Notice2023-11822
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Various Options 3 Rules and Options 5, Section 4
Primary source
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Published
June 5, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 107 (Monday, June 5, 2023)</title>
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[Federal Register Volume 88, Number 107 (Monday, June 5, 2023)]
[Notices]
[Pages 36625-36632]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-11822]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97620; File No. SR-BX-2023-013]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Various
Options 3 Rules and Options 5, Section 4
May 30, 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 16, 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, II, and III 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
The Exchange proposes to amend Options 3, Options Trading Rules,
at: Section 4 Entry and Display of Quotes; Section 5, Entry and Display
of Orders; Section 7, Types of Orders and Quote Protocols; Section 8,
Options Opening Process; Section 11, Auction Mechanisms; Section 13,
Price Improvement Auction (``PRISM''); Section 15, Risk Protections;
and Options 3, Section 18, Detection of Loss of Communication. The
Exchange also proposes to amend Options 5, Section 4, Order Routing.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/bx/rules">https://listingcenter.nasdaq.com/rulebook/bx/rules</a>, at the
principal office of the Exchange, 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
BX proposes to amend Options 3, Options Trading Rules, at: Section
4, Entry and Display of Quotes; Section 5, Entry and Display of Orders;
Section 7, Types of Orders and Quote Protocols; Section 8, Options
Opening Process; Section 11, Auction Mechanisms; Section 13, Price
Improvement Auction (``PRISM''); Section 15, Risk Protections; and
Options 3, Section 18, Detection of Loss of Communication. The Exchange
also proposes to amend Options 5, Section 4, Order Routing. Each change
will be discussed below. The amendments proposed herein seek to codify
the current System functionality. The proposed amendments will not
result in System changes.
Option 3, Sections 4 and 5
The Exchange proposes to codify existing functionality that allows
Market Makers to submit their quotes to the Exchange in block
quantities as a single bulk message. In other words, a Market Maker may
submit a single message to the Exchange, which may contain bids and
offers in multiple series. The Exchange's current rules do not specify
bulk messaging for orders. The Exchange has historically provided
Market Makers with information regarding bulk messaging in its publicly
available technical specifications.\3\ To promote greater transparency,
the Exchange is seeking to codify this functionality in its Rulebook.
Specifically, the Exchange proposes to amend BX Options 3, Section
4(b)(3) to memorialize that quotes may be submitted as a bulk message.
The Exchange also proposes to add a definition of ``bulk message'' in
new subparagraph (i) of Options 3, Section 4(b)(3), which will provide
that a bulk message means a single electronic message submitted by a
Market Maker to the Exchange which may contain a specified number of
quotations as designated by the Exchange.\4\ The bulk message,
submitted via SQF,\5\ may enter, modify, or cancel quotes. Bulk
messages are handled by the System in the same manner as it handles a
single quote message. MRX recently added bulk messages to MRX Options
3, Section 4(b)(3).\6\ The proposed amendment to the Rulebook to add BX
Options 3, Section 4(b)(3) will not result in a System change.
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\3\ See <a href="https://www.nasdaq.com/docs/2023/01/12/0054-Q23_SQF_8.2b%20akg_NAM.pdf">https://www.nasdaq.com/docs/2023/01/12/0054-Q23_SQF_8.2b%20akg_NAM.pdf</a> (specifying for bulk quoting of up to 200
quotes per quote block message). The specifications note in other
places the manner in which a Participant can send such quote block
messages.
\4\ Id. As noted above, quote bulk messages can presently
contain up to 200 quotes per message. This is the maximum amount
that is permitted in a bulk message. The Exchange would announce any
change to these specifications in an Options Technical Update
distributed to all Participants.
\5\ ``Specialized Quote Feed'' or ``SQF'' is an interface that
allows Market Makers to connect, send, and receive messages related
to quotes, Immediate-or-Cancel Orders, and auction responses to the
Exchange. Features include the following: (1) options symbol
directory messages (e.g., underlying instruments); (2) System event
messages (e.g., start of trading hours messages and start of
opening); (3) trading action messages (e.g., halts and resumes); (4)
execution messages; (5) quote messages; (6) Immediate-or-Cancel
Order messages; (7) risk protection triggers and purge
notifications; (8) opening imbalance messages; (9) auction
notifications; and (10) auction responses. The SQF Purge Interface
only receives and notifies of purge requests from the Market Maker.
Market Makers may only enter interest into SQF in their assigned
options series. See Options 3, Section 7(e)(1)(B).
\6\ See Securities Exchange Act, Release No. 95982 (October 4,
2022), 87 FR 61391 (October 11, 2022) (SR-MRX-2022-18) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Its Rules in Connection With a Technology Migration to Enhanced
Nasdaq Functionality) (``SR-MRX-2022-18'').
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The Exchange also proposes to amend BX Options 3, Section 4(b)(6)
to provide the following,
A quote will not be executed at a price that trades through
another market or displayed at a price that would lock or cross
another market. If, at the time of entry, a quote would cause a
locked or crossed market violation or would cause a trade-through,
violation, it will be re-priced to the current national best offer
(for bids) or the current national best bid (for offers) as non-
displayed, and displayed at one minimum price variance above (for
offers) or below (for bids) the national best price.
Where a quote is re-priced to avoid a locked or crossed market, the
best bid or offer will be non-displayed and the re-priced order will be
displayed at a price that is one minimum trading increment inferior to
the ABBO. A similar change is proposed for Options 3, Section 5(d). MRX
recently amended Options 3,
[[Page 36626]]
Section 4(b)(6) and Options 3, Section 5(d) to include this
language.\7\ At this time, the Exchange proposes to amend BX's rule
text to reflect that the actual price remains non-displayed in this
scenario. The proposed amendment to the Rulebook to add BX Options 3,
Section 4(b)(6) will not result in a System change.
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\7\ See Securities Exchange Act, Release No. 95807 (September
16, 2022), 87 FR 57933 (September 22, 2022) (SR-MRX-2022-16) (Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Certain Rules in Connection With a Technology Migration to
Enhanced Nasdaq Functionality) (``SR-MRX-2022-16'').
