Notice2024-19394
Self-Regulatory Organizations; Nasdaq BX, Inc.; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove Proposed Rule Change To Adopt an OTTO Protocol
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 29, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 168 (Thursday, August 29, 2024)</title>
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[Federal Register Volume 89, Number 168 (Thursday, August 29, 2024)]
[Notices]
[Pages 70234-70241]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-19394]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100810; File No. SR-BX-2024-019)]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Suspension of and
Order Instituting Proceedings To Determine Whether To Approve or
Disapprove Proposed Rule Change To Adopt an OTTO Protocol
August 23, 2024.
I. Introduction
On June 26, 2024, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission''), pursuant
to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change
(File Number SR-BX-2024-019) to adopt an OTTO protocol and associated
fee. The proposed rule change was immediately effective upon filing
with the Commission pursuant to Section 19(b)(3)(A) of the Act.\3\ The
proposed rule change was published for comment in the Federal Register
on July 15, 2024.\4\ Pursuant to Section 19(b)(3)(C) of the Act,\5\ the
Commission is hereby: (1) temporarily suspending the proposed rule
change; and (2) instituting proceedings to determine whether to approve
or disapprove the proposed rule change.
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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). A proposed rule change may take
effect upon filing with the Commission if it is designated by the
exchange as ``establishing or changing a due, fee, or other charge
imposed by the self-regulatory organization on any person, whether
or not the person is a member of the self-regulatory organization.''
15 U.S.C. 78s(b)(3)(A)(ii).
\4\ See Securities Exchange Act Release No. 99841 (July 9,
2024), 89 FR 57485 (``Notice'').
\5\ 15 U.S.C. 78s(b)(3)(C).
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II. Background and Description of the Proposed Rule Change
The Exchange states that the purpose of the proposed rule change is
to adopt a new protocol, ``Ouch to Trade Options'' or ``OTTO'' and
establish pricing for this new protocol.
According to the Exchange, today, BX Participants may enter orders
into the Exchange through the ``Financial Information eXchange'' or
``FIX.'' \6\ The Exchange states that the proposed new OTTO protocol is
identical to the OTTO protocol offered today on 3 Nasdaq affiliated
exchanges, Nasdaq ISE, LLC (``ISE''), Nasdaq GEMX, LLC (``GEMX'') and
Nasdaq MRX, LLC (``MRX'').\7\
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\6\ See Notice, 89 FR at 57485. The Exchange states that FIX is
an interface that allows Participants and their Sponsored Customers
to connect, send, and receive messages related to orders and auction
orders and responses to and from the Exchange. Id. at n.3. The
Exchange states that features include the following: (1) execution
messages; (2) order messages; and (3) risk protection triggers and
cancel notifications. Id. The Exchange states that, in addition, a
BX Participant may elect to utilize FIX to send a message and PRISM
Order, as defined within Options 3, Section 13, to all BX
Participants that opt in to receive Requests for PRISM requesting
that it submit the sender's PRISM Order with responder's Initiating
Order, as defined within Options 3, Section 13, into the Price
Improvement Auction (``PRISM'') mechanism, pursuant to Options 3,
Section 13 (``Request for PRISM''). Id. (citing Exchange Rule
Options 3, Section 7(e)(1)(A)).
\7\ See Notice, 89 FR at 57485-86.
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The Exchange states that the OTTO protocol is a proprietary
protocol of Nasdaq, Inc and that the Exchange continues to innovate and
modernize technology so that it may continue to compete among options
markets.\8\ The Exchange states that the ability to continue to
innovate with technology and offer new products to market participants
allows BX to remain competitive in the options space which currently
has seventeen options markets and potential new entrants.\9\
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\8\ See Notice, 89 FR at 57486.
\9\ See Notice, 89 FR at 57486.
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[[Page 70235]]
OTTO Protocol
The Exchange states that as proposed, OTTO would allow Participants
and their Sponsored Customers \10\ to connect, send, and receive
messages related to orders, auction orders, and auction responses to
the Exchange.\11\ The Exchange states that OTTO features would include
the following: (1) options symbol directory messages (e.g., underlying
and complex instruments); (2) System \12\ 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) order
messages; (6) risk protection triggers and cancel notifications; (7)
auction notifications; (8) auction responses; and (9) post trade
allocation messages.\13\ The Exchange notes that unlike FIX, which
offers routing capability, OTTO does not permit routing.\14\ The
Exchange states that it proposes to include this description of OTTO in
new Options 3, Section 7(e)(1)(B) and re-letter current ``B'' as
``C''.\15\
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\10\ The Exchange states that General 2, Section 22 describes
Sponsored Access arrangements. See Notice, 89 FR at 57486 n.4.
\11\ See Notice, 89 FR at 57486.
\12\ The Exchange states that the term ``System'' or ``Trading
System'' means the automated system for order execution and trade
reporting owned and operated by BX as the BX Options market. See
Notice, 89 FR at 57486 n.5. The Exchange states that BX Options
market comprises: (A) an order execution service that enables
Participants to automatically execute transactions in option series;
and provides Participants with sufficient monitoring and updating
capability to participate in an automated execution environment; (B)
a trade reporting service that submits ``locked-in'' trades for
clearing to a registered clearing agency for clearance and
settlement; transmits last-sale reports of transactions
automatically to the Options Price Reporting Authority for
dissemination to the public and industry; and provides participants
with monitoring and risk management capabilities to facilitate
participation in a ``locked-in'' trading environment; and (C) the
data feeds described in Options 3, Section 23. See id. (citing BX
Options 1, Section 1(a)(59)).
\13\ See Notice, 89 FR at 57486.
\14\ See Notice, 89 FR at 57486.
\15\ See Notice, 89 FR at 57486.
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The Exchange states that while the Exchange has no way of
predicting with certainty the amount or type of OTTO Ports market
participants will in fact purchase, the Exchange anticipates that some
Participants will subscribe to multiple OTTO Ports in combination with
FIX Ports.\16\ The Exchange notes that Options Participants may use
varying number of OTTO ports based on their business needs.\17\
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\16\ See Notice, 89 FR at 57486.
\17\ See Notice, 89 FR at 57486.
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Other Amendments
In connection with offering OTTO, the Exchange proposes to amend
other rules within Options 3.\18\ Each amendment is described below.
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\18\ See Notice, 89 FR at 57486.
