Notice2024-19148
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Introduce MRX Options Trade Outline
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 27, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 166 (Tuesday, August 27, 2024)</title>
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[Federal Register Volume 89, Number 166 (Tuesday, August 27, 2024)]
[Notices]
[Pages 68680-68683]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-19148]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100789; File No. SR-MRX-2024-31]
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Introduce MRX
Options Trade Outline
August 21, 2024.
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 August 9, 2024, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') 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 has designated the proposed rule
change as constituting a ``non-controversial'' rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6)
thereunder,\4\ which renders the proposal effective upon receipt of
this filing by the Commission. 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
The Exchange proposes to introduce MRX Options Trade Outline.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/mrx/rules">https://listingcenter.nasdaq.com/rulebook/mrx/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
The Exchange proposes to introduce MRX Options Trade Outline.\5\
Patterned after PHLX Options Trade Outline ``PHOTO,'' \6\ MRX Options
Trade Outline will replicate in substance \7\ PHOTO and the other trade
outline products currently offered by Nasdaq ISE, LLC (``ISE''),\8\
Nasdaq GEMX, LLC (``GEMX''),\9\ and the options market operated by the
Nasdaq Stock Market LLC (``Nasdaq Options Market'' or ``NOM'').\10\ It
is also similar to trade outline products offered by exchanges not
affiliated with Nasdaq.\11\
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\5\ A proposal to introduce BX Options Trade Outline on the BX
Exchange is being submitted concurrently with this filing.
\6\ See PHLX Rules, Options 7, Section 10; Securities Exchange
Act Release No. 62887 (September 10, 2010), 75 FR 57092 (September
17, 2010) (SR-Phlx-2010-121) (introducing PHOTO on September 1,
2010).
\7\ The underlying information for MRX Options Trade Outline
will be the same as the other trade outline products offered by the
Nasdaq exchanges. Presentation will differ, however, in that data
will not be subdivided into categories. For example, the trade
outline products offered by PHLX, ISE, GEMX and NOM subdivide the
aggregate volume traded for each reported series into categories
according to the quantity of contracts (less than 100, 100-199, and
greater than 200). MRX Options Trade Outline will not separate this
information into quantitative categories, but rather will provide
the same aggregate volume information as PHOTO and the other Nasdaq
exchanges without separating the information into categories
according to the quantity of contracts.
\8\ See Nasdaq ISE Rules, Options 7, Section 10(A) and (B)
(Nasdaq ISE Open/Close Trade Profile End of Day; Nasdaq ISE Open/
Close Trade Profile Intraday).
\9\ See Nasdaq GEMX Rules, Options 7, Sections 7(D) (Nasdaq GEMX
Open/Close End of Day Trade Profile) and 7(E) (Nasdaq GEMX Open/
Close Intraday Trade Profile).
\10\ See Nasdaq Rules, Options 7, Section 4 (Nasdaq Options
Trade Outline (``NOTO'')).
\11\ See, e.g., Securities Exchange Act Release No. 94913 (May
13, 2022), 87 FR 30534 (May 19, 2022) (SR-Cboe-2022-023) (describing
End-of-Day and Intraday Open-Close Data as a summary of trading
activity on the exchange at the option level by origin, side of the
market, price and transaction type); Securities Exchange Act Release
No. 93803 (December 16, 2021, 86 FR 72647 (December 22, 2021) (SR-
NYSEAMER-2021-46) (describing the NYSE Options Open-Close Volume
Summary as a volume summary of trading activity on the exchange at
the option level by origin, side of the market, contract volume and
transaction type); Securities Exchange Act Release No. 93132
(September 27, 2021), 86 FR 54499 (October 1, 2021) (SR-NYSEArca-
2021-82) (describing the NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the exchange at the option
level by origin, side of the market, contract volume and transaction
type); Securities Exchange Act Release No. 97174 (March 21, 2023),
88 FR 18201 (March 27, 2023) (SR-BOX-2023-09) (describing the BOX
exchange Open-Close Data report as providing volume by origin,
buying/selling, and opening/closing criteria); Securities Exchange
Act Release No. 91964 (May 21, 2021), 86 FR 28667 (May 27, 2021)
(SR-PEARL-2021-24) (introducing the Open-Close Report).
