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Federal Register / Vol. 86, No. 137 / Wednesday, July 21, 2021 / Notices and cancellations for orders/quotes, would be accepted during the halt period.
The Exchange next proposes to automate the process for resuming trading following a trading halt during CME futures reaching a limit state.
Particularly, the Exchange shall resume trading as described in Rule 5.31g once the following two conditions have been satisfied: 1 The 10-minute halt period has passed and 2, the relate CME
futures have not been in a limit state for the entirety of a rolling period of time which the Exchange determines which begins prior to the conclusion of the halt period.17 Resumption of trading will occur in the same manner that it is able to under Rule 5.31g today, but the Exchange would no longer have to rely on manual procedures for initiating the resumption of trading.

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Manual Determinations The Exchange notes that notwithstanding proposed Rules 5.20f1 and f2, the Exchange would retain the ability to manually resume trading at any time during a trading halt triggered by either a Dynamic Circuit Breaker or activation of CME OTH Price Limits at its discretion pursuant to current Rule 5.20b if it believes the interests of a fair and orderly market are best served by doing so. The Exchange also retains the ability to manually implement a trading halt at any time other than described under proposed paragraphs f1 and f2 if it is determined to be in the interests of a fair and orderly market and to protect investors pursuant to paragraph 5.20a.
To maintain clarity and transparency in the rules, the Exchange therefore also proposes to adopt Rule 5.20f3 to directly reference this continuing authority to manually halt and resume trading during GTH, notwithstanding the proposed provisions under Rule 5.20f1 and f2.
In sum, the Exchange believes a trading halt is generally necessary to maintain a fair and orderly market whenever there is a trading halt or activation of price limits in related 17 For example, if the Exchange determines that the period of consecutive time that CME futures must not be in a limit state is thirty consecutive seconds and the CME OTH Price Limit is activated at 4:00:00 a.m., then the Exchange shall initiate its reopening process at 4:10:00 a.m. so long as the futures were not in a limit state at any point during 4:09:30 and 4:10:00 a.m. Alternatively, for example, if the futures returned to a limit state at 4:09:45
a.m., trading in the related index options shall remain halted until at least 4:10:15 a.m. or until such time thirty consecutive seconds have passed in which CME futures were off the limit price e.g., if futures hit the limit price again at 4:09:55 a.m., then the earliest trading could resume is at 4:10:25
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futures products with respect to index options during GTH. Indeed, upon becoming aware of a halt of trading in related futures with respect to index options or activation of a OTH price limit, current practice is such that two Floor Officials in consultation with a designated senior executive officer of the Exchange would likely determine to halt trading in related index options, as permitted pursuant to current Rule 5.20a6. Although the Exchange currently has discretion to halt trading in these circumstances, the Exchange wishes to automate this process and make it clear in the rules that a trading halt shall automatically be triggered in certain circumstances as detailed above.
Similarly, for efficiency and transparency in the rules, the Exchange also wishes to specify when and how the Exchange shall automatically resume trading following a trading halt triggered by a Dynamic Circuit Breaker on CME or activation of a CME OTH
Price Limit.18 As noted above, pursuant to Rule 5.20b, when the conditions which led to the halt are no longer present, trading in a halted security may be resumed on the Exchange at its discretion. The Exchange notes that when a trading halt in related futures with respect to index options has ended, or a futures product is no longer in a limit state, the Exchange usually determines to resume trading.
Accordingly, the Exchange believes its proposal to automatically halt trading when CME employs a Dynamic Circuit Breaker or there is an activation of CME
OTH Price Limits is consistent with the Exchanges current authority to consider halting when there is a halt of trading or activation of price limits in related futures.19 The Exchange similarly believes the proposals relating to automatic resumption of trading following the two-minute Dynamic Circuit Breaker-triggered halt or tenminute limit state-triggered halt period is consistent with the Exchanges authority to consider resuming trading when the conditions that led to the halt are no longer present.20
Implementation Date The Exchange proposes to announce the implementation date of the proposed rule change in an Exchange 18 The Exchange notes that notwithstanding the proposed automated procedures for reopening, the Exchange would retain the ability to manually resume trading prior to the end of either trading halt period at its discretion pursuant to current Rule 5.20b. Similarly, the Exchange retains the ability to manually extend the halting period pursuant to current Rule 5.20a.
19 See Cboe Options Rule 5.20a6.
20 See Cboe Options Rule 5.20a6.

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Notice, to be published no later than sixty 60 days following the operative date. The implementation date will be no later than ninety 90 days following the operative date.
2. Statutory Basis The Exchange believes the proposed rule change is consistent with the requirements of Section 6b of the Act,21 in general, and Section 6b5 of the Act,22 in particular, in that it is designed to remove impediments to and perfect the mechanism of a free and open market and a national market system, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest and not to permit unfair discrimination between customers, issuers, brokers, or dealers.
In particular, the Exchange believes its proposal is consistent with the Exchanges current authority to determine when to halt and resume trading pursuant to Rules 5.20a and b. Today, two Floor Officials, in consultation with a designated senior executive officer of the Exchange, may halt trading in any security in the interests of a fair and orderly market and to protect investors. As discussed above, in making their determination, they may consider whether unusual conditions or circumstances are present, which may include the activation of price limits on futures exchanges or the halt of trading in related futures with respect to index options.23 Similarly, two Floor Officials, in consultation with a designated senior executive officer of the Exchange, may determine when in the interests of a fair and orderly market are best served by a resumption of trading. Among the factors to be considered in this determination are whether the conditions which led to the halt are no longer present.24 Although the Exchanges current rules provide the Exchange discretion to i halt trading when there is a halt of trading in related futures or activation of price limits and 2 resume when the conditions that led to a halt are no longer present, the Exchange historically was likely to halt and reopen in such situations. The Exchange believes that adopting an automated process in these situations would be more consistent and reliable for market participants and investors as such a process would be more efficient and not rely on manual processing by Exchange personnel. Moreover, the Exchange believes the proposed rule 21 15

U.S.C. 78fb.
U.S.C. 78fb5.
23 See Rule 5.20a6.
24 See Rule 5.20b.
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