
    (b) upon receipt by the System of an unrelated non-Priority 
Customer complex order on the same side as the Agency Order that would 
post to the COB at a price better than the stop price;
    (c) upon receipt by the System of an unrelated Priority Customer 
complex order on the same side as the Agency Order that would post to 
the COB at a price equal to or better than the stop price;
    (d) upon receipt by the System of an unrelated non-Priority 
Customer order or quote that would post to the Simple Book and cause 
the SBBO on the same side as the Agency Order to be better than the 
stop price;
    (e) upon receipt by the System of an unrelated Priority Customer 
order in any component of the complex strategy that would post to the 
Simple Book and cause the SBBO on the same side as the Agency Order to 
be equal to or better than the stop price;
    (f) upon receipt by the System of a simple non-Priority Customer 
order that would cause the SBBO on the opposite side of the Agency 
Order to be better than the stop price, or a Priority Customer order 
that would cause the SBBO on the opposite side of the Agency Order to 
be equal to or better than the stop price;
    (g) the market close; and
    (h) any time the Exchange halts trading in the complex strategy or 
any component of the complex strategy, provided, however, that in such 
instance, the C-AIM Auction concludes without execution.
    The Exchange now proposes to add an event under Rule 21.22(g) \8\ 
that would conclude a C-AIM Auction in response to an incoming order 
that would cause the SBBO to be at a price not permissible under the 
Limit Up-Limit Down Plan or Regulation SHO,\9\ and would conclude the 
C-AIM Auction without execution. This will ensure that the stock leg of 
a stock-option order submitted into a C-AIM Auction does not execute at 
a price not permissible under that plan or regulation. This is 
consistent with current C-AIM functionality to ensure that stock legs 
do not trade at prices not permissible under the Limit Up-Limit Down 
Plan or Regulation SHO.\10\
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    \8\ And subsequently re-letter the subparagraphs, changing 
current subparagraph (g) to (h), and current (h) to (i).
    \9\ See Rule 21.20(j)(3).
    \10\ Id.
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    The Exchange proposes to amend Rule 21.20(f)(2) to provide for how 
the Exchange will handle a stock-option order with one or multiple 
options legs when different minimum trading increments are allowed for 
the stock and options legs of such trades. Pursuant to SR-CboeEDGX-
2019-039, Rule 21.20(f)(1)(B) provides that the option leg(s) of a 
stock-option order may be executed in $0.01 increments, regardless of 
the minimum increments otherwise applicable to the option leg(s), and 
the stock leg of a stock-option order may be executed in any decimal 
price permitted in the equity market. In a small subset of cases, 
generally as a result of unusual leg ratios, in calculating the total 
notional value a stock leg may result in a price outside of the NBBO, 
thus cannot execute pursuant to Rule 21.20(f)(2)(B).\11\ In order to 
allow for the strategy to execute, the proposed rule change would offer 
functionality that allows the legs of the stock option order to trade 
outside of their expected notional value by a specified amount 
determined by the Exchange.\12\ Therefore, the System could ensure that 
options legs and stock leg were priced in in line with Rule 21.20, 
which includes ensuring that: (1) The option leg of a stock-option 
order with one option leg does not trade at a price worse than the 
individual component price on the Simple Book or at the same price as a 
Priority Customer Order on the Simple Book; (2) that the option leg(s) 
of a stock-option order with more than one option leg trades does not 
execute at a net price (i) that would cause a leg to execute at a price 
of zero, (ii) worse than the SBBO or equal to the SBBO when there is a 
Priority Customer Order at the SBBO, except AON complex orders may only 
execute at prices better than the SBBO, (ii) that would cause a leg to 
be executed at a price worse than the individual component prices on 
the Simple Book, (iv) worse than the price that would be available if 
the complex order Legged into the Simple Book, or (v) that would cause 
any component of the complex strategy to be executed at a price ahead 
of a Priority Customer Order on the Simple Book without improving the 
BBO of at least one component of the complex strategy; and (3) that a 
stock leg does not execute above (below) the buffer amount that is 
above (below) the NBBO.\13\ Although this would result in a negligible 
difference (i.e. residual amount) between the expected notional value 
of the trade and the actual trade value, Users generally prefer not to 
forgo an execution for their stock-option strategies when the residual 
amount is miniscule compared to the total value of the trade. The value 
allowance would work, for example, as follows:
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    \11\ Pursuant to Rule 21.20(f)(2)(B), the System will only 
execute the stock leg of a stock-option order up to a buffer amount 
outside of the stock leg NBBO and that the execution price of the 
buy (sell) stock leg of a QCC with Stock Order may be any price 
(including outside the NBBO for the stock leg). While the QCT 
exemption permits a stock leg to execute outside of the NBBO, the 
Exchange still offers price protections to prevent execution too far 
away from the NBBO, which it understands is consistent with market 
participants' desire. Currently on EDGX, the buffer referenced in 
Rule 21.20(f)(2)(B) is set to zero, so the Exchange does not permit 
execution of the stock leg of a stock-option order outside of the 
NBBO (other than a QCC with stock order, which will execute 
immediately without exposure and thus is unlikely to trade too far 
outside of the NBBO). Current rules of other exchanges (such as Cboe 
Options) prevent execution of the stock component from being too far 
away from the NBBO, as do the rules of stock exchanges.
    \12\ Pursuant to Rule 16.3, the Exchange announces to Options 
Members all determinations it makes pursuant to the Rules via 
specifications, Notices, or Regulatory Circulars with appropriate 
advanced notice, which will be posted on the Exchange's website, or 
electronic message.
    \13\ See supra note 11.
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     Assume the Exchange has determined a trade value allowance 
of $0.50 from the expected trade value.
     Assume also that:

(Equity) NBBO: 10.00 x 11.00
(Option) NBBO: 1.00 x 1.05, BBO: 1.00 x 1.05
SNBBO: 7.70 x 8.32 (i.e., bid = (47 x 10.00 / 100) + (3 x 1.00) = 7.70, 
and

[[Page 46059]]

offer = (47 x 11.00 / 100) + (3 x 1.05) = 8.32)

     A User enters a stock-option order to Buy 47 shares of XYZ 
stock and Buy 3 June 10 XYZ calls with a net price of 8.30 and a 
quantity of 3.
     The order matches with corresponding contra order on the 
complex order book.
     The expected trade value based on the order's limit price, 
quantity and a contract multiplier of 100 is $2,490.00 (i.e., 8.30 x 3 
x 100).
     The calculated options match price is 1.00 based on market 
prices and the stock match price is 11.2766 (rounded four decimals), 
therefore, outside of the NBBO.
     The trade value allowance then calculates the stock match 
price that results in a total notional trade value of $2489.9934:

Options leg notional = $1.05 x 100 x 3 x 3 = $945
Stock Leg notional = $10.9574 x 47 x 3 = $1,544.9934
    Notional trade value = $2,489.9934, which is within the $0.50 trade 
value allowance.

    The Exchange notes that a valid trade price within the NBBO for the 
stock leg with the smallest residual between the difference in actual 
trade value and expected notional trade value is $10.9574. Therefore, 
in this example, the corresponding options leg match price would be 
$1.05 because it is the options match price that could be paired with a 
valid stock trade price that would also allow for the smallest residual 
between the difference in actual trade value and expected notional 
trade value. If, for example, the next allowable options increment \14\ 
within the BBO ($1.04) was used, the stock leg notional trade value 
matched to meet the notional value closest to the expected trade value 
would be $11.0213, and therefore still outside of the NBBO.\15\ The 
Exchange also notes that $1.05 is consistent with the BBO in this 
example.
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    \14\ See Rule 21.20(f)(1)(B), which states that the option 
leg(s) of a stock-option order may be executed in $0.01 increments.
    \15\ The notional trade value would be: ($1.04 x 100 x 3 x 3) + 
($11.0213 x 47 x 3) = $2,490.0033.
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    Under the proposed rule, the System will not apply the trade value 
allowance to orders with a ``C'' capacity code (for the account of a 
Priority Customer).\16\ This limitation is intended to function as an 
additional protection for customers who may not have the same levels of 
trading sophistication or technological and informational advantages as 
that of Professionals or broker-dealers. Therefore, customers may not 
have measures in place to assume any level of risk that may be 
associated with trading outside of the expected trade value (which risk 
the Exchange believes is de minimis given that the Exchange will impose 
a reasonable cap, as described below, on the amount by which the actual 
trade value may differ from the expected trade level). As a result, the 
Exchange believes that not applying the trade value allowance to 
customer orders will further protect customers from assuming this 
potential risk for which they may not have calculated.
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    \16\ See Rule 16.1, which states that a Priority Customer means 
any person or entity that is not a broker or dealer in securities or 
a Professional. See also Securities Exchange Act Release No. 86415 
(July 19, 2019), 84 FR 35905 (July 25, 2019) (Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change Relating To Update 
Rule 16.1 To Include the Definition of Capacity, as well as Amend 
Its Fee Schedule To Reflect This Update) (SR-CboeEDGX-2019-046).
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    Overall, this proposed functionality is a helpful feature which 
will allow Users to receive an expeditious execution, and trade the 
stock and options components of a stock-option strategy in a moving 
market without introducing legging risk. Without this functionality 
members would be forced to resubmit their orders and potentially 
receive a much worse price or miss an execution. The Exchange will 
announce to all market participants the determined trade value 
allowance amount pursuant to Rule 1.5. The Exchange would determine an 
allowance amount that would reasonably account for the average 
differences in notional trade values as well as the cost benefit to 
market participants between the differences in actual trade value 
versus expected notional trade value and the imposition of resubmitting 
their orders and potentially receiving a much worse price or missing an 
execution.\17\ The Exchange notes that, if, however, a User determines 
that the trade value allowance is more attractive or favorable on 
another venue, Users are free to execute on other such venues. The 
proposed Exchange determination of a value allowance outside of the 
expected notional value is currently in place on other exchanges.\18\
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    \17\ The Exchange expects this value to be initially set at 
$0.50 as represented in the example above.
    \18\ See Nasdaq ISE Rules, Supplementary Material .03 to Options 
3, Section 14; and Nasdaq MRX Rules, Supplementary Material .03 to 
Options 3, Section 14.
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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.\19\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \20\ 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) \21\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(5).
    \21\ Id.
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    In particular, the proposed additional event that will conclude a 
C-AIM Auction is reasonable and promotes a fair and orderly market and 
national market system, because it will ensure that executions at the 
conclusion of a C-AIM Auction occur at permissible prices, 
specifically, that the stock leg of a stock-option order submitted into 
a C-AIM Auction does not execute at a price not permissible under the 
Limit Up-Limit Down Plan or Regulation SHO. Moreover, the Exchanges 
notes that this is consistent with current C-AIM functionality to 
ensure that stock legs do not trade at prices not permissible under the 
Limit Up-Limit Down Plan or Regulation SHO, therefore, the Exchange 
believes it is appropriate to conclude a C-AIM Auction if the proposed 
circumstance occurs.\22\ The proposed rule change will also benefit 
investors by providing additional clarity regarding what will cause C-
AIM Auction to conclude.
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    \22\ See supra note 6.
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    The proposed Exchange determination to set an allowable value 
outside of the expected notional trade value for the legs of a stock-
option order removes impediments to and perfects the mechanism of a 
free and open market and a national market system because it provides 
Users with functionality that allows a User's stock-option strategies 
to trade outside of their specified net prices when the executable 
stock match price results in a small difference between the expected 
notional value of the trade and the

[[Page 46060]]