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Similarly, the Exchange proposes to add a new BX Options 3, Section
4(b)(7) to clarify that, today, BX's System will automatically execute
eligible quotes using the Exchange's displayed best bid and offer
(``BBO'') or the Exchange's non-displayed order book (``internal BBO'')
\8\ if the best bid and/or offer on the Exchange has been repriced
pursuant to Options 3, Section 5(d) and Options 3, Section 4(b)(6).
This rule text seeks to codify the current System function and make
clear that the internal BBO is comprised of both orders and quotes.\9\
MRX recently amended Options 3, Section 4(b)(7) to include the same
language.\10\ At this time, the Exchange proposes to align BX's rule
text in Options 3, Section 4(b)(7) to MRX's rule text in Options 3,
Section 4(b)(7). The proposed amendment to the Rulebook to add BX
Options 3, Section 4(b)(7) will not result in a System change.
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\8\ The internal BBO refers to the Exchange's non-displayed
book.
\9\ The Exchange also proposes to re-number current Options 3,
Section 4(b)(7) as (8).
\10\ See SR-MRX-2022-16.
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Finally, the Exchange proposes to amend BX Options 3, Section 5(c)
to include a citation to Options 3, Section 4(b)(6) as the internal BBO
is comprised of both orders and quotes, similar to MRX.\11\
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\11\ Id.
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The amendments proposed to Options 3, Sections 4 and 5 do not
change the current System functionality.
Options 3, Section 7
The Exchange proposes to amend the title of BX Options 3, Section 7
from ``Types of Orders and Quote Protocols'' to ``Types of Orders and
Order and Quote Protocols'' so that it may align BX's title to MRX
Options 3, Section 7.
The Exchange proposes to amend BX Options 3, Section 7(a)(9) to add
the word ``Order'' after ``PRISM''. This is a non-substantive technical
amendment to align the term to its usage within Options 3, Section 13.
The Exchange proposes to amend the rule text of BX Options 3,
Section 7(a)(8), related to an Opening Sweep,\12\ and (b)(1), related
to Opening Only \13\ or ``OPG'' orders, to reflect a current System
function. The Exchange proposes to specify that these order types are
subject to the Market Wide Risk Protection within Options 3, Section
15. The Market Wide Risk Protection within Options 3, Section
15(a)(1)(C) automatically removes orders when certain firm-set
thresholds are met. Specifically, the Market Wide Risk Protection
requires all Participants to provide parameters for the order entry and
execution rate protections. Today, the Market Wide Risk Protection
applies to Opening Sweep Orders and OPG Orders, similar to other order
types, and allows BX Participants to manage their exposure to risk in
the Opening Process, described in Options 3, Section 8, as well as
intra-day. The Market Wide Risk Protection is designed to reduce risk
associated with System errors or market events that may cause
Participants to send a large number of orders, or receive multiple,
automatic executions, before they can adjust their exposure in the
market. Specifically, the availability of Market Wide Risk Protection
during the Opening Process assists Participants in managing their pre-
open risk. The proposed amendments to BX Options 3, Section 7(a)(8) and
(b)(1) will not result in a System change.
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\12\ An Opening Sweep is a one-sided order entered by a Market
Maker through SQF for execution against eligible interest in the
System during the Opening Process.
\13\ An OPG order is entered with a TIF of ``OPG.'' This order
can only be executed in the Opening Process pursuant to Options 3,
Section 8. See Options 3, Section 7(b)(1).
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The Exchange proposes to amend the rule text at BX Options 3,
Section 7(b)(2)(C) to add Block Orders \14\ and Customer Cross Orders
\15\ to Options 3, Section 7(b)(2)(C) and replace the term ``Price
Improvement Auction (``PRISM'') Mechanism'' with ``PRISM Orders.'' The
proposed sentence would state that ``Block Orders, Customer Cross
Orders, and PRISM Orders are considered to have a TIF of IOC.'' In
2020, BX adopted Block Orders and Customer Cross Orders in a technology
migration.\16\ At that time, the Exchange should have added those order
types to this list. At this time, the Exchange proposes to update this
list to include these order types. Further, the Exchange proposes to
state that, ``By their terms, these orders will be: (1) executed either
on entry or after the exposure period, or (2) cancelled.'' The
additional language is being added because Customer Cross Orders may be
executed upon entry, provided all the terms are satisfied. This
proposed change aligns BX's rule text to MRX's rule text at
Supplementary Material .02(d)(3) of Options 3, Section 7. The proposed
amendments to BX Options 3, Section 7(b)(2)(C) will not result in a
System change.
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\14\ A ``Block Order'' is an order entered into the Block Order
Mechanism as described in Options 3, Section 11(a). See Options 3,
Section 7(a)(11).
\15\ A ``Customer Cross Order'' is as described in Options 3,
Section 12(a). See Options 3, Section 7(a)(10).
\16\ See Securities Exchange Act, Release No. 89759 (September
3, 2020), 85 FR 55886 (September 10, 2020) (SR-BX-2020-023) (Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Rules in Connection With a Technology Migration to
Enhanced Nasdaq, Inc. Functionality) (``SR-BX-2020-023''). See also
Securities Exchange Act, Release No. 89476 (August 4, 2020), 85 FR
482274 (August 10, 2020) (SR-BX-2020-017) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Amend Various BX
Rules in Connection With a Technology Migration) (``SR-BX-2020-
017'').
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Finally, the Exchange proposes to amend the description of
Specialized Quote Feed or ``SQF'' within BX Options 3, Section
7(e)(1)(B) to add rule text which states, ``Immediate-or-Cancel Orders
entered into SQF are not subject to the Order Price Protection, Market
Order Spread Protection, or Size Limitation Protection in Options 3,
Section 15(a)(1), (a)(2), and (b)(2) respectively.'' This rule text is
currently noted within Options 3, Section 7(b)(2) above. The Exchange
is adding the same language into the description of SQF to provide a
more complete description. The addition of this information would align
the level of information of BX's rule text to MRX's rule text at
Supplementary Material .03(c) to Options 3, Section 7. The proposed
amendment to BX Options 3, Section 7(e)(1)(B) will not result in a
System change.
The amendments proposed to Options 3, Section 7 do not change the
current System functionality.