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Options 3, Section 7
The Exchange states that it proposes to amend Options 3, Section 7,
Types of Orders and Quote Protocols.\19\ The Exchange states that
specifically, BX proposes to amend Options 3, Section 7 (b)(2) that
describes the Immediate-or-Cancel'' or ``IOC'' order.\20\ The Exchange
states that today, Options 3, Section 7(b)(2)(B) notes that an IOC
order may be entered through FIX or SQF, provided that an IOC Order
entered by a Market Maker through SQF is not subject to the Order Price
Protection, the Market Order Spread Protection, or Size Limitation in
Options 3, Section 15(a)(1), (a)(2), and (b)(2), respectively.\21\ The
Exchange states that it proposes to add ``OTTO'' to the list of
protocols to note that an IOC order may also be entered through
OTTO.\22\
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\19\ See Notice, 89 FR at 57486.
\20\ See Notice, 89 FR at 57486.
\21\ See Notice, 89 FR at 57486.
\22\ See Notice, 89 FR at 57486.
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BX also states that it proposes to amend the ``DAY'' order in
Options 3, Section 7(b)(3) that currently provides that a Day order may
be entered through FIX.\23\ The Exchange states that with the addition
of OTTO, a Day order may also be entered through OTTO.\24\
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\23\ See Notice, 89 FR at 57486.
\24\ See Notice, 89 FR at 57486.
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BX states that it also proposes to amend the ``Good Til Cancelled''
or ``GTC'' order which currently does not specify that a GTC order may
be entered through FIX.\25\ The Exchange states that GTC orders would
only be able to be entered through FIX and not OTTO.\26\ The Exchange
states that it proposes to amend Options 3, Section 7(b)(4) to add a
sentence to note that GTC orders may be entered through FIX.\27\
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\25\ See Notice, 89 FR at 57486.
\26\ See Notice, 89 FR at 57486.
\27\ See Notice, 89 FR at 57486.
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Options 3, Section 8
The Exchange states that BX proposes to amend Options 3, Section 8,
Options Opening Process.\28\ The Exchange states that BX proposes to
amend Options 3, Section 8(l) that describes the Opening Process Cancel
Timer.\29\ The Exchange states that the Opening Process Cancel Timer
represents a period of time since the underlying market has opened, and
that if an option series has not opened before the conclusion of the
Opening Process Cancel Timer, a Participant may elect to have orders
returned by providing written notification to the Exchange.\30\ The
Exchange states that today, these orders include all non-Good Til
Cancelled Orders received over the FIX protocol.\31\ The Exchange
states that it proposes to add the OTTO protocol as well to the rule
text language in that paragraph.\32\
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\28\ See Notice, 89 FR at 57486.
\29\ See Notice, 89 FR at 57486.
\30\ See Notice, 89 FR at 57486.
\31\ See Notice, 89 FR at 57486.
\32\ See Notice, 89 FR at 57486.
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Options 3, Section 12
The Exchange states that it proposes to amend the Options 3,
Section 12, Crossing Orders.\33\ Specifically, the Exchange states that
it proposes to amend Customer Crossing Orders in Options 3, Section
12(a) that currently provides Public Customer-to-Public Customer Cross
Orders are automatically executed upon entry provided that the
execution is at or between the best bid and offer on the Exchange and
(i) is not at the same price as a Public Customer Order on the
Exchange's limit order book and (ii) will not trade through the
NBBO.\34\ The Exchange states that Public Customer-to-Public Customer
Cross Orders must be entered through FIX.\35\ The Exchange states that
it proposes to remove the sentence that provides that Public Customer-
to-Public Customer Cross Orders must be entered through FIX because
they will be able to be entered through both FIX and OTTO.\36\
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\33\ See Notice, 89 FR at 57486.
\34\ See Notice, 89 FR at 57486.
\35\ See Notice, 89 FR at 57486.
\36\ See Notice, 89 FR at 57486.
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Options 3, Section 17
The Exchange states that it proposes to amend the Kill Switch at
Options 3, Section 17.\37\ The Exchange states that the Kill Switch
provides Participants with an optional risk management tool to promptly
cancel and restrict orders.\38\ The Exchange states that with the
introduction of OTTO, the Exchange proposes to align its Kill Switch
rule text with MRX's Kill Switch.\39\ The Exchange states that it
proposes to note in Options 3, Section 17(a) that BX Participants may
initiate a message(s) to the System to promptly cancel and restrict
their order activity on the Exchange, as is the case today, as
described in section (a)(1).\40\ The Exchange states that this
amendment simply rewords the rule text without a
[[Page 70236]]
substantive amendment to the rule text.\41\
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\37\ See Notice, 89 FR at 57486.
\38\ See Notice, 89 FR at 57486.
\39\ See Notice, 89 FR at 57487 (citing MRX Options 3, Section
17).
\40\ See Notice, 89 FR at 57487.
\41\ See Notice, 89 FR at 57487.
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The Exchange states that it proposes to renumber Options 3, Section
17(a)(i) and (ii) as (a)(1) and (2).\42\ The Exchange states that
current Options 3, Section 17(a)(i) states, ``If orders are cancelled
by the BX Participant utilizing the Kill Switch, it will result in the
cancellation of all orders requested for the Identifier(s). The BX
Participant will be unable to enter additional orders for the affected
Identifier(s) until re-entry has been enabled pursuant to section
(a)(ii).'' \43\ The Exchange states that it proposes to instead
provide, ``A BX Participant may submit a request to the System through
FIX or OTTO to cancel all existing orders and restrict entry of
additional orders for the requested Identifier(s) on a user level on
the Exchange.'' \44\ The Exchange states that with the addition of
OTTO, the Exchange notes that both FIX and OTTO orders may be
cancelled.\45\ The Exchange states that further, today, BX Participants
utilize an interface to send a message to the Exchange to initiate a
Kill Switch.\46\ The Exchange notes that in lieu of the interface, BX
Participants will only be able to initiate a cancellation of their
orders by sending a mass purge request through FIX or OTTO.\47\ The
Exchange states that this change will align the Kill Switch
functionality to that of ISE, GEMX and MRX Options 3, Section 17 and
will enable BX Participants to initiate the Kill Switch more seamlessly
without the need to utilize a separate interface.\48\ The Exchange
states that when initiating a cancellation of their orders by sending a
mass purge request through FIX or OTTO, Participants will be able to
submit a Kill Switch request on a user level only.\49\ The Exchange
states that this is a change from the ability to cancel orders on
either a user or group level \50\ with the interface.\51\ The Exchange
states that it proposes to amend Options 3, Section 17(a) to note this
change by removing the words ``or group'' and the following sentence
that applies to a group.\52\
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\42\ See Notice, 89 FR at 57487.
