Notice2023-01881
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 21.1 Concerning All-or-None Orders With the Size of One Contract
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Published
January 31, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 20 (Tuesday, January 31, 2023)</title>
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[Federal Register Volume 88, Number 20 (Tuesday, January 31, 2023)]
[Notices]
[Pages 6352-6353]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-01881]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96748; File No. SR-CboeEDGX-2023-005]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Rule 21.1 Concerning All-or-None Orders With the Size of One
Contract
January 25, 2023.
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 January 13, 2023, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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 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.
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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 Rule 21.1. The text of the proposed rule change is provided
below.
(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe EDGX Exchange, Inc.
* * * * *
Rule 21.1. Definitions
The following definitions apply to Chapter XXI for the trading of
options listed on EDGX Options.
(a)-(c) No changes.
(d) The term ``Order Type'' shall mean the unique processing
prescribed for designated orders, subject to the restrictions set forth
in paragraph (j) below with respect to orders and bulk messages
submitted through bulk ports, that are eligible for entry into the
System. An Order Type applied to a bulk message applies to each bid and
offer within that bulk message. Unless otherwise specified in the Rules
or the context indicates otherwise, the Exchange determines which of
the following Order Types are available on a class, system, or trading
session basis. Rule 21.20 sets forth the Order Types the Exchange may
make available for complex orders.
(1)-(3) No changes.
(4) ``All-or-None orders'' or ``AON orders'' are orders to be
executed in their entirety or not at all. AON orders may be market or
limit orders. Users may not designate an AON order as All Sessions.
Users may not designate bulk messages as AON orders.
(A)-(E) No change.
(F) The System disregards an AON instruction on an order with a
size of one contract.
* * * * *
The text of the proposed rule change is also available on the
Exchange's website (<a href="http://markets.cboe.com/us/options/regulation/rule_filings/edgx/">http://markets.cboe.com/us/options/regulation/rule_filings/edgx/</a>), 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
The Exchange proposes to amend Rule 21.1. Specifically, the
proposed rule change codifies in new subparagraph (F) of the definition
of an All-or-None (``AON'') order in Rule 21.1(d)(4) that the System
will disregard an AON instruction on an order with a size of one
contract. An AON order is an order to be executed in its entirety or
not at all.\3\ Any order for one contract (regardless of whether it has
an AON instruction) may only be executed in its entirety or not at all,
as the Exchange does not permit executions of partial contracts.
Therefore, an AON instruction on such an order is unnecessary. If a
market participant submits an order for one contract with an AON
instruction, that order would execute in the same manner as an order
for one contract without an AON instruction. However, in certain
circumstances, the System handles orders with AON instructions
differently than non-AON orders. For example, pursuant to Rule 21.8(m),
AON orders are generally last in priority. Such provisions may prevent
or delay executions of one-lot orders with AON instructions, despite
the fact that they would otherwise execute in the same manner as one-
lot orders without AON instructions. The Exchange believes it is
appropriate to treat all one-lot orders (which are functionally like
AON orders (as they can only execute in their entirety or not at all))
as non-AON orders so such orders that unnecessarily include an AON
instruction, including AON orders from customers, do not lose otherwise
lose priority.
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\3\ Rule 21.1(d)(4).
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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.\4\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \5\ 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) \6\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
\6\ Id.
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The Exchange believes the proposed rule change will promote just
and equitable principles of trade and remove impediments to and perfect
the mechanism of a free and open market and a national market system,
because the System will handle and prioritize all one-lot orders, which
are functionally like AON orders (as they can only execute in their
entirety or not at all), in the same manner. The Exchange believes it
is equitable to treat all one-lot AON orders as non-AON orders so such
orders do not lose priority despite inclusion of an instruction that
has no practical impact on its execution. The
[[Page 6353]]
Exchange believes the proposed rule change may benefit and protect
market participants that submit one-lot orders with unnecessary AON
instructions, as it may improve the priority (and possibly increase
execution opportunities) of such orders. Additionally, because the
proposed rule change codifies current System behavior, it adds
transparency and clarity to the Rules, which ultimately benefits
investors.
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 that the proposed rule change will impose any intramarket
burden that is not necessary or appropriate in furtherance of the
purposes of the Act because it applies to all orders for one contract
with AON instructions in the same manner. Additionally, as described
above, by disregarding an AON instruction on an order for one contract,
the System handles and prioritizes all one-lot orders that may execute
in their entirety or not at all (and thus all one-lot orders) in the
same manner. The Exchange does not believe that the proposed rule
change will impose any intermarket burden that is not necessary or
appropriate in furtherance of the purposes of the Act because it only
impacts how the System internally handles and prioritizes one-lot
orders with AON instructions on the Exchange.
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 \7\ and Rule 19b-
4(f)(6) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 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 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 normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \9\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange requested
that the Commission waive the 30-day operative delay so that the
proposal may become operative immediately upon filing. The codification
of the new System functionality to treat all one-lot AON orders as non-
AON orders, so that such orders do not lose priority, may benefit and
protect investors sooner with the waiver of the operative delay. The
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest as
the proposed rule change does not raise any new or novel issues.
Accordingly, the Commission hereby waives the 30-day operative delay
and designates the proposed rule change operative upon filing.\10\
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\9\ 17 CFR 240.19b-4(f)(6)(iii).
\10\ 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.
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#4735322b226a24282a2a222933340734222469202831"><span class="__cf_email__" data-cfemail="1c6e697079317f7371717972686f5c6f797f327b736a">[email protected]</span></a>. Please include
File Number
SR-CboeEDGX-2023-005 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-CboeEDGX-2023-005.
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-CboeEDGX-2023-
005 and should be submitted on or before February 21, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-01881 Filed 1-30-23; 8:45 am]
BILLING CODE 8011-01-P
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