Options 3, Section 8
The Exchange proposes to amend BX Options 3, Section 8(h)(1), which
currently describes how the Potential Opening Price would be calculated
when there is more than one Potential Opening Price.\17\ Today, Section
8(h)(1) provides that when two or more Potential Opening Prices would
satisfy the maximum quantity criterion and leave no contracts
unexecuted, the System takes the highest and lowest of those prices and
takes the mid-point; if such mid-point is not expressed as a permitted
minimum price variation, it
[[Page 36627]]
will be rounded to the minimum price variation that is closest to the
closing price for the affected series from the immediately prior
trading session. If there is no closing price from the immediately
prior trading session, the System will round up to the minimum price
variation to determine the Opening Price. BX began rounding up when the
Exchange modified certain functionality during a technology
migration.\18\ Various parts of the BX rules were amended to reflect
that BX was rounding up.\19\ The Exchange inadvertently did not amend
Options 3, Section 8(h)(1) to reflect that BX was rounding up. At this
time, the Exchange proposes to amend the current language to reflect
that it no longer rounds in the direction of the previous trading day's
closing price. Instead, today, the System simply rounds up to the
minimum price variation if the mid-point of the high/low is not
expressed as a permitted minimum price variation. This proposed change
is intended to bring greater transparency to the Opening Process, as
market participants can now have a better sense of how the Potential
Opening Price will be calculated without having to account for the
closing price of each options series. This change is identical to a
change recently made in MRX Options 3, Section 8(g).\20\ The proposed
amendment to BX Options 3, Section 8(h)(1) will not result in a System
change.
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\17\ The Potential Opening Price indicates a price where the
System may open once all other Opening Process criteria is met.
\18\ See SR-BX-2020-017.
\19\ Id.
\20\ See SR-MRX-2022-18.
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The Exchange further proposes to amend BX Options 3, Section
8(j)(3), which currently describes the determination of Opening Quote
Range (``OQR'') boundaries in certain scenarios.\21\ Specifically, the
Exchange proposes to replace ``are marketable against the ABBO'' with
``cross the ABBO'' to precisely describe the specified scenario within
in this rule. The Exchange notes that this is not a System change,
rather this amendment clarifies the applicability of the rule text.
This change is identical to a change recently made on MRX at Options 3,
Section 8(i)(3).\22\ The proposed amendment to BX Options 3, Section
8(j)(3) will not result in a System change.
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\21\ OQR is an additional type of boundary used in the Opening
Process, and is intended to limit the opening price to a reasonable,
middle ground price, thus reducing the potential for erroneous
trades during the Opening Process.
\22\ See SR-MRX-2022-18.
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The Exchange proposes to amend BX Options 3, Section 8(k), which
currently describes the Price Discovery Mechanism.\23\ First, the
Exchange proposes to amend Options 3, Section 8(k)(1)(A) by removing
the phrase ``or (ii) internal quotes are crossing each other.'' Options
3, Section 8(d)(3) provides that the Opening Process will stop and an
option series will not open, if the ABBO becomes crossed. Once this
condition no longer exists, the Opening Process in the affected option
series will start again pursuant to paragraphs (f)-(k) below. Further,
where the internal quotes are crossed, Options 8, Section 8(i) rules
apply. At the time that Options 3, Section 8(k)(1)(A) is applicable,
the BX System has sent an Imbalance Message and the System would
disseminate an Imbalance Message showing ``0'' volume and ``$0.00''
price if no executions are possible, but routable interest is priced at
or through the ABBO. Internal quotes would not be crossing each other
at this point in the Opening Process. The Exchange proposes to remove
this language which describes a scenario involving crossed orders.\24\
The proposed amendment to BX Options 3, Section 8(k)(1)(A) will not
result in a System change.
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\23\ The Price Discovery Mechanism is a process that the
Exchange will undergo in the instance where the Exchange has not
Opened with a BBO or Trade. The Price Discovery Mechanism will
attempt to identify an Opening Price by attempting to satisfy the
maximum number of contracts possible.
\24\ The Exchange also proposes to take out (i) earlier in the
sentence as unnecessary with the removal of (ii).
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Second, the Exchange proposes to amend BX Options 3, Section
8(k)(4) to align BX's rule text with that of MRX Options 3, Section
8(j)(6)(i) by stating ``Pursuant to Options 3, Section 8(k)(3)(F), the
System will re-price Do Not Route Orders (that would otherwise have to
be routed to the exchange(s) disseminating the ABBO for an opening to
occur) to the current away best offer (for bids) or the current away
best bid (for offers) as non-displayed, and display at a price that is
one minimum trading increment inferior to the ABBO, and disseminate the
re-priced DNR Order as part of the new BBO.'' The proposed language
more explicitly describes the manner in which the Exchange will re-
price orders and would mirror rule text in BX Options 3, Section
4(b)(6). The proposed amendment to BX Options 3, Section 8(j)(6)(i)
will not result in a System change.
Options 3, Section 11
The Exchange proposes to amend BX Options 3, Section 11 which
describes the Block Order Mechanism. First, the Exchange proposes to
amend the introductory paragraph to Options 3, Section 11 to add a new
sentence which states, ``Responses submitted by Participants shall not
be visible to other auction participants during the exposure period and
can be modified or deleted before the exposure period has ended.'' This
rule text is intended to provide greater clarity regarding responses
that are entered into the Exchange's Block Order Mechanism. In 2020, BX
adopted the Block Order Mechanism,\25\ which it copied from Nasdaq ISE,
LLC (``ISE'') Options 3, Section 11. The proposed rule text within ISE
Options 3, Section 11 concerning responses should also have been
adopted at that time as the functionalities are identical. The proposed
amendment to the introductory paragraph to BX Options 3, Section 11
will not result in a System change.
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\25\ See SR-BX-2020-023.
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Second, the Exchange proposes to adopt new rule text within BX
Options 3, Section 11(a)(4) related to the Block Order Mechanism with
respect to minimum increments. Specifically, the Exchange proposes to
state that with respect to Penny Prices, orders and Responses may be
entered into the Block Order Mechanism and receive executions at penny
increments. Orders and quotes in the market that receive the benefit of
the block execution price under paragraph (a)(2)(A) may also receive
executions at penny increments. When BX copied MRX Options 3, Section
11 rule for Block Orders, this language should have been adopted as
well.\26\ The proposed amendment to the introductory paragraph to BX
Options 3, Section 11(a)(4) will not result in a System change.