\43\ See Notice, 89 FR at 57487.
\44\ See Notice, 89 FR at 57487.
\45\ See Notice, 89 FR at 57487.
\46\ See Notice, 89 FR at 57487 (citing Securities Exchange Act
Release No. 76116 (October 8, 2015), 80 FR 62147 (October 15, 2015)
(SR-BX-2015-050) (Order Approving Proposed Rule Change To Adopt a
Kill Switch)).
\47\ See Notice, 89 FR at 57487.
\48\ See Notice, 89 FR at 57487.
\49\ See Notice, 89 FR at 57487.
\50\ The Exchange states that a permissible group could include
all badges associated with a Market Maker. See Notice, 89 FR at
57487 n.9. The Exchange states that today, a Participant is able to
set up these groups in the interface to include all or some of the
Identifiers associated with the Participant firm so that a GUI Kill
Switch request could apply to this pre-defined group. Id.
\51\ See Notice, 89 FR at 57487.
\52\ See Notice, 89 FR at 57487. The Exchange also states that
it proposes to remove this sentence, ``Permissible groups must
reside within a single broker-dealer'' as the group option would no
longer exist. Id. at n.10.
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The Exchange states that finally, the Exchange proposes to amend
proposed Options 3, Section 17(a)(2) to align to MRX's rule text by
providing ``Once a BX Participant initiates a Kill Switch pursuant to
(a)(1) above. . .'' in the first sentence.\53\ The Exchange states that
this amendment simply rewords the rule text without a substantive
amendment to the rule text.\54\
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\53\ See Notice, 89 FR at 57487.
\54\ See Notice, 89 FR at 57487.
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Options 3, Section 18
The Exchange states that it proposes to amend Options 3, Section
18, Detection of Loss of Communication.\55\ The Exchange states that it
proposes to add OTTO to Options 3, Section 18 as OTTO would also be
subject to this rule.\56\ The Exchange states that today, when the SQF
Port or the FIX Port detects the loss of communication with a
Participant's Client Application because the Exchange's server does not
receive a Heartbeat message for a certain time period, the Exchange
will automatically logoff the Participant's affected Client Application
and automatically cancel all of the Participant's open quotes through
SQF and open orders through FIX.\57\ The Exchange states that quotes
and orders are cancelled across all Client Applications that are
associated with the same BX Options Market Maker ID and underlying
issues.\58\
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\55\ See Notice, 89 FR at 57487.
\56\ See Notice, 89 FR at 57487.
\57\ See Notice, 89 FR at 57487.
\58\ See Notice, 89 FR at 57487.
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The Exchange states that at this time, the Exchange proposes to
permit orders entered through OTTO to be cancelled similar to FIX
orders when the Exchange's server does not receive a Heartbeat message
for a certain time period.\59\ The Exchange states that it is proposing
to amend Options 3, Section 18 to also rearrange the rule text to add
the word ``Definitions'' next to ``a'' and move the rule text in
current ``a'' to ``b'' and re-letter the other paragraphs
accordingly.\60\ Also, the Exchange states that it proposes to define
``Session of Connectivity'' for purposes of this rule to mean each time
the Participant connects to the Exchange's System.\61\ The Exchange
states that further, each new connection, intra-day or otherwise, is a
new Session of Connectivity.\62\ The Exchange states that it proposes
to use the new definition throughout Options 3, Section 18.\63\
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\59\ See Notice, 89 FR at 57487.
\60\ See Notice, 89 FR at 57487.
\61\ See Notice, 89 FR at 57487.
\62\ See Notice, 89 FR at 57487.
\63\ See Notice, 89 FR at 57487.
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The Exchange states that similar to FIX, when the OTTO Port detects
the loss of communication with a Participant's Client Application
because the Exchange's server does not receive a Heartbeat message for
a certain time period, the Exchange will automatically logoff the
Participant's affected Client Application and automatically cancel all
of the Participant's open orders through OTTO.\64\ The Exchange states
that orders would be cancelled across all Client Applications that are
associated with the same BX Options Market Maker ID and underlying
issues.\65\ The Exchange states that it proposes to update Options 3,
Section 18 to provide in proposed Options 3, Section 18(a)(3) that the
OTTO Port is the Exchange's proprietary System component through which
Participants communicate their orders from the Client Application.\66\
The Exchange states that further, the Exchange would note in proposed
Options 3, Section 18(c) that when the OTTO Port detects the loss of
communication with a Participant's Client Application because the
Exchange's server does not receive a Heartbeat message for a certain
time period (``nn'' seconds), the Exchange will automatically logoff
the Participant's affected Client Application and if the Participant
has elected to have its orders cancelled pursuant to proposed Section
18(f), automatically cancel all orders.\67\ The Exchange states that
proposed Options 3, Section 18(f) would provide that the default period
of ``nn'' seconds for OTTO Ports would be fifteen (15) seconds for the
disconnect and, if elected, the removal of orders.\68\ The Exchange
states that a Participant may determine another time period of ``nn''
seconds of no technical connectivity, as required in proposed paragraph
(c), to trigger the disconnect and, if so elected, the removal of
orders and communicate that time to the Exchange.\69\ The Exchange
states the period of ``nn'' seconds may be modified to a number between
one
[[Page 70237]]
hundred (100) milliseconds and 99,999 milliseconds for OTTO Ports prior
to each Session of Connectivity to the Exchange.\70\ The Exchange
states that this feature may be disabled for the removal of orders,
however the Participant will be disconnected.\71\
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\64\ See Notice, 89 FR at 57487.
\65\ See Notice, 89 FR at 57487.
\66\ See Notice, 89 FR at 57487.
\67\ See Notice, 89 FR at 57487.
\68\ See Notice, 89 FR at 57487.
\69\ See Notice, 89 FR at 57487.
\70\ See Notice, 89 FR at 57487.
\71\ See Notice, 89 FR at 57487.
