Notice2023-28610
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.22 To Introduce a New Data Product To Be Known as the Short Interest Report
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
December 28, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 248 (Thursday, December 28, 2023)</title>
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[Federal Register Volume 88, Number 248 (Thursday, December 28, 2023)]
[Notices]
[Pages 89745-89747]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-28610]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99224; File No. SR-CboeBZX-2023-102]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 11.22 To Introduce a New Data Product To Be Known as the Short
Interest Report
December 21, 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 December 11, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to
amend Rule 11.22 to introduce a new data product to be known as the
Short Interest Report. The text of the proposed rule change is provided
below.
(additions are italicized; deletions are [bracketed])
* * * * *
Rules of Cboe BZX Exchange, Inc.
* * * * *
Rule 11.22. Data Products
The Exchange offers the following data products free of charge,
except as otherwise noted in the Exchange's fee schedule:
(a)-(m) No change.
(n) Short Interest Report. The Short Interest Report contains a
summary of consolidated market short interest positions in all BZX-
listed securities.
* * * * *
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 to adopt new subparagraph
(n) to include the Short Interest Report as an Exchange data product.
The Exchange currently makes available via its website, without
charge, a Short Interest Report.\5\ By way of background, pursuant to
the Financial Industry Regulatory Authority, Inc. (``FINRA'') Rule
4560, each FINRA member firm is required to report its ``total'' short
interest positions in all customer and proprietary firm accounts.\6\
FINRA uses the short interest data to, among other things, assess its
members' short selling activity and compliance with Regulation SHO. The
short interest data provided by FINRA members also provides analytical
and investment data that the brokerage industry, academic institutions
and investors use in developing risk-assessment tools and trading
models. The Short Interest Report that the Exchange currently makes
available is a summary of consolidated market short interest positions
in all BZX-listed securities \7\ only as reported by FINRA. The file is
provided daily, for each business day, but values are only updated
twice per month.
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\5\ <a href="https://www.cboe.com/us/equities/market_statistics/short_interest/">https://www.cboe.com/us/equities/market_statistics/short_interest/</a>
\6\ See FINRA Rule 4560.
\7\ A BZX-listed security is a security listed on the Exchange
pursuant to Chapter 14 of the Exchange's Rules and includes both
corporate listed securities and Exchange Traded Products (``ETPs'').
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Proposed Rule 11.22(n) provides that the Short Interest Report
contains a summary of consolidated market short interest positions in
all BZX-listed securities. The report data fields include Cycle
Settlement Date,\8\ BATS-Symbol,\9\ Security Name, Number of Shares Net
Short Current Cycle,\10\ Number of Shares Net Short Previous Cycle,\11\
Cycle Average Daily Trade Volume,\12\ Minimum Number of Trade Days to
Cover Shorts,\13\ Split Indicator,\14\ Manual Revision Indicator,\15\
Percent Change in Short Position,\16\ and Change in Short Position from
Previous.\17\
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\8\ ``Cycle Settlement Date'' is the reporting period date.
\9\ ``BATS-Symbol'' is the Exchange-assigned symbol for the
given security.
\10\ ``Number Shares Net Short Current Cycle'' is the total of
uncovered open short interest positions in a particular security in
shares, for the current reporting period.
\11\ ``Number of Shares Net Short Previous Cycle'' is the total
number of uncovered open short interest positions in a particular
security in shares, for the previous reporting period.
\12\ ``Cycle Average Daily Trade Volume'' is the number of
shares traded on average per day in a particular security in shares.
\13\ ``Minimum Number of Trade Days to Cover Shorts'' is the
ratio of the current short interest position over the average daily
volume for the current settlement date.
\14\ ``Split Indicator'' indicates whether the security has
undergone a stock split during the current reporting period.
\15\ ``Manual Revision Indicator'' indicates whether the
security's short interest for the previous reporting period has been
revised.
\16\ ``Percent Change in Short Position'' is the percent change
from the current reporting period's short interest compared to the
previous reporting period's short interest.
\17\ ``Change in Short Position from Previous'' is the
difference between the current and previous reporting period of
uncovered short interest positions in a particular security in
shares.