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\26\ Id. MRX adopted this rule text in its Form 1 Application.
See Securities Exchange Act Release No. 76998 (January 29, 2016), 81
FR 6066 (February 4, 2016) (File No. 10-221).
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Options 3, Section 13
The Exchange proposes to amend BX Options 3, Section 13 related to
its Price Improvement Auction or ``PRISM'' to include the concept of
``internal BBO'' within the order entry checks. Specifically, the
Exchange proposes to amend Options 3, Section 13(i)(A)-(C) to add the
words ``internal BBO'' \27\ where the NBBO is described. MRX recently
added the same language to its Price Improvement Auction within Options
3. Section 13(b)(1) and (2).\28\ The proposed changes will conform
these order entry check to the concept of re-pricing at an internal BBO
as
[[Page 36628]]
described within Options 3, Sections 4(b)(6), 4(b)(7), 5(c) and 5(d),
and will make clear that the PRISM Order measures the difference
between the NBBO or the internal BBO to be $0.01. Today, the Exchange
utilizes the internal BBO to determine PRISM eligibility. The proposed
amendment to the introductory paragraph of BX Options 3, Section
13(i)(A)-(C) will not result in a System change.
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\27\ The internal BBO refers to the Exchange's non-displayed
book.
\28\ See SR-MRX-2022-16.
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Additionally, the Exchange proposes to make a non-substantive
amendment to replace the word ``crosses'' within BX Options 3, Section
13(ii)(B)(ii) with ``improves beyond'' to conform the word choice to
Nasdaq PHLX LLC Options 3, Section 13(b)(2)(B) which similarly
describes the interaction between Phlx's Reference BBO and a stop
price. The proposed amendment to Options 3, Section 13(ii)(B)(ii) will
not result in a System change.
Options 3, Section 15
MRX recently amended its Order Price Protection (``OPP'') \29\ rule
to be functionally similar to the OPP functionality on BX.\30\ MRX's
OPP rule utilized different rule text to explain the OPP functionality.
At this time, the Exchange proposes to amend BX Options 3, Section
15(a)(1) to align BX's rule text to MRX's rule text within Options 3,
Section 15(a)(1)(A). Specifically, the Exchange proposes to remove the
references to ``day limit, good til cancelled, and immediate or cancel
orders'' and, instead, simply refer to ``limit'' orders as that order
type accurately captures the scope of the orders subject to OPP. This
change would also make the sentence, ``OPP applies to all options but
does not apply to market orders,'' unnecessary. The proposed amendment
to Options 3, Section 15(a)(1) will not result in a System change.
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\29\ OPP prevents the execution of Limit Orders at prices
outside pre-set parameters.
\30\ See SR-MRX-2022-18.
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Additionally, the Exchange proposes to amend its Acceptable Trade
Range (``ATR'') Rule within BX Options 3, Section 15(b)(1).\31\ MRX
recently amended its ATR rule to harmonize the rule to BX Options 3,
Section 15(b)(1).\32\ MRX's ATR rule utilized different rule text to
explain the ATR functionality. At this time, the Exchange proposes to
amend BX Options 3, Section 15(b)(1) to align BX's rule text to MRX's
rule text within Options 3, Section 15(b)(1). Specifically, like MRX,
BX's ATR rule applies to orders and quotes. BX's rule only discusses
quotes, but as noted in the title to Options 3, Section 15(b), the ATR
risk protection is an order and quote risk protection. To that end,
first, the Exchange proposes to add the term ``quote'' or ``quotes'' as
applicable next to the term ``order'' or ``orders'' throughout the BX
ATR rule. Second, the Exchange proposes to begin the ATR rule text with
``After the Opening Process'' as this risk protection does not apply
during the Opening Process today. This additional rule text provides
greater clarity to the rule. Today, the ATR risk protection is not
available during the Opening Process. Third, the Exchange proposes to
add the concept of ``internal BBO'' into the ATR rule. The Exchange
proposes to update the reference price definition to provide that upon
receipt of a new order or quote, the reference price will now be the
better of the NBB or internal best bid for sell orders/quotes and the
better of the NBO or internal best offer for buy orders/quotes or the
last price at which the order/quote is posted, whichever is higher for
a buy order/quote or lower for a sell order/quote.\33\ The Exchange
noted within the MRX rule change that its ATR reference price was
functionally identical to BX's ATR reference price.\34\ Fourth, the
Exchange proposes to amend Options 3, Section 15(b)(1)(A) to add the
words ``after the Posting Period'' to explain when a new ATR would be
calculated to provide more context to the rule.\35\ Fifth, similar to
MRX Options 3, Section 15(a)(2)(A)(v) the Exchange proposes to add the
following rule text within BX Options 3, Section 15(b)(1)(C),
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\31\ ATR is designed to guard against the System from
experiencing dramatic price swings by preventing the immediate
execution of quotes and orders beyond the thresholds set by the
protection.
\32\ See SR-MRX-2022-16.
\33\ The additions of ``internal BBO'' in this rule text are
consistent with the addition of this term elsewhere in the rules.
\34\ See SR-MRX-2022-16.
\35\ The Exchange also proposes a technical amendment to add
opening parentheses in two places.
There will be three categories of options for Acceptable Trade
Range: (1) Penny Interval Program Options trading in one cent
increments for options trading at less than $3.00 and increments of
five cents for options trading at $3.00 or more, (2) Penny Interval
Program Options trading in one-cent increments for all prices, and
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(3) Non-Penny Interval Program Options.
This is how BX operates today. This rule text makes clear the
application of BX Options 3, Section 3 to the ATR rule by explicitly
stating the Exchange's ability to set different ATR values by options
category. These ATR values are set forth in BX's System Settings
document which is posted online.\36\ The Exchange believes this rule
text will add greater clarity to the ATR rule. The proposed amendment
to Options 3, Section 15(b)(1) will not result in a System change.