actual trade value. Users generally prefer not to forgo an execution 
for their stock-option strategies when this occurs, as the residual 
amount is miniscule compared to the value of the trade. As a result of 
the proposed rule, Users will be able to receive an expeditious 
execution, and trade the stock and options components of a stock-option 
strategy in a moving market without introducing legging risk, instead 
of resubmitting their orders and potentially receiving a much worse 
price or missing an execution. In addition to this, the Exchange also 
believes that not permitting the trade value allowance to apply to 
customer orders will remove impediments to and perfect the mechanism of 
a free and open market and national market system, and, in general 
protect investors, in that it prevents customers from assuming 
potential risk (which the Exchange believes is de minimis given that 
the Exchange will impose a reasonable variance, as reiterated below). 
The Exchange believes the proposed rule will protect customers because 
customers may not have the same levels of trading sophistication or 
technological and informational advantages as that of Professionals or 
broker-dealers and, thus, may not have the measures in place to assume 
any level of risk that may be associated with trading outside of the 
expected trade value.
    As stated above, the proposed Exchange determination of a value 
allowance outside of the expected notional value is currently in place 
on other exchanges.\23\ The Exchange believes that the differences 
between the proposed rule and the rules of other exchanges will remove 
impediments to and perfect the mechanism of a free and open market and 
national market system, and, in general, protect investors. The other 
exchanges' rules allow for a notional variance based on a percentage, 
while the proposed rule will allow for a specific dollar amount which 
the exchange believes is more straightforward and less confusing for 
investors than the calculation of a percentage. The other exchanges' 
rules allow for Member determination or a default to Exchange 
determination of the notional variance, while the proposed rule will 
allow only for Exchange determination, which the Exchange believes will 
also simplify the implementation of this functionality and mitigate any 
potential investor confusion by setting just one Exchange-determined 
notional variance. The other exchanges rules also do not differentiate 
between the trade value application to customer and non-customer 
orders, however, as described herein this filing, the Exchange believes 
this implements an additional protection for customer orders. Finally, 
unlike other exchanges' rules, the proposed rule does not provide for a 
User opt-out function. Because the difference between the expected 
notional value of the trade and the actual trade value is 
inconsequential, especially as compared to the overall benefit to 
investors of an expeditious execution, this proposed difference will 
not have any significant impact on the Exchange's participants and, 
instead, will benefit participants overall. As stated, the Exchange 
would determine an allowance amount that would reasonably account for 
the average differences in notional trade values as well as the cost 
benefit to market participants between the differences in actual trade 
value versus expected notional trade value and the imposition of 
resubmitting their orders and potentially receiving a much worse price 
or missing an execution. The Exchange notes that, if, however, a User 
determines that the trade value allowance is more attractive or 
favorable on another venue, Users are free to execute on other such 
venues.
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    \23\ See supra note 17.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange does not 
believe the proposed rule change to add an additional event that would 
conclude a C-AIM Auction will impose any burden on intramarket 
competition, as this event, if it is the earliest to occur of the list 
of events that would conclude a C-AIM Auction, will conclude a C-AIM 
Auction in the manner which already occurs for the other events 
currently listed under the rule, and a manner which is consistent with 
current C-AIM functionality that ensures stock legs do not trade at 
