Notice2023-11239
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Offer Field-Programmable Gate Array Technology as an Optional Delivery Mechanism for BX TotalView
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 26, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 102 (Friday, May 26, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 102 (Friday, May 26, 2023)]
[Notices]
[Pages 34201-34203]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-11239]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97541; File No. SR-BX-2023-012]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Offer Field-
Programmable Gate Array Technology as an Optional Delivery Mechanism
for BX TotalView
May 22, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 12, 2023, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed with
the Securities and Exchange Commission (``SEC'' or ``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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to offer field-programmable gate array
(``FPGA'') technology as an optional delivery mechanism for BX
TotalView.
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
BX proposes to offer field-programmable gate array (``FPGA'')
technology as an optional delivery mechanism for BX TotalView.\3\
---------------------------------------------------------------------------
\3\ A proposal to make FPGA technology also available at the PSX
Exchange is being submitted together with this proposal. The
Exchange initially filed this Proposal on May 4, 2023 (SR-BX-2023-
011). On May 12, 2023, the Exchange withdrew SR-BX-2023-011 and
replaced it with the instant filing. This filing corrects an error
in the initial submission, but includes no substantive changes.
---------------------------------------------------------------------------
FPGA technology has been used for over a decade by the Nasdaq Stock
Market to facilitate customer ingestion of large quantities of
information at periods of peak activity. FPGA hardware is designed to
facilitate the processing of large data packets without introducing
variable queuing, thereby improving the predictability of data transfer
on telecommunications ports, a process known as ``determinism.''
Outside of peak activity, FPGA helps customers establish more
predictable consistency in message throughput over the course of the
trading day.
[[Page 34202]]
The Exchange proposes to use FPGA technology to process BX
TotalView data. BX TotalView is a real-time market data product that
provides full order depth using a series of order messages to track the
life of customer orders in the BX market, as well as trade data for BX
executions and administrative messages such as Trading Action messages,
Symbol Directory, and Event Control messages.\4\ BX TotalView allows
users to view all displayed quotes and orders, access total displayed
anonymous interest, and see total size of all displayed quotes and
orders.
---------------------------------------------------------------------------
\4\ See Nasdaq BX, Inc. Rules, Equity 7, Section 123 (BX
TotalView); see also Securities Exchange Act Release No. 59307
(January 28, 2009), 74 FR 6069 (February 4, 2009) (establishing fees
for BX TotalView).
---------------------------------------------------------------------------
FPGA technology has been offered by the Nasdaq Stock Exchange for
over a decade, and the Nasdaq Options Market for nearly as long,\5\ and
has been cited by the SEC as an example of a technology useful in the
distribution of market data products.\6\ It is a well-established
technology that is familiar to market participants.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 67297 (June 28,
2012), 77 FR 39752 (July 5, 2012) (SR-Nasdaq-2012-063) (introducing
FPGA technology); see also Nasdaq Data News 2012-13, available at
<a href="http://www.nasdaqtrader.com/TraderNews.aspx?id=dn2012-13">http://www.nasdaqtrader.com/TraderNews.aspx?id=dn2012-13</a>
(introducing TotalView FPGA service as of August 1, 2012);
Securities Exchange Act Release No. 74745 (April 16, 2015), 80 FR
22588 (April 22, 2015) (SR-Nasdaq-2015-035) (establishing FPGA for
the Nasdaq Options Market); see also The Nasdaq Stock Market LLC
Rules, Equity 7, Section 126(c) (Hardware-Based Delivery of Nasdaq
Depth data).
\6\ See Securities Exchange Act Release No. 90610, 86 FR 18596,
18647 (April 9, 2021) (File No. S7-03-20) (listing field
programmable gate array services as an example of a technological
innovation that could be employed by competing consolidators as part
of the Market Data Infrastructure rule).
---------------------------------------------------------------------------
The purchase of FPGA technology is entirely optional because FPGA
functionality can be replicated through a variety of software
solutions. Our experience with Nasdaq TotalView is that some customers
use FPGA technology to address determinism, others avail themselves of
software solutions, some use both, and others alternate between both.