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\36\ <a href="https://www.nasdaq.com/docs/BXOptionsSystemSettings">https://www.nasdaq.com/docs/BXOptionsSystemSettings</a>.
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Options 3, Section 18
The Exchange proposes to amend Options 3, Section 18, Detection of
Loss of Communication, to correct an error in a prior rule change. In
2019, BX relocated then Chapter VI, Section(e), Detection of Loss of
Communication, to Chapter VI, Section 23.\37\ BX noted in the rule
change that it was not proposing to amend the Detection of Loss
Communication rule.\38\ In relocating the rule, it appears The Nasdaq
Options Market, LLC's rule was inadvertently copied over instead of
BX's rule. At the time, NOM did offer OTTO. BX has never offered OTTO.
The Exchange proposes to reflect the absence of OTTO on BX by deleting
rule text related to OTTO within Options 3, Sections 18(a)(1), (a)(3),
18(c), 18(f) and 18(g) and re-lettering the renaming items to reflect
those deletions. The proposed amendment to Options 3, Section 18 will
not result in a System change.
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\37\ See Securities Exchange Act Release No. 87270 (October 10,
2019), 84 FR 55631 (October 17, 2019) (SR-BX-2019-033) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
BX Rules at Chapter VI, Section 6).
\38\ Id.
---------------------------------------------------------------------------
Options 5, Section 4
Options 5, Section 4 describes the manner in which BX routes
orders. The Exchange proposes to amend BX Options 5, Section 4(a) to
eliminate the following rule text,
The term ``System routing table'' refers to the proprietary
process for determining the specific trading venues to which the
System routes orders and the order in which it routes them. The
Exchange reserves the right to maintain a different System routing
table for different routing options and to modify the System routing
table at any time without notice.
When ISE filed to amend its routing rules, it copied BX's Options
5, Section 4 routing rule, except that it did not adopt the
aforementioned rule text.\39\ At this time, the Exchange proposes to
remove this unnecessary term that is not utilized elsewhere within
Options 5, Section 4. Removing this rule text will harmonize BX's
Options 5, Section 4 rule with ISE's Options 5, Section 4. The proposed
amendment to Options 5,
[[Page 36629]]
Section 4(a) will not result in a System change.
---------------------------------------------------------------------------
\39\ See Securities Exchange Act Release No. 94894 (May 18,
2022), 87 FR 30294 (May 12, 2022) (SR-ISE-2022-11) (Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Routing
Functionality in Connection With a Technology Migration).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\40\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\41\ 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.
---------------------------------------------------------------------------
\40\ 15 U.S.C. 78f(b).
\41\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Option 3, Sections 4 and 5
The Exchange believes that its proposal to memorialize its bulk
message functionality within Options 3, Section 4(b)(3) is consistent
with the Act as it will codify existing functionality, thereby
promoting transparency in the Exchange's rules and reducing any
potential confusion.\42\ This functionality provides Market Makers with
an additional tool to meet their various quoting obligations in a
manner they deem appropriate, consistent with the purpose of the bulk
message functionality to facilitate Market Makers' provision of
liquidity. By providing Market Makers with additional control over the
quotes they use to provide liquidity to the Exchange, this tool may
benefit all investors through additional execution opportunities at
potentially improved prices. Today, MRX offers this same functionality
within Options 3, Section 4(b)(3). Further, the Exchange does not
believe that the offering the bulk message functionality to only Market
Makers would permit unfair discrimination. Market Makers play a unique
and critical role in the options market by providing liquidity and
active markets, and are subject to various quoting obligations which
other market participants are not, including obligations to maintain
active markets, update quotes in response to changed market conditions,
to compete with other Market Makers in its appointed classes, and to
provide intra-day quotes in its appointed classes.\43\ Bulk message
functionality provides Market Makers with a means to help them satisfy
these obligations. The proposed amendment to the Rulebook to add BX
Options 3, Section 4(b)(3) will not result in a System change.
---------------------------------------------------------------------------
\42\ As discussed above, this existing functionality is
currently described in the Exchange's publicly available technical
specifications. See supra note 3.
\43\ See Options 2, Sections 4 and 5.
---------------------------------------------------------------------------
The Exchange's proposal to amend Options 3, Section 4(b)(6) to make
clear that the actual price remains non-displayed during re-pricing is
consistent with the Act and removes impediments to and perfects the
mechanism of a free and open market and a national market system
because it displays a re-priced order that does not lock or cross an
away market. The rule text clearly explains that the best bid or offer
will be non-displayed and the re-priced order will be displayed. A
similar change is proposed for BX Options 3, Section 5(d). MRX recently
amended Options 3, Section 4(b)(6) and Options 3, Section 5(d) to
include the same language.\44\ The proposed change aligns BX's rule
text to MRX's rule text. The proposed amendment to the Rulebook to add
BX Options 3, Section 4(b)(6) will not result in a System change.
---------------------------------------------------------------------------
\44\ See SR-MRX-2022-16.
---------------------------------------------------------------------------
The Exchange's proposal to add a new Options 3, Section 4(b)(7) to
clarify that, today, BX's System will automatically execute eligible
quotes using the Exchange's displayed best bid and offer (``BBO'') or
the Exchange's non-displayed order book (``internal BBO'') if the best
bid and/or offer on the Exchange has been repriced pursuant to Options
3, Section 5(d) and Options 3, Section 4(b)(6) is consistent with the
Act and protects investors and the public interest. This rule text
seeks to codify the current System function and make clear that the
internal BBO is comprised or both orders and quotes, both of which are
considered for price checks. MRX recently amended Options 3, Section
4(b)(7) to include this language.\45\ The proposed change aligns BX's
rule text to MRX's rule text. The proposed amendment to the Rulebook to
add BX Options 3, Section 4(b)(7) will not result in a System change.
---------------------------------------------------------------------------
\45\ Id.
---------------------------------------------------------------------------
Options 3, Section 7
The Exchange's proposal to amend the title of Options 3, Section 7
from ``Types of Orders and Quote Protocols'' to ``Types of Orders and
Order and Quote Protocols'' aligns BX's title to MRX Options 3, Section
7. This change is non-substantive.
The Exchange's proposal to amend Options 3, Section 7(a)(9) to add
the word ``Order'' after ``PRISM'' is a non-substantive amendment that
aligns the term to its usage within BX Options 3, Section 13.