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Cboe LiveVol, LLC (``LiveVol''), a wholly owned subsidiary of the
Exchange's parent company, Cboe Global Markets, Inc., will make the
Short Interest Reports available for purchase \18\ to Members and non-
Members on the LiveVol DataShop website.\19\
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\18\ The Exchange intends to submit a separate filing to
establish fees for the Short Interest Report.
\19\ See <a href="https://datashop.cboe.com/">https://datashop.cboe.com/</a>.
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The Exchange notes that the data fields included in the Short
Interest Report are substantially similar to the
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fields included by the Nasdaq Stock Market LLC (``Nasdaq'') \20\ and
the New York Stock Exchange LLC (``NYSE'') \21\ in their Short Interest
Report files. Specifically, the Nasdaq Short Interest Report file also
includes Security Name and Symbol, Current Shares Short, Previous Month
Shares Short, Change in Shares Short, Percent Change, Average Daily
Share Volume, Days to Cover, and Stock Split Flag, and New Issue
Flag.\22\ The proposed Short Interest Report is also similar to NYSE's
Short Interest Report file, which includes Stock Symbol and Standard
Suffix, Issue Name, Revision Indicator, Split Indicator Current Short
Interest Position, Previous Short Interest Position, Change in Short
Interest Position, Average Daily Volume, and Current Days to Cover.\23\
Accordingly, the data fields included in the Short Interest Report are
nearly identical to the fields included by Nasdaq and NYSE in their
respective short interest reports, except that the Exchange will not
include one field that appears within the Nasdaq report (i.e., the New
Issue Flag) and three fields that appear within the NYSE report (i.e.,
the Change in Days to Cover, Free Float and Change in Average Daily
Volume). The Exchange's proposed Short Interest Report will include
only data points provided by FINRA, and as the foregoing fields are not
included in the FINRA-provided data points, the Exchange will not
include such fields in the report. Additionally, like NYSE, the
Exchange will offer historical Short Interest Reports, dating back to
March 31, 2015, which will include the same data fields as the daily
end-of-day files.
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\20\ See Specifications for Short Interest file, available at:
<a href="https://www.nasdaq.com/solutions/short-interest-report">https://www.nasdaq.com/solutions/short-interest-report</a>.
\21\ See NYSE Group Short Interest Client Specification,
available at:
NYSE_Group_Short_Interest_Client_Specification_v1.5.pdf. Unlike
NYSE, the proposed Short Volume Report will not include the trading
exchange, as the proposed report includes short interest information
only for transactions executed on BZX.
\22\ See supra note 20.
\23\ See supra note 21.
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The Exchange anticipates that a wide variety of market participants
will purchase the proposed Short Interest Report, including, but not
limited to, active equity trading firms and academic institutions. For
example, the Exchange notes that academic institutions may utilize the
Short Interest Report data and as a result promote research and studies
of the equities industry to the benefit of all market participants. The
Exchange further believes the proposed Short Interest Report may
provide helpful trading information regarding investor sentiment that
may allow market participants to make more informed trading decisions
and may be used to create and test trading models and analytical
strategies and provide comprehensive insight into trading on the
Exchange. The proposal is a completely voluntary product, in that the
Exchange is not required by any rule or regulation to make this data
available and that potential subscribers may purchase it only if they
voluntarily choose to do so.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of section 6(b) of the Act.\24\ Specifically, the
Exchange believes the proposed rule change is consistent with the
section 6(b)(5) \25\ 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) \26\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\24\ 15 U.S.C. 78f(b).
\25\ 15 U.S.C. 78f(b)(5).
\26\ Id.
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In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. It was
believed that this authority would expand the amount of data available
to consumers, and also spur innovation and competition for the
provision of market data. The Exchange believes that the proposed Short
Interest Report, which supplies data on short interest positions for
all BZX-listed securities as reported by FINRA, broadens the
availability of U.S. equity market data to investors consistent with
the principles of Regulation NMS. The proposal also promotes
transparency through the dissemination of short interest data. The
proposed rule change would benefit investors by providing access to the
Short Interest Report data, which may promote better informed trading,
as well as research and studies of the equities industry. Further, data
products such as the Short Interest Report are a means by which
exchanges compete to attract order flow. To the extent that exchanges
are successful in such competition, they earn trading revenues and also
enhance the value of their data products by increasing the amount of
data they provide. The need to compete for order flow places
substantial pressure upon exchanges to keep their market data offerings
competitive.