prices not permissible under the Limit Up-Limit Down Plan or Regulation 
SHO. The subsequent conclusion of a C-AIM Auction applies in the same 
manner to all Users. The Exchange does not believe the proposed change 
to allow option legs of a stock-option strategy to trade outside of 
their expected notional value by a specified amount determined by the 
Exchange and communicated to Members via specifications and/or 
Regulatory Circular will impose any burden on intramarket competition 
because the amount will apply to all User's non-customer stock-option 
strategies equally. As described above, the Exchange does not believe 
that excluding customer orders from the trade value allowance 
functionality would impose any significant burden on completion as 
customers generally do not have the same levels of trading 
sophistication or technological and informational advantages as that of 
Professionals or broker-dealers in order to take on any level of risk 
associated with trading outside the expected trade value. Rather, the 
proposed rule benefits customers by ensuring that customers will not 
assume potential risk for which they have not calculated.
    The Exchange does not believe the proposed rule change to add an 
additional event that would conclude a C-AIM Auction will impose any 
burden on intermarket competition because the proposed change is 
designed as a protection intended to ensure that the stock leg of a 
stock-option order submitted into a C-AIM Auction does not execute at a 
price not permissible under the Limit Up-Limit Down Plan or Regulation 
SHO. As stated, current C-AIM functionality already exists which 
ensures stock legs do not trade at prices not permissible under this 
plan or regulation. The Exchange does not believe the proposed rule 
change to allow option legs of a stock-option strategy to trade outside 
of their expected notional value by a specified amount determined by 
the Exchange and communicated to Members via specifications and/or 
Regulatory Circular will impose any burden on intermarket competition 
because it is substantially similar to other options exchanges' rules, 
previously filed with the Commission.\24\
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    \24\ See supra note 17.
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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: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A)

[[Page 46061]]

of the Act \25\ and Rule 19b-4(f)(6) thereunder.\26\
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    \25\ 15 U.S.C. 78s(b)(3)(A).
    \26\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and the text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \27\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \28\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
notes that waiver of the operative delay would allow it to implement 
the proposal immediately and as close in time as possible to the 
implementation date of other rule changes regarding stock-option 
orders.\29\ The Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest because the proposed rule change is designed to benefit 
investors by allowing stock-option strategies to trade outside of their 
specified net price when the executable match price results in a small 
difference between the expected notional value of the trade and the 
actual trade value, instead of forgoing an execution for their stock-
option strategies when this occurs. The Commission also notes that the 
proposed rule change is consistent with the practices of other options 
exchanges, which provide for similar notional variance for legs in a 
stock-option strategy.\30\ Accordingly, the Commission hereby waives 
the operative delay and designates the proposal operative upon 
filing.\31\
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    \27\ 17 CFR 240.19b-4(f)(6).
    \28\ 17 CFR 240.19b-4(f)(6)(iii).
    \29\ See supra note 7.
    \30\ See supra note 18.
    \31\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall 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-CboeEDGX-2019-053 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-CboeEDGX-2019-053. 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-CboeEDGX-2019-053 and should be 
submitted on or before September 24, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-18873 Filed 8-30-19; 8:45 am]
 BILLING CODE 8011-01-P