The Exchange's proposal to amend the rule text of Options 3,
Section 7(a)(8), related to an Opening Sweep, and (b)(1) related to OPG
orders, is consistent with the Act and protects investors and the
general public because the availability of Market Wide Risk Protection
during the Opening Process assists Participants in managing their pre-
open risk. The Market Wide Risk Protection is designed to reduce risk
associated with System errors or market events that may cause
Participants to send a large number of orders, or receive multiple,
automatic executions, before they can adjust their exposure in the
market. The proposed amendments to BX Options 3, Section 7(a)(8) and
(b)(1) will not result in a System change.
The Exchange's proposal to amend the rule text of Options 3,
Section 7(b)(2)(C) to add Block Orders and Customer Cross Orders to
Options 3, Section 7(b)(2)(C) and replace the term ``Price Improvement
Auction (``PRISM'') Mechanism'' with ``PRISM Orders'' is consistent
with the Act. In 2020, BX adopted Block Orders and Customer Cross
Orders in a technology migration \46\ and should have added those order
types to this list. At this time, the Exchange proposes to update this
rule to include these order types. Further, the Exchange proposes to
state that ``By their terms, these orders will be: (1) executed either
on entry or after the exposure period, or (2) cancelled.'' The
additional language is being added because Customer Cross Orders may be
executed upon entry provided all the terms are satisfied. This proposed
change aligns to MRX Supplementary Material .02(d)(3) of Options 3,
Section 7. The proposed amendments to BX Options 3, Section 7(b)(2)(C)
will not result in a System change.
---------------------------------------------------------------------------
\46\ See supra note 16.
---------------------------------------------------------------------------
The Exchange's proposal amends the description of SQF within
Options 3, Section 7(e)(1)(B) is consistent with the Act as this rule
text is currently noted within Options 3, Section 7(b)(2) above. The
addition of this language into the description of SQF provides a more
complete description of this protocol. The addition of this information
also aligns the level of information with that offered on MRX for SQF
within Supplementary Material .03(c) to Options 3, Section 7. The
proposed amendment to BX Options 3, Section 7(e)(1)(B) will not result
in a System change.
Options 3, Section 8
The Exchange's proposal to amend Options 3, Section 8(h)(1), which
currently describes how the Potential Opening Price would be calculated
when there is more than one Potential Opening Price, is consistent with
the Act and protects investors and the public interest. BX began
rounding up
[[Page 36630]]
when the Exchange modified certain functionality during a technology
migration.\47\ Various parts of the BX rules were amended to reflect
that BX was rounding up.\48\ The Exchange inadvertently did not amend
Options 3, Section 8(h)(1) to reflect that BX was rounding up. At this
time, the Exchange proposes to amend the current language to reflect
that it no longer rounds in the direction of the previous trading day's
closing price. Today, the System simply rounds up to the minimum price
variation if the mid-point of the high/low is not expressed as a
permitted minimum price variation. This proposed change is intended to
bring greater transparency to the Opening Process, as market
participants can now have a better sense of how the Potential Opening
Price will be calculated without having to account for the closing
price of each options series. This change is identical to a change
recently made in MRX Options 3, Section 8(g).\49\ The proposed
amendment to BX Options 3, Section 8(h)(1) will not result in a System
change.
---------------------------------------------------------------------------
\47\ See SR-BX-2020-017.
\48\ Id.
\49\ See SR-MRX-2022-18.
---------------------------------------------------------------------------
The Exchange's proposal to amend Options 3, Section 8(j)(3), which
currently describes the determination of OQR boundaries in certain
scenarios is consistent with the Act. Replacing the phrase ``are
marketable against the ABBO'' with ``cross the ABBO'' serves to
precisely describe the specified scenario within in this rule. The
Exchange notes that this is not a System change, rather this amendment
clarifies the applicability of the rule text. This change is identical
to a change recently made on MRX at Options 3, Section 8(i)(3).\50\ The
proposed amendment to BX Options 3, Section 8(j)(3) will not result in
a System change.
---------------------------------------------------------------------------
\50\ Id.
---------------------------------------------------------------------------
The proposal to amend Options 3, Section 8(k)(1)(A) by removing the
phrase ``or (ii) internal quotes are crossing each other'' remove
impediments to and perfect the mechanism of a free and open market and
a national market system by removing a scenario from this section of
the rule that is covered elsewhere. Options 3, Section 8(d)(3) provides
that the Opening Process will stop and an option series will not open,
if the ABBO becomes crossed. Once this condition no longer exists, the
Opening Process in the affected option series will start again pursuant
to paragraphs (f)-(k) below. Further, where the internal quotes are
crossed, Options 8, Section 8(i) rules apply. At the time that Options
3, Section 8(k)(1)(A) is applicable, the BX System has sent an
Imbalance Message and the System would disseminate an Imbalance Message
showing ``0'' volume and ``$0.00'' price if no executions are possible,
but routable interest is priced at or through the ABBO. Internal quotes
would not be crossing each other at this point in the Opening Process.
The proposed amendment to BX Options 3, Section 8(k)(1)(A) will not
result in a System change.
The Exchange's proposal to amend Options 3, Section 8(k)(4) to
align BX's rule text with that of MRX Options 3, Section 8(j)(6)(i) is
consistent with the Act because it explicitly describes the manner in
which the Exchange will re-price orders and mirrors rule text similar
to the language within Options 3, Section 4(b)(6). The proposed
amendment to BX Options 3, Section 8(j)(6)(i) will not result in a
System change.
Options 3, Section 11
The Exchange's proposal to amend the introductory paragraph to
Options 3, Section 11 to provide greater clarity regarding responses
that are entered into the Exchange's Block Order Mechanism is
consistent with the Act and protects investors and the public interest.
In 2020, BX adopted the Block Order Mechanism,\51\ which it copied from
ISE Options 3, Section 11. This rule text concerning responses should
also have been adopted at that time as the functionality on BX is
identical to that on ISE. The proposed amendment to the introductory
paragraph to BX Options 3, Section 11 will not result in a System
change.
