Notice2023-18303
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 11.22 (“Data Products”) To Eliminate the ETF Implied Liquidity Feed
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
August 25, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 164 (Friday, August 25, 2023)</title>
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[Federal Register Volume 88, Number 164 (Friday, August 25, 2023)]
[Notices]
[Pages 58327-58329]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-18303]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98181; File No. SR-CboeBZX-2023-059]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Exchange Rule 11.22 (``Data Products'') To Eliminate the ETF Implied
Liquidity Feed
August 21, 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 August 8, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to
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solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to
amend Exchange Rule 11.22 (``Data Products'') to eliminate one of the
Exchange's data offerings. The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (<a href="http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/">http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/</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 11.22 (``Data Products'') to
eliminate the data product listed under subparagraph (n), the ``ETF
Implied Liquidity'' data feed,\5\ which the Exchange intends to
decommission on August 8, 2023.
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\5\ The ETF Implied Liquidity Feed was adopted in 2017. See
Securities Exchange Act Release No. 80580 (May 3, 2017), 82 FR 21585
(May 9, 2017) (SR-BatsBZX-2017-25) and Securities Exchange Act
Release No. 80772 (May 25, 2017), 82 FR 25389 (June 1, 2017) (SR-
BatsBZX-2017-036).
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By way of background, the ETF Implied Liquidity feed is an optional
data feed that provides the Exchange's proprietary calculation of the
implied liquidity and the aggregate best bid and offer (``BBO'') of all
displayed orders on the Exchange and its affiliated exchanges \6\ for
all standard, non-leveraged U.S. equity Exchange Traded Funds
(``ETFs'') traded on the System.\7\ An ETF's implied liquidity
disseminated via the feed consists of the ETF's implied BBO (including
the implied size) calculated via a proprietary methodology based on the
national best bid and offer (``NBBO''), the number of shares of
securities underlying one creation unit of the ETF, and the estimated
cash included in one creation unit of the ETF. The Exchange
disseminates the aggregate BBO through the ETF Implied Liquidity feed
no earlier than it provides its BBO to the processors under the CTA
Plan or the Nasdaq/UTP Plan.
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\6\ The Exchange's affiliates are Cboe EDGA Exchange, Inc.,
(``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX''), and Cboe BYX
Exchange, Inc. (``BYX'') (``collectively, the ``Bats Exchanges'').
\7\ The securities underlying each of the U.S. equity ETFs
included in the proposed feed must be considered NMS Securities as
defined under Rule 600(b)(46) of Regulation NMS. 17 CFR
242.600(b)(46).
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Currently there are no market participants that are taking the ETF
Implied Liquidity feed. As such, the Exchange no longer wishes to
maintain or offer this product and therefore proposes to decommission
the ETF Implied Liquidity feed and delete the corresponding reference
to the product from its rulebook.\8\
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\8\ The Exchange intends to also submit a corresponding rule
filing to eliminate reference to this feed and corresponding fees in
the Exchange's fee schedule. See SR-CboeBZX-2023-060.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of section 6(b) of the
Act.\9\ Specifically, the Exchange believes the proposed rule change is
consistent with the section 6(b)(5) \10\ 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) \11\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ Id.
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In particular, the Exchange believes that the proposal to
decommission the ETF Implied Liquidity feed is appropriate given the
non-usage of the product among market participants. Further, the ETF
Implied Liquidity feed is optional, and its use is not a prerequisite
for trading on the Exchange. The Exchange also notes that is not
required to maintain or offer any one proprietary market data product,
including the ETF Implied Liquidity feed. The Exchange also believes
that the proposed rule change is fair and equitable and is not designed
to permit unfair discrimination as it applies uniformly to all Members
(i.e., the product will no longer be available for any Member).
Eliminating reference to this feed in the Exchange's rulebook will
promote clarity in the rules as to what data products may or may not be
available.
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 ETF Implied Liquidity
feed is an optional data feed offered by the Exchange, it is not a
prerequisite to trading on the Exchange, and the Exchange is not
required to offer or maintain such feed.
The Exchange believes that the proposed deletion does impose any
intramarket competition as it applies to all Members (i.e. the product
will no longer be available to any Member). The Exchange believes that
the proposed rule change also does not impose any undue burden on
intermarket competition. The ETF Implied Liquidity feed is an optional
data product offered by the Exchange and market participants are not
required to subscribe to it and the Exchange is not required to offer
it. Moreover, the proposed change is not being submitted for
competitive reasons, but rather to eliminate a data product that is not
being actively used by market participants today.
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
[[Page 58329]]
operative for 30 days after the date of the filing, or such shorter
time as the Commission may designate if consistent with the protection
of investors and the public interest, it has become effective pursuant
to section 19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6) \13\
thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission
may 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 proposed
rule change may become operative upon filing. The Exchange requested
the waiver because it intended to decommission the ETF Implied
Liquidity feed effective August 8, 2023, and eliminate such references
from the Exchange's rulebook to alleviate potential confusion as to
what data products the Exchange currently offers. Because the proposed
rule change does not raise any novel legal or regulatory issues, the
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
Therefore, the Commission hereby waives the 30-day operative delay and
designates the proposal operative upon filing.\16\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ 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. 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#5f2d2a333a723c3032323a312b2c1f2c3a3c71383029"><span class="__cf_email__" data-cfemail="f88a8d949dd59b9795959d968c8bb88b9d9bd69f978e">[email protected]</span></a>. Please include
file number SR-CboeBZX-2023-059 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-CboeBZX-2023-059. 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="https://www.sec.gov/rules/sro.shtml">https://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
a.m. and 3 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-CboeBZX-2023-059 and should
be submitted on or before September 15, 2023.
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\17\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-18303 Filed 8-24-23; 8:45 am]
BILLING CODE 8011-01-P
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