Moreover, as noted above, Nasdaq offers a Short Interest file which
provides short interest data that is nearly identical to that currently
proposed by the Exchange.\27\ The proposed Short Interest Report is
also nearly identical to NYSE's Short Interest file.\28\ As stated
previously, the Exchange's Short Interest Report is nearly identical to
the NYSE and Nasdaq reports in that the Exchange will offer identical
data fields except that the Exchange will not include one field that
appears within the Nasdaq report (i.e., the New Issue Flag) and three
fields that appear within the NYSE report (i.e., the Change in Days to
Cover, Free Float and Change in Average Daily Volume). As noted above,
the Exchange's report will include data points provided by FINRA, and
the foregoing Nasdaq and NYSE fields are not included in the FINRA-
provided data points. Accordingly, the proposed Short Interest Report
does not provide a unique or novel data offering, but rather offers
data points consistent with other data products already available and
utilized by market participants today.
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\27\ See supra note 20.
\28\ See supra note 21.
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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. Rather, the Exchange
believes that the proposal will promote fair competition among the
national securities exchanges by permitting the Exchange to offer a
data product that provides substantially the same data offered by other
competitor equities exchanges, with the only difference, as noted
above, being that the Exchange's report not include fields outside of
those provided by FINRA.
Additionally, the Exchange believes the proposed rule change does
not impose any burden on intramarket
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competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Short Interest Report will be available
equally to Members and non-Members. Market participants are not
required to purchase the Short Interest Report, and the Exchange is not
required to make the Short Interest Report available to investors.
Rather, the Exchange is voluntarily making the Short Interest Report
available, and market participants may choose to receive (and pay for)
this data based on their own business needs. Potential purchasers may
request the data at any time if they believe it to be valuable or may
decline to purchase such data. Given the above, the Exchange does not
believe the proposed rule change will result in any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
The Exchange also believes the proposed rule change does not impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. Moreover, as
noted above, Nasdaq offers a Short Interest file which provides short
interest data that is nearly identical to that currently proposed by
the Exchange.\29\ The proposed Short Interest Report is also nearly
identical to NYSE's Short Interest file.\30\ As stated previously, the
Exchange's Short Interest Report is nearly identical to the NYSE and
Nasdaq reports in that the Exchange will offer identical data fields
except that the Exchange will not include one field that appears within
the Nasdaq report (i.e., the New Issue Flag) and three fields that
appear within the NYSE report (i.e., the Change in Days to Cover, Free
Float and Change in Average Daily Volume). As noted above, the
Exchange's report will include data points provided by FINRA, and the
foregoing Nasdaq and NYSE fields are not included in the FINRA-provided
data points. Accordingly, the proposed Short Interest Report does not
provide a unique or novel data offering, but rather offers data points
consistent with other data products already available and utilized by
market participants today.
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\29\ See supra note 20.
\30\ See supra note 21.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to section 19(b)(3)(A) of the Act \31\ and Rule 19b-
4(f)(6) \32\ thereunder.
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\31\ 15 U.S.C. 78s(b)(3)(A).
\32\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \33\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\34\ the Commission
may designate a shorter time of such action is consistent with the
protection of investor 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 states that
waiving the operative delay would allow market participants to realize
immediately the benefits of the proposal, which the Exchange states
includes trading information regarding investor sentiment that may
allow market participants to make more informed trading decisions. The
proposed change raises no novel legal or regulatory issues. Based on
the foregoing, 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 operative
delay and designates the proposal operative upon filing.
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\33\ 17 CFR 240.19b-4(f)(6).
\34\ 17 CFR 240.19b-4(f)(6).
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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 will 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="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#3d4f485158105e5250505853494e7d4e585e135a524b"><span class="__cf_email__" data-cfemail="245651484109474b4949414a5057645741470a434b52">[email protected]</span></a>. Please include
file number SR-CboeBZX-2023-102 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-2023-102. 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-2023-102 and should
be submitted on or before January 18, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
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\35\ 17 CFR 200.30-3(a)(12), (59).
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Christina Z. Milnor,
Assistant Secretary.
[FR Doc. 2023-28610 Filed 12-27-23; 8:45 am]
BILLING CODE 8011-01-P
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