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The Exchange states that proposed Options 3, Section 18(f)(1) would
provide that if the Participant changes the default number of ``nn''
seconds, that new setting shall be in effect throughout the current
Session of Connectivity and will then default back to fifteen
seconds.\72\ The Exchange states that a Participant may change the
default setting prior to each Session of Connectivity.\73\ The Exchange
states that finally, as proposed in Options 3, Section 18(f)(2), if the
time period is communicated to the Exchange by calling Exchange
operations, the number of ``nn'' seconds selected by the Participant
will persist for each subsequent Session of Connectivity until the
Participant either contacts Exchange operations by phone and changes
the setting or the Participant selects another time period through the
Client Application prior to the next Session of Connectivity.\74\ The
Exchange states that the trigger for OTTO Ports is event and Client
Application specific.\75\ The Exchange states that automatic
cancellation of the BX Options Market Maker's open orders for OTTO
Ports entered into the respective OTTO Ports via a particular Client
Application will neither impact nor determine the treatment of orders
of the same or other Participants entered into the OTTO Ports via a
separate and distinct Client Application.\76\ The Exchange states that
the proposed amendments for OTTO mirror the manner in which FIX Ports
are treated when the Exchange's server does not receive a Heartbeat
message for a certain time period for a FIX Port.\77\
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\72\ See Notice, 89 FR at 57487.
\73\ See Notice, 89 FR at 57487.
\74\ See Notice, 89 FR at 57487.
\75\ See Notice, 89 FR at 57487.
\76\ See Notice, 89 FR at 57487-88.
\77\ See Notice, 89 FR at 57488. The Exchange states that it
proposes to update internal cross-references to accommodate
relocated text. Id.
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Pricing
The Exchange states that it proposes to amend its Pricing Schedule
at Options 7, Section 3, BX Options Market--Ports and other Services,
to assess a port fee for the new OTTO protocol.\78\
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\78\ See Notice, 89 FR at 57488.
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The Exchange states that it proposes to assess an OTTO Port Fee of
$650 per port, per month, per account number.\79\
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\79\ See Notice, 89 FR at 57488. The Exchange states that the
term ``account number'' means a number assigned to a Participant.
The Exchange states that only one account number is necessary to
transact an options business of BX and that Participants may have
more than one account number. See Notice, 89 FR at 57488 n.12
(citing Options 1, Section 1(a)(2)). The Exchange states that
account numbers are free on BX. Id.
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The Exchange states that it also proposes to add OTTO and Disaster
Recovery Ports to the list of ports that are capped at $7,500 on
BX.\80\ The Exchange states that today, the maximum monthly fees in the
aggregate for FIX Port, CTI Port, FIX DROP Port, BX Depth Port and BX
TOP Port Fees on BX is $7,500.\81\ The Exchange states that these ports
are available to all BX Participants.\82\ The Exchange states that, for
example, to the extent that a Participant expended more than $7,500 for
FIX or OTTO Ports, BX would not charge a Participant for additional FIX
or OTTO Ports, respectively, beyond the cap.\83\ The Exchange also
states that it will provide each Participant the first FIX Port at no
cost to submit orders into BX.\84\
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\80\ See Notice, 89 FR at 57488. The Exchange notes that BX
currently does not assess BX Participants for Disaster Recovery
Ports. See Notice, 89 FR at 57488 (citing BX Options 7, Section 3).
\81\ See Notice, 89 FR at 57488 (BX Options 7, Section 3(i)).
\82\ See Notice, 89 FR at 57488.
\83\ See Notice, 89 FR at 57488.
\84\ See Notice, 89 FR at 57488.
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Implementation
The Exchange states that it will implement this rule change on or
before December 20, 2025, and that it will announce the operative date
to Participants in an Options Trader Alert.\85\
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\85\ See Notice, 89 FR at 57488.
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III. Suspension of the Proposed Rule Change
Pursuant to Section 19(b)(3)(C) of the Act,\86\ at any time within
60 days of the date of filing of an immediately effective proposed rule
change pursuant to Section 19(b)(1) of the Act,\87\ the Commission
summarily may temporarily suspend the change in the rules of a self-
regulatory organization (``SRO'') 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. A temporary suspension of the proposed rule changes is
necessary and appropriate to allow for additional analysis of the
proposed rule change's consistency with the Act and the rules
thereunder.
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\86\ 15 U.S.C. 78s(b)(3)(C).
\87\ 15 U.S.C. 78s(b)(1).
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A. Exchange Statements In Support of the Proposal
Exchange Arguments Concerning Sections 6(b)(4) and 6(b)(5) of the Act
The Exchange states that the Exchange believes that its proposal is
consistent with Section 6(b) of the Act,\88\ in general, and furthers
the objectives of Section 6(b)(5) of the Act,\89\ 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. The Exchange states that,
additionally, the Exchange believes that its proposal furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\90\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees, and other charges among members and issuers and
other persons using any facility, and is not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.\91\
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\88\ See Notice, 89 FR at 57488 (citing 15 U.S.C. 78f(b)).
\89\ See Notice, 89 FR at 57488 (citing 15 U.S.C. 78f(b)(5)).
\90\ See Notice, 89 FR at 57488 (citing 15 U.S.C. 78f(b)(4) and
(5)).
\91\ See Notice, 89 FR at 57488.
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OTTO Protocol
The Exchange states that the Exchange's proposal to adopt OTTO is
consistent with the Act because OTTO would provide BX Participants with
an alternative protocol to submit orders to the Exchange.\92\ The
Exchange states that as proposed, BX would offer the first OTTO Port at
no cost to submit orders into BX, which would remove impediments to and
perfect the mechanism of a free and open market.\93\ The Exchange
states that while BX Participants may elect to obtain multiple ports to
organize their business,\94\ only one order port is necessary for a
Participant to enter orders on BX.\95\ The Exchange states
[[Page 70238]]
that a BX Participant may send all orders, proprietary and agency,
through one port to BX without incurring any cost with this
proposal.\96\ The Exchange states that in the alternative, BX
Participants may elect to obtain multiple ports to organize their
business.\97\
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\92\ See Notice, 89 FR at 57488.
\93\ See Notice, 89 FR at 57488.
\94\ The Exchange states that, for example, a Participant may
desire to utilize multiple FIX or OTTO Ports for accounting
purposes, to measure performance, for regulatory reasons or other
determinations that are specific to that Participant. See Notice, 89
FR at 57488 n.14 and 57489 n.27.
\95\ See Notice, 89 FR at 57489. The Exchange states that only
BX Participants may utilize ports on BX and that any market
participant that sends orders to a BX Participant would not need to
utilize a port. See Notice, 89 FR at 57486.
