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Federal Register / Vol. 86, No. 18 / Friday, January 29, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES

trading floor remained closed until June 15, 2020. During the time when the trading floor was closed, the Exchange operated in an all-electronic trading environment and the temporary rules in Rule 5.24e1 applied to that electronic trading environment. The Exchange believes that, while those temporary rules did not fully replicate open outcry trading, they allowed all-electronic trading to occur more similarly to open outcry trading. The Exchange has continued to consider other enhancements to the all-electronic trading configuration to further replicate the open outcry trading environment.
As part of those enhancements, the Exchange recently adopted Rule 5.24e3, which would permit the Exchange to make available a virtual trading floor in one or more classes if the trading floor became inoperable.
That rule provides that if the Exchange makes a virtual trading floor available in a class, the temporary rules in subparagraph e1 above will not apply to that class.
The trading floor is currently open for open outcry trading, and the Exchange is operating pursuant to its normal hybrid trading rules. The Exchange implemented numerous health and safety measures in connection with the reopening of the trading floor on June 15, 2020 to help protect the safety and welfare of the trading floor community and help prevent the continued spread of COVID19.9 However, the Exchange recognizes the ongoing nature of the COVID19 pandemic in the United States, which may cause the Exchange to once again close its trading floor. In the event the Exchange did close its trading floor again, the Exchange believes it would be necessary to operate in an all-electronic trading environment. The Exchange may determine to make a virtual trading floor available in some or all classes.
However, to the extent the virtual trading is unavailable in any class, the Exchange believes it would be necessary again to apply the adopted temporary rules in Rule 5.24e1 in that class to maintain a fair and orderly market while the trading floor was not operable in order to create an all-electronic trading environment for that class similar to the otherwise unavailable open outcry distancing measures, placed significant limitations on large gatherings, limited travel, and closed nonessential businesses.
9 See Exchange Notice C2020052601, Standards of Conduct related to the Reopening of the Cboe Options Trading Floor and COVID19 May 26, 2020, available at https cdn.cboe.com/resources/
release_notes/2020/Standards-of-Conduct-relatedto-the-Reopening-of-the-Cboe-Options-TradingFloor-Notice-Final.pdf.

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trading environment. As noted above, Rule 5.24e1 is currently effective only until December 31, 2020 and the rules became inapplicable upon the reopening of the trading floor on June 15, 2020. Given the Exchange may believe it is appropriate to close the trading floor with little advanced notice and in a short timeframe to help protect the safety and welfare of the trading floor community, the Exchange proposes to extend the effectiveness of the temporary rules in Rule 5.24e1 to June 30, 2021 unless further extended.
The Exchange believes this will permit the Exchange to as seamlessly as possible transition back to an allelectronic trading environment in any class in which the Exchange did not make a virtual trading floor available.
The Exchange notes Rule 5.24e1 will not apply to trading during times when the trading floor remains operable or to any class in which the Exchange makes a virtual trading floor available when the trading floor is inoperable.
Previously when the temporary provisions of Rule 5.24e1 were in place, the Exchanges Regulatory Division has continued its standard routine surveillance reviews for electronic trading and implemented a regulatory plan to surveil the rules in place in Rule 5.24e1 when operating in a screen-based only environment. In the event the Exchange closes its trading floor again and the temporary provisions in Rule 5.24e1 become applicable to any class in an allelectronic trading environment, the Exchanges Regulatory Division would reimplement that regulatory plan to surveil those rules.
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 6b of the Act.10 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6b5 11 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 10 15
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system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is consistent with the Section 6b5 12 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers.
In particular, the Exchange believes the proposed rule change will remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, protect investors and the public interest by permitting the Exchange to as seamlessly as possible transition back to an all-electronic trading environment in the event the Exchange determines it is appropriate to again close its trading floor. The Exchange expects it would take this action if it believes necessary and appropriate to help protect the safety and welfare of the trading community. Such a determination may occur with little advance notice, and closure of the trading floor may need to occur in a short time frame. The Exchange continues to believe the recent amendments to Rule 5.24e1
allowed all-electronic trading to occur more similarly to open outcry trading while the trading floor was closed. The Exchange believes the proposed rule change is necessary and appropriate to provide TPHs with execution opportunities in an all-electronic trading environment in which a virtual trading floor is unavailable for orders that generally execute in open outcry trading. Rule 5.24e3, which would permit the Exchange to make available a virtual trading floor in one or more classes if the trading floor became inoperable, provides that if the Exchange makes a virtual trading floor available in a class, the temporary rules in subparagraph e1 will not apply to that class. The proposed rule change will provide investors with definitive knowledge of what rules will apply when the trading floor is closed and a virtual trading floor is not available.
B. Self-Regulatory Organizations 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 proposed rule change is not intended as a competitive filing, but rather extends the effectiveness of temporary rules as part of the Exchanges business continuity plans, which are intended to allow the Exchange to continue to maintain fair and orderly markets while 12 Id.

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