Notice2022-16659
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Update Exchange Rule 13.4(a) Regarding the Exchange's Usage of Data Feeds
Primary source
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Published
August 4, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 149 (Thursday, August 4, 2022)</title>
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[Federal Register Volume 87, Number 149 (Thursday, August 4, 2022)]
[Notices]
[Pages 47799-47800]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-16659]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95395; File No. SR-MEMX-2022-20]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Update Exchange
Rule 13.4(a) Regarding the Exchange's Usage of Data Feeds
July 29, 2022.
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 July 26, 2022, MEMX LLC (``MEMX'' or the ``Exchange'') 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.
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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
The Exchange is filing with the Commission a proposed rule change
to update Exchange Rule 13.4(a) regarding the sources of data that the
Exchange utilizes for the handling, execution and routing of orders, as
well as for surveillance necessary to monitor compliance with
applicable securities laws and Exchange rules, with respect to certain
market centers. The text of the proposed rule change is provided in
Exhibit 5.
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
The Exchange proposes to update Exchange Rule 13.4(a) regarding the
sources of data that the Exchange utilizes for the handling, execution
and routing of orders, as well as for surveillance necessary to monitor
compliance with applicable securities laws and Exchange rules, with
respect to certain market centers. Specifically, the Exchange proposes
to amend Exchange Rule 13.4(a) to reflect that it will no longer
utilize direct data feeds and instead will utilize market data from the
Consolidated Quotation System (``CQS'')/UTP Quotation Data Feed
(``UQDF'') for such purposes with respect to the following markets
centers: Cboe BYX, Cboe EDGA, Nasdaq BX, Nasdaq PSX, NYSE American,
NYSE Chicago, and NYSE National. The Exchange will not have a secondary
source for data for these market centers.
The Exchange proposes for this proposed rule change to become
operative on August 1, 2022, which is the date that the Exchange
intends to switch data sources with respect to these market centers, as
described above.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\5\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\6\ in particular, in that it
is 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.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that its proposal to update Exchange Rule
13.4(a) to reflect that it will utilize market data from the CQS/UQDF
with respect to Cboe BYX, Cboe EDGA, Nasdaq BX, Nasdaq PSX, NYSE
American, NYSE Chicago, and NYSE National is consistent with the Act
because it will ensure that the Rule correctly identifies and publicly
states on a market-by-market basis all of the specific network
processor and proprietary data feeds that the Exchange utilizes for the
handling, routing, and execution of orders, and for performing the
regulatory compliance checks related to each of those functions. In
particular, the Exchange receives and processes data feeds to
facilitate compliance with the applicable requirements of Regulation
NMS, including SEC Rule 611 (i.e., the Order Protection Rule).\7\ The
proposed rule change also removes impediments to and perfects the
mechanism of a free and open market and protects investors and the
public interest because it provides additional specificity, clarity and
transparency.
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\7\ 17 CFR 242.611.
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[[Page 47800]]
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes its proposed rule change would not impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. To the contrary, the Exchange
believes the proposal would enhance competition because disclosing the
primary and secondary data sources utilized by the Exchange with
respect to all of the exchanges enhances transparency and enables
investors to better assess the quality of the Exchange's execution and
routing services.
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, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 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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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \10\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ 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.
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\10\ 17 CFR 240.19b-4(f)(6).
\11\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange believes that waiver of the operative delay is
appropriate because the Commission previously approved MEMX Rule 13.4
to permit the Exchange to disclose via its rules the data feeds it
utilizes for order handling, routing and execution, and related
compliance processes, and the proposed changes merely provide necessary
updates to such disclosure. The Commission believes that waiver of the
30-day operative delay is consistent with the protection of investors
and the public interest because the proposed rule change does not raise
any new or novel issues and does not alter the Exchange's
functionality. Rather, the proposal memorializes that MEMX has chosen
not to subscribe to the direct proprietary market data feeds of several
exchanges, most of which currently have relatively low market share
(e.g., below 1%), and will instead utilize the applicable consolidated
market data source for those exchanges. MEMX's proposal is not novel,
as other exchanges also use the consolidated data feeds to receive data
from certain other exchanges.\12\ Therefore, the Commission hereby
waives the operative delay and designates the proposal as operative
upon filing.\13\
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\12\ See, e.g., NYSE American Rule 7.37E(d) (showing that NYSE
American uses the consolidated data for several exchanges, including
MEMX).
\13\ For purposes only of waiving the 30-day operative delay,
the Commission also has 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 under
Section 19(b)(2)(B) \14\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\14\ 15 U.S.C. 78s(b)(2)(B).
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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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#4e3c3b222b632d2123232b203a3d0e3d2b2d60292138"><span class="__cf_email__" data-cfemail="eb999e878ec6888486868e859f98ab988e88c58c849d">[email protected]</span></a>. Please include
File Number SR-MEMX-2022-20 on the subject line.
Paper Comments
<bullet> 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-MEMX-2022-20. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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-MEMX-2022-20 and should be submitted on
or before August 25, 2022.
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\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-16659 Filed 8-3-22; 8:45 am]
BILLING CODE 8011-01-P
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