\96\ See Notice, 89 FR at 57489.
\97\ See Notice, 89 FR at 57489.
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The Exchange states that with the addition of OTTO, a BX
Participant may elect to enter their orders through FIX, OTTO, or both
protocols, although both protocols are not necessary.\98\ The Exchange
states that each BX Participant would receive one OTTO Port at no cost,
thereby promoting just and equitable principles of trade.\99\ The
Exchange notes that Participants may prefer one order protocol as
compared to another order protocol, for example, the ability to route
an order may cause a Participant to utilize FIX and a Participant that
desires to execute an order locally may utilize OTTO.\100\ The Exchange
states that also, the OTTO Port offers lower latency as compared to the
FIX Port, which may be attractive to Participants depending on their
trading behavior.\101\ The Exchange states that with this proposal, BX
Participant may organize their business as they chose with the ability
to send orders to BX at no cost.\102\ The Exchange states that the
proposed new OTTO protocol is identical to the OTTO protocol offered
today on ISE, GEMX, MRX.\103\
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\98\ See Notice, 89 FR at 57489.
\99\ See Notice, 89 FR at 57489.
\100\ See Notice, 89 FR at 57489.
\101\ See Notice, 89 FR at 57489.
\102\ See Notice, 89 FR at 57489.
\103\ See Notice, 89 FR at 57489.
---------------------------------------------------------------------------
Other Amendments
The Exchange that in connection with offering OTTO, the Exchange
proposes to amend other rules within Options 3 to make clear where the
FIX and OTTO protocols may be utilized.\104\ The Exchange states that
IOC Orders may be entered through FIX, OTTO or SQF, a Day order may be
entered through FIX or OTTO, a GTC order may only be entered through
FIX, and a Public Customer-to-Public Customer Cross Order may be
entered through FIX or OTTO.\105\ The Exchange states that other
processes such the Opening Cancel Timer would impact FIX and OTTO
equally.\106\
---------------------------------------------------------------------------
\104\ See Notice, 89 FR at 57489.
\105\ See Notice, 89 FR at 57489.
\106\ See Notice, 89 FR at 57489.
---------------------------------------------------------------------------
The Exchange states that the Exchange's proposal to amend the Kill
Switch at Options 3, Section 17 to align its rule text in proposed
Options 3, Section 17(a) and (a)(2) with MRX's Options 3, Section 17 is
consistent with the Act because it does not substantively amend the
functionality beyond removing the group level cancel capability.\107\
The Exchange states that the Exchange's proposal to amend proposed
Options 3, Section 17(a)(2) to specify that FIX and OTTO orders may be
cancelled is consistent with the Act as it will make clear that all
orders entered on BX may be purged through the Kill Switch.\108\ The
Exchange states that finally, allowing BX Participants to send a mass
purge request through FIX or OTTO, in lieu of an interface, is
consistent with Act and the protection of investors and the general
public because it will enable BX Participants to initiate the Kill
Switch more seamlessly without the need to utilize a separate
interface.\109\ The Exchange states that further, utilizing the order
protocols directly, in lieu of the interface, will align the Kill
Switch functionality to that of ISE, GEMX and MRX.\110\ The Exchange
states that when initiating a cancellation of their orders by sending a
mass purge request through FIX or OTTO, Participants will be able to
submit a Kill Switch request on a user level only because the purge
will be specific to a FIX or OTTO user for these ports.\111\
---------------------------------------------------------------------------
\107\ See Notice, 89 FR at 57489.
\108\ See Notice, 89 FR at 57489.
\109\ See Notice, 89 FR at 57489.
\110\ See Notice, 89 FR at 57489.
\111\ See Notice, 89 FR at 57489.
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The Exchange states that finally, the Detection of Loss of
Communication would apply equally to FIX and OTTO.\112\ The Exchange
believes that its proposal is consistent with the Act and protects
investors as the Exchange is making clear what types of order types and
other mechanisms may utilize OTTO.\113\ The Exchange states that today,
BX Participants utilize FIX to enter their orders.\114\ The Exchange
states that despite the fact that OTTO would not be available for the
GTC Time-In-Force modifier, the Exchange notes that one OTTO Port is
being provided to Participants at no cost.\115\ The Exchange states
that today, FIX is the only manner in which to enter orders into
BX.\116\
---------------------------------------------------------------------------
\112\ See Notice, 89 FR at 57489.
\113\ See Notice, 89 FR at 57489.
\114\ See Notice, 89 FR at 57489.
\115\ See Notice, 89 FR at 57489.
\116\ See Notice, 89 FR at 57489.
---------------------------------------------------------------------------
Pricing
Proposed Port Fees Are Reasonable, Equitable and Not Unfairly
Discriminatory
The Exchange states that only one FIX order protocol is required
for a BX Participant to submit orders into BX and to meet its
regulatory requirements \117\ at no cost while meeting its regulatory
requirements.\118\ The Exchange states that the Exchange will provide
each Participant the first FIX Port at no cost to submit orders into
BX.\119\ The Exchange states that only one account number is necessary
to transact an options business on BX and account numbers are available
to Participants at no cost.\120\
---------------------------------------------------------------------------
\117\ The Exchange states that BX Participants have trade-
through requirements under Regulation NMS as well as broker-dealers'
best execution obligations. See Notice, 89 FR at 57489 n.20 (citing
Rule 611 of Regulation NMS; 17 CFR 242.611 and FINRA Rule 5310).
\118\ See Notice, 89 FR at 57489.
\119\ See Notice, 89 FR at 57489.
\120\ See Notice, 89 FR at 57489.
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The Exchange states that the Exchange proposes to offer each
Participant the first FIX Port at no cost to meet their regulatory
requirements.\121\ The Exchange states as noted above, Participants may
freely choose to rely on one or many ports, depending on their business
model.\122\
---------------------------------------------------------------------------
\121\ See Notice, 89 FR at 57489.
\122\ See Notice, 89 FR at 57489.
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The Exchange states that the Exchange's proposal is reasonable,
equitable and not unfairly discriminatory as BX is providing BX
Participants the first FIX Port to submit orders at no cost.\123\ The
Exchange states that these ports, which are offered at no cost, would
allow a BX Participant to meet its regulatory requirements.\124\ The
Exchange states that all other ports offered by BX are not required for
a BX Participant to meet its regulatory obligations.\125\ The Exchange
states that therefore, for the foregoing reasons, it is reasonable to
assess no fee for the first FIX Port obtained by a Participant as a BX
Participant is able to meet its regulatory requirements with these
ports.\126\ The Exchange states that additionally, the proposal offers
a free FIX Port to BX Participants that already subscribe to FIX,
thereby reducing fees for these market participants.\127\
---------------------------------------------------------------------------
\123\ See Notice, 89 FR at 57489.