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Information will be provided on an End of Day, Intra-Day, and
historical basis.
MRX Options Trade Outline, like all of these other trade outline
products, provides data to help market participants understand market
sentiment on the Exchange and to support the creation of trading models
useful in both options and equities markets. Market participants have
expressed an interest in purchasing a trade outline product from the
Exchange similar to those products already sold on the PHLX and other
Nasdaq affiliates. MRX Options Trade Outline is being introduced to
meet that demand, and to offer investors an additional perspective on
investor sentiment.
MRX Options Trade Outline
MRX Options Trade Outline will provide aggregate quantity and
volume information for trades on the Exchange for all series \12\
during a trading session. Information is provided in the following
categories: (i) total exchange volume for Intra-Day information and
total exchange and industry volume for End of Day information for each
reported series; (ii) open interest for the series; (iii) aggregate
quantity of trades and aggregate trade volume effected to open a
position,\13\ characterized by origin type (Priority Customers,\14\
Broker-Dealers,\15\ Market Makers,\16\ Firm
[[Page 68681]]
Proprietary,\17\ and Professional Customers \18\); and (iv) aggregate
quantity of trades and aggregate trade volume effected to close a
position,\19\ characterized by origin type (Priority Customers, Broker-
Dealers, Market Makers, Firm Proprietary, and Professional
Customers).\20\
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\12\ Every options series trades as a distinct symbol; the terms
``series'' and ``symbol'' are therefore synonyms.
\13\ This includes the aggregate number of ``opening purchase
transactions,'' defined as an Exchange Transaction that will create
or increase a long position in an options contract, see Options 1,
Section 1(a)(27), and the aggregate number of ``opening writing
transactions,'' defined as an Exchange Transaction that will create
or increase a short position in an options contract. See Options 1,
Section 1(a)(28).
\14\ The term ``Priority Customer'' means a person or entity
that (i) is not a broker or dealer in securities, and (ii) does not
place more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s). See
Options 1 Sec. 1(a)(36).
\15\ A ``Broker-Dealer'' order is an order submitted by a Member
for a broker-dealer account that is not its own proprietary account.
See Options 7 Sec. 1(c).
\16\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See Options 1
Sec. 1(a)(21). The term ``Competitive Market Maker'' means a Member
that is approved to exercise trading privileges associated with CMM
Rights. See Options 1 Sec. 1(a)(12). The term ``Primary Market
Maker'' means a Member that is approved to exercise trading
privileges associated with PMM Rights. See Options 1 Sec. 1(a)(35).
\17\ A ``Firm Proprietary'' order is an order submitted by a
Member for its own proprietary account. See Options 7 Sec. 1(c).
\18\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer. See Options 7
Sec. 1(c).
\19\ This includes the aggregate number of ``closing purchase
transactions'' in the affected series, defined as an Exchange
Transaction that will reduce or eliminate a short position in an
options contract, see Options 1, Section 1(a)(9), and the aggregate
number of ``closing writing transactions,'' defined as an Exchange
Transaction that will reduce or eliminate a long position in an
options contract. See Options 1, Section 1(a)(10).
\20\ These are the same types of information available on PHOTO,
and the other trade outline products offered by Nasdaq exchanges.
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MRX Trade Outline End of Day will also provide opening buy, closing
buy, opening sell and closing sell information, which shall include
option first trade price, option high trade price, option low trade
price, and option last trade price.
End of Day information will be available the next business day.
Intra-Day information is updated at 10-minute intervals over the course
of the trading day. Historical information will be available upon
request.
This information will be available to all market participants,
including both members and non-members, for all series and symbols in
End of Day, Intra-Day, and historical files (upon request).
MRX Options Trade Outline will provide proprietary Exchange trading
data and will not include any intraday trading data from any other
exchange.\21\ The information provided, both in End of Day and Intraday
formats, is not a real-time data feed. MRX Options Trade Outline is a
completely voluntary product in that the Exchange is not required by
any rule or regulation to make this data available and potential
subscribers may purchase it only if they voluntarily choose to do so.
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\21\ The End of Day report includes a field that presents Total
Industry Volume for the Series.
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The End of Day file will be updated during an overnight process
with additional fields \22\ and will be available the following
morning, providing aggregate data for the entire trading session.
