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Federal Register / Vol. 86, No. 18 / Friday, January 29, 2021 / Notices
SECURITIES AND EXCHANGE
COMMISSION
Release No. 3490986; File No. SRCBOE
2021004

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 5.24
January 25, 2021.

Pursuant to Section 19b1 of the Securities Exchange Act of 1934 the Act,1 and Rule 19b4 thereunder,2
notice is hereby given that on January 14, 2021, 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 noncontroversial proposed rule change pursuant to Section 19b3Aiii of the Act 3 and Rule 19b4f6
thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
I. Self-Regulatory Organizations Statement of the Terms of Substance of the Proposed Rule Change Text of the Proposed Rule Change a Cboe Exchange, Inc. the Exchange or Cboe Options proposes to amend Rule 5.24. The text of the proposed rule change is provided below.
additions are italicized; deletions are bracketed

Rules of Cboe Exchange, Inc.

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Rule 5.24. Disaster Recovery ad No change.
e Loss of Trading Floor. If the Exchange trading floor becomes inoperable and the Exchange does not make a virtual trading floor available in a class pursuant to subparagraph 3 below, the Exchange will continue to operate in a screen-based only environment using a floorless configuration of the System that is operational while the trading floor facility is inoperable. The Exchange will operate using this configuration only until the Exchanges trading floor facility is operational. Open outcry trading will not be available in the event the trading floor becomes inoperable, except as otherwise set forth in this paragraph e below and pursuant to Rule 5.26, as applicable.
1 15

U.S.C. 78sb1.
CFR 240.19b4.
3 15 U.S.C. 78sb3Aiii.
4 17 CFR 240.19b4f6.
2 17

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1 Applicable Rules. In the event that the trading floor becomes inoperable, trading will be conducted pursuant to all applicable System Rules, except that open outcry Rules will not be in force, including but not limited to the Rules or applicable portions of the Rules in Chapter 5, Section G, and as follows subparagraphs A through DC will be effective until December 31, 2020June 30, 2021:

The text of the proposed rule change is also available on the Exchanges website http www.cboe.com/
AboutCBOE/
CBOELegalRegulatoryHome.aspx, at the Exchanges Office of the Secretary, and at the Commissions Public Reference Room.
II. Self-Regulatory Organizations 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 Organizations Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 5.24 regarding the Exchanges business continuity and disaster recovery plans. Rule 5.24 describes which Trading Permit Holders TPHs are required to connect to the Exchanges backup systems as well as certain actions the Exchange may take as part of its business continuity plans so that it may maintain fair and orderly markets if unusual circumstances occurred that could impact the Exchanges ability to conduct business.
This includes what actions the Exchange would take if its trading floor became inoperable. Specifically, Rule 5.24e states if the Exchange trading floor becomes inoperable and the Exchange does not make a virtual trading floor available in a class pursuant to Rule 5.24e3, the Exchange will continue to operate in a screen-based only environment using a floorless configuration of the System that is operational while the trading floor facility is inoperable. The Exchange would operate using that
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configuration only until the Exchanges trading floor facility became operational. Open outcry trading would not be available in the event the trading floor becomes inoperable.5
Rule 5.24e1 currently states in the event that the trading floor becomes inoperable, trading will be conducted pursuant to all applicable System Rules, except that open outcry Rules would not be in force, including but not limited to the Rules or applicable portions in Chapter 5, Section G,6 and that all nontrading rules of the Exchange would continue to apply. The Exchange recently adopted several rule changes that would apply during a time in which the trading floor in inoperable, which are currently effective until December 31, 2020.7 The Exchange believes these rules were necessary to implement to maintain a fair and orderly market while the trading floor was not operable in order to create an all-electronic trading environment similar to the otherwise unavailable open outcry trading environment.
As of March 16, 2020, the Exchange suspended open outcry trading to help prevent the spread of COVID19.8 The 5 Pursuant to Rule 5.26, the Exchange may enter into a back-up trading arrangement with another exchange, which could allow the Exchange to use the facilities of a back-up exchange to conduct trading of certain of its products. The Exchange currently has no back-up trading arrangement in place with another exchange.
6 Chapter 5, Section G of the Exchanges rulebook sets forth the rules and procedures for manual order handling and open outcry trading on the Exchange.
7 See Securities Exchange Act Release Nos. 88386
March 13, 2020, 85 FR 15823 March 19, 2020
SRCBOE2020019; 88447 March 20, 2020, 85
FR 17129 March 26, 2020 SRCBOE2020023;
88490 March 26, 2020, 85 FR 18318 April 1, 2020 SRCBOE2020026; 88530 March 31, 2020, 85 FR 19182 April 6, 2020 SRCBOE
2020031; 88886 May 15, 2020, 85 FR 31008
May 21, 2020 SRCBOE2020047; 89307 July 14, 2020, 85 FR 43938 July 20, 2020 SRCBOE
2020066; 89789 September 8, 2020, 85 FR 56658
September 14, 2020 SRCBOE2020081; and 90174 October 14, 2020, 85 FR 66617 October 20, 2020 SRCBOE2020092. The Exchange recently adopted permanent Position Compression Cross PCC/Compression orders and deleted subparagraph D, pursuant to which the Exchange could offer PCC/Compression orders in the even the trading floor was inoperable. See Securities Exchange Act Release No. 90179 October 14, 2020, 85 FR 66590 October 20, 2020 SRCBOE2020
074. In the rule filing to permanently adopt PCC/
Compression orders, the Exchange deleted the temporary version of compression orders in subparagraph E in its entirety which was later relettered to subparagraph D pursuant to a separate rule filing that deleted the prior subparagraph D, but inadvertently did not change the applicability of subparagraph e1 to subparagraphs A through C rather than A
through D. Therefore, the proposed rule change makes this update.
8 On March 11, 2020, the World Health Organization characterized COVID19 as a pandemic and to slow the spread of the disease, federal and state officials implemented social-

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