\124\ See Notice, 89 FR at 57489.
\125\ See Notice, 89 FR at 57489.
\126\ See Notice, 89 FR at 57489.
\127\ See Notice, 89 FR at 57489.
---------------------------------------------------------------------------
The Exchange states that further, it is equitable and not unfairly
discriminatory to assess no fee for the first FIX Port to Participants
as all BX
[[Page 70239]]
Participants would be entitled to the first FIX Port at no cost.\128\
The Exchange states that with this proposal, BX Participants may
organize their business in such a way as to submit orders to BX at no
cost.\129\
---------------------------------------------------------------------------
\128\ See Notice, 89 FR at 57489.
\129\ See Notice, 89 FR at 57489.
---------------------------------------------------------------------------
The Exchange states that the Exchange's proposal to assess $650 per
port, per month, per account number for an OTTO Port is reasonable
because OTTO is not required for a Participant to meet its regulatory
requirements.\130\ The Exchange states that it is offering the first
FIX Port at no cost to submit orders to BX.\131\ The Exchange states
that in addition to the FIX Port, all Participants may elect to
purchase OTTO to submit orders to BX.\132\ The Exchange states that BX
Participants utilizing the FIX Port, which is offered at no cost, do
not need to utilize OTTO.\133\
---------------------------------------------------------------------------
\130\ See Notice, 89 FR at 57489.
\131\ See Notice, 89 FR at 57489.
\132\ See Notice, 89 FR at 57489.
\133\ See Notice, 89 FR at 57489.
---------------------------------------------------------------------------
The Exchange states that finally, in the event that a BX
Participant elects to subscribe to multiple ports, the Exchange offers
a monthly cap beyond which a Participant would be assessed no
additional fees for the month and proposes to add OTTO to the monthly
cap.\134\ The Exchange states that BX proposes to cap FIX Port, OTTO
Port, CTI Port, FIX Drop Port, BX Depth Port, BX TOP Port Fees, and all
Disaster Recovery Port Fees \135\ at a monthly cap of $7,500.\136\ The
Exchange states that these caps are reasonable because they allow
Participants to limit their fees beyond a certain level if they elect
to purchase multiple ports in a given month.\137\ The Exchange states
that the caps are also equitable and not unfairly discriminatory
because any Participant will be subject to the cap, provided they
exceeded the appropriate dollar amount in a given month.\138\ The
Exchange states that these ports are available to all BX
Participants.\139\
---------------------------------------------------------------------------
\134\ See Notice, 89 FR at 57489.
\135\ The Exchange states that BX does not assess fees for
Disaster Recovery Ports. See Notice, 89 FR at 57489 n.30.
\136\ See Notice, 89 FR at 57489.
\137\ See Notice, 89 FR at 57489.
\138\ See Notice, 89 FR at 57489.
\139\ See Notice, 89 FR at 57489.
---------------------------------------------------------------------------
The Exchange states that the proposed BX OTTO fee is the same as
the OTTO Port fee on MRX, for the identical port.\140\ The Exchange
states that additionally, MRX offers one free FIX Port to its Members
and assesses the same FIX Port fee of $650 per port, per month, per
account number as BX assesses today for a FIX Port. The Exchange states
that MRX offers its Members a free FIX Disaster Recovery Port.\141\ The
Exchange states that today, BX does not assess Disaster Recovery Port
fees.\142\ The Exchange states that finally, today, MRX offers a $7,500
monthly cap for OTTO Ports, CTI Ports, FIX Ports, FIX Drop Ports and
all Disaster Recovery Ports.\143\ The Exchange states that BX's
proposed monthly cap includes BX Depth Ports and BX Top Ports, which
are currently assessed fees of $650 per port, per month, in addition to
the same ports that are capped on MRX (FIX Ports, OTTO Ports, CTI
Ports, FIX DROP Ports, and all Disaster Recovery Ports).\144\
---------------------------------------------------------------------------
\140\ See Notice, 89 FR at 57490.
\141\ See Notice, 89 FR at 57490 (citing MRX Options 7, Section
6).
\142\ See Notice, 89 FR at 57490 (citing BX Options 7, Section
3).
\143\ See Notice, 89 FR at 57490 (citing MRX Options 7, Section
6).
\144\ See Notice, 89 FR at 57490. The Exchange states that,
therefore, BX's proposed cap can also be obtained utilizing BX Depth
Port and BX Top Port in addition to the same ports that MRX
aggregates for purposes of the monthly cap. See Notice, 89 FR at
57488.
---------------------------------------------------------------------------
Exchange Arguments Concerning Competition and Section 6(b)(8)
The Exchange states that 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.\145\
---------------------------------------------------------------------------
\145\ See Notice, 89 FR at 57490.
---------------------------------------------------------------------------
The Exchange states that the OTTO protocol is a proprietary
protocol of Nasdaq, Inc.\146\ The Exchange states that the Exchange
continues to innovate and modernize technology so that it may continue
to compete among options markets.\147\ The Exchange states that the
ability to continue to innovate with technology and offer new products
to market participants allows BX to remain competitive in the options
space which currently has seventeen options markets and potential new
entrants.\148\ The Exchange states that if BX were unable to offer and
price new protocols, it would result in an undue burden on competition
as BX would not have the ability to innovate and modernize its
technology to compete effectively in the options space.\149\ The
Exchange states that BX's ability to offer OTTO will enable it to
compete with other options markets that provide its market participants
a choice as to the type of order entry protocols that may be
utilized.\150\ The Exchange states that BX's ability to offer and price
new and innovative products and continue to modernize its technology,
similar to other options markets, supports intermarket
competition.\151\
---------------------------------------------------------------------------
\146\ See Notice, 89 FR at 57490.
\147\ See Notice, 89 FR at 57490.
\148\ See Notice, 89 FR at 57490.
\149\ See Notice, 89 FR at 57490.
\150\ See Notice, 89 FR at 57490.
\151\ See Notice, 89 FR at 57490.