---------------------------------------------------------------------------
\51\ See SR-BX-2020-023.
---------------------------------------------------------------------------
The Exchange's proposal to adopt new rule text within BX Options 3,
Section 11(a)(4) related to the Block Order Mechanism with respect to
minimum increments is consistent with the Act as it will make clear the
manner in which minimum increments apply within this mechanism. This
language codifies current System behavior. When BX copied the MRX
Options 3, Section 11 rule for Block Orders, this language should have
been adopted as well.\52\ The proposed amendment to the introductory
paragraph to BX Options 3, Section 11(a)(4) will not result in a System
change.
---------------------------------------------------------------------------
\52\ Id.
---------------------------------------------------------------------------
Options 3, Section 13
The Exchange's proposal to amend Options 3, Section 13 related to
PRISM to include the concept of ``internal BBO'' within the order entry
checks is consistent with the Act and protects investors and the public
interest. The proposed changes will conform these order entry check to
the concept of re-pricing at an internal BBO as described within BX
Options 3, Sections 4(b)(6), 4(b)(7), 5(c) and 5(d), and will make
clear that the PRISM Order measures the difference between the NBBO or
the internal BBO to be $0.01. MRX recently added the same language to
its Price Improvement Auction within Options 3. Section 13.\53\ The
proposed amendment to the introductory paragraph of BX Options 3,
Section 13(i)(A)-(C) will not result in a System change.
---------------------------------------------------------------------------
\53\ See SR-MRX-2022-16.
---------------------------------------------------------------------------
The Exchange's proposal to replace the word ``crosses'' within
Options 3, Section 13(ii)(B)(ii) with ``improves beyond'' conforms the
word choice to Nasdaq PHLX LLC Options 3, Section 13(b)(2)(B) which
similarly describes the interaction between Phlx's Reference BBO and a
stop price. The proposed amendment to Options 3, Section 13(ii)(B)(ii)
will not result in a System change.
Options 3, Section 15
The Exchange's proposal to amend BX Options 3, Section 15(a)(1) to
align BX's OPP rule text to MRX's OPP rule text within Options 3,
Section 15(a)(1)(A) is consistent with the Act \54\ because removing
the references to ``day limit, good til cancelled, and immediate or
cancel orders and, instead, referring to ``limit'' orders accurately
captures the scope of the orders subject to OPP. This change would also
make unnecessary the remainder of the rule text stating it does not
apply to market orders. The proposed amendment to Options 3, Section
15(a)(1) will not result in a System change.
---------------------------------------------------------------------------
\54\ MRX recently amended its Order Price Protection (``OPP'')
rule to be functionally similar to the OPP functionality on BX. See
SR-MRX-2022-18.
---------------------------------------------------------------------------
The Exchange's proposal to amend the ATR Rule within Options 3,
Section 15(b)(1) is consistent with the Act. MRX recently amended its
ATR rule to harmonize the rule with BX Options 3, Section 15(b)(1).\55\
MRX's ATR rule utilized different rule text to explain the ATR
functionality. Amending BX Options 3, Section 15(b)(1) to align BX's
rule text to MRX's rule text within Options 3, Section 15(b)(1) is
consistent with the Act because like MRX, BX's ATR rule applies to
orders and quotes. BX's rule only discusses quotes, but as noted in the
title to Options 3, Section 15(b), the ATR risk protection is an order
and quote risk protection. The Exchange's proposal to begin the rule
text with ``After the Opening Process'' is
[[Page 36631]]
consistent with the Act as this risk protection does not apply during
the Opening Process today. This additional rule text provides greater
clarity to the rule. The Exchange's proposal to add the concept of
``internal BBO'' into the ATR rule is consistent with the Act and
protects investors and the public interest by specifying that the
reference price definition is the better of the NBB or internal best
bid for sell orders/quotes and the better of the NBO or internal best
offer for buy orders/quotes or the last price at which the order/quote
is posted, whichever is higher for a buy order/quote or lower for a
sell order/quote. The Exchange noted within the MRX rule change that
the proposed additional functionally is identical to BX's ATR reference
price.\56\ The Exchange's proposal to amend Options 3, Section
15(b)(1)(A) to add the words ``after the Posting Period'' to explain
when a new ATR would be calculated provides more context to the rule.
Adding rule text within BX Options 3, Section 15(b)(1)(C) to make clear
the Exchange's ability to set different ATR values by options category
is consistent with the Act because the ATR risk protection limits the
range of prices at which an order and quote trades and would take into
account the minimum increment. The ability for the Exchange to set the
ATR based on the increment allows the Exchange to set appropriate
limits. The Exchange believes this rule text will add greater clarity
to the ATR rule. The proposed amendment to Options 3, Section 15(b)(1)
will not result in a System change.
---------------------------------------------------------------------------
\55\ See SR-MRX-2022-16.
\56\ Id.
---------------------------------------------------------------------------
Options 3, Section 18
Amending Options 3, Section 18, Detection of Loss of Communication,
to delete rule text related to OTTO within Options 3, Sections
18(a)(1), (a)(3), 18(c), 18(f) and 18(g) and re-lettering the renaming
items to reflect those deletions is consistent with the Act because it
corrects a prior error when this rule was relocated within the Rulebook
by placing the replica of the original rule from SR-BX-2019-033 into
its Rulebook. The proposed amendment to Options 3, Section 18 will not
result in a System change.
Options 5, Section 4
Eliminating an unnecessary term in Options 5, Section 4(a) that is
not utilized elsewhere within Options 5, Section 4 which is unnecessary
is consistent with the Act as it will remove confusion. The proposed
amendment to Options 5, Section 4(a) will not result in a System
change.
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.