Some market participants that have purchased FPGA technology in the
past have discontinued its use. There are no systematic differences
among market participants that choose to use or not to use FPGA
technology beyond the compatibility of FPGA technology with the
customer's specific technical systems, which can change over time as
systems are modified, replaced or updated.
The proposal to offer FPGA technology to customers of BX TotalView
is in response to customer demand. To date, lower levels of peak
activity at the BX Exchange relative to the Nasdaq Exchange have been
associated with low levels of customer interest in this product.
Recently, however, BX has heard from customers interested in using FPGA
technology for BX TotalView. To address this customer demand, and to
drive liquidity to the BX Exchange by making it a more attractive
trading venue, BX has decided to offer this product to meet evolving
customer needs.
The Exchange will submit a proposed fee schedule for this product
in a separate filing. The Exchange intends to make this product
available on June 1, 2023.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\7\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote
just and equitable principles of trade, 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.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
As noted above, the current proposal to offer FPGA technology with
BX TotalView is in response to changes in customer demand. This
proposal reflects the need for the Exchange to stay competitive in the
market for exchange services. It also promotes competition and
innovation by providing market participants additional choices in the
transmission of depth of book data.
Offering this well-recognized technology to customers will
facilitate their usage of the data. If the technology is not ultimately
beneficial, the customer can discontinue it at any time, and for any
reason, as they have done in the past. Customers that choose not to
purchase FPGA technology will not be affected because these customers
have alternative methods to facilitate determinism available to them.
Approval of this proposal is in the public interest and otherwise
furthers the objectives of Section 6(b)(5) of the Act because it
promotes competition, facilitates the ingestion of market data by
certain market participants, and has no impact on customers that do not
elect to avail themselves of the service.
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 not necessary or appropriate in
furtherance of the purposes of the Act.
Nothing in the Proposal burdens inter-market competition (the
competition among self-regulatory organizations) because approval of
the Proposal does not impose any burden on the ability of other
exchanges to compete. All exchanges are free introduce products that
facilitate the ingestion of data at peak periods.
Nothing in the Proposal burdens intra-market competition (the
competition among consumers of exchange data) because FPGA technology
will be available to any market participant on a non-discriminatory
basis.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
FINRA has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ Because
the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \12\ 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 so that the proposal
may become operative on June 1 so that any potential customer that
wishes to obtain
[[Page 34203]]
the FPGA service would be able to do so on June 1, 2023. The Exchange
argues that an operative date of June 1, 2023 is consistent with the
protection of investors and the public interest because market data
services are typically initiated at the beginning of a calendar month,
and the June 1 operative date would allow any interested customer to
utilize the service for the entire month, while still allowing any
interested party almost a month to review the proposal.\13\ The
Exchange also argues that the benefits of the full month of operation
outweigh any costs associated with a slightly shorter operative delay,
given that FPGA is a well-established technology that is familiar to
market participants. The Commission believes that waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest. Accordingly, the Commission hereby waives the
operative delay and designates the proposed rule change as operative
upon filing.\14\
---------------------------------------------------------------------------
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ The Exchange initially filed the substance of this proposed
rule change on May 4, 2023 as SR-BX-2023-011. This initial proposal
was withdrawn and replaced on May 12, 2023.
\14\ 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).
---------------------------------------------------------------------------
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 to
determine whether the proposed rule change should be approved or
disapproved.
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#592b2c353c743a3634343c372d2a192a3c3a773e362f"><span class="__cf_email__" data-cfemail="ee9c9b828bc38d8183838b809a9dae9d8b8dc0898198">[email protected]</span></a>. Please include
File Number SR-BX-2023-012 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-BX-2023-012. 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. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to File Number SR-BX-2023-012, and should be submitted on
or before June 16, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------
\15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-11239 Filed 5-25-23; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on May 26, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.