---------------------------------------------------------------------------
OTTO Protocol
The Exchange states that the Exchange's proposal to adopt an OTTO
Protocol does not impose an undue burden on intramarket
competition.\152\ The Exchange states that today, all BX Participants
utilize FIX to send orders to BX.\153\ The Exchange states that the
Exchange would offer each BX Participant the first FIX Port at no cost
with this proposal.\154\ The Exchange states that with the addition of
OTTO Ports, a BX Participant may elect to enter their orders through
FIX, OTTO, or both protocols, although both protocols are not
necessary.\155\ The Exchange states that the Exchange's proposal to
adopt an OTTO Protocol does not impose an undue burden on intermarket
competition as other options exchanges offer multiple protocols today
such as ISE, GEMX and MRX.\156\
---------------------------------------------------------------------------
\152\ See Notice, 89 FR at 57490.
\153\ See Notice, 89 FR at 57490.
\154\ See Notice, 89 FR at 57490.
\155\ See Notice, 89 FR at 57490.
\156\ See Notice, 89 FR at 57490.
---------------------------------------------------------------------------
Other Amendments
The Exchange states that the Exchange's proposal to amend other
rules within Options 3 to make clear where the FIX and OTTO protocols
may be utilized does not impose an undue burden on intramarket
competition as these rules will apply in the same manner to all
Participants.\157\ The Exchange states that the Exchange's proposal to
amend other rules within Options 3 to make clear where the FIX and OTTO
protocols may be utilized does not impose an undue burden on
intermarket competition as other options exchanges may elect to utilize
their order entry protocols in different ways.\158\
---------------------------------------------------------------------------
\157\ See Notice, 89 FR at 57490.
\158\ See Notice, 89 FR at 57490.
---------------------------------------------------------------------------
Pricing
The Exchange states that nothing in the proposal burdens inter-
market competition because BX's proposal to offer the first FIX Port
for free is similar to MRX's FIX Port offering and allows BX
Participants to meet their regulatory obligations.\159\ The Exchange
states that
[[Page 70240]]
BX's offering would permit Participants the ability to submit orders to
BX at no cost.\160\ The Exchange states that OTTO Ports are not
required for BX Participants to meet their regulatory obligations.\161\
---------------------------------------------------------------------------
\159\ See Notice, 89 FR at 57490.
\160\ See Notice, 89 FR at 57490.
\161\ See Notice, 89 FR at 57490.
---------------------------------------------------------------------------
The Exchange states that nothing in the proposal burdens intra-
market competition because the Exchange would uniformly assess the port
fees to all Participants, as applicable, and would uniformly apply
monthly caps.\162\ The Exchange states that the proposed fees are
identical to fees recently approved on MRX.\163\ The Exchange states
that the proposed BX OTTO fee is the same as the OTTO Port fee on MRX,
for the identical port.\164\ The Exchange states that additionally, MRX
offers one free FIX Port to its Members and assesses the same FIX Port
fee of $650 per port, per month, per account number as BX assessed
today for FIX.\165\ The Exchange states that MRX also offers a free FIX
Disaster Recovery Port.\166\ The Exchange states that today, BX does
not assess Disaster Recovery Port fees.\167\ The Exchange states that
finally, today, MRX offers a $7,500 monthly cap for OTTO Ports, CTI
Ports, FIX Ports, FIX Drop Ports and all Disaster Recovery Ports.\168\
The Exchange states that BX's proposed monthly cap includes BX Depth
Ports and BX Top Ports, which are assessed fees of $650 per port, per
month, in addition to the same ports that are capped on MRX (FIX Ports,
OTTO Ports, CTI Ports, FIX DROP Ports, and all Disaster Recovery
Ports).\169\
---------------------------------------------------------------------------
\162\ See Notice, 89 FR at 57490.
\163\ See Securities Exchange Commission Release No. 96824
(February 7, 2023), 88 FR 8975 (February 10, 2023) (SR-MRX-2023-05).
\164\ See Notice, 89 FR at 57490.
\165\ See MRX Options 7, Section 6.
\166\ Id.
\167\ See BX Options 7, Section 3. BX is adding Disaster
Recovery Ports to its monthly cap.
\168\ See MRX Options 7, Section 6.
\169\ See Notice, 89 FR at 57490.
---------------------------------------------------------------------------
The Exchange states that to the extent that the Commission does not
permit BX to assess the same identical fees for the same identical
products on its market, the Commission is creating a burden on
competition by allowing MRX to assess fees and offer a product that
would otherwise be unavailable on BX.\170\ The Exchange states that
additionally, the proposal offers a free FIX Port to BX Participants
that already subscribe to FIX, the only order port currently offered on
BX, thereby reducing fees for these market participants.\171\ The
Exchange states that each SRO should be permitted to mirror fees
assessed by another SRO to further competition among the
exchanges.\172\
---------------------------------------------------------------------------
\170\ See Notice, 89 FR at 57490.
\171\ See Notice, 89 FR at 57490.
\172\ See Notice, 89 FR at 57490.
---------------------------------------------------------------------------
B. Suspension
When exchanges file their proposed rule changes with the
Commission, including fee filings like the Exchange's present proposal,
they are required to provide a statement supporting the proposal's
basis under the Act and the rules and regulations thereunder applicable
to the exchange.\173\ The instructions to Form 19b-4, on which
exchanges file their proposed rule changes, specify that such statement
``should be sufficiently detailed and specific to support a finding
that the proposed rule change is consistent with [those]
requirements.'' \174\
---------------------------------------------------------------------------
\173\ See 17 CFR 240.19b-4(Item 3 entitled ``Self-Regulatory
Organization's Statement of the Purpose of, and Statutory Basis for,
the Proposed Rule Change'').
\174\ See id.
---------------------------------------------------------------------------
Section 6 of the Act, including Sections 6(b)(4), (5), and (8),
require the rules of an exchange to: (1) provide for the equitable
allocation of reasonable fees among members, issuers, and other persons
using the exchange's facilities; \175\ (2) perfect the mechanism of a
free and open market and a national market system, protect investors
and the public interest, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers; \176\
and (3) not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.\177\
---------------------------------------------------------------------------
\175\ 15 U.S.C. 78f(b)(4).
\176\ 15 U.S.C. 78f(b)(5).
