Notice2024-10190
Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Introduce a New Connectivity Offering Through Dedicated Cores
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 10, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 92 (Friday, May 10, 2024)</title>
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[Federal Register Volume 89, Number 92 (Friday, May 10, 2024)]
[Notices]
[Pages 40517-40519]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-10190]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100062; File No. SR-CboeBYX-2024-013]
Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Introduce a New Connectivity Offering Through Dedicated Cores
May 6, 2024.
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 April 24, 2024, Cboe BYX Exchange, Inc. (the ``Exchange'' or
``BYX'') 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
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 BYX Exchange, Inc. (the ``Exchange'' or ``BYX'') proposes to
introduce a new connectivity offering.
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/byx/">http://markets.cboe.com/us/equities/regulation/rule_filings/byx/</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 introduce a new connectivity offering
relating to the use of Dedicated Cores. By way of background, all
Central Processing Units (``CPU Cores'') have historically been shared
by logical order entry ports (i.e., multiple logical ports from
multiple firms may connect to a single CPU Core). Starting May 6, 2024,
the Exchange will allow Users \5\ to assign a single Binary Order Entry
(``BOE'') logical order entry port \6\ to a single dedicated CPU Core
(``Dedicated Core'').\7\ Use of Dedicated Cores can provide reduced
latency, enhanced throughput, and improved performance since a firm
using a Dedicated Core is utilizing the full processing power of a CPU
Core instead of sharing that power with other firms. This offering is
completely voluntary and will be available to all Users.\8\ Users will
also continue to have the option to utilize BOE logical order entry
ports on shared CPU Cores as they do today, either in lieu of, or in
addition to, their use of Dedicated Core(s). As such, Users will be
able to operate across a mix of shared and dedicated CPU Cores which
the Exchange believes provides additional risk and capacity management,
especially during times of market volatility and high message traffic.
Further, Dedicated Cores are not required nor necessary to participate
on the Exchange and as such Users may opt not to use Dedicated Cores at
all.
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\5\ A User may be either a Member or Sponsored Participant. The
term ``Member'' shall mean any registered broker or dealer that has
been admitted to membership in the Exchange. limited liability
company or other organization which is a registered broker or dealer
pursuant to Section 15 of the Act, and which has been approved by
the Exchange. A Sponsored Participant may be a Member or non-Member
of the Exchange whose direct electronic access to the Exchange is
authorized by a Sponsoring Member subject to certain conditions. See
Exchange Rule 11.3.
\6\ Users may currently connect to the Exchange using a logical
port available through an application programming interface
(``API''), such as the Binary Order Entry (``BOE'') protocol. A BOE
logical order entry port is used for order entry.
\7\ The Exchange notes that firms will not have physical access
to their Dedicated Core and thus cannot make any modifications to
the Dedicated Core or server. All Dedicated Cores (including servers
used for this service) are owned and operated by the Exchange.
\8\ The Exchange intends to submit a separate rule filing to
adopt monthly fees related to the use of Dedicated Cores.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\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 proposal would provide Users the option to
assign a single BOE logical entry port to a single Dedicated Core. As
described above, CPU Cores have historically been shared by logical
order entry ports (i.e., multiple logical ports from multiple
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firms may connect to a single CPU Core). Use of Dedicated Cores can
provide reduced latency, enhanced throughput, and improved performance
since a firm using a Dedicated Core is utilizing the full processing
power of a CPU Core instead of sharing that power with other firms. The
Exchange also emphasizes that the use of Dedicated Cores is not
necessary for trading and as noted above, is entirely optional. Indeed,
Users can continue to access the Exchange through shared CPU Cores at
no additional cost. Depending on a firm's specific business needs, the
proposal enables Users to choose to use Dedicated Cores in lieu of, or
in addition to, shared CPU Cores (or as noted, not use Dedicated Cores
at all). The Exchange believes the proposal to operate across a mix of
shared and dedicated CPU Cores may further provide additional risk and
capacity management. The Exchange also notes that its affiliated
exchange, Cboe EDGA Exchange, Inc, recently introduced Dedicated Cores
and that another Exchange [sic] also provides a similar connectivity
offering.\12\
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\12\ See Securities Exchange Act Release No. 99818 (March 21,
2024), 89 FR 21294 (March 27, 2024) (SR-CboeEDGA-2024-008). See also
The Nasdaq Stock Market, Equity 7 Pricing Schedule, Section
115(g)(3), Dedicated Ouch Port Infrastructure.
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Furthermore, this service is optional and is available to all
Users. In this regard, some Users may determine it does not want or
need Dedicated Cores and may continue their use of the shared CPU
Cores, unchanged. The Exchange has no current plans to eliminate shared
Cores nor require subscription to the dedicated offering.
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. Particularly, the Exchange
believes the proposed rule change does not impose any burden on intra-
market competition that is not necessary or appropriate in furtherance
of the purposes of the Act because Dedicated Cores will be available to
all Users. While the Exchange believes that the proposed Dedicated
Cores provide a valuable service, Users can choose to purchase, or not
purchase, Dedicated Cores based on their own determination of the value
and their business needs. Indeed, no User is required or under any
regulatory obligation to use Dedicated Cores.
Additionally, nothing in the proposal imposes any burden on the
ability of other exchanges to compete. The Exchange operates in a
highly competitive market in which exchanges offer various connectivity
services as a means to facilitate the trading and other market
activities of those market participants and at least one other exchange
has an offering comparable to Dedicated Cores.\13\
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\13\ See Securities Exchange Act Release No. 99818 (March 21,
2024), 89 FR 21294 (March 27, 2024) (SR-CboeEDGA-2024-008). See also
The Nasdaq Stock Market, Equity 7 Pricing Schedule, Section
115(g)(3), Dedicated Ouch Port Infrastructure.
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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 proposed rule change does not: (i) significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \14\ and Rule
19b-4(f)(6) thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A)(iii).
\15\ 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) \16\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Exchange states that its affiliated exchange, Cboe EDGA
Exchange, Inc., recently introduced Dedicated Cores and another
exchange has a connectivity offering comparable to Dedicated Cores.\18\
The Commission believes that the proposed rule change presents no novel
legal or regulatory issues, and that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest. Accordingly, the Commission hereby waives the 30-day
operative delay and designates the proposed rule change operative upon
filing.\19\
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\18\ See supra note 12.
\19\ 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 under
Section 19(b)(2)(B) \20\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\20\ 15 U.S.C. 78s(b)(2)(B).
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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#5321263f367e303c3e3e363d2720132036307d343c25"><span class="__cf_email__" data-cfemail="4e3c3b222b632d2123232b203a3d0e3d2b2d60292138">[email protected]</span></a>. Please include
file number SR-CboeBYX-2024-013 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-CboeBYX-2024-013. 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="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
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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-CboeBYX-2024-013 and should
be submitted on or before May 31, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12), (59).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-10190 Filed 5-9-24; 8:45 am]
BILLING CODE 8011-01-P
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