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\22\ The additional fields are: First Trade Price, High Trade
Price, Low Trade Price, Last Trade Price, Underlying Close,
Moneyness, Total Exchange volume, Total Industry Volume for the
Series, and Open Interest.
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Intra-Day information will be released in scheduled ``snapshots''
available every 10 minutes for all options series over the course of
the trading day. The snapshot will be updated to reflect whatever
activity occurred, or to indicate that no activity occurred.\23\ This
is the same schedule currently offered on PHLX, ISE, GEMX, and Nasdaq
Options Market.\24\
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\23\ Subscribers will receive the first snapshot at 9:42 a.m.
ET, representing data captured from 9:30 a.m. to 9:40 a.m., and the
second calculation at 9:52 a.m., representing data from both the
most recent snapshot and previous snapshots, and continuing over the
course of the trading day. The final Intra-Day snapshot will be
distributed at 4:15 p.m.
\24\ See Supra, notes 4 through 8.
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Historical data will be available in both End of Day and Intra-Day
formats for all option series traded for every calendar month after
September 2017, based on specific request.\25\
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\25\ Market participants generally use historical files for
model testing and research, and the period of time required by a
particular market participant will depend on its unique testing and
research needs as well as whether it is using End of Day or Intra-
Day information. Some customers, for example, may request years of
data, while others only months, or even a single month. The same
principle applies to End of Day vs. Intra-Day information.
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Fees for MRX Options Trade Outline will be proposed in a separate
filing.
The proposed date of implementation, subject to the regulatory
process, will be September 2, 2024.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\26\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\27\ 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.
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\26\ 15 U.S.C. 78f(b).
\27\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that MRX Options Trade Outline would further
broaden the availability of U.S. option market data to investors. The
proposal promotes transparency through the dissemination of aggregate
quantity and volume information for trades on the Exchange for all
series during a trading session, and would benefit investors by
promoting better informed trading throughout the trading day and at the
end of the day. The proposed product is well-understood in the market,
and provides the same information as ISE, GEMX, NOM, and substantially
the same information as many exchanges not affiliated with Nasdaq.
The Exchange believes that MRX Options Trade Outline would further
broaden the availability of U.S. option market data to investors
consistent with the principles of the Act. The proposed rule change
would promote better informed trading by, for example, disseminating
information that may indicate investor sentiment. Data recipients may
also be able to enhance their ability to analyze option trade and
volume data on an intraday basis, and create and test trading models
and analytical strategies. MRX Options Trade Outline will provide a
valuable tool that subscribers can use to gain comprehensive insight
into the trading activity in particular series.\28\
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\28\ While such information is valuable, it is not necessary for
trading.
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Trade outline products have been available on multiple exchanges
for many years and are well known in the market and used by many market
participants. PHLX Options Trade Outline, which is a model for MRX
Options Trade Outline, has been available for well over a decade.\29\
Similar products available on other Nasdaq exchanges include ISE Trade
Profile,\30\ GEMX Trade Profile,\31\ and Nasdaq Options Trade
Outline.\32\ Trade outline products are also offered by competitor
exchanges such a Cboe,\33\ NYSE American,\34\ NYSE Arca,\35\
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BOX,\36\ and MIAX PEARL.\37\ The trade outline products offered by the
Nasdaq-affiliated exchanges provide exactly the same information as the
proposed MRX Options Trade outline, and those offered by other
exchanges provide substantially the same information, including both
Intra-Day and End of Day data.
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\29\ See Securities Exchange Act Release No. 62887 (September
10, 2010), 75 FR 57092 (September 17, 2010) (SR-Phlx-2010-121)
(introducing PHOTO on September 1, 2010).
\30\ See Nasdaq ISE Rules, Options 7, Section 10(A) and (B)
(Nasdaq ISE Open/Close Trade Profile End of Day; Nasdaq ISE Open/
Close Trade Profile Intraday).
\31\ See Nasdaq GEMX Rules, Options 7, Sections 7(D) (Nasdaq
GEMX Open/Close End of Day Trade Profile) and 7(E) (Nasdaq GEMX
Open/Close Intraday Trade Profile).
\32\ See Nasdaq Rules, Options 7, Section 4 (Nasdaq Options
Trade Outline (``NOTO'')).