\177\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
In temporarily suspending the Exchange's proposed rule change, the
Commission intends to further consider whether the Proposal is
consistent with the statutory requirements applicable to a national
securities exchange under the Act. In particular, the Commission will
consider whether the proposed rule change satisfies the standards under
the Act and the rules thereunder requiring, among other things, that an
exchange's rules provide for the equitable allocation of reasonable
fees among members, issuers, and other persons using its facilities;
not permit unfair discrimination between customers, issuers, brokers or
dealers; and do not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.\178\
---------------------------------------------------------------------------
\178\ See 15 U.S.C. 78f(b)(4), (5), and (8), respectively.
---------------------------------------------------------------------------
Therefore, the Commission finds that it is appropriate in the
public interest, for the protection of investors, and otherwise in
furtherance of the purposes of the Act, to temporarily suspend the
proposed rule change.\179\
---------------------------------------------------------------------------
\179\ For purposes of temporarily suspending the proposed rule
change, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
IV. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Changes
In addition to temporarily suspending the Proposal, the Commission
also hereby institutes proceedings pursuant to Sections 19(b)(3)(C)
\180\ and 19(b)(2)(B) of the Act \181\ to determine whether the
Exchange's proposed rule change should be approved or disapproved.
Institution of proceedings does not indicate that the Commission has
reached any conclusions with respect to any of the issues involved.
Rather, the Commission seeks and encourages interested persons to
provide additional comment on the proposed rule change to inform the
Commission's analysis of whether to approve or disapprove the proposed
rule change.
---------------------------------------------------------------------------
\180\ 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily
suspends a proposed rule change, Section 19(b)(3)(C) of the Act
requires that the Commission institute proceedings under Section
19(b)(2)(B) to determine whether a proposed rule change should be
approved or disapproved.
\181\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
Pursuant to Section 19(b)(2)(B) of the Act,\182\ the Commission is
providing notice of the grounds for possible disapproval under
consideration:
---------------------------------------------------------------------------
\182\ Id. Section 19(b)(2)(B) of the Act also provides that
proceedings to determine whether to disapprove a proposed rule
change must be concluded within 180 days of the date of publication
of notice of the filing of the proposed rule change. See id. The
time for conclusion of the proceedings may be extended for up to 60
days if the Commission finds good cause for such extension and
publishes its reasons for so finding, or if the exchange consents to
the longer period. See id.
---------------------------------------------------------------------------
<bullet> Whether the Exchange has demonstrated how the proposed
fees are consistent with Section 6(b)(4) of the Act, which requires
that the rules of a national securities exchange ``provide for the
equitable allocation of reasonable dues, fees, and other charges among
its members and issuers and other persons using its facilities''; \183\
---------------------------------------------------------------------------
\183\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
<bullet> Whether the Exchange has demonstrated how the proposed
fees are consistent with Section 6(b)(5) of the Act, which requires,
among other things, that the rules of a national securities exchange
not be ``designed to permit unfair discrimination between
[[Page 70241]]
customers, issuers, brokers, or dealers''; \184\ and
---------------------------------------------------------------------------
\184\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
<bullet> Whether the Exchange has demonstrated how the proposed
fees are consistent with Section 6(b)(8) of the Act, which requires
that the rules of a national securities exchange ``not impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of [the Act].'' \185\
---------------------------------------------------------------------------
\185\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
As discussed in Section III above, the Exchange made various
arguments in support of the Proposal. There are questions as to whether
the Exchange has provided sufficient information to demonstrate that
the proposed fees are consistent with the Act and the rules thereunder.
The Commission will specifically consider, among other things, whether
the Exchange has provided sufficient evidence to demonstrate that the
proposed fees are reasonable and equitably allocated, are not unfairly
discriminatory, and do not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the [Act]
and the rules and regulations issued thereunder . . . is on the [SRO]
that proposed the rule change.'' \186\ The description of a proposed
rule change, its purpose and operation, its effect, and a legal
analysis of its consistency with applicable requirements must all be
sufficiently detailed and specific to support an affirmative Commission
finding,\187\ and any failure of an SRO to provide this information may
result in the Commission not having a sufficient basis to make an
affirmative finding that a proposed rule change is consistent with the
Act and the applicable rules and regulations.\188\
---------------------------------------------------------------------------
\186\ 17 CFR 201.700(b)(3).
\187\ See id.
\188\ See id.
---------------------------------------------------------------------------
The Commission is instituting proceedings to allow for additional
consideration and comment on the issues raised herein, including as to
whether the proposed fees are consistent with the Act, and
specifically, with its requirements that exchange fees be reasonable
and equitably allocated, not be unfairly discriminatory, and not impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.\189\
---------------------------------------------------------------------------
\189\ See 15 U.S.C. 78f(b)(4), (5), and (8).
---------------------------------------------------------------------------
V. Commission's Solicitation of Comments
The Commission requests written views, data, and arguments with
respect to the concerns identified above as well as any other relevant
concerns. Such comments should be submitted by September 19, 2024.
Rebuttal comments should be submitted by October 3, 2024. Although
there do not appear to be any issues relevant to approval or
disapproval that would be facilitated by an oral presentation of views,
data, and arguments, the Commission will consider, pursuant to Rule
19b-4, any request for an opportunity to make an oral
presentation.\190\
---------------------------------------------------------------------------
\190\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants
the Commission flexibility to determine what type of proceeding--
either oral or notice and opportunity for written comments--is
appropriate for consideration of a particular proposal by an SRO.
See Securities Acts Amendments of 1975, Report of the Senate
Committee on Banking, Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------
The Commission asks that commenters address the sufficiency and
merit of the Exchange's statements in support of the Proposal, in
addition to any other comments they may wish to submit about the
proposed rule changes.
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#5022253c357d333f3d3d353e2423102335337e373f26"><span class="__cf_email__" data-cfemail="6210170e074f010d0f0f070c1611221107014c050d14">[email protected]</span></a>. Please include
file number SR-BX-2024-019 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-2024-019. 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-BX-2024-019 and should be
submitted on or before September 19, 2024. Rebuttal comments should be
submitted by October 3, 2024.
VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(3)(C) of the
Act,\191\ that File No. SR-BX-2024-019, be and hereby is, temporarily
suspended. In addition, the Commission is instituting proceedings to
determine whether the proposed rule change should be approved or
disapproved.
---------------------------------------------------------------------------
\191\ 15 U.S.C. 78s(b)(3)(C).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\192\
---------------------------------------------------------------------------
\192\ 17 CFR 200.30-3(a)(57).
---------------------------------------------------------------------------
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-19394 Filed 8-28-24; 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.