Option 3, Sections 4 and 5
The Exchange believes that its proposal to memorialize its bulk
message functionality within Options 3, Section 4(b)(3) does not impose
an undue burden on intra-market competition. While the Exchange
currently offers this functionality to Market Makers only, bulk
messaging is intended to provide Market Makers with an additional tool
to meet their various quoting obligations in a manner they deem
appropriate. As such, the Exchange believes that this functionality may
facilitate Market Makers' provision of liquidity, thereby benefiting
all market participants through additional execution opportunities at
potentially improved prices. Furthermore, while the Exchange will offer
the proposed Post-Only Quote Configuration to Market Makers only, the
proposed risk protection will enhance the ability of Market Makers to
add liquidity and avoid removing liquidity from the Exchange's order
book in the manner described above. Greater liquidity benefits all
market participants by providing more trading opportunities and
attracting greater participation by Market Makers. The Exchange
believes that its proposal to memorialize its bulk message
functionality within Options 3, Section 4(b)(3) does not impose an
undue burden on inter-market competition as other options exchanges may
adopt this functionality.
The Exchange's proposal to amend BX's rules at Options 3, Section
4(b)(6) and Options 3, Section 4(b)(7) do not impose an undue burden on
competition because all options markets must not trade-through other
orders on their markets as well as away markets. The proposed change
aligns BX's rule text to MRX's rule text.
Options 3, Section 7
The Exchange's proposal to amend the rule text of BX Options 3,
Section 7(a)(8), related to an Opening Sweep, and (b)(1), related to
OPG orders, does not impose an undue burden competition because the
availability of Market Wide Risk Protection during the Opening Process
assists all Participants in managing their pre-open risk.
The Exchange's proposal to amend the rule text at BX Options 3,
Section 7(b)(2)(C) to add Block Orders and Customer Cross Orders to
Options 3, Section 7(b)(2)(C) and replace the term ``Price Improvement
Auction (``PRISM'') Mechanism'' with ``PRISM Orders'' does not impose
an undue burden on competition as these order types are well
established and the manner in which they trade is specified in each of
the particular auction rules. This proposed change aligns to MRX
Supplementary Material .02(d)(3) of Options 3, Section 7.
Options 3, Section 8
The Exchange's proposal to amend Options 3, Section 8(h)(1), which
currently describes how the Potential Opening Price would be calculated
when there is more than one Potential Opening Price, does not impose an
undue burden on competition. BX began uniformly rounding up when the
Exchange modified certain functionality during a technology migration,
this amendment makes clear the System functionality.
The proposal to amend Options 3, Section 8(k)(1)(A) by removing the
phrase ``or (ii) internal quotes are crossing each other'' does not
impose an undue burden on intra-market competition because internal
quotes would not be crossing each other at this point in the Opening
Process. All Participants are subject to the Opening Process rule.
Options 3, Section 11
The Exchange's proposal to amend the introductory paragraph to
Options 3, Section 11 does not impose an undue burden on competition,
rather it provides greater clarity regarding responses that are entered
into the Exchange's Block Order Mechanism. In 2020, BX adopted the
Block Order Mechanism,\57\ which it copied from ISE Options 3, Section
11. This rule text concerning responses should also have been adopted
at that time as the functionality on BX is identical to that on ISE.
---------------------------------------------------------------------------
\57\ See SR-BX-2020-023.
---------------------------------------------------------------------------
The Exchange's proposal to adopt new rule text within BX Options 3,
Section 11(a)(4) related to the Block Order Mechanism with respect to
minimum increments does not impose an undue burden on competition as it
will make clear the manner in which minimum increments apply within
this mechanism. When BX copied the MRX Options 3, Section 11 rule for
Block Orders, this language should have been adopted as well.\58\
---------------------------------------------------------------------------
\58\ Id.
---------------------------------------------------------------------------
[[Page 36632]]
Options 3, Section 13
The Exchange's proposal to amend Options 3, Section 13 related to
its Price Improvement Auction to include the concept of ``internal
BBO'' within the order entry checks does not impose an undue burden on
competition because all options markets must not trade-through other
orders on their markets as well as away markets. The proposed change
aligns BX's rule text to MRX's rule text.
Options 3, Section 15
The Exchange's proposal to amend BX Options 3, Section 15(a)(1) to
align BX's OPP rule text to MRX's OPP rule text within Options 3,
Section 15(a)(1)(A) does not impose an undue burden on competition
because removing the references to ``day limit, good til cancelled, and
immediate or cancel orders and, instead, referring to ``limit'' orders
accurately captures the scope of the orders subject to OPP. This change
would also make unnecessary the remainder of the rule text stating it
does not apply to market orders.
The Exchange's proposal to amend the ATR Rule within Options 3,
Section 15(b)(1) does not impose an undue burden on competition. Like
MRX, BX's ATR rule applies to orders and quotes as noted in the title
to Options 3, Section 15(b), the ATR risk protection is an order and
quote risk protection. Additionally, ATR does not apply during the
Opening Process today. Further, adding the concept of ``internal BBO''
into the ATR rule because all options markets must not trade-through
other orders on their markets as well as away markets. The proposed
change aligns BX's rule text to MRX's rule text.
Adding rule text within BX Options 3, Section 15(b)(1)(C) to make
clear the Exchange's ability to set different ATR values by options
category does not impose an undue burden on competition because the
ability for the Exchange to set the ATR based on the increment allows
the Exchange to set appropriate limits. The Exchange believes this rule
text will add greater clarity to the ATR rule.
Options 3, Section 18
Amending Options 3, Section 18, Detection of Loss of Communication,
to remove references to OTTO does not impose an undue burden on
competition because it corrects a prior error when this rule was
relocated within the Rulebook by placing the replica of the original
rule from SR-BX-2019-033 into its Rulebook.
Options 5, Section 4
Eliminating an unnecessary reference within amend Options 5,
Section 4(a) does not impose an undue burden on competition because the
term is not utilized elsewhere within Options 5, Section 4.
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
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)(iii) of the Act \59\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\60\
---------------------------------------------------------------------------
\59\ 15 U.S.C. 78s(b)(3)(A)(iii).
\60\ 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.
---------------------------------------------------------------------------
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 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#81f3f4ede4ace2eeecece4eff5f2c1f2e4e2afe6eef7"><span class="__cf_email__" data-cfemail="4634332a236b25292b2b232832350635232568212930">[email protected]</span></a>. Please include
File Number SR-BX-2023-013 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-2023-013. 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-2023-013, and should be submitted on
or before June 26, 2023.
---------------------------------------------------------------------------
\61\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\61\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-11822 Filed 6-2-23; 8:45 am]
BILLING CODE 8011-01-P
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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.