\33\ See, e.g., Securities Exchange Act Release No. 94913 (May
13, 2022), 87 FR 30534 (May 19, 2022) (SR-Cboe-2022-023) (describing
End-of-Day and Intraday Open-Close Data as a summary of trading
activity on the exchange at the option level by origin, side of the
market, price and transaction type).
\34\ See, e.g., Securities Exchange Act Release No. 93803
(December 16, 2021, 86 FR 72647 (December 22, 2021) (SR-NYSEAMER-
2021-46) (describing the NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the exchange at the option
level by origin, side of the market, contract volume and transaction
type).
\35\ See, e.g., Securities Exchange Act Release No. 93132
(September 27, 2021), 86 FR 54499 (October 1, 2021) (SR-NYSEArca-
2021-82) (describing the NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the exchange at the option
level by origin, side of the market, contract volume and transaction
type).
\36\ See, e.g., Securities Exchange Act Release No. 97174 (March
21, 2023), 88 FR 18201 (March 27, 2023) (SR-BOX-2023-09) (describing
the BOX exchange Open-Close Data report as providing volume by
origin, buying/selling, and opening/closing criteria).
\37\ See, e.g., Securities Exchange Act Release No. 91964 (May
21, 2021), 86 FR 28667 (May 27, 2021) (SR-PEARL-2021-24)
(introducing the Open-Close Report).
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MRX Options Trade Outline will foster investor protection by
expanding the amount of information available to investors. Adding
information from another exchange to the current mix of trade outline
products will help investors become better informed about market
sentiment and therefore better able to protect their interests.
Approval of this proposal will expand customer choice. Trade
outline products can serve as substitutes or complements, depending on
the information needs of the market participant. In general, the value
of a trade outline product depends on trading volume on a particular
exchange; the higher the volume of transactions on an exchange, the
more valuable the information on market sentiment. Customers can choose
to purchase multiple trade outline products, or to substitute the
product of one exchange for another, based on their particular trading
strategy and information needs. Adding a new exchange to the product
mix will expand the number of options available to market participants,
and will foster competition among the exchanges offering these
products. As noted above, this proposal is a direct response to
customer demand.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Nothing in the proposal burdens inter-market competition (the
competition among self-regulatory organizations) because approval of
the proposal does not impose any burden on the ability of other
exchanges to compete. As explained above, many exchanges not affiliated
with Nasdaq currently offer competing products and the introduction of
MRX Options Trade Outline will assist the Exchange in competing with
those other exchanges.
Nothing in the proposal burdens intra-market competition (the
competition among consumers of exchange data) because MRX Options Trade
Outline will be available to any market participant, including both
members and non-members.
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 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 \38\ and Rule 19b-
4(f)(6) \39\ thereunder.
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\38\ 15 U.S.C. 78s(b)(3)(A).
\39\ 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) \40\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\41\ 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 states that
waiver of the operative delay does not present market participants with
any new or novel issues, as the proposed product is well-understood in
the market, and provides the same information as trade outline products
offered by PHLX, ISE, GEMX, and NOM,\42\ and substantially the same
information as many exchanges not affiliated with Nasdaq.\43\ The
Exchange also states that the proposed trade outline product will
promote better informed trading throughout the trading day and at the
end of the day by disseminating information that may indicate investor
sentiment, and which may allow data recipients to create and test
trading models and analytic strategies. For these reasons, 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.\44\
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\40\ 17 CFR 240.19b-4(f)(6).
\41\ 17 CFR 240.19b-4(f)(6)(iii).
\42\ See supra note 7.
\43\ See supra note 11.
\44\ For purposes only of waiving the 30-day operative delay,
the Commission has 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#1c6e697079317f7371717972686f5c6f797f327b736a"><span class="__cf_email__" data-cfemail="196b6c757c347a7674747c776d6a596a7c7a377e766f">[email protected]</span></a>. Please include
file number SR-MRX-2024-31 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-MRX-2024-31. 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
[[Page 68683]]
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-MRX-2024-31 and should be submitted on
or before September 17, 2024.
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\45\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\45\
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-19148 Filed 8-26-24; 8:45 am]
BILLING CODE 8011-01-P
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